In a sector-wide letter dated 4 May 2026, DNB calls on management boards to actively contribute to improved compliance with these prudential obligations. At the same time DNB announces its tightened enforcement policy. Where a capital or liquidity shortfall is identified, a formal enforcement procedure will in principle be initiated immediately, typically resulting in the imposition of a penalty payment order last onder dwangsom. DNB may also impose an administrative fine in the event of persistent or repeated breaches. With this approach the supervisor aims to enforce remediation more swiftly. Early notification of an impending shortfall to DNB can prevent such further enforcement action.

Increase in shortfalls and responsibility of the management board

DNB observes that the number of capital and liquidity shortfalls has increased in recent years and that such shortfalls tend to persist for longer periods on average. Moreover, these issues are often not reported to DNB in a timely manner. This lack of compliance poses risks and places additional pressure on supervisory capacity resulting in higher supervisory costs for the sector. The management board of supervised entities remains primarily responsible for complying with all prudential requirements and for immediately informing DNB of any impending shortfall. DNB emphasises that financial institutions must comply with capital and liquidity requirements at all times. If a shortfall nevertheless arises or threatens to arise DNB must be informed without delay. Common causes of shortfalls include internal factors such as insufficient knowledge of prudential requirements or incorrect application of calculation rules for example, distributing dividends too early or applying incorrect deductions in capital calculations. DNB holds the management board accountable if a shortfall arises and is not reported.

Stricter enforcement policy immediate action in the event of a shortfall

With its new enforcement policy DNB applies a stricter and more formal approach to prudential breaches. Where a capital or liquidity shortfall is identified DNB will in principle immediately initiate a formal enforcement procedure. In practice, this means that DNB will usually issue a notice of intent to impose a penalty payment order almost immediately. Such an order grants the institution a short remediation period of four weeks to remedy the shortfall, with an escalating penalty of up to EUR 75,000, if remediation is not achieved in time. In addition a two week period applies for submitting views. If the institution succeeds in remedying the shortfall within this period and informs DNB thereof in a timely manner the imposition of the penalty payment order can be avoided.

Administrative fines may also come into play. DNB will in principle impose a fine if a shortfall persists despite the penalty payment order or if a similar breach occurs again within 25 months. This stricter stance underlines the principle that breaches will no longer be tolerated informally. DNB intends to act more quickly in order to resolve prudential shortfalls as swiftly as possible.

Please read our earlier article “DNB publishes enforcement policy for breaches of capital requirements” for a summary.

Importance of timely and accurate reporting

In addition to sufficient capital and liquidity buffers DNB emphasises the importance of timely and high quality prudential reporting. These periodic reports such as FINREP and IFREP form the basis for supervision and for the risk profiling of financial institutions. High data quality and timely submission are crucial for efficient data driven and risk based supervision. DNB notes however that many reports in the sector are submitted late despite repeated calls to improve this. The management board is responsible for the timely submission of reports. Late submission may lead DNB to take enforcement action which can include a supervisory antecedent meaning a negative record in DNB’s supervisory register for the responsible board members. DNB also regularly identifies reporting errors or inconsistencies between reported data and internal records. Such errors often arise from insufficient knowledge of reporting standards or inadequate internal controls. Compliance with reporting obligations is therefore also a key area of attention in preventing enforcement action.

Practical points of attention

For management boards and compliance departments of investment firms and AIFMs these developments underline that prevention is better than cure. DNB highlights the following actions to prevent enforcement and strengthen compliance.

  • Financial institutions should ensure that internal monitoring and early warning systems provide timely alerts of impending shortfalls. They should assess whether internal controls provide sufficient insight into applicable capital and liquidity requirements so that corrective action can be taken in a timely manner.
  • Financial institutions are encouraged to engage with DNB at an early stage when a potential shortfall emerges. DNB explicitly states that proactive notification of impending breaches can prevent unnecessary further enforcement action.
  • Financial institutions should ensure that potential recovery options and measures such as shareholder capital injections capital planning actions or liquidity support can be implemented immediately if needed allowing swift remediation without procedural delay.
  • Prudential reports should be submitted on time and without errors. Financial institutions should invest in strong data quality and effective controls around these reports and ensure sufficient expertise and experience within the organisation.

By taking these steps financial institutions can significantly reduce the risk of formal enforcement action.

Contact

Should you require support in assessing how DNB’s new enforcement policy may affect your organisation, we are here to assist. Please contact your trusted adviser at Loyens & Loeff or one of our colleagues listed below.