The European Banking Authority (EBA) launched today a public consultation on new Guidelines on the role, tasks and responsibilities of anti-money laundering and countering the financing of terrorism (AML/CFT) compliance officers. The Guidelines also include provisions on the wider AML/CFT governance set-up, including at the level of the group. Once adopted, these Guidelines will apply to all financial sector operators that are within the scope of the AML Directive. This consultation runs until 2 November 2021.
The draft Guidelines comprehensively address, for the first time at the level of the EU, the whole AML/CFT governance set-up. They set clear expectations of the role, tasks and responsibilities of the AML/CFT compliance officer and the management body and how they interact, including at group level. AML/CFT compliance officers need to have a sufficient level of seniority, which entails the powers to propose, on their own initiative, all necessary or appropriate measures to ensure the compliance and effectiveness of the internal AML/CFT measures to the management body in its supervisory and management function.
Without prejudice to the overall and collective responsibility of the management body, the draft Guidelines also specify the tasks and role of the member of the management board, or the senior manager where no management board exists, who are in charge of AML/CFT overall, and on the role of group AML/CFT compliance officers. As information reaching the management body needs to be sufficiently comprehensive to enable informed decision-making, the draft Guidelines set out which information should be at least included in the activity report of the AML/CFT compliance officer to the management body.
Where a financial services operator is part of a group, the draft Guidelines provide that a Group AML/CFT compliance officer in the parent company should be appointed to ensure the establishment and implementation of effective group-wide AML/CFT policies and procedures and to ensure that any shortcomings in the AML/CFT framework affecting the entire group or a large part of the group are addressed effectively.
Provisions in the draft Guidelines are designed to be applied in a proportionate manner, taking into account the diversity of financial sector operators that are within the scope of the AML Directive. They are also in line with existing ESA guidelines, in particular: the revised Guidelines on internal governance under the capital requirements Directive (CRD); the revised Joint ESMA and EBA Guidelines on the assessment of the suitability of members of the management body; the draft Guidelines on the authorisation of credit institutions; and the draft Guidelines for common procedures and methodologies for the supervisory review and evaluation process (SREP) and supervisory stress testing.
Comments to the draft Guidelines can be sent by clicking on the "send your comments" button on the EBA's consultation page. The deadline for the submission of comments is 2 November 2021.
All contributions received will be published following the close of the consultation, unless requested otherwise.
The EBA will hold a virtual public hearing on the draft Guidelines on 28 September 2021 from 10:00 to 12:00 Paris time. The dial-in details will be communicated to those who have registered for the meeting.
The EBA drafted these Guidelines in line with its legal mandate to lead, coordinate and monitor the EU financial sector’s fight against ML/TF.
In drafting these guidelines, the EBA fulfills a request by the Commission’s request in its Supra-National Risk Assessment (SNRA) of 2019 to develop guidance that ‘clarifies the role of AML/CFT compliance officers in credit and financial institutions’.
The European Banking Authority (EBA) launched today a public consultation on draft regulatory technical standards (RTS) setting out criteria for the identification of shadow banking entities for the purposes of reporting large exposures. The consultation runs until 26 October 2021.
Entities that offer banking services and perform banking activities as defined in the draft RTS but are not regulated and are not being supervised in accordance with any of the acts that form the regulated framework are identified as shadow banking entities.
Considering the characteristics of funds regulated under the Undertakings for the Collective Investment in Transferable Securities (UCITS) Directive and the Alternative Investment Fund Managers (AIFM) Directive, special provisions are included in the draft RTS. In view of the severe liquidity issues that affected money market funds (MMFs) during the COVID-19 crisis and the ongoing discussions at EU and international level to strengthen their regulation, MMFs are identified as shadow banking entities.
Finally, the draft RTS consider the situation of entities established in third countries and provide for a treatment that distinguishes between banks and other entities.
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 26 October 2021.
A public hearing will take place via conference call on 29 September 2021 from 10:00 to 12:00 CEST.
