Opinion of the European Central Bank of 26 August 2024 on the modernisation of laws on international sanctions (CON/2024/27)
Date: 2024-08-26
Institutions: European Central Bank
Subjects: financial stability

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 26 August 2024  

on the modernisation of laws on international sanctions  

(CON/2024/27) 

Introduction and legal basis 

On 5 July 2024 the European Central Bank (ECB) received a request from the Dutch Minister for Finance 

for an opinion on a draft legislative  proposal  for a Law on the implementation  of international sanctions 

(hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning of the European Union (TFEU) and Article 2(1), third indent, of Council Decision 98/415/EC 1, 

as the draft law relates to De Nederlandsche Bank (DNB) and the tasks conferred upon the ECB concerning 

the  prudential  supervision  of  credit  institutions  pursuant  to  Article  127(6)  TFEU.  In  accordance  with 

Article 17.5, first sentence, of the Rules of Procedure of the European Central Bank, the Governing Council 

has adopted this opinion. 

1. 

Purpose of the draft law  

1.1  As noted in the explanatory memorandum accompanying the draft law (hereinafter the ‘explanatory 

memorandum’),  sanctions  imposed  by  the  United  Nations  (UN)  and  the  Union  are  intended  to 

maintain  or restore  peace; support the democratic rule of  law, human rights  and the  principles of 

international law; prevent conflicts; strengthen international security; and fight terrorism. The Dutch 

sanctions regime consists of various national acts2 that implement in national law sanctions based 

on international law without ‘goldplating’ the latter. Over the past decade the Dutch sanctions regime 

has  changed  only  to  a  limited  extent,  while  the  scope  and  complexity  of  international  sanction 

measures have increased sharply. The draft law modernises the Dutch sanctions regime in response 

to the increased importance of sanctions3.  

1.2  The draft law safeguards the effective implementation of international sanction measures within the 

Dutch legal order but is not an implementation of Union or international law. The draft law modernises 

the  Dutch  sanctions  regime  by  providing  for,  inter  alia,  an  enforcement  regime  based  on  Dutch 

administrative law (instead of solely on criminal law), specific enforcement powers to be used in the 

event  of  serious  non-compliance  or  evasion  of  sanction  measures  (e.g.  replacement  of  the 

1  

2  
3  

Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

See, for example, the Law on sanctions (Sanctiewet 1977, Stb. 1980, 93). 
Pages 1 and 2 of the explanatory memorandum. 

 
 
 
 
 
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management of an undertaking), and measures to safeguard business continuity and resolution of 

undertakings impacted by international sanctions 4.  

1.3  To mitigate or prevent adverse consequences for financial stability or serious social, economic or 

employment effects on Dutch society, the draft law contains provisions on business continuity and 

resolution for undertakings that are impacted by international sanctions. The draft law provides for 

the possibility for the responsible minister to take measures aimed at (1) ensuring that undertakings 

comply with international sanction measures, and (2) limiting the influence that can be exercised by 

a sanctioned owner or other affiliate. The purpose of these measures is to ensure the continuity or 

the  orderly  wind-down  of  the  respective  undertaking,  as  the  case  may  be 5.  According  to  the 

explanatory memorandum, the measures will always be aimed at minimising negative social effects, 

such  as  loss  of  employment  and  disruption  of  economic  processes  in  the  Netherlands  and  the 

Union6.  

1.4  A core competence of the responsible minister is to appoint a third-party administrator 7, either on his 

or her own initiative or at the request of an undertaking that is subject to an obligation pursuant to an 

international sanction. The appointment of a third-party administrator and any instructions issued by 

such administrator may only be intended to secure the cooperation of the undertaking  in order to 

ensure  its  compliance  with  obligations  under  the  imposed  sanctions,  while  also  safeguarding 

financial  stability,  the  continuity  of  the  undertaking  or  the  careful  winding-up  of  the  undertaking’s 

activities. The draft law defines an instruction as the imposition of an obligation to perform or refrain 

from any factual act or legal act8. Apart from the purpose of the instruction, the draft law does not 

expressly  limit  or  specify  the  kinds  of  instructions  the  third-party  administrator  may  give  to  an 

undertaking,  but  the  explanatory  memorandum  refers  to  instructions  that  aim  to  restructure  the 

undertaking  in  a  way  that  safeguards  compliance  with  international  sanction  measures  (e.g. 

terminating  contracts  with  sanctioned  counterparties  of 

the  undertaking).  The 

third-party 

administrator does not replace the undertaking’s board of directors. The undertaking does not need 

the consent of its shareholders when it implements the instructions of the third-party administrator, 

and  neither  the  provisions  of  the  articles  of  association  nor  any  arrangements  between  the 

undertaking  and  its  shareholders  (e.g.  on  decision-making  in  shareholders’  meetings)  apply 9.  All 

officials (e.g. board members) who work for the undertaking are obliged to respond to information 

requests from the third-party administrator and to follow its instructions. Legal acts of an undertaking 

in  breach  of  an  instruction  of  the  third-party  administrator  may  be  annulled  by  the  third-party 

administrator or the responsible minister 10. The responsible minister may revoke the appointment of 

the third-party administrator if he or she deems the presence of the third-party administrator to be no 

longer necessary, but this may be done no later than the time at which the obligation to comply with 

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5  
6  
7  
8  
9  
10  

Page 6 of the explanatory memorandum. 

Chapter 5 of the draft law.  
Article 5.2(3) of the draft law and pages 67 and 68 of the explanatory memorandum. 

Articles 5.2 and 5.4 of the draft law.  
Article 5.1 of the draft law. 

Article 5.3(2) of the draft law. 
Article 5.3(3) of the draft law. 

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the international sanction measure expires11. The decision to appoint a third-party administrator and 

the revocation thereof must be published in the Government Gazette 12. 

1.5  The  draft  law  provides  that  if  an  undertaking  is  subject  to  supervision  under  the  Law  on  financial 

supervision13 or the Law on  the supervision of trust  offices 201814, the responsible  minister  must 

exercise the abovementioned powers15, including the power to appoint or provide instructions to the 

third-party  administrator  in  agreement  with  DNB  or  the  Dutch  Authority  for  the  Financial  Markets, 

each  to  the  extent  responsible  for  carrying  out  tasks  pursuant  to  those  laws,  or  the  ECB,  if  it  is 

authorised to supervise that undertaking pursuant to Articles 4 and 6 of Council Regulation (EU) No 

1024/201316 (hereinafter the ‘SSM Regulation’). The explanatory memorandum notes in this respect 

that the largest banks are supervised by the ECB17. 

1.6  The responsible minister will revoke the appointment of the third-party administrator for a financial 

institution in the event that (1) a resolution decision is taken, (2) a prudential supervisor appoints a 

(silent) administrator 18, or (3) the continuous presence of DNB at the credit institution is established19, 

unless the competent authority consents to keeping the third-party administrator in place20. 

1.7  Under  the  draft  law  DNB  is  responsible  for  the  supervision  and  enforcement  of  administrative 

organisation and internal control in relation to the compliance of financial institutions with international 

sanction measures, which already falls under its supervision under Dutch supervisory law21, 22.  

1.8  Under  the  draft  law  DNB  may  share  information  on  international  sanction  measures  with  various 

foreign  financial  supervisors,  including  the  ECB 23.  This  refers  to  information  DNB  receives  in  its 

capacity as supervisor in respect of compliance with sanction laws. The draft law contains various 

requirements  for  the  sharing  of  information,  including  the  following:  adequate  justification  that 

provides  a  clear  goal  for  the  use  of  the  shared  information;  sufficient  guarantees  regarding  the 

confidential treatment of the information; and the requirement that the intended use of the information 

fits  within  the  framework  of  the  draft  law,  prudential  regulations  or  the  supervision  of  financial 

institutions24.  

