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    EBA Issues Opinion on Implementation of Deposit Guarantee Directive

    October 30, 2019

    EBA published its second opinion on implementation of the Deposit Guarantee Schemes Directive (DGSD) in EU. The Opinion, which is addressed to EC, is focused on the payouts by deposit guarantee schemes and proposes a number of changes to the EU legal framework; the proposed changes are intended to strengthen depositor protection, improve depositor information, enhance financial stability, and reinforce operational effectiveness of deposit guarantee schemes. EBA invites EC to consider the proposals outlined in the Opinion when preparing a report on the implementation of the DGSD to be submitted to the European Parliament and the Council.

    In its Opinion, EBA assesses nine different topics related to deposit guarantee scheme payouts and sets out 30 proposals on how to improve the current EU legal framework. The proposals include changes in relation to cases where depositors have lost access to their funds but payouts have not started and cases where there are money laundering and terrorism financing (ML/TF) concerns. The Opinion also proposes improvements to the treatment of specific situations, such as the treatment of beneficiary accounts and depositors temporarily holding deposits above the coverage level or with banks headquartered in another EU member state. Based on recent real-life cases, the Opinion proposes changes to ensure that depositors are not unduly left without access to their funds when the decision that deposits have become unavailable has not (yet) been made by the authorities. The Opinion proposes that, in such instances, depositors should have access to an appropriate daily amount from their deposits.

    Similarly, EBA proposes that the EU framework could benefit from more clarity on deposit guarantee scheme payouts where there are ML/TF concerns, including the introduction of powers necessary to suspend payouts to depositors suspected of ML/TF. The Opinion also proposes how cooperation between deposit guarantee schemes and anti-money laundering authorities can be improved and highlights the importance of informing depositors in such instances. Given the complexity of such cases, EBA is of the view that further analysis is needed, both from the deposit guarantee scheme and the anti-money laundering perspective. 

    Finally, throughout the Opinion, EBA underlines the importance of enhancing depositor protection and clearly informing depositors about the most relevant features of such protection, in normal times as well as during a deposit guarantee scheme payout. In this respect, EBA proposes, for example, that depositors should be clearly informed about their rights in relation to temporary high balances and the possibility that their deposits would be set-off against their liabilities that have fallen due before their deposits had became unavailable. EBA also proposes that depositors should have sufficient time to claim their funds after a bank failure.

    Article 19(6) of DGSD requires EBA to support EC in its development of a report on the progress toward the implementation of DGSD. This Opinion is the second part of the fulfillment of this mandate by EBA. This Opinion follows the first opinion, which was published in August 2019 and covered the eligibility of deposits, coverage level, and cooperation between deposit guarantee schemes. The third and final EBA opinion on deposit guarantee scheme funding and uses of deposit guarantee scheme funds will be published in early 2020.


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    Keywords: Europe, EU, Banking, Deposit Guarantee Schemes, DGSD, EDIS, ML/TF Risk, Opinion, EC, EBA

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