Article 394(2) of the CRR, as amended by Regulation (EU) 2019/876, “institutions shall report the following information to their competent authorities in relation to their 10 largest exposures to institutions on a consolidated basis, as well as their 10 largest exposures to shadow banking entities which carry out banking activities outside the regulated framework on a consolidated basis, including large exposures exempted from the application of Article 395(1) […]”
Article 394(4) of the CRR mandates the EBA “to develop draft regulatory technical standards to specify the criteria for the identification of shadow banking entities referred to in paragraph 2. In developing those draft regulatory technical standards, EBA shall take into account international developments and internationally agreed standards on shadow banking and shall consider whether (a) the relation with an individual entity or a group of entities may carry risks to the institution's solvency or liquidity position; (b) entities that are subject to solvency or liquidity requirements similar to those imposed by this Regulation and Directive 2013/36/EU should be entirely or partially excluded from the obligation to be reported referred to in paragraph 2 on shadow banking entities.”
While developing the draft RTS, the EBA has relied as far as possible on the guidelines on limits on exposures to shadow banking (EBA/GL/2015/20), yet having due regard to international developments in shadow banking and taking into account the lack of third-country equivalence for institutions in certain jurisdictions.
The European Banking Authority (EBA) launched today a public consultation on amendments to its Implementing Technical Standards (ITS) on currencies with constraints on the availability of liquid assets in the context of the liquidity coverage ratio (LCR). The proposed amendments remove the Norwegian Krone (NOK) from the list, with the result that no currency will be recognised as having constraints on the availability of liquid assets. The consultation runs until 16 October 2021.
Article 419 of the Capital Requirements Regulation (CRR) specifies a number of derogations applicable to currencies with constraints on the availability of liquid assets for the purpose of the calculation of the LCR. An additional derogation was added as part of the Risk Reduction Measures (RRM) package adopted by the European legislators.
The EBA has been tasked to amend the existing Regulatory Technical Standards (RTS) specifying the use of derogations and the conditions of their application following the addition of a new derogation, with a concomitant need to update the corresponding ITS on the effective list of currencies with constraints, which currently consists of one single currency, the NOK.
Based on the updated data analysis, which demonstrates that there is no longer a shortage in the supply of liquid assets in the NOK currency, the EBA proposes to amend the ITS by removing NOK from the list. Since this amendment will lead to an empty list, in order to keep its regulatory efforts proportionate to their impact, the EBA will not update the corresponding RTS. Such an update will be proposed if during a future assessment the EBA observes that a currency will have to be added to the list.
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 16 October 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
These draft ITS have been developed on the basis of Article 419 of Regulation (EU) No 575/2013 of the European Parliament and of the Council), as amended by Regulation (EU) 2019/876 of the European Parliament and of the Council of 20 May 2019, which mandates the Authority to list the currencies with constraints on the availability of liquid assets and specify the derogations and conditions of their application.
The European Banking Authority (EBA) launched today a public consultation on draft Guidelines providing clarity on the application of the limited network exclusion requirements, which certain payment instruments might benefit from, as laid down in the revised Payment Services Directive (PSD2). Such payment instruments include store cards, fuel cards, public transport cards, and meal vouchers. Given the significant inconsistencies the EBA has identified on how this exclusion is applied across the EU, the proposed Guidelines aim at clarifying specific aspects of its application, including on how a network of service providers or a range of goods and services should be assessed in order to qualify as ‘limited’, the use of payment instruments within limited networks, the provision of excluded services by regulated financial institutions and the submission of notification to competent authorities (CAs). The consultation runs until 15 October 2021.
In line with its statutory objective of contributing to the convergence of supervisory practices, the EBA arrived at the view that it should issue own-initiative Guidelines aimed at bringing about convergence on a number of issues related to the application of this exclusion.
In particular, the draft Guidelines propose requirements, and where relevant, criteria and indicators, aimed at ensuring that excluded payment instruments are used in a limited way, thus reducing potential risks that may arise for the users of such instruments.
In addition, in order to address potential concerns on any possible circumvention of the PSD2 requirements and to increase transparency for consumers who may not be aware that they do not benefit from the protection the PSD2 provides to regulated services, the draft Guidelines propose requirements on the provision of excluded services by regulated firms.
Finally, to ensure transparency on the provision of excluded services, the draft Guidelines provide clarity on the calculation of the thresholds set out in Article 37(2) of the PSD2, the submission of the related notifications to competent authorities and the information to be covered in the description of the excluded activity on the national and EBA registers.
However, the proposed Guidelines cannot address all the inconsistencies that the EBA has identified, as the EBA is not in a position to change definitions or amend legal requirements set out in the PSD2.
