Financial Services Regulation and Compliance - General Cross Sectoral October 2022

Domestic

CBI Speech on addressing climate risk in the financial system during Climate Finance Week 2022

On 18 October, Sharon Donnery, Deputy Governor, spoke at Climate Finance Week 2022. In her address, reference was made to the IMF-World Bank Annual Meetings in Washington held earlier in October. The Deputy Governor highlighted that climate change was high on the agenda and that a sense of urgency was conveyed by all who discussed the topic.

The Deputy Governor referenced the prioritisation of climate risk at the CBI. The Deputy Governor also spoke of CBI's consultation paper on guidance for the insurance sector and expectations of governance structures, business strategy and risk management to manage climate change risks. The Deputy Governor notes that "the issues raised in our consultation can also apply in other sectors".

CBI launch Consumer Protection Code review discussion paper

On 3 October 2022, the CBI launched a discussion paper on the review of the Consumer Protection Code. The discussion paper presents a discussion on ten themes:

  • availability and choice
  • firms acting in consumers’ best interests
  • innovation and disruption
  • digitalisation
  • unregulated activities
  • pricing
  • informing effectively
  • vulnerability
  • financial literacy
  • climate matters The CBI will engage with key stakeholders on the topics including:

The proposed revisions will in turn be the subject of a formal public consultation on proposed changes to the Code.

The beneficial ownership register for certain financial vehicles has been updated to provide for the mandatory inclusion of PPS numbers or a CBI reference number as applicable

On 27 October 2022, further to the incoming obligation for the collection of PPS numbers for the purpose of verifying the information delivered to the register, commencing Friday, 11 November 2022, the current reporting template has been updated to provide for the mandatory inclusion of a PPS number, or a Central Bank of Ireland (CBI) reference number as applicable, for each beneficial owner. The updated template will be available from 11 November 2022. To allow the CBI transition from the current template to the updated template, CFV’s are requested not to submit any beneficial ownership returns on Thursday 10 November 2022. For beneficial owners who do not hold a PPS number, or have not previously been approved in a pre-approval controlled function (PCF) role under the Fitness and Probity Regime, the verification of identity (VOI) process is now in operation, allowing beneficial owners to obtain a Central Bank of Ireland reference number.

CBI announce changes to Fitness and Probity application process

On 3 October 2022, the CBI announced that the CBI Portal will be enhanced to facilitate the submission of applications to become a holder of a pre-approved controlled function. Individual questionnaires will no longer be submitted via the online reporting system (ONR) and will now be submitted via the CBI Portal. These changes will go live from Q1 2023.

European

EBA – Speech – The future regulation of the European payments industry

On 14 October 2022 at the "Payments Tomorrow" annual conference, Jose Manuel Campa's keynote speech covered the ongoing review of the Payment Services Directive (PSD2) and the opportunities and challenges in the move from open banking to open finance. The future impact of PSD3 and framework on open finance was also covered.

Earlier this year the EBA published a response to the call for review of PSD2. With decreasing levels of fraud, it is the view of the EBA that PSD2 has succeeded in pursuing its objectives. PSD3 should be adjusted to relate to:

  • enhancing the security requirements and addressing new types of fraud
  • ensuring consumers are properly protected and their needs taken into account
  • enhancing the enforcement of the legal requirements and the scope of supervision
  • streamlining and simplifying the legal framework by merging PSD2 and the Electronic Money Directive
  • ensuring easy access to payment systems and avoid de-risking practices

The European Commission is to determine whether or not to propose PSD3 and/ or a framework on open finance in the future.

European Commission's report on open finance

On 24 October 2022, the report on open finance was published. Part B of the report describes the key elements of an open finance ecosystem as seen by the expert group and sets out some findings in that respect. Part C of the report includes findings from an assessment of challenges and opportunities of open finance. To achieve the objective of open finance, a condition for open finance is to protect consumers and firms by addressing risks related to data access and use and reducing use issues particularly relating to consumer risks, exclusion risks and operational risks.

The European Commission has published its final report on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities

On 27 October 2022, the European Commission published its final report on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities. The Commission proposed AML/CFT Regulation would extend the list of obliged entities to include all crypto-asset service providers, as recommended by the Financial Action Task Force (FATF), and streamline beneficial ownership requirements across the EU. It would also restrict transactions in cash, setting at €10,000 a maximum cap for accepting or making payments in cash by persons trading in goods or providing services. Moreover, it would harmonise the EU approach to third countries with strategic deficiencies in their AML/CFT regimes. The Commission proposed to task the AML/CFT Authority with direct supervisory powers and should be operational in 2024. The Authority should start exercising its supervisory powers once the AMLD6 has been transposed and the new rules start to apply.

The Commission will continue to monitor the implementation of the recommendations of this supranational risk assessment and report again, in principle by 2024, in light of the changes that may be introduced to the current EU regulatory framework. The review will also assess how EU and national measures affect risk levels.

Sanctions imposed in response to the crisis in the Ukraine

Since February, the EU imposed a number of sanctions in response to the crisis in the Ukraine. Given that the crisis is developing and sanctions are continuing to evolve, the CBI is publishing details of new restrictive measures/sanctions that are adopted in this regard, as well as any associated EU/UN guidance, on their dedicated webpage.

On 6 October the CBI announced that the EU adopted a further package of sanctions. These measures comprise of:

  • Amendments to existing sanctions regime – Russia (Sectoral Measures) Regime (Council Regulation 2022/1904)

This introduces an exemption from the prohibition to provide technical assistance, brokering services or financing or financial assistance, related to the maritime transport to third countries of crude oil or petroleum products which originate in or are exported from Russia, purchased at or below a pre-established price cap. It also expands the prohibition to engage in any transaction with certain Russian state-owned or controlled legal persons, entities or bodies by including a ban on Union nationals to hold any posts on the governing bodies of those legal persons, entities or bodies. Furthermore, it removes the threshold for the existing prohibition on the provision of crypto-asset wallet, account or custody services to Russian persons and residents, thereby banning the provision of such services regardless of the total value of such crypto-asset.

  • Amendments to existing sanctions regime – Ukraine (Territorial Integrity) Regime (Council Regulation 2022/1905 and Council Implementing Regulation 2022/1906)

Council Regulation 2022/1905 introduces further criterion for the listing of natural or legal persons, entities or bodies subject to asset freeze and the prohibition to make funds and economic resources available to designated persons and entities. It also introduces further derogations from the asset freeze and the prohibition to make funds and economic resources available to certain listed entities, and introduces additional provisions regarding Member States’ obligations concerning the granting of derogations. Council Implementing Regulation 2022/1906 adds 30 persons and seven entities, to the list of persons, entities and bodies subject to restrictive measures.

  • Amendments to existing sanctions regime – Ukraine (Donetsk & Luhansk) Regime (Council Regulation 2022/1903) 

This amends the title of the Regulation and extends the geographical scope of the restrictions contained therein to cover all the non-government controlled areas of Ukraine in the oblasts of Donetsk, Kherson, Luhansk and Zaporizhzhia.

European Commission Work Programme 2023

On 18 October 2022, the European Commission published its 2023 work programme which it has adopted together with annexes and factsheets. Annex I sets out a full list of 43 new policy initiatives across six headline ambitions. Those related to financial services include, a European Green Deal, a Europe Fit for the Digital Age and an Economy that Works for People. Annex III lists priority legislation, including the proposal for regulation to amend the Central Securities Depositories (CSDs) Regulation (909/2014/EU) (CSDR), a proposal for a regulation amending the MiFID and a proposal for a regulation on EU green bonds.

European Commission proposes to accelerate the rollout of instant payments in euro

On 26 October 2022, the European Commission adopted a legislative proposal to make instant payment in euro available to all citizens and businesses holding a bank account in the EU and in EEA countries. Instant payments allow people to transfer money at any time of any day within ten seconds.

Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market for Digital Services and amending Directive 2000/31/EC (Digital Services Act) has been published

The Regulation was published on 27 October 2022. The Regulation will enter into force on the 20th day following its publication (16 November 2022). The regulation shall apply from 17 February 2024 (although rules specific to ‘very large online platforms’ are expected to come into effect earlier). Key measures include due diligence and content moderation rules for all online intermediaries providing services in the EU. Online platforms and search engines failing to comply with the Regulation can be fined up to 6 per cent of their worldwide turnover.

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

Date published: 17 November 2022