Deputy Governor of the Central Bank of Ireland discusses the new EU Anti – Money Laundering Authority
On 16 May 2024, Deputy Governor of the Central Bank of Ireland (CBI), Derville Rowland, discussed the new European Anti-Money Laundering (AML) Framework and the establishment of a central Anti-Money Laundering Authority (AMLA). Deputy Governor Rowland noted the adoption of a single AML rulebook signifies a historic step in tackling financial crime across Europe, collectively noting that technological advancements have contributed to far more complex and significant financial crime rates.
Deputy Governor Rowland acknowledged the CBI support the roll out of AMLA and aim to contribute to its success. She stated that for AMLA to be successful it must take an independently governed and maintain a strong, risk based approach and be afforded sufficient powers to tackle financial crime. Further, it was noted that AMLA should leverage the current initiatives in place and foster cooperation with national supervisors along with other EU institutions.
Financial consumer protection and market conduct considerations of AI in finance - Remarks by Colm Kincaid, Director of Consumer Protection
On 22 May 2024, the Director of Consumer Protection of the Central Bank of Ireland (CBI), Colm Kincaid, delivered remarks discussing the opportunities and risks of digitalisation and artificial intelligence (AI) from the consumer perspective at the OECD/FSB Roundtable on Artificial Intelligence in Finance. Kincaid addressed the focus of the CBI as supervisors of financial service firms using AI.
He explained the CBI will want to understand why AI is an appropriate response to the business challenge being addressed and to see how firms identify and prepare for any new source of risk to their operational resilience arising from the use of AI.
Governor of the CBI, Gabriel Makhlouf addresses developments to the Consumer Protection Code
On 27 May 2024, the Governor of the Central Bank of Ireland (CBI), Gabriel Makhlouf published an update on the Governor’s blog addressing the incoming transformation of the Consumer Protection Code (CPC).
The CBI commenced a review of the CPC in 2022. Following this, the CBI engaged in discussions with stakeholders in relation to the modernisation of the CPC. Subsequently, the CBI published a consultation paper in March 2024 with the consultation period having closed on 7 June 2024.
The CPC amendments seek to review the protections afforded to consumers to reflect the current financial services climate and provide a clearer regulatory format of the obligations for regulated firms. The CBI are also proposing the introduction of new digitalisation requirements; disclosure requirements on switching mortgages; new suitability and advertising requirements along with new requirements onto regulated entities that provide unregulated services.
The Governor outlines that consumers will benefit from a range of protections under the revised CPC that will accurately reflect how consumers interact with financial services today.
CBI publishes industry letter to retail intermediaries’ in relation to its thematic review of compliance with the Minimum Competency Code and Consumer Protection Code
On the 29 May 2024, the Central Bank of Ireland (CBI) published an industry letter to retail intermediaries in relation to the results of a thematic review conducted by the CBI which examined their compliance with the Minimum Competency Code (MCC), knowing the consumer and suitability requirements contained in the CPC.
The CBI found:
The CBI asked that all retail intermediaries review and update their practices and policies in line with the best practice outlined in the letter.
CBI publishes notice of intention in relation to ESMA guidelines on stress test scenarios under the MMF Regulation
On 2 May 2024, the CBI published a notice of intention in relation to the application of the ‘ESMA guidelines on stress test scenarios under the MMF Regulation (EU) 2017/1131’ (ESMA50-43599798-9011) (the guidelines) which were published on 6 March 2024. ESMA noted that the guidelines are set to apply from 6 May 2024. The guidelines apply to competent authorities, money market funds (MMFs) and managers of MMFs. They apply in relation to Article 28 of the MMF Regulation establishing common reference parameters for the stress test scenarios to be included in the stress tests conducted by MMFs and MMF managers.
SMSG provide advice to ESMA on its consultation papers on reverse solicitation and the qualification of crypto-assets as financial instruments in the context of the Markets in Crypto Assets (MiCA) Regulation
On 2 May 2024, the Securities and Markets Stakeholder Group (SMSG) published it recommendations to ESMA on its consultation papers on reverse solicitation and the qualification of crypto-assets as financial instruments in the context of the Markets in Crypto Assets (MiCA) Regulation.
In its advice, SMSG noted its support for reverse solicitation, whereby, the provision of crypto-asset services by a third-country firm is strictly limited under MiCA to cases where such services are initiated exclusively by clients. SMSG also welcomed the ‘same type’ requirement noting its relevance in the circumvention of MiCA by third country entities.
SMSG noted that uniformity should be reached in the interpretation of the meaning of financial instruments under MiCA and MiFID II. The SMSG noted its support for the adoption of an extensive interpretation for the qualification of crypto-assets as financial instruments stating that it would reinforce investor protection due to the application of the MiFID II framework.
