Financial Services Regulation and Compliance - General Cross Sectoral Sept 2020

DOMESTIC

Text of Bill transposing Fifth Anti-Money Laundering Directive published

A bill transposing the Fifth Anti-Money Laundering Directive (5AMLD) into Irish law has been published. The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020 (the Bill) proposes to amend the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010-2018 (the Acts). 

Some notable features of the Bill include:

  • the provision for new designated persons, including virtual currency providers
  • the requirement for designated persons to ascertain that beneficial ownership information of a customer is entered on the relevant beneficial ownership register
  • the broadening of the definition of politically exposed persons

Speech - Gabriel Makhlouf: economies facing new structural changes in a post COVID-19 world

Speaking at a webinar hosted by the Institute of International and European Affairs, Gabriel Makhlouf, the Governor of the Central Bank of Ireland, spoke about COVID-19 and the future of monetary policy. Makhlouf commented that the impact of the COVID-19 pandemic on globalisation and digitalisation will affect monetary policy across the euro area. Makhlouf also noted that monetary policy makers will need to understand the nature of structural shifts in the economy so that they can effectively deliver on their mandate. 

Speech - Derville Rowland: remarks on the global fight against financial crime

Speaking at a London City Week panel discussion, Derville Rowland, Director General, Financial Conduct at the Central Bank of Ireland, commented that recent money laundering scandals have shown that the current framework to fight financial crime and money laundering is not as effective as desired. Rowland also pointed to the European Commission's recently published AML Action Plan as a significant development in the area, allowing for a more coordinated and cross-border focus on the fight against money-laundering. Rowland also welcomed the bringing of so-called virtual asset service providers within the scope of AML directives. 

EUROPEAN

Outsourcing to Cloud Service Providers – EBF responds to consultation on ESMA guidelines

The European Banking Federation (EBF) has responded to ESMA's consultation on guidelines on outsourcing to cloud service providers. The EBF called for a strong alignment of the ESMA guidelines with the existing guidelines of the EBA in order to prevent a disproportionate burden for financial institutions covered by both regimes. 

EBA publishes opinion on future AML/CFT framework in the EU. 

The EBA has published an opinion on the future anti-money laundering/counter terrorist financing (AML/CFT) framework in the EU. The opinion was published in response to the European Commission's (the Commission) call for advice on the scope of application of a new regulation defining the scope of application of a regulation in the area of money laundering and terrorist financing. The EBA recommends that the Commission establish a single rulebook where a robust set of common rules supports the implementation of a proportionate and effective risk-based AML/CFT regime. 

The EBA also recommends that the proposed regulation:

  • harmonises aspects of the EU’s legal framework where evidence suggests that the divergence of national rules and practices has had a significant adverse impact on the prevention of the use of the EU’s financial system for money laundering/terrorist financing purposes
  • strengthens aspects of the EU’s legal framework where current provisions are insufficiently robust and create vulnerabilities in the EU’s AML/CFT defences
  • reviews the scope of the EU’s AML/CFT legislation to ensure that the list of obliged entities is sufficiently comprehensive and well‐defined, and in line with international AML/CFT standards
  • clarifies provisions in sectoral financial services legislation to ensure that they are compatible with the EU’s AML/CFT objectives

European Commission proposes regulatory framework for crypto-assets and stablecoins 

On 24 September 2020, the European Commission published a proposed regulatory framework for crypto-assets and stablecoins. The proposal is part of the "digital finance" package, which aims to further enable and support the potential of digital finance, while also mitigating the risks involved.    

The proposed framework, which covers crypto-assets falling outside existing EU financial services legislation, as well as e-money tokens, has four general objectives:

  • to create a legal framework, clearly defining the regulatory treatment of all crypto-assets not covered by existing financial services legislation
  • to put in place a safe and proportionate framework to support innovation and fair competition
  • to instil appropriate levels of consumer and investor protection and market integrity, given that crypto-assets not covered by existing financial services legislation present many of the same risks as more familiar financial instruments
  • to create safeguards to address potential risks to financial stability and orderly monetary policy that could arise from stablecoins

ESAs launch survey on environment and/or social financial product templates

Several European Supervisory Authorities (ESAs), including the EBA and ESMA, have published a survey seeking feedback on presentational aspects of product templates pursuant to Regulation (EU) 2019/2088 on sustainability-linked disclosures in the financial services sector. The survey is open for comments until 16 October 2020. 

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

Date published: 7 October 2020