Article 5.2(5) of the draft law. 

Article 5.2(4) of the draft law. 

11  
12  
13   Wet op het financieel toezicht, Stb. 2018, 443. 
14   Wet toezicht trustkantoren 2018, Stb. 2006, 475. 
15  
16  

Article 5.6(1) of the draft law. 

Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank 
concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 

17  
18  

19  
20  
21  
22  
23   
24  

Page 70 of the explanatory memorandum. 
On  the  basis  of  Article  1:76  or  Article  1:76a  of  the  Law  on  financial  supervision.  These  articles  also  cover  the 
appointment of a temporary administrator under Article 29 of Directive 2014/59/EU of the European Parliament and of 
the  Council  of  15  May  2014  establishing  a  framework  for  the  recovery  and  resolution  of  credit  institutions  and 
investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 
2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) 
No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190). 

On the basis of Article 3:111a(2)(o) of the Law on financial supervision. 
Article 5.6(4) of the draft law. 

Chapter 7 of the draft law.  
See Article 10(1) of the Law on sanctions. 

Article 10i of the draft law. 
See Article 10i(2) of the draft law.  

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2. 

Observations  

2.1  The ECB’s role under the draft law 

2.1.1  Article  127(6) TFEU and the  provisions of the SSM  Regulation referenced  in the  draft law confer 

various specific tasks concerning the prudential supervision of credit institutions upon the ECB. The 

ECB carries out the tasks, inter alia, of authorising and withdrawing authorisations and assessing 

notifications of the acquisition and disposal of qualifying holdings in respect of all credit institutions. 

For significant credit institutions the ECB also has the task, inter alia, of ensuring compliance with 

relevant Union law imposing prudential requirements on credit institutions, including the requirement 

to have in place robust governance arrangements, such as sound risk management processes and 

internal  control  mechanisms25.  To  this  end,  the  ECB  is  given  all  supervisory  powers  that  are 

necessary for the exercise of its functions 26. The draft law envisages that the agreement of either 

DNB or the ECB, rather than both DNB and the ECB, is required in respect of the exercise of the 

responsible minister’s powers under the draft law. Consequently, and in view of the reference in the 

explanatory memorandum to the largest banks being supervised by the ECB, the ECB understands 

that the draft law requires the ECB’s agreement in respect of significant institutions only, while DNB’s 

agreement would be required in respect of less significant institutions.  

2.1.2  The UN and the Union are the authorities responsible for the imposition of international sanctions. 

UN sanctions range from comprehensive economic and trade sanctions to more targeted measures 

such  as  arms  embargoes,  travel  bans,  and  financial  or  commodity  restrictions27.  The  Union  can 

impose sanctions as a means of, inter alia, promoting peace, international security, human rights, 

democracy, the rule of law, and compliance with international law. Union sanctions do not target a 

country or population, but are always targeted at specific policies or activities, the means to conduct 

them  and  those  responsible  for  them28.  The  ECB  neither  imposes  these  sanctions  nor  monitors 

compliance with them, even if they are imposed on significant institutions directly supervised by the 

ECB. It is for those entities to implement and monitor compliance with the different sanctions regimes. 

Meanwhile, individual Member States are responsible for identifying breaches of sanctions applicable 

within the Union and imposing penalties if necessary.  

2.1.3  Against this backdrop, the purpose of the draft law’s envisaged appointment and revocation of the 

appointment of a third-party administrator is to ensure the effective implementation and monitoring 

of  compliance  with  international  sanctions;  while  also  ensuring  that  the  imposition  of  those 

international  sanctions  does  not  result  in  adverse  consequences  for  an  undertaking’s  financial 

stability or continuity, insofar as ceasing the operations of an undertaking could have serious social, 

economic or employment effects for Dutch society. Consequently, the draft law does not concern the 

exercise  of  the  ECB’s  prudential  supervisory  tasks  or  underpin  a  prudential  supervisory  function 

25  
26  
27  

28  

See Article 4(1), points (a), (c) and (e), and Article 6(4) of the SSM Regulation. 
See paragraph 2.1 of Opinion CON/2020/15. All ECB opinions are published on EUR-Lex. 

