EBA Proposes to Revise Guidelines on Internal Governance
EBA launched a consultation on revisions to the guidelines on internal governance of certain entities in EU. The guidelines will apply to competent authorities across EU as well as to credit institutions on a solo and consolidated basis. This review takes into account amendments introduced by the fifth Capital Requirements Directive (CRD5) and the Investment Firms Directive in relation to sound and effective governance arrangements of credit institutions. The consultation runs until October 31, 2020 and the amended guidelines are expected to enter into force on June 26, 2021.
The proposed guidelines clarify that identifying, managing, and mitigating money laundering and financing of terrorism risk is part of sound internal governance arrangements and risk management framework of credit institutions. The draft guidelines further specify and reinforce the framework regarding loans to members of the management body and their related parties. Such loans may constitute a specific source of actual or potential conflict of interest and, therefore, specific requirements have been explicitly included in CRD (Directive 2013/36/EU). Similarly, other transactions with members of the management body and their related parties have the potential to create conflicts of interest and, therefore, EBA is providing guidance on how to properly manage them. Finally, in line with the requirement to have a gender-neutral remuneration policy, the consultation paper contains new guidance on the code of conduct to ensure that credit institutions take all necessary measures to avoid discrimination and guarantee equal opportunities to staff of all genders.
The consultation paper indicates that the final guidelines would apply similarly to credit institutions and to investment firms that are subject to Title VII of CRD (Directive 2013/36/EU) in application of the Article 1(2) and (5) of Regulation 2019/2033/EU. The guidelines are based on an earlier set of guidelines on internal governance and add requirements that aim to foster a sound risk culture implemented by the management body, to strengthen the management body oversight of the activities of credit institutions and to strengthen the risk management frameworks of credit institutions. Additional guidelines have been provided to further increase the transparency of credit institutions’ offshore activities of credit institutions and to ensure the consideration of risks within change processes of credit institutions.
Related Links
Comment Due Date: October 31, 2020
Effective Date: June 26, 2021 (Expected)
Keywords: Europe, EU, Banking, Internal Governance, Governance, Guidelines, CRD, IFD, AML/CFT, EBA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
BOM Issues Guideline on Cross-Border Exposure of BanksRelated Articles
NGFS Updates Address Short-Term Climate Scenarios and Transition Plans
The Network for Greening the Financial System (NGFS) is exploring the development of short-term climate scenarios to complement its existing scenario framework of long-term climate scenarios.
ISSB Updates Address ESG Issues while IASB Consults on Impairments
The International Sustainability Standards Board (ISSB) is seeking feedback, until August 09, 2023, on the exposure draft that sets out the methodology proposed by ISSB to amend the Sustainability Accounting Standards Board (SASB) Standards' metrics
OSFI to Review Liquidity Adequacy Guidelines and Policy Architecture
The Office of the Superintendent of Financial Institutions (OSFI) is consulting, until June 21, 2023, on a review of the liquidity treatment provided in the Liquidity Adequacy Requirements (LAR) Guideline for wholesale funding sources with retail-like characteristics.
ESRB Publishes Report on Cryptos and DeFi; ECB Updates on Digital Euro
The European Systemic Risk Board (ESRB) published a report that outlines the systemic implications of crypto markets and proposes policy options to address the risks stemming from crypto-assets and decentralized finance or DeFi.
EU Agencies Issue Updates on DORA, ESAP, and Crowdfunding Regulation
The European Supervisory Authorities (ESAs) published a discussion paper on their joint advice to the European Commission (EC) on proposals to specify criteria for critical information and communication technology (ICT) third-party service providers
ESAs Propose ESG Disclosure on STS Securitization, Issue Other Updates
The Joint Committee of the three European Supervisory Authorities (ESAs) proposed to amend the Implementing Regulation 2016/1799 on the mapping of External Credit Assessment Institutions' (ECAIs) credit assessments.
UK Authorities Issue Updates, Finalize Policy on Model Risk Management
The Prudential Regulation Authority (PRA) finalized the model risk management principles for banks, the policy statement PS5/23 on risks from contingent leverage, and PS4/23 on moving senior managers regime forms from the PRA Rulebook.
APRA Revises Implementation Timeline for Operational Risk Standard
The Australian Prudential Regulation Authority (APRA) updated the implementation date of the new cross-industry prudential standard CPS 230 on operational risk management
BCBS Consults on Basel FAQs and Amendments, Issues Other Updates
The Basel Committee on Banking Supervision (BCBS) published a report assessing implementation of the global Basel standards on net stable funding ratio (NSFR) and large exposures (LEX) in South Africa
EBA Announces Multiple Regulatory and Reporting Updates in April 2023
The European Banking Authority (EBA) published consultations on the amendments to the guidelines on risk-based anti-money laundering and countering the financing of terrorism (AML/CFT) supervision
