Featured Product

    EBA Identifies Issues in Cross-Border Banking and Payment Services

    October 29, 2019

    EBA published a report that identifies potential impediments to the cross-border provision of banking and payment services in EU. The report focuses on issues in identification of a digital activity to be regarded as a cross-border provision of services. The report also identifies issues in areas of authorizations and licensing, consumer protection and conduct of business requirements, and anti-money laundering, building on the matters highlighted in the Consumer Financial Services Action Plan of EC and the FinTech Roadmap of EBA. The report highlights possible actions for the EC and EBA. EBA also published a list of frequently asked questions on this report.

    The first important challenge is the identification of when a digital activity is to be regarded as a cross-border provision of services. The report highlights that the current EC interpretative communications do not reflect technological developments or accurately specify criteria for digital activity to be classified as cross-border. In particular, digital solutions provide new ways for institutions, including new entrant fintech firms, to reach consumers in multiple jurisdictions but competent authorities and consumers face difficulties in determining when such activities constitute cross-border business under the freedom to provide services. Although this issue is not limited to financial services, EBA highlights the need for EC to update its 1997 Communication to promote greater convergence of practices in determining when business is to be regarded as being provided cross-border under the freedom to provide services, taking particular account of technological developments. The second challenge stems from areas of EU law that are not fully harmonized or are not yet covered by EU law. In particular:

    • Authorizations. From this perspective, competent authorities lack visibility on institutions’ cross-border activities. In this regard, changes in Level 1 text could strengthen the reporting requirements of cross-border activities by institutions to home and host authorities. Development of legislative proposals to introduce at Level 1 include formulating new reporting requirements for cross-border activities by institutions to home and host competent authorities and mandating EBA to issue guidelines to promote more consistent communication, by competent authorities, of requirements imposed in host jurisdictions. EBA stands ready to enhance supervisory convergence efforts by the use of the Q&A tool, where appropriate and by further encouraging home-host dialog on the provision of services cross-border, including initiatives such as holding EBA workshops and training.
    • Conduct of business and consumer protection requirements. To facilitate and possibly enable the scaling up of services provision across the EU Single Market and to ensure an adequate and uniform level of consumer protection across the EU, further harmonization in the area of conduct of business and consumer protection requirements would be required. Development of legislative proposals to further harmonize at Level 1 include consumer-facing disclosure requirements; allocation of home or host responsibilities for the supervision of complaints handling in the context of cross-border services; and supervisory powers regarding the right of establishment and freedom to provide services cross-border.
    • Money laundering and terrorist financing. The analysis conducted identifies regulatory divergence, arising from the minimum harmonization directive, as one of the main factors impacting the cross-border operations. EBA considers that potential changes to the Level 1 text could be necessary, including potential new mandates for EBA to produce technical standards or guidelines to promote further convergence in the application of supervisory measures.

    EBA will continue to monitor the adoption of digital solutions in the context of the provision of banking and payments services and take further action as required should new issues emerge that may impede the capacity for financial institutions to provide services cross-border.

     

    Related Links

    Keywords: Europe, EU, Banking, Cross-Border Activities, Fintech Roadmap, AML/CFT, Level 1, Reporting, Supervisory Convergence, EC, EBA

    Featured Experts
    Related Articles
    News

    EBA Analyzes Impact of Unwind Mechanism of Liquidity Coverage Ratio

    EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.

    November 19, 2020 WebPage Regulatory News
    News

    ECB Outlines Views on Possible Changes to AnaCredit Rule and TLTROs

    In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.

    November 19, 2020 WebPage Regulatory News
    News

    IASB Begins First Phase of Post-Implementation Review of IFRS 9

    IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Report Examines Progress in Resolvability of Systemic Institutions

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.

    November 18, 2020 WebPage Regulatory News
    News

    EBA Benchmarks National Insolvency Frameworks Across EU

    EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Reports Assess Impact of Pandemic on Financial Stability

    FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.

    November 17, 2020 WebPage Regulatory News
    News

    RBNZ Consults on Implementation of Capital Review Changes

    RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.

    November 17, 2020 WebPage Regulatory News
    News

    IASB Announces Andreas Barckow as the New Chair from July 2021

    The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.

    November 17, 2020 WebPage Regulatory News
    News

    HKMA Consults on Capital Rules for Bank Equity Investments in Funds

    HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.

    November 17, 2020 WebPage Regulatory News
    News

    ESRB Supports Extension of Macro-Prudential Measure by Swedish FSA

    ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).

    November 17, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6153