Financial Services Regulation and Compliance - Cross Sectoral and Other January 2024
Domestic
Competition and Consumer Protection Commission Levy
On 23 January 2024, the Consumer Protection Act 2007 (Competition and Consumer Protection Commission) Levy Regulations 2024 (the regulations) were published in Iris Oifigúil. The regulations set out the levies to be paid by various undertakings for the period commencing 1 January 2024 to 31 December 2024 (the levies).
The levies imposed by the Competition and Consumer Protection Commission (the CCPC) relate to the functions transferred previously to the NCA from the Financial Regulator (now the Central Bank of Ireland (CBI)), which are now functions of the CCPC, and are separate from any levies that are imposed by the CBI in relation to its current functions.
Fitness and Probity 'Certification Regulations' Published
On 12 January 2024, the Central Bank Reform Act 2010 (Section 21(6)) Regulations 2024 (the certification regulations) were signed into law.
The new certification regulations, were previously published in draft form alongside the CBI's new Individual Accountability Framework (IAF) guidance and feedback statement.
In March 2023, the Central Bank (Individual Accountability Framework) Act 2023 (IAF Act) amended and replaced section 21 of the Central Bank Reform Act 2010 to provide that a regulated financial service provider (RFSP) shall not permit a person to perform a controlled function in relation to it unless a certificate of compliance with standards of fitness and probity, given by the RFSP in accordance with section 21, is in force in relation to the person.
Updated Fitness and Probity Standards and Guidance
The CBI has updated the Fitness and Probity Standards and the Fitness and Probity guidance as part of the IAF reforms.
The Fitness and Probity Standards have been updated to include reference to holding companies and there have been updates to section 4 (relating to requirements to be honest, ethical and to act with integrity).
The guidance on the Fitness and Probity Standards has been updated as follows:
- by the deletion of section 10, which dealt with the process to expedite an application for a pre-approval controlled function (PCF) role in Ireland, where the individual is currently approved for a similar PCF role within the same sector or industry in another EEA Member State, as the process has not been operating in practice
- inclusion of the new certification process
- inclusion of the new requirements for holding companies
- the appendices have been updated (e.g. in relation to sample due diligence checks, agreement of employees to comply with the standards, and updated lists of PCFs and CFs)
Fitness and Probity in-situ submission guidance
On 17 January 2024, the CBI published Fitness and Probity in-situ submission guidance. The new document sets out guidance for RFSPs and holding companies in relation to the submission of PCF in-situ information to the CBI through the CBI’s portal.
New PCFs have been introduced for RFSPs and holding companies under the CBI’s Individual Accountability Framework. The PCF application form (the individual questionnaire) will be amended to allow new applicants apply for any new PCF roles via the portal. However, for individuals already performing the new roles at the time of implementation (29 December 2023), an in-situ process will be available so that those individuals do not have to submit an individual questionnaire.
The new document explains the process for making in-situ submissions to the CBI. The in-situ returns process for new PCF and HCPCF roles introduced from 29 December 2023 will remain open on the CBI portal for a six week period from 22 January 2024. The closing date is 3 March 2024.
Fitness and Probity: Annual PCF Confirmation Guidance for 2024 published
The CBI has published its Annual PCF Confirmation Guidance for 2024. It provides guidance for RFSPs and in-scope holding companies in relation to submitting PCF Confirmation submissions through the CBI’s portal.
European
ESAs consult on draft implementing technical standards specifying certain tasks of collection bodies and certain functionalities of the European Single Access Point
On 8 January 2024, the three European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) published a consultation paper on the draft implementing technical standards (ITSs) regarding the tasks of the collection bodies and the functionalities of the European single access point (ESAP).
These ITSs and the requirements they set out are designed to enable future users to be able to effectively harness the comprehensive financial and sustainability information centralised on the ESAP. Stakeholders are encouraged to provide their feedback to this consultation by 8 March 2024.
The establishment of the ESAP is a flagship action of the Capital Markets Union Action Plan and its purpose is to facilitate access to publicly available information of relevance to financial services, capital markets and sustainability.
