What does the Authority for the Financial Markets do — and where does its power end?
What is the AFM?
The Authority for the Financial Markets (AFM) is the Dutch regulator that supervises the financial markets. The AFM checks whether investment firms comply with the law, possess the correct licenses, and inform consumers fairly and completely about the risks of financial products.
Licensing requirement
Companies that offer investment services in the Netherlands require, in principle, a license from the AFM. The licensing requirement exists to protect investors: licensed companies are monitored, must meet requirements, and can be sanctioned if they break the rules. However, there are exceptions. For example, Floresteca B.V. Netherlands did not need a license because it offered bonds with a nominal value starting at €50,000. By deliberately applying this threshold, Floresteca fell outside the AFM’s licensing system — a structure aimed at operating without supervision.
The limits of supervision
The AFM’s scope stops at the Dutch border. Investment projects located abroad — such as teak plantations in Brazil, mines in Africa, or real estate in Asia — fall outside the reach of the AFM. The regulator cannot verify what happens on a plantation in Brazil, cannot force a Brazilian company to provide information, and cannot take action against foreign directors. This means that foreign investment structures effectively have free rein.
Goodwood and the AFM
Goodwood Investments did not have an AFM license and, after years of legal proceedings, was ultimately forced to stop selling guarantee products. The company flouted the regulations and operated in violation of the law for years.
The AFM vs. a mass claim
The AFM can warn, enforce, and impose fines, but it can NOT arrange damage compensation for you. The regulator protects the market as a whole but does not help individual investors recover their money. That requires a civil-law procedure — a mass claim via a foundation like BFRG.
