DNB publishes enforcement policy for breaches of capital requirements

The new enforcement policy in brief

Under its new enforcement policy, when a breach of capital or liquidity requirements is identified, DNB will in principle immediately initiate a formal enforcement procedure. This will generally result in the imposition of a penalty payment order (last onder dwangsom). These measures are aimed at achieving recovery as quickly as possible. DNB may also impose an administrative fine.

Unnecessary escalation can be avoided if an institution informs DNB at an early stage of (impending) breaches.

The Staatscourant text indicates the policy applies to a broad range of institutions that must meet capital/liquidity requirements under the Wet op het financieel toezicht (Wft) and/or directly applicable EU regulations, including (among others):

• investment firms and relevant holding entities;
• managers of investment funds (AIFMs) and UCITS managers;
• payment institutions and electronic money institutions;
• as well as other categories referenced in the policy (e.g., crowdfunding service providers and crypto-asset service providers, where relevant).

The enforcement mechanics: timelines and escalation triggers

Default response: “last onder dwangsom” (penalty payment order)

DNB states it will send a notice of intent to impose a penalty payment order immediately after establishing a capital or liquidity shortfall. The key parameters highlighted are:

• a four-week remediation period (begunstigingstermijn);
• an increasing penalty payment up to EUR 75,000 if not remediated in time;
• a two-week period to submit views (right to be heard) on the intended decision.

Avoiding the order: DNB indicates the penalty payment order can be avoided if the shortfall is remedied by the last day of the views period, and institutions should notify DNB immediately with evidence once remediation is achieved.

DNB indicates it will in principle also impose an administrative fine where:

• the maximum penalty amount has been incurred and the breach continues; or
• there is a repeat breach within 25 months after remediation of an earlier breach.

Why this shift in policy?

DNB’s new policy reinforces a broader trend of heightened interest from DNB on compliance of financial institutions with capital and liquidity requirements and can be explained by:

• the systemic importance of capital and liquidity compliance for a stable financial sector;
• DNB’s observation that shortfalls have increased and that breaches have lasted longer on average in recent years; and
• DNB’s view that shortfalls also lead to additional administrative work, increasing supervisory costs for the sector.

This aligns with the broader enforcement approach described in the joint supervisors’ enforcement policy: formal instruments are used where needed to achieve compliance and protect the interests the financial regulatory framework is intended to safeguard.

What this means in practice for firms: governance, monitoring and escalation discipline

In practical terms, firms should assume that a capital/liquidity breach will rapidly become a formal process with fixed deadlines even if the shortfall is operationally remediable.

It is important to note that “unnecessary escalation” may be avoided if an institution informs DNB early about (impending) breaches. That makes early detection and escalation internally (to senior management/board) and externally (to DNB) more important than ever.

The following practical steps can reduce the likelihood of enforcement being triggered:

1. Stress-test your monitoring and early-warning indicators
   Confirm whether internal monitoring flags (impending) shortfalls early enough to allow corrective action before thresholds are breached.
2. Reconfirm regulatory mapping and governance ownership
   Ensure you have a clear view of which capital/liquidity requirements apply to your entity (and on what basis), and that ownership is assigned at senior level.
3. Pre-position recovery options
   Make sure recovery options and decision pathways are executable immediately (capital injection mechanics, capital planning levers, liquidity measures).
4. Prepare a “rapid remediation pack”
   Assemble templates and evidence bundles you can provide to DNB quickly once remediation is completed (calculations, approvals, confirmations).
5. Engage early with DNB when risk crystallises
   Consider proactive outreach when an undershoot is plausible, DNB explicitly indicates this can help avoid unnecessary escalation.

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