Recent announcement

The Dutch Authority for the Financial Markets (“AFM”) has recently taken the decision to impose a fine on Novum Bank Ltd. (Malta) relating to activities in the period from September 2013 to June 2016.  This fine is based on the AFM's belief that Novum Bank obtained the incorrect European Union passport of its banking license prior to operating in the Netherlands over that period.

Novum Bank applied for, and was granted in 2013, a Freedom of Services passport enabling it to provide consumer credit to Dutch consumers. This license was obtained from its home state regulator, the Malta Financial Services Authority (“MFSA”), and in force throughout the period in question.

The MFSA has come to the conclusion that the European passport in place was not the correct passport and, on 16 November 2018, decided to impose a fine. The AFM also believes Novum Bank should have first obtained a Freedom of Establishment passport and decided to also impose a fine.  Neither the AFM nor the MFSA fine pertain to the products or conduct of the bank while operating in the Netherlands, but rather to a failure to passport its license correctly.

Although Novum Bank is of the opinion that it was operating in the Netherlands in full compliance with its European passport, it should be noted that the bank took a business decision to discontinue all consumer lending activities to the Dutch market in early 2016.

The bank strongly disagrees with the decision of the AFM to impose a fine, not only because it is of the opinion that it could legitimately rely on the European passport granted by its home state regulator, but also because the home state regulator is the sole competent authority to decide on banking licenses and passporting rights of banks. It is clear that, as a result of the actions of the AFM, Novum Bank would be held accountable twice for one technicality, i.e. the incorrect notification.

Novum Bank will continue to defend itself against the AFM's decision through the appropriate appeals process.

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