Financial Services Regulation and Compliance - Cross Sectoral Sept 2019

DOMESTIC

The Register of Beneficial Owners goes live

The website of the Central Register of Beneficial Ownership was launched and began accepting details of Beneficial Owners. The deadline for filing details is 29 November 2019. Alternatively, if a company was incorporated after 22 June 2019, the deadline for filing is five months form the date of incorporation.

Feedback Statement on CP128 – Consultation on the Central Bank of Ireland’s Anti-Money Laundering and Countering the Financing of Terrorism Guidelines for the Financial Sector

The CBI has finalised its Guidelines on Anti-Money Laundering and Countering the Financing of Terrorism for the Financial Sector. A summary of the key issues and common themes identified by the CBI were published in a feedback paper, which includes amendments to clear up potential ambiguities in the text of the Guidelines. Respondents were broadly supportive of the removal of prescriptive/definitive examples of documentation from the Guidelines in favour of a risk-based approach to fulfilling obligations and ensuring that controls, policies and procedures are fit for purpose.

Diversity and Inclusion: why it matters for the Central Bank

Vasileios Madouros, Director of Financial Stability, CBI delivered a speech at the National Diversity & Inclusion Conference on why diversity is important to the Bank and why the fostering an environment where the impact of "difference" is not just understood but should be celebrated and captured. He states the potential benefits of diversity are:

  • diverse organisations are better equipped to tackle complex problems
  • a diverse Central Bank is more likely to be effective if it represents the people that it serves
  • representing those that it serve also increases the likelihood that the Bank will be trusted by the public
  • to ensure that the financial system operates in the best interests of society, financial services firms need to be able to draw from a range of perspectives, competencies, insights and experiences

Ireland remains vulnerable to a negative global shock - Deputy Governor Sharon Donnery

In a speech at the Dublin Economics Workshop in Wexford on 26 September 2019, Sharon Donnery, Deputy Governor of the Central Bank of Ireland, said that while the Irish economy greatly benefits from being one of the most open in the world for trade and finance, this comes with vulnerabilities beyond our control. Referring to CBI research, the Deputy Governor noted that compared to the UK, US and euro area, Ireland is the most affected by, or the most elastic to, a negative global shock. Factors point to the economy, the public finances, businesses and households being more exposed to macroeconomic risk than larger economies. The CBI is continuing to put in place measures to build the resilience of households and banks to such shocks. A legislative provision will be introduced giving the CBI power to introduce a systemic risk buffer for banks to help countercyclical structural shocks to the economy.

CBI: What does good regulation look like?

In remarks to the SuperReturn CFO/COO Regulation and Compliance Summit on 18 September 2019, Colm Kincaid, Director of Securities and Markets Supervision of the CBI outlined the five principles of good regulation:

  • a high level of protection for investors and market participants
  • transparency as to the features of products and their market price
  • a well governed market
  • a trusted market, by both those using the market to raise funds and those seeking to invest
  • a resilient enough market to continue to operate its core functions in stressed conditions and to innovate appropriately as markets evolve

The CBI publish the Regulatory Service Standards Performance Report

The Central Bank of Ireland has published the Regulatory Service Standards Performance Report for the first half of 2019. This report sets out the Central Bank’s performance against standards and deadlines it has committed to for the authorisation of financial service providers and Fitness and Probity applications.

EUROPEAN

Digital challenges to the international monetary and financial system

Benoît Cœuré, Member of the Executive Board of the ECB made remarks at a conference on The Future of the International Monetary System on 17 September 2019. He stated that global “stablecoin” initiatives can make international payments cheaper and faster and support financial inclusion. They also raise formidable challenges across a broad range of policy domains: operational robustness, safety and soundness as payment systems, customer protection, risks to financial stability and monetary sovereignty, and, last but not least, data protection and compliance with anti-money laundering and terrorism financing rules.

He stated that policy makers need to strike a balance between effectiveness and security and that, partly in response to these concerns, a G7 working group has been mandated to examine global “stablecoins” in more detail. The Financial Stability Board has also started looking into the regulatory implications of these initiatives.

EBA adds the Securitisation Regulation to its online Interactive Single Rulebook and Q&A tools

The European Banking Authority (EBA) has updated its online Interactive Single Rulebook and Q&A tool with the inclusion of the "simple, transparent and standardised" (STS) Securitisation Regulation, (EU) 2017/2402. The inclusion of the Securitisation Regulation into the Q&A tool will also allow users to submit any questions they may have on the application of this Regulation and the EBA's work related to it.

EU Financial regulators highlight risks and vulnerabilities in the EU financial system

The European Supervisory Authorities (ESAs) have published a Joint Committee report on risks and vulnerabilities in the EU financial system. The ESAs have called on the European and national competent authorities (NCAs), financial institutions and market participants to:

  • continue work on contingency planning and assurance of business continuity in the case of a no-deal Brexit
  • continue taking into account a “low-for-long” interest rate scenario and the risks that such a scenario can bring with it
  • further address unprofitable banks and their business models in order to increase the resilience of institutions to a more challenging economic environment
  • further explore risks related to the leveraged loan market and Collateralized Loan Obligations (CLOs) in the global financial sector
  • continue the work on identifying exposures to climate related risks and facilitate access to sustainable assets for investors wanting to invest in the transition to a low-carbon emission economy

ESMA publishes responses to survey on short-termism in the financial sector

The European Securities and Markets Authority (ESMA) has published the responses it received to its call for evidence on potential short-term pressures on corporations stemming from the financial sector. The report presents evidence and advice on potential undue short-termism. The Commission will consider ways to follow up on the report’s findings, which may include policy actions.

Sustainable Finance – Recent EU Developments

The EU Commission has published guidelines in order to efforts to strike a balance between ensuring the financial sector plays a critical role in transitioning to a climate-neutral economy while still funding large scale investments. The guidelines will provide assistance to an estimated 6,000 EU listed companies, banks and insurance companies, who are required to disclose non-financial information under the Non-Financial Reporting Directive.

For more information on this topic please contact any member of A&L Goodbody's Financial Regulation team.

Date published: 10 October 2019