Responses to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 15 October 2021.
All contributions received will be published following the close of the consultation, unless requested otherwise. A public hearing will take place online on 8 September 2021 from 10.00 to 12.00 CEST.
Following the publication of PSD2 in November 2015, the EBA and the European Commission (EC) have received a number of queries on the interpretation and application of the exclusion under Article 3(k) of the PSD2 and the related notification requirements articulated in Article 37 of the PSD2. The EBA assessed these queries and arrived at the view that the implementation and application of the requirements diverges significantly between Member States, thus impeding the Single Market for payment services in the EU and creating opportunities for regulatory arbitrage.
The EBA issued the draft Guidelines under Article 16 of the EBA Regulation, which mandates the Authority to issue guidelines and recommendations addressed to Competent Authorities or financial institutions with a view to establishing consistent, efficient and effective supervisory practices, including, where appropriate, to conduct open public consultations.
Article 3(k) of Directive (EU) 2015/2366 on payment services in the internal market (PSD2) specifies that the ‘Directive does not apply to services based on specific payment instruments that can be used only in a limited way, that meet specified conditions.
Article 37(2) of PSD2 prescribes that ‘Member States shall require that service providers carrying out either of the activities referred to in points (i) and (ii) of point (k) of Article 3 or carrying out both activities, for which the total value of payment transactions executed over the preceding 12 months exceeds the amount of EUR 1 million, send a notification to competent authorities containing a description of the services offered, specifying under which exclusion referred to in point (k)(i) and (ii) of Article 3 the activity is considered to be carried out.’
The European Banking Authority (EBA) launched today a public consultation on draft Regulatory Technical Standards (RTS) specifying the requirements for originators, sponsors, original lenders and servicers related to risk retention, in line with the Securitisation Regulation. The RTS aim to clarify requirements relating to risk retention, thus reducing the risk of moral hazard and aligning interests. The RTS also provide clarity on new topics, including risk retention in traditional securitisation of non-performing exposures (NPE). The consultation runs until 30 September 2021.
The RTS carry over a substantial amount of provisions from the EBA RTS on risk retention submitted to the European Commission in July 2018. The RTS also include a number of new provisions, such as specifying modalities of risk retention in traditional NPE securitisations and specifying requirements for the expertise of servicers acting as a retainers in such NPE securitisations. In addition, the RTS address some specific issues, related, for instance, to the impact of fees payable to the retainer on risk retention, risk retention in re-securitisations or in securitisations of own issued debt instruments. They also provide clarification on the treatment of synthetic excess spread.
By providing additional clarity on risk retention in case of portfolios of NPE, this publication is also part of the EBA comprehensive work on supporting the functioning of the secondary markets for NPE. For more information about the EBA work on NPE you can read here.
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 30 September 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
A public hearing will take place online on 14 September 2021 from 11:00 to 12:00 Paris time.
These draft RTS have been developed on the basis of Article 6(7) of Securitisation Regulation (Regulation (EU) 2017/2402), as amended by the Capital Market Recovery Package (Regulation (EU) 2021/557), which mandates the EBA to specify in greater detail the risk retention requirement in securitisation.
The European Banking Authority (EBA) launched today a public consultation on its revised Guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP) and supervisory stress testing. The comprehensive revisions aim at implementing the recent amendments to the Capital Requirements Directive (CRD V) and Capital Requirements Regulation (CRR II), as well as aligning with other regulatory developments and best supervisory practices. The consultation runs until 28 September 2021.
SREP is an ongoing supervisory process bringing together findings from all supervisory activities into a comprehensive supervisory overview of an institution. These Guidelines aim at achieving convergence of practices followed by competent authorities across the EU in their SREP and supervisory stress testing processes.
The current review of the SREP Guidelines affects all main SREP elements, including (i) business model analysis, (ii) assessment of internal governance and institution-wide control arrangements, (iii) assessment of risks to capital and capital adequacy to cover these risks, and (iv) assessment of liquidity and funding risks and adequacy of liquidity resources to cover such risks. The main amendments implementing the requirements laid down in the CRD V and CRR II include the following:
Comments to the two consultations can be sent to the EBA by clicking on the "send your comments" button on the respective consultation page. Please note that the deadline for the submission of comments is 28 September 2021.
