ESMA Q&A on application of AIFMD
On 6 October 2016, ESMA published an updated version of its Q&A paper on the application of the AIFMD. The Q&As have been amended to include a new section on the impact of the Regulation on reporting and transparency of securities financing transactions (SFT Regulation) on the AIFMD framework. ESMA has included a Q&A on the commencement of periodical reporting pursuant to Article 13 of the SFT Regulation for alternative investment fund managers (AIFMs).
ESMA Q&A on application of UCITS Directive
On 12 October 2016, ESMA published an updated version of its Q&A paper on the application of the UCITS Directive as revised by UCITS V. The Q&As have been amended to include information about the meaning of a "regulated market" under the UCITS Directive, translation requirements relating to remuneration disclosure, and collateral management. There is also a new section on reporting under the Regulation on reporting and transparency of securities financing transactions (SFTR).
ESMA Q&As on MAR
ESMA published an updated version of its Q&As on the Market Abuse Regulation.
The updated version includes new Q&As on:
- Managers' transactions (section 2).
- Investment recommendations (section 3).
Steven Maijoor, Chair of ESMA, made a statement to the Economic and Monetary Affairs Committee of the EU Parliament on ESMA's advice on the application of the passport to non-EU AIFMs and AIFs under AIFMD, explaining that ESMA is focusing on the following areas in the short term:
- ESMA will continue its assessment of Bermuda and the Cayman Islands with a view to reaching a definitive conclusion on whether to extend the passport to these countries.
- ESMA will start to assess an additional group of non-EU countries when it has more clarity on the next steps envisaged by co-legislators.
- ESMA will focus on putting in place a framework in case the passport is extended to one or more non-EU countries. This includes making preparations for ESMA's role in the functioning of the passporting system and strengthened supervisory co-operation.
Regulation amending EuVECA Regulation and EuSEF Regulation
On 24 October 2016, the Presidency of the Council of the EU published a further compromise proposal relating to the proposed Regulation amending the European Venture Capital Funds Regulation) (EuVECA Regulation) and the European Social Entrepreneurship Funds Regulation (EuSEF Regulation).
Anti- Money Laundering/ Combating the Financing of Terror/ Corruption
FATF report to G20 on beneficial ownership
The Financial Action Task Force (FATF) published a report to the G20 Finance Ministers and Central Bank Governors setting out its ongoing work to improve the implementation of international standards on transparency, including on the availability and exchange of beneficial ownership information. The standards, which are intended to prevent the misuse of companies, trusts, and other corporate vehicles, are globally recognised and used in the peer review process of the Global Forum on transparency and exchange of information for tax purposes (Global Forum). The report explains that a review of the first nine countries to undergo the FATF's current assessment cycle has highlighted that many countries still do not implement the beneficial ownership requirements effectively. FATF intends to work on the following proposals:
- Greater emphasis on beneficial ownership in the follow-up processes to FATF mutual evaluations.
- Providing clear and consistent recommendations to assessed countries on how to improve effective implementation of beneficial ownership requirements.
- Enhanced co-operation between the FATF and the Global Forum to reinforce their respective work to improve transparency relating to beneficial ownership.
FATF guidance on Correspondent Banking Relationships
FATF issued guidance on correspondent banking relationships which explains FATF’s requirements in the context of correspondent banking services to manage, rather than avoid, the money laundering and terrorist financing risks associated with these business relationships. The guidance highlights that not all correspondent banking relationships carry the same level of money laundering or terrorist financing risks and any enhanced due diligence measures have to be commensurate with the degree of risks identified.
FATF guidance on Criminalising Terrorist Financing
FATF issued guidance on criminalising terrorist financing which explains the various aspects that the terrorist financing offence must cover in national legal systems.
ECB opinion on proposed Directive amending AMLD4
On 17 October 2016, the Council of the EU published an opinion from the European Central Bank (ECB) on the proposed Directive amending the Fourth Money Laundering Directive. The ECB was asked to provide an opinion by the Council and the European Parliament in August and September 2016 respectively. In the opinion, the ECB sets out its observations on:
- Regulation of virtual currency exchange platforms and custodian wallet providers.
- Central registers of bank and payment accounts.
Where the ECB recommends that amendments are made to the proposed Directive in relation to these areas, it sets out some specific drafting proposals.
Joint G20 and FATF experts meeting on corruption
FATF and the G20 Anti-Corruption Working Group (ACWG) held a joint experts meeting on corruption. The focus of the meeting was on transparency and beneficial ownership. The meeting discussed;
- The misuse of legal persons and arrangements, which focused attention on the need to improve implementation of controls against the misuse of corporate structures.
- The beneficial ownership work is currently being undertaken by different bodies at the international level, including work by the FATF, the Global Forum on Transparency, the Exchange of Information for Tax Purposes, the World Bank and the Organisation for Economic Co-operation and Development.
- The international standards on beneficial ownership in practice, for AML/CFT and anti-corruption purposes, including the practical challenges for implementation and ways to overcome them.
- The specific actions that the G20 and FATF members can take to implement beneficial ownership commitments, including how the G20 members can support other countries through leading by example, capacity building and technical support, and how the international bodies can work with other stakeholders to ensure the use of beneficial ownership information to tackle corruption in a concerted effort.
Cyber security for the financial sector
The European Commission published the G7 fundamental elements of cyber security in the financial sector which consist of:
- Establishing and maintaining a cyber security strategy and framework.
- Defining and facilitating performance of roles and responsibilities for personnel implementing, managing and overseeing the effectiveness of the cyber security strategy and framework.
- Conducting a risk and control assessment.
- Establishing a systematic monitoring process.
- Responding to cyber incidents in a timely manner.
- Resuming operations responsibly after an incident.
- Sharing reliable and actionable cyber security information with internal and external stakeholders.
- Regularly reviewing the cyber security strategy and framework.
Central Bank of Ireland