Looking ahead to the AFM’s supervision agenda for 2025

Important developments 2025

The AFM signals three key developments in the financial sector for 2025, being digitalisation, sustainability and internationalisation. It points out that financial institutions are increasingly dependent on (new) technologies and IT systems, which pose risks for financial stability and cyber resilience. In this context, preventing and combating money laundering and terrorist financing, as well as monitoring compliance with sanctions legislation, will require the ongoing attention from the AFM.

Furthermore, the AFM identifies that the market for sustainable financing has grown strongly and many new (European) regulations on sustainability in the financial sector (including the Corporate Sustainability Reporting Directive (CSRD)) have been adopted.

Finally, the AFM notes that the increasing degree of internationalisation of the provision of financial services comes with the benefit of an increase in supply and diversity of financial services providers, but also entails cross-border risks that require an international approach.

Supervision on provision of financial services

In its supervision on the provision of financial services, the AFM will focus on the interests of the consumer. The AFM firstly prioritises that consumers are not adversely affected by digitalisation. Therefore, the AFM will conduct assessments into (i.a.) the use of AI in retail markets (e.g. by the insurance sector using algorithms for claim handling), the quality of marketing and advertising by providers of crypto asset services, and compliance with the AML Act and the Dutch Sanctions Act 1977. Furthermore, the AFM prioritises ensuring that sustainable products are reliable and consumers can trust these products. The AFM will be investigating compliance with the Sustainable Finance Disclosure Regulation (SFDR) and sustainability claims by relevant financial institutions. It is expected that the AFM will also enforce on these matters.   

The AFM also aims to ensure that consumers can trust European financial services by preparing its supervision on European legislation, such as the Digital Operational Resilience Act (DORA), Directive (EU) 2019/882 on the accessibility requirements for products and services, the Consumer Credit Directive, the Non-Performing Loans Directive, and the European Artificial Intelligence Act. In due course, the announced and debated Financial Data Access Regulation (FIDA) will be added to this list. Furthermore, the AFM will continue assess whether institutions comply with the rules pertaining to the product approval and review process and the suitability of financial products.  

Moreover, the AFM has indicated to focus on the supervision of new pension schemes by conducting assessments into the way pension providers provide guidance to pension participants in relation to the choices they make. Additionally, it will investigate risk preferences of participants and the impact of the new pension scheme on the wishes and needs of those participants.

Supervision on capital markets

The AFM further announced it will focus on detecting and investigating insider trading. The AFM will furthermore handle signals and conduct supervisory investigations in the field of market abuse, by using data-driven supervision and cooperating with other supervisors in cross-border and cross-market investigations.

In addition to the focus areas as described above, the AFM will continue to devote its time to ongoing tasks in capital markets supervision in 2025, concerning, for example, conducting one-off operations on behalf of institutions such as license applications, continued supervision (e.g. on trading platforms, proprietary traders), monitoring signals and conducting investigations into suspected violations of laws and regulations by capital market institutions and supervision of prospectuses and timely disclosure of information.

Supervision on asset management

Digital resilience and sustainability will remain priority in the supervision of the asset management sector for 2025.

As per January 2025, asset managers will have to comply with DORA. The AFM stresses that outsourcing business processes to service providers, such as cloud platforms, further increases the vulnerability of the entire asset management sector to cyber incidents. Asset managers must therefore take measures to strengthen their digital operational resilience, also when outsourcing IT tasks. The AFM also sees asset managers increasingly using artificial intelligence (AI)-based applications in investment policy, portfolio management and operational processes. The AFM emphasises that while the use of AI may improve investment strategies, it also comes with risks, including biases, poor data quality, and a potential lack of transparency and explainability. The AFM announced that it will conduct investigations into the use of AI applications, digital resilience and (model) risk management, data risk management in addition to its attention for DORA implementation and compliance.

The AFM noticed an increased offering and demand of sustainable products and impact from (new) European laws and regulations. Adequate management and integration of sustainability risks into business operations and investment policies therefore remain important, as well as full transparency towards investors on how asset managers pursue sustainability. Furthermore, the monitoring of compliance with transparency requirements based on the SFDR is considered as an important activity. The AFM announced that it will conduct follow-up research into (ESG) data risk management, with the aim of assessing whether this is properly set up at the institutional level based on the previous research and analyse the extent to which the participations of asset managers meet the sustainability criteria.

Moreover, the AFM announced it will give substance to testing compliance with the guidelines ‘Funds’ names using ESG or sustainability related terms in UCITS and AIF names. The AFM aims to test whether Dutch asset managers are compliant with these guidelines. Please be referred to the earlier blog post of our fund regulatory team on this topic.

As the European rules for asset managers are becoming increasingly comprehensive in the fields of digitalisation and sustainability the AFM aims to increase its involvement with the EU agenda and legislative proposals at EU level.

Supervision on accountancy and reporting

For 2025, the AFM’s oversight of accounting and reporting will include a focus on promoting ESG information in reporting. For instance, from the fiscal year of 2024, the CSRD requires large public-interest organisations to conduct comprehensive sustainability reporting. Accounting firms must audit the extent to which these organisations comply with these reporting requirements. The AFM supervises how institutions (that are subject to the AFM’s supervision) and accounting firms comply with the requirements laid down in the CSRD. In this context, the AFM will assess the implementation of the CSRD by accounting firms and reporting by large institutions. Another priority of the AFM in this respect is to ensure that accounting firms are cyber resilient. Therefore, the AFM will assess whether accounting organisations comply with cyber resilience requirements. Finally, the AFM acknowledges the responsibility of accounting firms to detect and combat fraud discontinuity and threatening potential insolvencies. In this regard, the AFM will conduct further assessments into fraud risks analyses and related working activities performed by accounting firms.

Countering criminal conduct

Lastly, the AFM set objectives to combat criminal behaviour in 2025. In order to strengthen AFM’s gatekeeping role, the AFM announced it will focus on being alert to AML risks, while specifically mentioning the Markets in Crypto-Assets Regulation (EU) 2023/1114 on markets in crypto-assets (MiCAR) and the Transfer of Funds Regulation ((EU) 2023/1113 (TFR). More specifically, the AFM will further develop risk models and improve its data position in respect of its risk-based supervision on the compliance of the Dutch AML Act and Dutch Sanctions Act. Furthermore, the AFM will conduct risk-based assessments and provide the sector with guidance on the compliance of these acts. In case of non-compliance, the AFM may lay down sanctions.

Conclusion

For 2025, the AFM has set its main focus areas for financial services, capital markets, asset management and accounting and reporting based on the identified trends regarding digitalisation, sustainability and European cooperation.

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