If a credit institution intends to carry out activities in another EEA member state, the home supervisor of that institution must be notified of this intention. Furthermore, the second Markets in Financial Instruments Directive (MiFID II) allows credit institutions to submit passport notifications of their tied agents. For this, credit institutions can use the "Tied agent passport notification" form.

Legal bases

Notification procedure

Outgoing passport (section 24a of the KWG)

Section 24a of the KWG and section 38 of the German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG) set out the rules applicable to institutions that are domiciled in Germany and intend to carry out activities in another member state of the EEA either by way of establishing a branch or by providing cross-border services, for example via the internet.

Branches

If a credit institution plans to establish a branch abroad, BaFin must be informed of this using the form laid down in Annex I to the applicable Implementing Regulation. As soon as the complete notification has been received, BaFin informs the European Central Bank (ECB). If the company concerned is a significant institution (SI), the ECB processes the notification and transmits it to the supervisory authority of the host country within two to three months if all statutory requirements have been fulfilled.

Together with the Deutsche Bundesbank, BaFin is responsible for processing and transmitting the notifications of less significant institutions (LSIs).

Before submitting the notification, credit institutions are advised to determine the national regulations of the host country since the host country’s requirements for establishing a branch may differ from the German regulations under section 53b of the KWG. For example, there could be differences in the requirements concerning the branch’s senior management or in the area of money laundering prevention.

In the event of changes in the originally notified particulars of the branch, for example changes in the branch’s senior management, the organisational structure (opening/closure of further sub-branches, changes in the reporting lines etc.) or in the address of the branch, these changed particulars must be notified to the home and host supervisor using the form laid down in Annex I to the applicable Implementing Regulation at least one month before the change becomes effective. The first page should always be completed and an explanation of the change provided in the corresponding section of the form, including the date on which the change becomes effective. BaFin assesses whether the notification is complete (e.g. whether a CV has been enclosed/attached in the event of a change in the members of the branch’s senior management) and informs the host supervisor within a month that it has taken note of the change and that it has no objections.

If an existing branch is to be closed , the credit institution can use the form laid down in Annex IV to the applicable Implementing Regulation for notifying the termination of the branch operations (Form for the submission of a change in branch particulars notification which concerns a planned termination of the operation of a branch). This notification must be submitted to both the home and the host supervisor. BaFin assesses whether the notification is complete and informs the host supervisor within a month that it has taken note of the planned closure and that it has no objections to the closure.

Cross-border services

If a German credit institution intends to carry out activities in another EEA member state and does not wish to establish a branch, this institution must notify BaFin and the Deutsche Bundesbank of this intention, using the Form for the submission of a services passport notification under Annex V of the applicable Implementing Regulation. A description of the planned activities should be enclosed with/attached to the form. The supervisory authority assesses whether the notification is complete and determines the institution’s financial soundness and the adequacy of its organisational structure. If the assessment is positive, the notification is submitted to the respective host supervisor within one month. If the institution intends to carry out cross-border activities in several states of the EEA at the same time and to the same extent, the institution does not need to submit several forms. It is sufficient for the institution to submit one form into which all the states concerned have been entered.

Changes to cross-border services must also be notified using the aforementioned form. It is helpful if the institution states both the old and the new activities, highlighting the new activities in colour for example, particularly in the MiFID matrix. If the institution discontinues activities, these should be separately listed in the submission letter.

If the provision of cross-border services is to be discontinued completely, the institution can notify this in writing, stating the date on which the discontinuation becomes effective.

Incoming passport (section 53b of the KWG)

Section 53b of the KWG sets out the rules applicable to institutions that are domiciled in the EEA and intend to carry out activities in Germany either by way of establishing a branch or by providing cross-border services, for example via the internet.

Branches

If BaFin receives a complete notification from the competent bodies (supervisory authority of an EEA member state or the ECB) to establish a branch in Germany, it assesses all the necessary information and registers the branch in a database. BaFin also informs the Deutsche Bundesbank and other organisational units within BaFin (e.g. the units responsible for the prevention of money laundering) and makes preparations to supervise the branch.

Within two months of BaFin having received the complete notification, the branch receives the so-called “Welcome Letter” with information on national legislation. This letter of confirmation is usually required in order to enter the branch in the German commercial register. Both the Deutsche Bundesbank and other organisational units within BaFin (e.g. the units responsible for the prevention of money laundering) inform the branch of the reporting obligations and other notification requirements.

If the institution concerned is domiciled in a member state that is not participating in the Single Supervisory Mechanism (SSM) (e.g. Poland or Sweden), BaFin transmits the notification of the intention to establish a branch to the ECB. The ECB carries out an assessment of the expected significance of the branch. If the branch fulfils one or more of the significance criteria (e.g. total assets, economic importance), the ECB takes over the direct supervision of the branch.

The aforementioned procedures also apply for notifying changes or notifying an intention to close a branch.

Cross-border services

If BaFin receives a complete notification from the supervisory authority of an EEA member state regarding the provision of cross-border services in Germany, it assesses all the necessary information and registers the cross-border services provider in a database. BaFin also informs the Deutsche Bundesbank and, if applicable, the ECB. Within one month of receiving the complete notification, the institution receives the so-called “Welcome Letter” with information on national legislation.

Further information

The forms required for submitting notifications can be downloaded under "Additional information".

Contact

BaFin accepts notifications in German or English, preferably by e-mail to the following address: