Final version of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Guidelines for the Financial Sector to be published at end of quarter three

Correspondence received from the CBI on 17 June 2019 indicates that the Anti-Money Laundering Division of the CBI is currently considering submissions received following the closing of the consultation period to Consultation Paper CP 128. The CBI's intention is to publish the final version of the AML/CFT Guidelines for the Financial Sector towards the end of Q3 this year.

The CBI has currently published draft guidelines to assist designated persons when complying with AML requirements. The new guidelines do not reference the earlier 2012 AML/CFT guidelines and are silent on some issues (e.g. the need to re-verify CDD upon acquisition of a portfolio). It is thought that whilst the new guidelines will replace the 2012 guidelines, the 2012 guidelines will still be useful guidance from a best practice point of view, particularly where the new guidelines are silent on an issue.

Funding the cost of financial regulation

On 14 June 2019, the CBI issued guidance on the movement towards financial services firms paying 100% of the costs of financial services regulation and supervision. The approach has been agreed with the DOF and is based on the "user pays" principle. The end goal is the elimination of the taxpayer paying the costs of financial regulation. The CBI is providing early notice to industry on how financial regulation/supervision will be funded in the coming years. The CBI also aims to enhance the transparency and predictability of the levy through this process.

Speech by Mark Cassidy, Director of Economics and Statistics of the CBI, at the Seanad Special Select Committee on the withdrawal of the UK from the EU

On 19 June 2019, Director Mark Cassidy spoke about the work that the CBI has undertaken in respect of Brexit, and the potential implications for the financial system and the wider economy. He specified that the CBI has focused on ensuring that:

  • the risks of Brexit to the Irish economy are understood
  • the consumer protection and financial stability risks are identified and mitigated to the greatest extent possible regulated firms have prepared their businesses for these risks
  • the CBI's role as gatekeeper is as transparent and efficient as possible

Key trends on current account activity and switching

On 20 June 2019, the CBI published its ninth Consumer Protection Bulletin, which dealt with switching and current account activity. This bulletin gave a high level overview of the number and value of consumer accounts held by personal consumers, the number of consumers using the "Switching Code" and the level of consumer complaints received by firms in relation to consumer accounts.

Speech by Derville Rowland, Director General of Financial Conduct Derville Rowland at the Joint European Supervisory Authorities Consumer Protection Day 2019

On 28 June 2019, in her speech about delivering enhanced consumer protection and the importance of supervisory convergence across the EU, Director General Derville Rowland addressed the next wave of regulatory challenges, Fintech and digitalisation, environmentally sustainable financial products and the importance of culture. In the context of supervisory convergence across the EU, the Director General discussed the importance of:

  • consumer and investor confidence in a post-Brexit Europe
  • high quality options available for consumers
  • simplifying and improving disclosure requirements to better inform consumers
  • allowing consumers to make the informed choice to buy sustainable products


The Banking Package is published in the Official Journal of the EU: Revised Rules on Capital Requirements (CRD V and CRR II) and Resolution (BRRD II and SRMR II)

On 7 June 2019, Directive (EU) 2019/878 of the European Parliament and of the Council of 20 May 2019 (CRDV), Regulation (EU) 2019/876 of the European Parliament and of the Council amending Regulation 575/2013 (CRRII), Directive 2019/879 of the European Parliament and of the Council 20 May 2010 (BRRDII) and Regulation (EU) 2019/877 of the European Parliament and of the Council of 20 May 2019 (SRMRII) were published in the Official Journal of the EU. These directives and regulations, otherwise known as the "Banking Package" will enter into force on 27 June 2019.

CRDV amended Directive 2013/36 with regards to (among other things):

  • the introduction of a requirement for large institutions to publically disclose their environmental, social and governance related risks
  • new binding Pillar 1 requirements
  • strengthened market risk and large exposure requirements
  • the new requirement to establish an intermediate parent undertaking for certain third country groups in the EU by 2023
  • updates to the resolution rules

CRR2 amended Regulation 575/2013 with regards to (among other things):

  • imposing a net stable funding requirement, designed to ensure that exposures are matched with stable funding
  • implementing the international standard on total loss absorbing capacity for EU global systemically important banks by aligning the EU's regime on minimum requirements for own funds and eligible liabilities
  • the introduction of supervisory perimeters and requirements when holding companies
  • provisions designed to facilitate the management of NPLs by EU banks
  • implementation of the new Basel standardized approach to counterparty credit risk

SRMRII amends Regulation 806/2014 with regards to (among other things):

  • implementation of the new standard for total loss absorbing capacity
  • the introduction of resolution entities and resolution groups
  • requirements on supervisory reporting and public disclosure relating to MREL
  • new test requirements for a firm contemplating the sale of MREL liabilities
  • the power to impose an additional institution-specific requirement for own funds

BRRDII amends Directive 2014/59/EU and Directive 98/26/EC with regards to (among other things):

  • exemptions in relation to the contractual recognition of bail-in provisions
  • powers of early intervention for regulators
  • introducing a requirement to contractually recognise resolution stay powers
  • amending the calibration of MREL requirements

Communication from the EU Commission on the status of contingency measures for the withdrawal of the United Kingdom (UK) from the EU

On 12 June 2019, the EU Commission published its Fifth Brexit Preparedness Communication. The report examines the preparations and contingency measures in place for the withdrawal of the UK from the EU including financial services. The communication confirms that the EU is ready for the UK's withdrawal on the 31 October 2019. At a national level, all member states have put legislation in place to deal with this issue and have developed strategies to deal with all possible outcomes.

In relation to the financial services industry in particular, while firms have made significant progress with their contingency planning, some residual issues remain. Insurance firms, payment services providers and other financial service operators which remain unprepared are strongly encouraged to finalise their preparatory measures by 31 October 2019. The Commission is working with EU and national supervisors to ensure that firms' contingency plans are fully implemented, and it expects that UK supervisors will not prevent firms from implementing such plans.

ECB publishes letter on supervisory expectations on risk data aggregation capabilities and risk reporting practices

On 14 June 2019, the ECB published a letter to significant institutions on supervisory expectations on risk data aggregation capabilities and risk reporting practices. The letter referred to:

  • the ECB's final report of the Thematic Review on effective risk data aggregation and risk reporting which raised "severe concerns and showed that risk data aggregation capabilities and risk reporting practices within the sample of significant institutions were unsatisfactory."
  • the overall results of the supervisory assessment of institutions’ Internal Capital Adequacy Assessment Processes (ICAAP) and Internal Liquidity Adequacy Assessment Processes (ILAAP) which revealed that IT infrastructure and risk data aggregation capabilities in banks are the most problematic ICAAP/ILAAP assessment areas

The letter stated that:

  • substantial and timely improvements of institutions’ risk data aggregation capabilities and risk reporting practices are warranted
  • integrated reporting solutions are best practices and encourage institutions to implement such solutions

The ECB Joint Supervisory Teams intend to assess risk data aggregation capabilities and risk reporting practices of significant institutions including any improvements, in the next months, in the context of the SREP assessment.

EU Commission publishes guidelines to improve how firms report climate-related information

On 18 June 2019, the EU Commission published guidelines on corporate climate-related information reporting, as part of its Sustainable Finance Action Plan. These guidelines will provide companies with practical recommendations on how to better report the impact that their activities are having on the climate as well as the impact of climate change on their business.

EBA updates data on Deposit Guarantee Schemes (DGS) across the EU

On 17 June 2019, the EBA published 2018 data relating to two key concepts in the Deposit Guarantee Schemes Directive (DGSD): available financial means and covered deposits.

Available financial means data as of 31 December 2018 shows that 32 out of a total of 43 DGSs in EU Member States had increased their funds since 31 December 2017. This result is mainly triggered by the levies paid by the members of those DGSs, which were raised in order to reach the target level of 0.8% of covered deposits set out in the DGSD and to be attained by July 2024.

ESMA publishes 2018 Annual Report

On 17 June 2019, ESMA published its Annual Report, which reviews its achievements against its 2018 priorities and objectives in meeting its mission of enhancing investor protection and promoting stable and orderly financial markets in the EU. In 2018, ESMA’s key achievements and highlights included its work on:

  • promoting supervisory convergence in Brexit preparations and product intervention measures
  • assessing risks to investors, markets and financial stability, including in relation to the provision of advice on initial coin offerings and cryptoassets
  • completing a single rulebook for EU financial markets
  • directly supervising specific financial entities, specifically credit rating agencies

ESMA updates the Central Securities Depository Regulation (CSDR) Q&As

On 18 June 2019, ESMA updated its Q&As regarding the implementation of the CSDR. The updated Q&A's provide answers to questions regarding practical issues on the implementation of the new CSDR regime. The update clarifies aspects regarding the process applicable to the provision of the grand fathering rule for notary or central maintenance services provided on a cross-border basis, and the passporting procedures.

RTE Morning Ireland Interview with Andrea Enria

On 20 June 2019, Andrea Enria, Chairman of the Supervisory Board of the ECB gave an interview with Morning Ireland relating to:

  • compliance – Chairman Enria discussed the Permanent TSB fine, saying that requiring banks to pay fines when they make mistakes is a very effective punishment that the public authorities can use and he showed support for holding senior bankers responsible for these failings
  • bonuses – Chairman Enria discussed the possible return of banker's bonuses in Ireland, saying that the constraints were fair at the time but they could be brought back if legacy issues have been addressed
  • NPLs – Chairman Enria says that very significant progress has been made in addressing the NPLs in Irish banks, decreasing from 24% of all loans in 2014 to 6.4% today

EBA publishes an Opinion on the elements of SCA under PSD2

On 21 June 2019, the EBA published an opinion on the elements of SCA contained in PSD2. The opinion provides clarity in relation to (amongst other things):

  • current authentication approaches
  • confirming that the EBA cannot postpone the application date of the SCA rules
  • NCAs may decide to provide limited additional time to those who are not payment service providers to allow them to migrate to authentication approaches that are SCA compliant, and acquirers to migrate their merchants to solutions that support SCA.

EBA publishes roadmap for new market and counterparty credit risk approaches and launches consultation on technical standards on the IMA (Internal Model Approach)

On 27 June 2019, the EBA published its roadmap for the new market and counterparty credit risk approaches. THE EBA launched consultations on technical standards on the IMA under the Fundamental Review of the Trading Book along with a data collection on non-modellable Risk Factors. The roadmap is broadly in line with the deadlines included in the CRRII, prioritised into four phases, starting with the implementation of essential parts of the framework and ending with regulatory products that require some experience or feedback from the early stages of the implementation of the framework.

The eleven draft technical standards have been divided into three different Consultation Papers (CP):

  1. CP on draft RTS on liquidity horizons
  2. CP on draft RTS on back-testing and profit and loss attribution requirements
  3. CP on draft RTS on criteria for assessing the modellability of risk factors under the IMA

The consultations will run until 4 October 2019.