See, for the UN, Chapter VII, in particular Article 41, of the United Nations Charter, available on the website of the 
United Nations at www.un.org.  

Union sanctions are based on Article 29 of the Treaty on the European Union (TEU) and Article 215 TFEU. The policy 
goals of the sanction measures are laid down in Article 21 TEU. 

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under Union law29. The competences and powers under the draft law are therefore distinct from, and 

without prejudice to, the ECB’s prudential supervisory tasks under the SSM Regulation. Therefore, 

the ECB should not have a formal role in approving the exercise of the responsible minister’s powers 

under the draft law, including the appointment of a third-party administrator, since this would exceed 

the  scope  of  the  ECB’s  prudential  supervisory  mandate  under  Article  127(6)  TFEU  and  the  SSM 

Regulation.  

2.1.4  Although  the  subject  matter  of  the  draft  law  falls  outside  the  ECB’s  fields  of  competence,  certain 

competences under the  draft law, such as the  appointment of a third-party administrator on, inter 

alia, financial stability grounds, could indeed have prudential repercussions for the credit institution 

concerned. For example, a third-party administrator might be appointed by the responsible minister 

with the aim of terminating client relationships between the credit institutions and entities that are 

subject to international sanction measures. Terminating these client relationships could negatively 

influence  the  prudential  soundness  of  a  credit  institution.  Therefore,  the  ECB  would  welcome  the 

introduction  of  a  duty  to  inform  the  ECB  of  measures  taken  under  the  draft  law  insofar  as  such 

measures could impact the prudential requirements applicable to an institution that falls under the 

supervision of the ECB pursuant to the SSM Regulation. As the exercise of the responsible minister’s 

powers could have a prudential impact on credit institutions, the Dutch legislator should also consider 

clarifying that the relevant provisions of the draft law are without prejudice to the tasks and powers 

conferred  on  the  ECB  for  prudential  supervisory  purposes  under  the  TFEU  and  the  SSM 

Regulation 30. 

2.1.5  The  ECB  welcomes  that  the  draft  law  expressly  provides  for  the  possibility  for  DNB  to  share 

information related to international sanction measures directly with the ECB31. The ECB takes the 

view that, in order for it to be timely informed, the draft law would benefit from an express legal basis 

for the responsible minister to also share with the ECB information which is related to international 

sanction measures and relevant for the supervisory task of the ECB.   

2.2  Relationship between the draft law and the resolution of credit institutions 

2.2.1  The measures relating to financial institutions, including credit institutions, under the draft law, such 

as the appointment of a third-party administrator, may be taken in the event a sanction has adverse 

consequences  for  financial  stability  or  the  continuity  of  an  enterprise,  and  is  thus  likely  to  cause 

serious  social,  economic  or  employment  effects  for  Dutch  society.  Hence,  the  rationale  for  these 

measures seems to overlap with the aim of the various resolution regimes for financial institutions, 

such  as  credit  institutions  and  investment  firms,  which  also  aim  to  safeguard  the  public  interest, 

including the continuity of critical functions, financial stability and the imposition of minimal costs on 

taxpayers.  Under  Regulation  (EU)  No  806/2014  of  the  European  Parliament  and  of  the  Council 32 

(hereinafter the ‘SRMR’) the Single Resolution Board (SRB) can take resolution measures provided 

See paragraphs 2.4 and 2.5 of Opinion CON/2022/13. 

See paragraph 2.6 of Opinion CON/2020/2.  
Article 10i(1) of the draft law. 

