The Use of Cash and the Banking Sector Guidance Note issued by the FIAU

The Financial Intelligence Analysis Unit has published a guidance note applicable to the banking sector and to subject persons carrying out activities involving cash deposits and or withdrawals. The Guidance Note provides guidance in relation to the acceptance of cash deposits and transaction monitoring of cash withdrawals. It also includes examples of cash-related red flags while providing information on the reporting of such suspicious deposits and withdrawals.

The European Centralised Infrastructure of Data to be used for reporting of payment fraud

In view of payment service providers' obligations to submit to their competent authorities statistical data on fraud relating to different means of payments and competent authorities' obligations to provide such data to the European Banking Authority (''EBA'') and the European Central Bank (''ECB''), the EBA has decided that competent authorities are to provide the aforementioned data on payment fraud via the European Centralised Infrastructure of Data (EUCLID) and in accordance with the EBA Data Point Model.

The EBA's decision seeks to streamline data flows and reduce the double burden faced by competent authorities who had to report to both the EBA and the ECB.

BR/15 and BR/24 amended by the MFSA for further clarity

The MFSA has updated two banking rules in order to clarify certain references and to clearly provide for the applicability of specific guidelines which have already been applicable to credit institutions.

BR/15 on 'Capital Buffers of Credit Institutions Authorised under the Banking Act 1994' was amended to include correct references to various paragraphs while BR/24 on 'Internal Governance of Credit Institutions Authorised under the Banking Act' was amended to clearly set out the fact that credit institutions are to abide by 'EBA Guidelines on ICT and Security Risk Management (EBA/GL/2019/04)' and the 'Guidance on Technology Arrangements, IT and Security Risk Management and Outsourcing Arrangements' issued by the MFSA.

Consultation on implementation of Bail-In tool launched

In order to ensure that the resolution framework and the manner in which write-down and conversion of capital instruments laid out in the Bank Recovery and Resolution Directive 2014/59 (''BRRD'') is predictable and transparent, the EBA has launched a public consultation on its draft Guidelines to Resolution Authorities on the Publication of the Write-Down and Conversion and Bail-In Exchange Mechanic. The consultation is open until 7th September 2022.

The draft guidelines includes information which resolution authorities set-up under article 3 BRRD must make public in relation to the write-down and conversion being applied in the context of bail-in tool. As from 1st January 2024, resolution authorities must comply with the draft guidelines in order to ensure credibility and safeguard investors' interests.

ESA's joint report on Withdrawal of Authorisation for Serious Breaches of AML/CFT rules

The EBA, European Insurance and Occupational Pensions Authority ("EIOPA") and European Securities and Markets Authority ("ESMA"), commonly known as the three European Supervisory Authorities (the "ESAs") prepared a joint report on withdrawal of licences for serious breaches of anti-money laundering and funding of terrorism (''AML/CFT'') obligations.

In the joint report the ESAs highlighted how important it is for competent authorities to ensure, prior to granting authorisations or registrations, that proper arrangements and processes which ensure AML/CFT compliance are in place. More importantly, in the joint report the ESAs set out criteria used to determine whether a breach of AML/CFT obligations is serious and clarified that the identification of a serious breach is subject to a case-by-case assessment and a proportionality assessment. The ESAs also referred to the fact that prudential regulation and supervision should integrate AML/CFT issues even in new legislative proposals such as the Markets in Crypto-Assets Regulation (MiCA).

Draft Regulatory Technical Standards identifying Shadow Banking Entities published by EBA

In view of the fact that credit institutions or investment firms are obliged under the Capital Requirements Regulation 2019/876 to report on their 10 largest exposures to shadow banking entities which carry out banking activities outside the regulated framework on a consolidated basis, the EBA has published its final draft regulatory technical standards clarifying which entities are to be considered shadow banking entities.

The draft regulatory technical standards provide that the following entities (amongst others) are not deemed to be shadow banking entities: (i) entities authorised under the EU prudential framework to provide banking activities or services; (ii) undertakings in the consolidated supervision of an institution; and (iii) central clearing counterparties when performing 'clearing' as defined under Regulation 648/2012.

Management of non-performing exposures peer review published by EBA

Following the EBA Guidelines on the Management of Non-Performing and Forborne Exposures, the EBA conducted a peer review in order to understand the manner in which the Guidelines have been implemented and how competent authorities supervise and manage non-performing exposures.

The findings suggest that a risk-based approach has been implemented and that in countries having a higher non-performing exposure (''NPE'') level, the competent authorities applied more sophisticated supervisory processes and were more involved and engaged with credit institutions which they supervised. The EBA did not raise any serious concerns on NPE supervision.

EBA publishes consultation on Standardised Information Requirements concerning Non-Performing Loans

In an attempt to reduce information asymmetries, enable cross-country comparisons and to ensure that smaller credit institutions have access to non-performing loans secondary markets, the EBA has published its consultation on the draft implementing technical standards on standardised information which must be provided by sellers of non-performing loans to prospective buyers.

The standardised information is based on the EBA's NPL data templates which it had developed in 2017 and on industry feedback it collected during a discussion paper launched a year ago. The information to be provided is dependent on the size of the NPL based on a proportionality principle. The information required mainly includes (i) contractual characteristics of the loan; (ii) whether collateral or guarantees were provided; (iii) enforcement procedures; and (iv) a collection and repayment schedule. The consultation is open until 31st August 2022.

Credit Scoring and Loan Pricing Disclosure, Credit Risk Assessment and Risk Management requirements for Crowdfunding Service Providers draft regulatory standards published by EBA

The EBA in close collaboration with ESMA has developed draft regulatory technical standards which would be applicable to crowdfunding service providers regulated under Regulation 1503/2020 on European Crowdfunding Service Providers Regulation (ECSPR) should they be accepted in final form.

The purpose of such regulatory technical standards is to ensure that investors are provided with adequate and sufficient information, including but not limited to, information on the method used to calculate credit scoring and pricing, as well as minimum standards which crowdfunding service providers must follow when carrying out credit risk assessments and loan valuations and policies and procedures which crowdfunding service providers must have in force.

Template for annual reporting of information on deposits subject to Russian and Belarusian economic sanctions developed by EBA

In view of credit institutions' obligations to supply their national competent authorities with information of deposits held by Russian and Belarusian nationals in accordance with article 5g of Regulation 833/2014 and article 1z of Regulation 765/2006 (both as updated from time to time) respectively, the EBA has introduced a template which national competent authorities may utilise in relation to such annual reporting of information in order to monitor whether EU credit institutions are following EU sanctions.

The template provides guidance and a list of information which is to be provided by credit institutions to their national competent authorities in view of the aforementioned obligations.

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