A public hearing will take place on 31 August 2021 from 11:00 to 12:30.
All contributions received will be published following the end of the consultation, unless requested otherwise.
These draft Guidelines have been developed on the basis of Article 107(3) of Directive 2013/36/EU, which mandates the Authority to further specify the common procedures and methodologies for the SREP.
The EBA Guidelines will apply to competent authorities across the EU. Once the revised Guidelines will enter into force, the current SREP Guidelines will be repealed.
The European Banking Authority (EBA) launched today a public consultation on amendments to its Regulatory Technical Standards (RTS) on credit risk adjustments in the context of the calculation of the Risk Weight (RW) of defaulted exposures under the Standardised Approach (SA). The proposed amendments follow up on the European Commission’s Action Plan to tackle non-performing loans in the aftermath of the COVID-19 pandemic, which indicated the need for a revision of the treatment of defaulted exposures under the SA. This update is necessary to ensure the prudential framework does not create disincentives to the sale of non-performing assets. The consultation runs until 24 September 2021.
The Commission’s Action Plan specifically asks the EBA to consider the appropriate regulatory treatment of defaulted assets, as laid out in the Capital Requirements Regulation (CRR), which have been sold at a discount, i.e. NPL sales. Under the current regulatory framework, the capital charge for a defaulted exposure may – under certain circumstances - increase after its sale from a risk weight of 100% on the seller’s balance sheet to a risk weight of 150% on the balance sheet of the credit institution buying the assets.
The proposed amendment to the existing RTS on credit risk adjustments introduces a change to the recognition of total credit risk adjustments, which ensures that the risk weight can remain the same in both cases. In particular, the price discount stemming from the sale will be recognised as a credit risk adjustment for the purposes of determining the risk weight.
By implementing this change through an RTS amendment, the EBA aims at clarifying the regulatory treatment of sold NPL assets. However, the EBA also recommends that the treatment set out in this RTS be included in the Commission’s considerations as part of the revised Capital Requirements Regulation (CRR3) proposal, which is expected at a later stage.
Comments on the consultation can be sent to the EBA by clicking on the “send your comments” button on the consultation page. Please note that the deadline for the submission of comments is 24 September 2021.
A public hearing will take place via conference call on 13 July 2021 from 11:00 to 12:00 CEST.
All contributions received will be published after the consultation closes, unless requested otherwise.
The European Banking Authority (EBA) launched today a public consultation to amend its Implementing Technical Standards (ITS) on Supervisory Reporting with regards to COREP and asset encumbrance reporting as well as the reporting for the purposes of identifying global systemically important institutions (G-SIIs). Among others, this consultation paper aims to enhance proportionality in the area of asset encumbrance reporting, as recommended by the EBA’s Report on the Study on the Cost of compliance with supervisory reporting requirements (CoC report). The consultation runs until 23 September 2021.
In response to the Capital Markets Recovery Package (CMRP), the reporting on securitisations needs to be amended to keep it aligned with the prudential requirements. Furthermore, the EBA is proposing some minor amendments to COREP (reporting on own funds and own funds requirements) in order to obtain a deeper understanding of institution’s use of the option to exempt certain software assets from the deduction from own funds.
Following the proposals for enhanced proportionality on asset encumbrance reporting, small and non-complex institutions will be exempted from the reporting of more granular data, as proposed in the CoC report. Besides that, this consultation paper suggests changing the definition of the level of asset encumbrance.
Regarding the reporting of information for determining G-SIIs and assigning G-SII buffer rates, the EBA is proposing to slightly expand the scope of application of the reporting obligation, to include standalone entities, and not only banking groups, that meet the relevant criteria.
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 23 September 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
A public hearing will be organised in the form of a webinar on 9 July from 10:30 to 11:30 CET. The EBA invites interested stakeholders to register using this link by 6 July, 16:00 at the latest. The dial-in details will be communicated after the registration deadline.
These draft ITS have been developed in accordance with Article 430 of Regulation (EU) No 575/2013, which mandates the EBA to develop and specify uniform formats, definitions, frequencies and reference and remittance dates and IT solutions for the reporting to supervisory authorities.
The EBA expects to submit these draft ITS to the European Commission in Q4 2021 or Q1 2022. The revised requirements are envisaged to apply from the reference date 31 December 2022.