EBA published final guidelines on STS criteria for on-balance-sheet securitisation
On 27 May 2024, the European Banking Authority (EBA) published its final guidelines (guidelines) on the criteria related to simplicity, standardisation and transparency and additional specific criteria for on-balance-sheet securitisations (STS criteria). The guidelines have been developed as part of the Capital Markets Recovery Package and are widely welcomed as it will aid in a common understanding and harmonised interpretation of the STS criteria.
The guidelines also include a limited set of targeted amendments to the guidelines for non-ABCP securitisation and ABCP securitisation to ensure that the interpretation provided by the EBA is, where appropriate, the same and consistent across all three sets of guidelines.
European Commission publishes Delegated Regulations on asset-referenced tokens and e-money tokens
On 30 May 2024, the European Commission published four Commission Delegated Regulations (the Delegated Acts) on asset-referenced tokens (ARTs) and e-money tokens (EMTs) in the Official Journal of the EU, which supplement the Regulation on Markets in Crypto-Assets (MiCA).
The Delegated Acts:
Delegated Regulations supplementing DORA published in the Official Journal of the EU
On 30 May 2024, the two Delegated Regulations supplementing the Digital Operational Resilience Act (DORA) were published in the Official Journal of the EU.
The Delegated Regulations will enter into force on 19 June 2024.
Council of the EU formally adopts AML/CFT package
On 30 May 2024, the Council of the EU (the Council) formally adopted the enhanced anti-money laundering and counter financing of terrorism (AML/CFT) package.
The enhanced AML/CTF package comprises of the following:
Following their publishing in the Official Journal, the AMLD6 and AMLR will enter into force after 20 days and the AMLA Regulation will enter into force after 27 days.
The AMLR will apply three years from the date it enters into force.
AMLD6 must be transposed by Member States into national law three years from the date on which it enters into force, however some parts of the Directive must be transposed within two years.
The AMLA is expected to start operations in July 2025 and will be based in Frankfurt.
ESMA publishes report on the rules of conflicts of interests of crypto-asset service providers under MiCA
On 31 May 2024, ESMA published the final report (the report) on the rules on conflicts of interests of crypto-asset service providers (CASPs) under the Markets in Crypto Assets Regulation (MiCA).
The report outlines draft regulatory technical standards (RTS) on the rules regarding conflicts of interests for CASPs under MiCA. The report clarifies certain elements regarding the vertical integration of CASPs and introduces standards more aligned with the EBA’s draft rules for issuers of asset-referenced tokens. The draft RTS also contain requirements in relation to the policies and procedures regarding conflicts of interest and the content of disclosures of conflicts of interest.
The final report has been submitted to the European Commission.
EBA publishes three final draft regulatory technical standards (RTS) and a draft implementing technical standards (ITS) under MiCAR
On 7 May 2024, the European Banking Authority (the EBA) published three sets of final draft regulatory technical standards (RTS) on information for application for authorisation to offer to the public and to seek admission to trading of asset-referenced tokens (ARTs), information for assessment of acquisition of qualifying holdings for issuers of ARTs and approval procedure of white papers for ARTs. It also published a draft implementing technical standards (ITS) on standard forms, templates and procedures for the information to be included in the application, under Regulation (EU) 2023/1114 (MiCA).
The RTS on authorisation provides the information requirements to be included when applying for authorisation to offer to the public or seek admission to trading of an ART.
The ITS on authorisation establishes the application letter and template and aims to provide clarity around the process relating to the assessment of completeness of the application by the competent authority. The RTS and ITS on authorisation do not apply to credit institutions.
The RTS on information to be included for a proposed acquisition of a qualifying holding sets out the relevant information requirements in order for a competent authority to carry out its assessment.
The RTS on procedure for the approval of white papers for ARTs issued by credit institutions includes information regarding the timeframes credit institutions, competent authorities and the ECB will be required to follow during the approval procedure.
European Commission launches consultation on macroprudential policies for non-bank financial intermediation
On 22 May 2024, the European Commission (the Commission) launched a targeted consultation (the consultation) assessing the adequacy of macroprudential policies for non-bank financial intermediation (NBFI).
The consultation questions address the sources of systemic risk and vulnerabilities stemming from NBFIs’ activities with an emphasis on systemic liquidity risk and build-up of excessive leverage, risks for credit institutions stemming from their exposures to NBFIs and the consequences of potential NBFI failure and systemic risk. The consultation also asks stakeholders to comment on vulnerabilities emerging from crypto assets trading and intermediaries in the EU and ways that macroprudential policies can support NBFIs’ ability to provide funding opportunities to companies.
The Consultation will run until 22 November 2024 and the targeted stakeholders include EU institutions and bodies, national authorities, including National Competent Authorities (NCAs) that supervise NBFIs and markets, central banks and the NBFI industry.
For more information on these topics please contact any member of A&L Goodbody's Financial Regulation Advisory team.
Date published: 27 June 2024