EBA issues guidance to crypto-asset service providers to effectively manage their exposure to ML/TF risks
On 16 January 2024, the EBA published its guidelines (the guidelines) on money laundering (ML) and terrorist financing (TF) risk factors to crypto-asset service providers (CASPs). CASPs will be authorised under the incoming Markets in Crypto-Assets Regulation (MiCA). The new guidelines highlight ML/TF risk factors and mitigating measures that CASPs need to consider, representing an important step forward in the EU’s fight against financial crime.
Based on these risk factors, CASPs can develop an understanding of their customer base and identify which part of their business or activity is most vulnerable. The guidelines also include guidance addressed to other credit and financial institutions that have CASPs as their customers or which are exposed to crypto assets.
ESAs publish first set of rules under DORA for ICT and third-party risk management and incident classification
On 17 January 2024, the ESAs published the first set of final technical standards under Regulations EU 2022/2555 on digital operational resilience (DORA) aimed at enhancing the digital operational resilience of the EU financial sector by strengthening financial entities’ information and communication technology (ICT) and third-party risk management and incident reporting frameworks.
The joint final draft technical standards include:
- regulatory technical standards (RTS) on ICT risk management framework and on simplified ICT risk management framework
- RTS on criteria for the classification of ICT-related incidents
- RTS to specify the policy on ICT services supporting critical or important functions provided by ICT third-party service providers (TPPs)
- ITS to establish the templates for the register of information
DORA will apply from 17 January 2025.
ESMA publishes list of consultations due to commence in 2024
On 19 January 2024, ESMA published a list of its planned consultation papers for 2024 (the list).
The list includes:
- guidelines on the due diligence requirements under the Securitisation Regulation
- MiCA guidelines and technical standards
- MiFID and MiFIR reviews
- RTS on the European Single Electronic Format for reporting sustainability information under the European Sustainability Reporting Standards (ESRS)
ESMA consults on reverse solicitation and classification of crypto assets as financial instruments under MiCA
On 29 January 2024, ESMA published two consultation papers on guidelines under MiCA (the consultations).
The first consultation is on draft guidelines in relation to the conditions of application of the reverse solicitation exemption (the reverse solicitation guidelines) and the supervision practices that national competent authorities (NCAs) may take to prevent its circumvention. The proposed reverse solicitation guidelines confirm ESMA’s previous message that the provision of crypto-asset services by a third-country firm is limited under MiCA to cases where the client is the exclusive initiator of the service. The exemption is to be interpreted very narrowly and is not to be used as a means to bypass MiCA and authorisation requirements.
The second consultation is on draft guidelines on conditions and criteria for the classification of crypto-assets as financial instruments (the classification guidelines). The proposed classification guidelines aim at providing NCAs and market participants with structured but flexible conditions and criteria to determine whether a crypto-asset can be classified as a financial instrument. To do so, the draft strikes a balance between providing guidance and avoiding establishing a one-size-fits-all approach.
The consultations close on by 29 April 2024.
Political agreement on the sixth Anti-Money Laundering Directive is reached
On 18 January 2024, the Council of the EU and the European Parliament announced that they have reached a provisional political agreement on the proposed sixth EU Anti-Money Laundering Directive (AMLD6) and on a new EU Anti-Money Laundering Regulation (the Single Rulebook Regulation). Both measures are key components of the European Commission’s package of legislative proposals to strengthen the EU’s rules on anti-money laundering and countering the financing of terrorism (AML/CFT), which was announced in 2021. The Single Rulebook Regulation will replace the AML/CFT Directives currently in force with detailed and directly applicable provisions which banks and other obliged entities will need to apply. It will exhaustively harmonise rules throughout the EU, closing possible loopholes used by criminals to launder illicit proceeds or finance terrorist activities through the financial system.
AMLD6 will improve the organisation of national AML/CFT systems by bringing about greater convergence between national AML/CFT supervisors and financial intelligence units.
For more information on these topics please contact any member of A&L Goodbody's Financial Regulation Advisory team.
Date published: 26 February 2024