ING Direct 2011 Annual Report Download - page 305

• Dodd−Frank also includes various securities law reforms that may affect the Group’s business practices and the liabilities and/or
exposures associated therewith, including a provision intended to authorize the SEC to impose on broker-dealers fiduciary duties
to their customers, as applies to investment advisers under existing law, which new standard could potentially expose certain of
ING’s US broker-dealers to increased risk of SEC enforcement actions and liability. The SEC staff released a study on this issue.
Although the full impact of Dodd-Frank cannot be determined until the various studies mandated by the law are conducted and
implementing regulations are adopted, many of the legislation’s requirements could have profound and/or adverse consequences for
the financial services industry, including for us. Dodd-Frank could make it more expensive for us to conduct business, require us to make
changes to our business model or satisfy increased capital requirements, subject us to greater regulatory scrutiny or to potential increases
in whistleblower claims in light of the increased awards available to whistleblowers under Dodd-Frank and have a material effect on our
results of operations or financial condition.
Foreign Account Tax Compliance Act
Under US federal tax legislation passed in 2010, a 30% withholding tax will be imposed on ‘withholdable payments’ made to non-US
financial institutions (including non-US investment funds and certain other non-US financial entities) that fail (or that have 50% affiliates
which are also non-US financial institutions that fail) to provide certain information regarding their US accountholders and/or certain
US investors (such US accountholders and US investors, ‘US accountholders’) to the US Internal Revenue Service (the ‘IRS’). For non-US
financial institutions that fail to comply, this withholding will generally apply without regard to whether the beneficial owner of a
withholdable payment is a US person or would otherwise be entitled to an exemption from US federal withholding tax. ‘Withholdable
payments’ generally include, among other items, payments of US-source interest and dividends and the gross proceeds from the sale or
other disposition of property that may produce US-source interest and dividends. The US Internal Revenue Service (the ‘IRS’) has issued
guidance stating that this withholding tax is expected to take effect on a ‘phased’ schedule, starting in January 2014.
In general, non-publicly traded debt and equity interests in investment vehicles will be treated as ‘accounts’ and subject to these reporting
requirements. In addition, the IRS has stated that certain insurance policies and annuities may be considered accounts for these purposes.
The Group closely monitors all present and new legislation that is or will be applicable for its organisation, and is currently investigating all
implications of this legislation. While investigating these implications, the Group is and will be in close contact with all of its stakeholders,
including its peers and financial industry representative organisations.
The Group intends to take all necessary steps to comply with this legislation (including entering into such agreements with the US tax
authorities as may be required), in accordance with the timeframe set by the US tax authorities. However, if the Group cannot enter into
such agreements or satisfy the requirements thereunder (including as a result of local laws prohibiting information sharing with the IRS, as
a result of contracts or local laws prohibiting withholding on certain payments to accountholders, policyholders, annuitants or other
investors, or as a result of the failure of accountholders, policyholders, annuitants or other investors to provide requested information),
certain payments to the Group may be subject to US withholding tax under this legislation. The possibility of such withholding tax and the
need for accountholders, policyholders, annuitants and investors to provide certain information may adversely affect the sales of certain of
the Group’s products. In addition, entering into agreements with the IRS and compliance with the terms of such agreements and with this
legislation and any regulations or other guidance promulgated thereunder may substantially increase the Group’s compliance costs.
Because regulatory guidance implementing this legislation remains under development, the future impact of this law on the Group is
uncertain.
Dutch Intervention Act
In October 2011 the Ministry of Finance submitted a bill to the Dutch Parliament called the ‘Intervention Act’. The Intervention Act would
amend the Dutch Financial Supervision Act and the Dutch Insolvency Act and set out what actions can be taken by Dutch authorities when
banks and insurers fail and cannot be wound up under ordinary insolvency rules due to concerns regarding the stability of overall financial
system. The proposal provides for two categories of measures. The first category includes measures related to the timely and efficient
liquidation of failing banks and insurers and would give the Dutch Central Bank (De Nederlansche Bank N.V., ‘DNB’) the power to transfer
customer deposits, assets and/or liabilities other than deposits and shares of an entity to third parties or to a bridge bank. The DNB would
also be granted the power to influence the internal decision making of failing institutions. The second category includes measures
intended to safeguard the stability of the financial system as a whole and grants special powers to the Minister of Finance, including the
power to take ownership of failing financial institutions. The Intervention Act also includes proposals to limit the ability of counterparties to
exercise their rights after any of the measures mentioned above has been put into place. The Intervention Act has not been approved by
the Dutch Parliament as of this writing (and remains subject to change). If approved, the Intervention Act is not expected to enter into
force until 1 July 2012 at the earliest. We are unable to predict what effects, if any, the Intervention Act (if passed) may have on the
financial system generally, our counterparties, or on us, our operations or our financial position.
The Financial Stability Board
In addition to the adoption of these measures, regulators and lawmakers around the world are actively reviewing the causes of the
financial crisis and exploring steps to avoid similar problems in the future. In many respects, this work is being led by the Financial Stability
Risk factors continued
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information
303ING Group Annual Report 2011