RegBrief, May/June 2015

ANTI-MONEY LAUNDERING

On 5 June 2015, the Fourth Money Laundering Directive (Directive 2015/849/EU) and the revised Wire Transfer Regulation (Regulation (EU) 2015/847) were published in the Official Journal. For further information, see our recent briefing here.

In May 2015, the Central Bank also published a report on anti-money laundering (AML), counter terrorism financing and financial sanctions in the credit union sector, finding that while good practices were observed, "widespread and common deficiencies" regarding compliance with the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (as amended) (CJA 2010) were also discovered. Particular issues identified included lack of oversight at board level, inadequate customer due diligence policies and procedures, failure to adhere to policies, engaging in non-standard practices and failure to provide appropriate training. Credit unions will be required to confirm annually that they have put in place appropriate measures to address the matters set out in the report.

BANKING UNION: BANK RECOVERY AND RESOLUTION DIRECTIVE

On 6 May 2015, the European Banking Authority (EBA) published Guidelines on Recovery Plan Indicators addressed to national competent authorities (NCAs) under the Bank Recovery and Resolution Directive (Directive 2015/59/EU) (BRRD).

These guidelines set out the minimum list of indicators that must be included in a recovery plan to identify points at which appropriate actions referred to in the plan may be taken. The guidelines enter into force on 31 July 2015 and NCAs must confirm their compliance status to the EBA within 2 months of translations being published.

On 8 May 2015, the EBA published final Guidelines on Triggers for use of Early Intervention Measures addressed to NCAs under Article 27(4) of the BRRD. These guidelines apply from 1 January 2016.

The EBA also published Guidelines on the Effectiveness of the Sale of Business Tool, Guidelines on the Asset Separation Tool and Guidelines on the Minimum List of Services and Facilities on 20 May 2015, addressed to NCAs under the BRRD, which will apply from 1 August 2015.

The EBA is currently consulting on draft regulatory technical standards (RTS) for the valuation of derivatives under BRRD. The European Commission (the Commission) has asked 11 Member States to take steps to implement the BRRD in light of their failure to meet the 31 December 2014 deadline. Ireland was not on that list, despite having not yet transposed BRRD into national law, presumably on the basis that the relevant statutory instrument is expected shortly. Member States that do not comply with the Commission's request within 2 months risk being referred to the European Court of Justice.

BANKING UNION: DEPOSIT GUARANTEE SCHEMES

On 28 May 2015, the EBA published two sets of guidelines in relation to the recast Deposit Guarantee Schemes Directive (Directive 2014/49/EU) (the Recast DGSD). The first ( Guidelines on Methods for Calculating Contributions to DGS), deals with methods for calculating contributions (which must be risk-based) and must be implemented by Member States by 31 December 2015 (that date can be extended to 31 May 2016). The second ( Guidelines on DGS payment commitments) deals with the legal agreements that should be entered into between schemes and credit institutions in respect of payment commitments and must be implemented in practice by schemes and by designated authorities by 31 December 2015.

Member States are required to transpose the Recast DGSD into national law by 3 July 2015 to enable application of the Recast DGSD from 4 July 2015. The Department of Finance issued a 3-week consultation on transposition, which closed on 12 June 2015. The transposing statutory instrument is awaited and we will be issuing a further briefing once transposition has been effected.

BANKING UNION: PROPOSED REGULATION ON BANKING STRUCTURAL REFORM

On 19 June 2015, the EU Council announced that it had agreed its general approach to the proposed regulation on banking structural reform. The Commission had published the original proposal in January 2014 (following on from the 2012 publication of the Liikanen Report); the proposal is designed to prevent larger banks from engaging in proprietary trading. The Commission's proposal would give bank supervisors the ability to oblige those banks to separate activities perceived as risky from their deposit-taking business where the pursuit of the risky activities could compromise financial stability.

The EU Council has proposed that the regulation apply to global systemically important institutions or to entities with total assets of at least30 billion over the last 3 years and trading activities of at least70 billion or 10% of their total assets. Those entities would be divided into two tiers: one tier for entities where the sum of their trading activities during the last 3 years exceeds100 billion and the other tier for entities where that threshold was not reached. The entities in the upper tier would be subject to stricter reporting requirements, more detailed risk assessment and different supervisory actions. The EU Council has proposed that the regulation not apply to entities with total eligible deposits of less than 3% of their total assets or total eligible retail deposits of less than35 billion. The EU Council has also proposed that excessive risk arising from trading activities could be managed...