Dutch Private-Banking Clients: Cross-Border Servicing Checks from Luxembourg

ByBertrand Mariaux Updated on

Dutch private-banking clients must be serviced from Luxembourg on a service-by-service basis. The European passport is the starting point.

For a Luxembourg credit institution, Article 2 of the Law of 5 April 1993 on the financial sector, as amended (hereafter, the Financial Sector Law) sets the authorisation requirement. Article 34(1) of the Financial Sector Law frames outbound banking services in another Member State. It implements the notification logic of Article 39(1) of Directive 2013/36/EU of 26 June 2013 (hereafter, the CRD) where the institution provides services for the first time in another Member State. For investment services, Article 34(1) to (3) of Directive 2014/65/EU of 15 May 2014 on markets in financial instruments (hereafter, MiFID II) is reflected, for outbound Luxembourg servicing, in Article 34(2) to (4) of the Financial Sector Law.

Three Key Takeaways

  • (i) Map the exact service perimeter: deposits, lending, investment advice, discretionary portfolio management, reception and transmission of orders, and ancillary services must match the authorisation, the passport notification and, for investment services, the programme of operations required under Article 34(2)(b) of MiFID II and Article 34(2)(b) of the Financial Sector Law.
  • (ii) Do not confuse private-banking status, professional-client status and eligible-counterparty status. “Private-banking client” is not a legal client category under MiFID II. Article 4(1)(10) of MiFID II defines the professional client. Article 4(1)(11) of MiFID II defines the retail client. Eligible counterparties fall under Article 30 of MiFID II, transposed in Article 37-7 of the Financial Sector Law. A high-net-worth Dutch client remains retail unless properly classified as professional.
  • (iii) Apply the relevant Dutch rules in practice, including Section 4:19(2) of the Wet op het financieel toezicht (hereafter, the Wft) and Section 2 of the AFM Policy Rule on Provision of Information of 30 September 2024, for correct, clear and non-misleading communications. The same investment-services standard is reflected in Article 24(3) of MiFID II and Article 37-3(2) of the Financial Sector Law.

Must-know: the fact that transactions are merely recorded or booked in Luxembourg is not enough to evidence compliance. The file needs a Netherlands control trail: passported services, client status, entry channel, language, marketing material, documentation, visits, complaints and exceptions.

In practice, the bank should formalise Netherlands-specific cross-border controls before recurring client coverage. Without them, cross-border servicing becomes an operational grey zone.

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References:

Bertrand Mariaux is a certified Avocat à la Cour (admitted lawyer in Luxembourg, Liste I and Paris), holding an LL.B and LL.M (Hons).
He is an experienced lawyer with extensive expertise in investment funds, regulatory compliance, corporate & criminal law. Bertrand regularly contributes to legal publications and speaks at industry events, with a particular focus on financial regulation and corporate governance.

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