EBA Revises Validation Rules, Proposes Liquidity and Onboarding Guides

The draft regulatory standards and draft guidelines on liquidity aim to ensure consistent supervisory practices with regard to the application of liquidity requirements for investment firms across all member states in European Union. The draft regulatory standards on specific liquidity measurement set out liquidity risk elements that may raise major concern for investment firms and that competent authorities will be required to consider when setting specific liquidity requirements as a result of an investment firm’s supervisory review and evaluation process (SREP). The draft standards specify that those elements shall be considered under normal and severe, but plausible, conditions. In addition, to ensure proportionality, competent authorities should assess only a smaller set of elements for small and non-interconnected investment firms. In addition, the draft guidelines set out the criteria that competent authorities should take into account when exempting small and non-interconnected investment firms from liquidity requirements set out in the Investment firms Regulation. These guidelines specify that an exemption should be based on the assessment of the financial resource needed for an orderly wind-down of the investment firm.

The guidelines on use of remote customer onboarding solutions set out a common understanding by competent authorities of the steps financial sector operators should take to ensure safe and effective remote customer onboarding practices in line with the applicable anti-money laundering and countering the financing of terrorism (AML/CFT) legislation and the data protection framework of European Union. Once adopted, these guidelines will apply to all financial sector operators that are within the scope of the Anti-money Laundering Directive (AMLD). Given the growing demand for remote customer onboarding solutions, EBA considers it important for competent authorities and financial sector operators to understand the capabilities of these new remote solutions to make the most of the opportunities they offer, to support their sound and responsible use, to be aware of the money laundering and terrorist financing risks arising from the use of such tools, and to take steps to mitigate these risks effectively. These draft guidelines set common European Union standards on the development and implementation of sound, risk-sensitive initial customer due diligence policies and processes in the remote customer onboarding context. They set out the steps financial institutions should take when choosing remote customer onboarding tools and when assessing the adequacy and reliability of such tools, in order to comply effectively with their AML/CFT obligations.

Related Links

• Validation Rules
• Reporting Frameworks
• Liquidity Requirements Proposals
• Proposed Onboarding Guidelines

Comment Due Date: March 10, 2022

Keywords: Europe, EU, Banking, CRR, IFR, Reporting, Basel, Investment Firms, Liquidity Risk, Lending, Customer Onboarding, AML/CFT, ML/TF Risk, Implementing Technical Standards, Regulatory Technical Standards, Reporting Framework 3.1, Loan Origination, EBA