29   
30  
31  
32    Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform 
rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of 
a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ L 
225, 30.7.2014, p. 1). 

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that (1)  the credit  institution is failing or  likely to fail,  (2) there  is no reasonable  prospect that any 

alternative  private  sector  measures  would  prevent  the  failure  of  the  credit  institution  within  a 

reasonable timeframe, and (3) a resolution action is necessary in the public interest33. The public 

interest  requirement  refers  to  the  resolution  objectives  laid  down  in  the  SRMR34,  two  of  which 

correspond  with  the  objectives  of  the  draft  law:  the  avoidance  of  significant  adverse  effects  on 

financial stability and ensuring the continuity of critical functions. Critical functions refer to activities, 

services or operations the discontinuance of which is likely to lead to the disruption of services that 

are essential to the real economy or to disrupt financial stability 35. 

2.2.2  To safeguard the proper functioning of the various resolution regimes, good cooperation between 

the competent authorities under the draft law and the relevant resolution authorities is key. Although 

the draft law prevents the responsible minister from appointing a third-party administrator for a credit 

institution in respect of which a resolution decision is taken, and provides for the possibility for DNB 

to relieve such an administrator of its duties in the event it takes a resolution decision, the draft law 

does not clarify the cooperation between the two functions  in the event that a resolution  decision 

may be taken in the (near) future. Therefore, the ECB would welcome clarification of the cooperation 

between  the  responsible  minister,  the  respective  resolution  authorities  and  the  third-party 

administrator.  For  example,  the  draft  law  should  take  into  account  the  role  of  the  SRB,  which  is 

responsible for the effective and consistent functioning of the Single Resolution Mechanism within 

the  Banking  Union36.  A  duty  for  the  responsible  minister  to  inform  the  SRB  and  DNB  should  be 

considered.  In  addition,  the  draft  law  should  cater  for  the  sharing  of  information  by  DNB  on 

international sanction measures with the SRB and the resolution function within DNB, as the draft 

law currently lacks a legal basis for sharing such information. 

2.3  Relationship between the draft law and DNB’s task to promote financial stability 

DNB  is  responsible  within  the  Netherlands  for  the  promotion  of  financial  stability,  which  also 

encompasses DNB’s tasks as the Dutch macroprudential authority 37. There is an overlap between 

the task of the third-party administrator under the draft law and DNB’s financial stability mandate. 

DNB’s  involvement  in  the  appointment  and  instruction  of  the  third-party  administrator  should 

therefore not be limited to DNB’s supervisory mandate and its role as resolution authority, but should 

also expressly take into account its financial stability task. 

2.4  DNB’s enforcement and supervision powers under the draft law 

Under the draft law DNB will be responsible for the enforcement and supervision of the adequacy of 

the internal controls and the administrative organisation of financial institutions in order to comply 

33  
34  
35  

36  
37  

See Article 18(1) of the SRMR. 

See Article 14(2) of the SRMR. 
See  Article  2,  point  (35),  of  Directive  2014/59/EU  of  the  European  Parliament  and  of  the  Council  of  15  May  2014 
establishing  a  framework  for  the  recovery  and  resolution  of  credit  institutions  and  investment  firms  and  amending 
Council  Directive  82/891/EEC,  and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC, 
2011/35/EU,  2012/30/EU  and  2013/36/EU,  and  Regulations  (EU)  No  1093/2010  and  (EU)  No  648/2012,  of  the 
European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190). 
Article 7 of the SRMR. 
See Article 4(1)(c) of the Law on De Nederlandsche Bank (Bankwet 1998, Stb. 1998, 200). 

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with international sanctions. The ECB welcomes the strengthening of the legal basis and clarification 

of DNB’s supervisory powers in this respect.  

ECB-PUBLIC 

This opinion will be published on EUR-Lex. 

Done at Frankfurt am Main, 26 August 2024. 

[signed] 

The President of the ECB 

Christine LAGARDE 

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