UCITS legislation and regulations

Transparancy UCITS

Depending on the characteristics of the product, the investment is legally qualified as a security, a unit in a UCITS, investment object or another financial instrument. This qualification determines which legal requirements your disclosure must meet. Below is a list of recommendations to meet those requirements.

With a UCITS, there is a distinction between complex products and non-complex products.

Securities (not complex)

Providers of the securities are subject to capital markets supervision (no conduct regulations) and are faced with other disclosure requirements. Examples include a share issue by a listed company, a note issued by a bank.

Units (complex)

Providers of units are financial companies and are subject to the supervision of conduct of financial companies. Some units are not a complex product; these are closed-end investment funds with negotiable units, which are subject to the disclosure requirements for securities.

The AFM regularly monitors whether your information meets the requirements.

Which information is contained in the Wwft guidance?

The Wwft guidance is an aid for interpreting and applying the legal obligations of the Money Laundering and Terrorist Financing (Prevention) Act (Wet ter voorkoming van witwassen en financieren van terrorisme; (Wwft) and the Sanctions Act 1977 (Sanctiewet). This guidance document is not a legally binding document or policy rule.

The guidance covers the following topics:

Client due diligence

Before entering into a business relationship or performing a transaction, institutions must carry out client due diligence. Client due diligence enables the institution to establish and verify the identity of the client. Client due diligence may be conducted on a risk basis. This means that institutions are free to make their own assessment of the integrity risks of certain clients or products and may adjust the nature and depth of client due diligence accordingly.

Notification of unusual transactions

Institutions are obliged to report unusual transactions to the Financial Intelligence Unit - Netherlands (FIU - NL). The annex to Article 4 of the Wwft Implementation Decree contains the list of indicators that require reporting. The list of indicators is divided into objective and subjective indicators.

Monitoring activities

During the term of the business relationship, institutions must continuously monitor to assess whether transactions correspond with the client’s risk profile. Any anomalous transaction patterns may be grounds for the institution to file an unusual transaction report with the FIU - NL.

Outsourcing client due diligence

Institutions may outsource client due diligence to a third party. The ultimate responsibility for complying with legal requirements remains with the institution that outsourced the investigation. The monitoring of the business relationship should only be performed by the institution itself.

If you have any further questions, please contact the AFM Business Desk.