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

    ECB Allows Temporary Relief in Leverage Ratio Amid COVID-19 Pandemic

    ECB published a decision allowing the euro area banks under its direct supervision to exclude certain central bank exposures from the leverage ratio.

    September 21, 2020 WebPage Regulatory News
    News

    ESAs Launch Survey on Templates for Product Disclosures Under SFDR

    ESAs launched a survey seeking feedback on the presentational aspects of product templates under the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088).

    September 21, 2020 WebPage Regulatory News
    News

    ECB Proposes Integrated Reporting Framework to Reduce Burden for Banks

    ECB published input of the European System of Central Banks (ESCB) into the EBA feasibility report on reducing the reporting burden for banks in EU.

    September 21, 2020 WebPage Regulatory News
    News

    ECB Finalizes Methodology to Assess CCR and A-CVA Risk of Banks

    ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.

    September 18, 2020 WebPage Regulatory News
    News

    EBA Provides Opinion on Definition of Credit Institution in CRR

    EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).

    September 18, 2020 WebPage Regulatory News
    News

    APRA Consults on Alignment of Daily Liquidity Report for Banks

    APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.

    September 17, 2020 WebPage Regulatory News
    News

    FED Releases Scenarios for Second Round of Stress Tests on Banks

    FED released hypothetical scenarios for a second round of stress tests for banks.

    September 17, 2020 WebPage Regulatory News
    News

    FED to Temporarily Revise FR Y-14 Reports to Conduct Stressed Analysis

    FED is proposing to temporarily revise the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes necessary to conduct stressed analysis in connection with the re-submission of capital plans, using data as of June 30, 2020.

    September 17, 2020 WebPage Regulatory News
    News

    FED Revises Information Collection Under Market Risk Capital Rule

    FED adopted a proposal to extend for three years, with revision, the information collection under the market risk capital rule (FR 4201; OMB No. 7100-0314).

    September 17, 2020 WebPage Regulatory News
    News

    EBA Seeks Input on ESG Disclosure Practices of Banks

    EBA published a voluntary online survey seeking input from credit institutions on their practices and future plans for Pillar 3 disclosures on the environmental, social, and governance (ESG) risks.

    September 17, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5809