Featured Product

    PRA Proposes Rules on Identity Verification of Depositor Protection

    January 20, 2021

    PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS). It also proposes amendments to the expectations of PRA in respect of insolvency practitioners being best placed to carry out identity verification checks in the event that a firm has failed to do so by the compensation date. The proposals in CP3/21 would result in changes to the Depositor Protection Part of the PRA Rulebook (Appendix 1) and the supervisory statement SS18/15 on depositor and dormant account protection (Appendix 2). This consultation closes on February 15, 2021, with PRA proposing the implementation date to be March 24, 2021.

    CP3/21 is relevant to the FSCS, all PRA-authorized deposit-takers, and insolvency practitioners. It contains no material of direct relevance to retail financial services consumers or consumer groups, upon which they might need to act. Under the existing PRA Depositor Protection rules, which implemented an EU Directive, if a depositor or ultimate beneficiary has not had their identity verified in accordance with the Relevant Anti Money Laundering (AML) Requirements at the compensation date, their deposits are automatically ineligible for FSCS protection (through no fault of the depositor or ultimate beneficiary). The proposed rule changes are intended to prevent FSCS eligibility issues in the event that a firm has failed to conduct identity verification in accordance with the relevant anti-money laundering requirements referred to in Depositor Protection Rule 2.2(4)(f) while continuing to ensure identity verification is carried out before any compensation is paid.

    PRA proposes to amend existing Depositor Protection rules to allow deposits to become eligible for FSCS protection if identity verification is, in any case, carried out in the manner set out in Regulation 28 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLR). CP3/21 also outlines the proposal to set out, by way of amendment to SS18/15, that PRA considers that insolvency practitioners should undertake post-compensation date identity verification, given their obligations and responsibilities under the Banking Act 2009. PRA has engaged closely with FCA on these issues, due to the responsibility of FCA for consumer protection and role as competent authority for the anti-money laundering regime in UK, and has also engaged with the FSCS. The proposals have been designed in the context of UK having left EU and the transition period having come to an end. Unless otherwise stated, any references made to legislation, including that which is “retained EU law,” relate to the UK version. PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework.

     

    Related Links

    Comment Due Date: February 15, 2021

    Effective Date: March 24, 2021 (Proposed)

    Keywords: Europe, UK, Banking, Depositor Protection, Consumer Protection, PRA Rulebook, AML, Identity Verification, FSCS, PRA

    Related Articles
    News

    EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation

    The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).

    May 23, 2022 WebPage Regulatory News
    News

    EBA Publishes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.

    May 23, 2022 WebPage Regulatory News
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    News

    EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR

    The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    May 13, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.

    May 12, 2022 WebPage Regulatory News
    News

    MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy

    The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.

    May 12, 2022 WebPage Regulatory News
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8201