Financial Crime World

Fintech Regulation in the Netherlands: A Guide for Startups

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As fintech companies continue to disrupt traditional financial services, regulatory bodies in the Netherlands are working to ensure a balanced approach between innovation and consumer protection.

Light Registration Regime for AIF Managers

Dutch managers of Alternative Investment Funds (AIFs) may opt for a light registration regime instead of obtaining a full AIFM license. This regime is available only for Dutch AIF managers whose aggregate assets under management remain below €100 million or €500 million on an unleveraged basis, subject to no units being redeemable within five years upon issuance.

Key Points:

  • Available only for Dutch AIF managers
  • Aggregate assets under management must remain below €100 million or €500 million on an unleveraged basis
  • No units can be redeemed within five years upon issuance

Risk Management

Risk management is not a regulated activity in the Netherlands, but it is a critical component of business operations. Companies must have internal procedures and processes in place to mitigate operational and compliance risks.

Key Elements:

  • Risk management system and function
  • Policy and strategy
  • Internal procedures
  • Monitoring, reporting, and evaluation

Roboadvice

The AFM published its views on roboadvice in March 2018, stating that this form of fintech can enhance accessibility and quality of financial advice. However, a duty of care still applies, and companies must comply with applicable laws and regulations.

Key Takeaways:

  • Duty of care still applies
  • Companies must comply with applicable laws and regulations
  • May result in an obligation to obtain a licence as a financial services provider or investment firm

Insurtech

Insurtech players are regulated in the same manner as traditional insurance companies. The main laws and regulations applicable to insurance companies in the Netherlands are laid down in the Dutch Civil Code and Financial Supervision Act.

Key Regulations:

  • Dutch Civil Code
  • Financial Supervision Act
  • Solvency II (for larger insurers)
  • Local regime (for smaller insurers)
  • Exemption from financial regulation (for smallest insurers)

AFM and DNB’s Focus on AI

The AFM and DNB recently published a report outlining 10 key focus areas when using artificial intelligence (AI) in the insurance sector. The regulators emphasize the need to monitor the fast-evolving insurtech market closely, paying special attention to ethical aspects involved in insurtech solutions.

Key Focus Areas:

  • Data protection
  • Transparency and explainability
  • Bias and fairness
  • Robustness and resilience
  • Human oversight and decision-making

Conclusion

For fintech startups operating in the Netherlands, it is essential to understand the regulatory landscape and ensure compliance with applicable laws and regulations. By doing so, companies can focus on innovation while protecting consumers and maintaining a healthy financial system.