The European Banking Authority (EBA) published today a consultation paper on draft Regulatory Technical Standards (RTS) specifying the information that crowdfunding service providers offering individual portfolio management of loans shall provide to investors in relation to the method to assess credit risk, and on each individual portfolio. The draft Regulatory Technical Standards also specify the policies, procedures and organisational arrangements that crowdfunding service providers shall have in place in relation to any contingency fund they may offer to investors. The consultation runs until 4 September 2021.
In order to reduce the information asymmetry between crowdfunding service providers and investors, as well as to ensure transparency and adequate protection for investors, the latter should have access to all relevant information about the composition of the portfolio, including the projects where their funds are invested, as well as the quality of the loans financing these projects.
Investors are exposed not only to risks connected to the projects or the loans in which their funds are invested, but also to the way the crowdfunding service provider assesses the risk of these loans and projects and how it manages the selection of loans for the portfolio.
Against this backdrop, these draft RTS require crowdfunding service providers to show that the measurement techniques used for credit risk assessments are based on a sufficient number of elements and are appropriate to the complexity and level of the risks underlying i) the single projects; ii) the portfolio; iii) the project owners. In addition, the draft RTS set out the information that crowdfunding platforms must disclose referring to several key characteristics of each loan included in a certain portfolio.
Finally, as crowdfunding service providers may offer a dedicated contingency fund to compensate investors for the losses they may incur, in case project owners do not reimburse their loans, the draft RTS specify adequate policies, procedures and governance arrangements that providers should have in place when managing, either directly or through a third party provider, contingency funds.
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 4 September 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
A public hearing will be organised in the form of a webinar on 20 July 2021 from 11:00 to 12:30 CET. The EBA invites interested stakeholders to register using this link. The dial-in details will be communicated in due course.
These draft RTS have been developed according to Articles 6(7) of Regulation (EU) No 1503/2020 (European Crowdfunding Service Providers Regulation - ECSPR), which mandates the EBA to develop, in close cooperation with the European Securities and Market Authority (ESMA), draft RTS to specify:
The European Banking Authority (EBA) launched today a public consultation on draft implementing technical standards (ITS) on Pillar 3 disclosures regarding exposures to interest rate risk on positions not held in the trading book (IRRBB). The draft ITS put forward comparable disclosures that would allow stakeholders to assess institutions’ IRRBB risk management framework as well as the sensitivity of institutions’ economic value of equity and net interest income to changes in interest rates. The proposed standards will amend the comprehensive ITS on institutions’ public disclosures, in line with the strategic objective of developing a single and comprehensive Pillar 3 package that should facilitate implementation by institutions and further promote market discipline.
The draft ITS propose qualitative disclosures on how institutions calculate their IRRBB exposure values based on their internal measurement systems and on institutions’ overall IRRBB objective and management. They also provide quantitative disclosures about the impact of changes in interest rates on institutions’ economic value of equity and net interest income.
In addition, given the ongoing EBA work on the policy framework for IRRBB, the EBA is proposing transitional provisions that should facilitate institutions’ disclosures while the policy frameworks is being finalised.
Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 30 August 2021. All contributions received will be published following the end of the consultation, unless requested otherwise.
A public hearing will be organised in the form of a webinar on 30 June 2021 from 11:00 to 12:30 CET. The EBA invites interested stakeholders to register using this link (by no later than 28 June 2021, 16:00).
The dial-in details will be communicated in due course.
Article 448 of Regulation (EU) No 575/2013 (‘CRR’) requires institutions to disclose, as from 28 June 2021, quantitative and qualitative information on the risks arising from potential changes in interest rates that affect both the economic value of equity and the net interest income of their non-trading book activities referred to in Article 84 and Article 98(5) of the Directive 2013/36/EU (Capital requirements directive- CRD).
The EBA has developed the draft ITS following the mandate in Article 434a of Regulation (EU) No 575/2013. These ITS will amend the Implementing Regulation (EU) No 637/2021 of 15 March 2021 with the aim to facilitate the institutions’ compliance to Article 448 CRR.
When developing these proposals, the EBA has built on BCBS’s Pillar 3 disclosure framework.
The EBA expects to submit these draft ITS to the European Commission in October 2021.