AIFMD MoUs with third country regulators

ESMA issued an updated list of AIFMD Memoranda of Understanding (MoUs) signed by EU National Competent Authorities (NCAs) with third country regulators on 17 September 2018.

Regulatory and supervisory relationships between EU and third countries

On 11 September 2018, the European Parliament adopted a resolution on relationships between the EU and third countries concerning financial services regulation and supervision. The resolution contains recommendations relating to the equivalence framework in financial services legislation.

It recommends that:

  • the Commission should review the effectiveness of the current equivalence regime and publish its findings together with any proposals for improvement
  • the Commission should introduce a standardised process for the determination, review, suspension or withdrawal of equivalence
  • the relevant European Supervisory Authority (ESA) should subject equivalence decisions to ongoing monitoring and the outcome of this monitoring should be made public
  • the Commission should report annually on all decisions on equivalence, including equivalence granted, suspended and withdrawn, and explain the rationale for those decisions
  • equivalence decisions should require good regulatory and supervisory co-operation and satisfactory third-country rules on fighting tax evasion, tax fraud, tax avoidance and money laundering
  • through the EU's future equivalence framework, third countries should keep the ESAs informed of any national regulatory developments
  • the ESAs should have the capacity and powers to collect, collate and analyse data to enable them to monitor third country supervisory and regulatory frameworks
  • the ESAs should review and monitor regulatory and supervisory developments in third countries, and co-operate closely with NCAs in the authorisation process for financial institutions that wish to delegate part of their portfolio management or risk management to service providers in third countries. This will facilitate the sharing of best practices and ensure uniform implementation of regulatory cooperation and activities with third countries. The resolution also notes the ongoing review of the ESAs, in particular the proposals on the supervision of delegation, outsourcing or risk transfer arrangements by financial institutions.

Cross-border distribution of UCITS and AIFs

On 21 September 2018, the European Parliament's Economic and Monetary Affairs Committee (ECON) published the following draft reports, both dated 18 September 2018:

  • Draft report on the proposal for a Directive on the cross-border distribution of collective investment funds.
  • Draft report on the proposal for a Regulation on facilitating cross-border distribution of collective investment funds.

Both draft reports contain a European Parliament legislative resolution with suggested amendments to the proposals. These include procedures for meeting marketing requirements by national authorities, transparency on fees set by national authorities, and the possibility of "pre-marketing" AIFs that have not been established cross-border

Proposed pan-European personal pension product (PEPP) Regulation

On 7 September 2018, the ECON had voted to adopt the report on 3 September 2018. The EU Parliament will next consider the report in plenary.

Anti-Money Laundering/Combating the Financing of Terror/Corruption

Proposal to enhance EBA AML supervision role

On 12 September 2018, the European Commission published a communication on strengthening the EU framework for prudential and AML supervision for financial institutions. The Commission has set out a strategy for "seamless supervisory co-operation between prudential and AML supervisors". A key element will be that the European Banking Authority (EBA) will have an enhanced role in investigating breaches of AML rules and will be empowered to impose enforcement decisions directly to individual financial sector operators. The strategy also includes:

  • Revisions to the proposed CRD V Directive on improved information exchange and a duty of cooperation between AML and prudential supervisors.
  • Short-term non-legislative initiatives to be carried out by the ESAs and the European Central Bank. These include that the ESAs monitor the implementation of the Joint Committee's risk-based supervision guidelines and expand these guidelines to specify common procedures and methodologies for the supervision and assessment by AML authorities of financial institutions' compliance with AML rules. Also, the ESAs should issue guidelines covering the co-operation and information exchanges between AML and prudential supervisors and promoting the establishment of AML colleges.
  • Long-term initiatives to be considered in the Commission's review of the AML legislative framework.

Proposed Directive on countering money laundering by criminal law

On 12 September 2018, the European Parliament adopted its first reading legislative resolution on the proposed Directive on countering money laundering by criminal law. This is part of the package of measures to reinforce the EU's legal framework on money laundering, illicit cash flows and the freezing and confiscation of assets (the Fight Terrorism Financing Package).

FATF Business Bulletin

The FATF issued the third issue of the FATFs Business Bulletin (September 2018) which presents a short summary of updates on the FATF 4th Round of Mutual Evaluations, the FATF President's priorities and the Joint FATF/EAG Fintech and Regtech Forum.