1. PAYMENTS
1.1 EBA updates Single Rulebook Q&A on PSD2
During the period 1 October 2022 to 31 December 2022, the European Banking Authority (EBA) updated its Single Rulebook Questions and Answers (Q&As) publication on Directive (EU) 2015/2366 (the Revised Payment Services Directive or PSD2) (the Single Rulebook Q&A). The Q&As in respect of the following articles have been updated:
- Article 6 - Control of the shareholding
A copy of the Single Rulebook Q&A can be accessed here.
1.2 Proposal to amend regulations regarding instant credit transfers in euro
On 26 October 2022, the European Commission adopted a legislative proposal for a regulation on instant payments in euro across the EU (Proposal) amending Regulation (EU) No 260/2012 (the SEPA Regulation) and Regulation (EU) 2021/1230 (the Cross-Border Payment Regulation). Instant payments allow for a credit transfer in a matter of seconds at any time and differ from other credit transfers which are processed by payment service providers (PSPs) only during business hours, with the funds credited to the payee only by the end of the following business day. The EU are also considering if the requirements under PSD2 require amending to fully integrate the proposed regulation.
While the infrastructure for instant payments has existed since the implementation of the Single Euro Payments Area (SEPA) instant credit transfer scheme (SCT Scheme), uptake has been slow with instant payments accounting for only 11% of the euro credit transfers in the EU at the end of 2021.
The Commission's draft regulation consists of four central measures, designed to fuel supply and demand for instant payments in euro:
- Obligation on PSPs to provide instant payments in euro –EU PSPs will be obligated to provide instant payments in euro, applicable to PSPs that operate both inside and outside the euro area, on the basis that they already offer credit transfers in euro.
- Making euro instant payments affordable – The draft regulation will ensure that charges for instant payments will have to be equal or lower than the charges for traditional, non-instant credit transfers, thus incentivising the affordable instant euro payment.
- Verification of payee details - All PSPs will be required to offer a service verifying that the payee's IBAN matches the name of the payee prior to payment being made and notifying the payer of any detected discrepancy suggesting fraud or error.
- Harmonised EU sanctions screening– All PSPs will be required to follow a harmonised procedure for sanctions screening, based on daily checks of their own clients against the regularly updated EU sanctions list.
The European Council and Parliament are now considering the European Commission's Proposal, with the requirements expected to come into force from the end of 2024.
A copy of the Proposal is available here.
1.3 Amendment of regulatory technical standards in relation to the 90-day exemption for account access
On 5 December 2022, the Commission Delegated Regulation (EU) 2022/2360 of 3 August 2022 amending the regulatory technical standards laid down in Delegated Regulation (EU) 2018/389 as regards the 90-day exemption for account access was published in the Official Journal of the EU (OJ).
The amendments include:
- A new mandatory exemption from the strong customer authentication (SCA) requirement mandating that SCA will not be applied when customers use an account information service provider (AISP) to access their payment account information (subject to certain conditions being met);
- The voluntary exemption in Article 10 of the RTS will be limited to instances where the customer accesses the account information directly; and
- Where the above exemptions apply, the renewal date of the SCA will be extended from 90 days to 180 days.
The Delegated Regulation entered into force on the 25 December 2022 and will apply from 25 July 2023.
A copy of the Delegated Regulation is available here.
1.4 EBA Single Rulebook Q&A on PAD
On 22 December 2022, the EBA published a new Single Rulebook Questions and Answers (Q&As) publication on Directive 2014/92/EU (Payment Accounts Directive or PAD) addressing a Q&A under Article 5 – Statement of Fees.
A copy of the Single Rulebook Q&A is available here.
2. DIGITAL FINANCE & CRYPTO-ASSETS
2.1 Update on the recast Funds Transfers Regulation and EBA call for interest
Following the provisional agreement reached on the proposal for a Regulation on information accompanying transfers of funds and certain crypto-assets (recast) (Recast Regulation) in June 2022, the text of the Recast Regulation looks close to being finalised by the European Parliament and the Council of the EU (the Council). The Recast Regulation sets out new obligations on crypto-asset service providers (CASPs) regarding the collection and provision of information about the originator and the beneficiary of the transfer of cryptoassets they operate.
