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The Dutch minister of finance has formally requested the European Commission to consider amending the Transfer of Funds Regulation (TFR) to better facilitate market surveillance and consumer protection operations.
This appeal comes after regulatory authorities in the Netherlands, including the Authority for Financial Markets (AFM), reported significant challenges in conducting online transactions under fictitious identities — a practice allowed under current EU regulations for monitoring purposes.
In a letter signed by Steven van Weyenberg, minister of economic affairs and climate policy, the finance ministry has highlighted the practical difficulties faced by regulators.
To carry out their duties effectively, authorities need to perform undercover online purchases. However, the TFR mandates that all transfers of funds must include accurate customer information, creating a conflict that the minister warns hampers anonymous transactions.
The ministry emphasised that the proposed solution of using false passports or IDs, suggested by representatives from the European Commission’s Directorate-General for Financial Stability, Financial Services and Capital Markets Union (FSMA), as well as its Internal Market, Industry, Entrepreneurship and SMEs department (DG GROW) and Justice and Consumers department (DG JUST), is neither proportionate nor feasible.
Instead, the Dutch government advocates a more sustainable solution: amending the TFR to introduce exceptions for consumer protection and market surveillance authorities.
This change, the letter says, would allow these entities to perform their duties without revealing their true identities, thereby maintaining the integrity of their investigations.
"We have explored alternative solutions, such as using gift cards or the personal bank accounts of employees, but these do not offer a permanent solution," the letter states. "The effectiveness of supervision has been compromised by the inability to perform necessary online actions under a cover identity."
The letter underscores the urgency of this issue, noting that the rapid growth of the e-commerce sector makes effective online monitoring increasingly critical.
Without the ability to conduct covert transactions, regulatory bodies risk exposing their identities, which could undermine their investigative efforts and the overall trust in market surveillance mechanisms.
The letter, addressed to outgoing EU commissioner Mairead McGuinness says Dutch authorities are prepared to provide a detailed analysis and proposal to amend the relevant regulations, aiming to align the legal framework with practical enforcement needs.
The letter concludes with a call from the finance minister, who sits with the centrist D66 party, for collaboration with the European Commission to ensure the EU legal framework supports robust consumer protection and market surveillance.