On 21 October 2022, the EBA launched a call for interest to join two technical expert groups and a call for input on the Joint Guidelines to prevent the abuse of fund transfers for money laundering and terrorist financing (ML/TF) purposes issued in 2017. The deadline to submit interest to join the technical expert groups expired on 4 November 2022 and the deadline for submissions with input on the Joint Guidelines was 15 November 2022.
The proposal of the Recast Regulation can be accessed here.
The EBA's press release can be accessed here.
2.2 Taxation: New transparency rules require service providers to report crypto-asset transactions
On 8 December 2022, the European Commission published a statement, outlining proposed new tax transparency rules for all service providers facilitating transactions in crypto-assets for customers in the European Union (Statement). These new transparency rules are set down in a proposal for a Directive amending Directive 2011/16/EU on administrative cooperation (DAC1) in the field of taxation (Proposal). These new rules compliment the Markets in Crypto-assets Regulation (MiCA) and existing anti-money laundering rules.
The European Commission, in its statement, underscores the importance of fair and effective taxation for securing public investment and facilitating an innovative business environment, yet highlights the current limitations tax authorities face whilst monitoring proceeds obtained by crypto-assets. The Proposal aims to remedy this by requiring all CASPs to report transactions of clients residing in the EU. The Proposal also aims to establish minimum level of penalties for serious non-compliance.
The Proposal amending the DAC1, is consistent with the OECD initiative on the Crypto-Asset Reporting Framework (CARF) and the amendments to the OECD Common Reporting Standard (CRS) (the OECD publication is available here).
The draft text will be submitted to the European Parliament for consultation and to the Council for adoption. It is foreseen that the new reporting requirements would take effect on 1 January 2026.
A copy of the Proposal can be accessed here.
A copy of the European Commission press release is available here.
2.3 DLT Pilot Regime Regulation Update
On 27 September 2022, ESMA published a report (Report) on Regulation (EU) 2022/858 on a pilot regime for market infrastructures based on DLT (DLT Pilot Regime Regulation). The DLT Pilot Regime Regulation will apply from 23 March 2023 and allow for certain DLT market infrastructures to be temporarily exempted from specific requirements of Union financial services legislation.
The DLT Pilot Regime Regulation required ESMA to assess whether the regulatory technical standards (RTS) developed under Regulation (EU) No 600/2014 (Markets in Financial Instruments Regulation or MiFIR) relative to certain pre-and post-trade transparency and data reporting requirements require amendment. On 4 January 2022, ESMA published a call for evidence on distributed ledger technology (DLT). Based on the feedback received, ESMA indicates in the Report it is not necessary to amend the pre-and post-trade transparency and data reporting requirements in the RTS to allow for use on tokenised securities. However, ESMA recognised that supervisory guidance on certain technical elements would contribute to a consistent application of the DLT Pilot Regime.
On 15 December 2022, ESMA published a final report (Final Report) containing its draft guidelines on the DLT Pilot Regime Regulation following a public consultation in Q3 2022. The guidelines (Guidelines) set out standard forms, formats and templates to apply for permission to operate a DLT market infrastructure. The Guidelines will also apply from 23 March 2023.
On 16 December 2022, ESMA published a new Q&A document on the implementation of the DLT Pilot Regime Regulation and its interaction with other EU financial services legislation. The Q&As relate to the topics of transaction reporting, financial instruments reference data, and order record keeping.
The DLT Pilot Regime Regulation can be accessed here.
The Report on the DLT Pilot Regime Regulation can be accessed here.
The Final Report containing the Guidelines on the DLT Pilot Regime can be accessed here.
The ESMA Q&As on the implementation of the DLT Pilot Regime can be access here.
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