Edition Highlights:

  • The Financial Conduct Authority has issued final guidance on the Treatment of Politically Exposed Persons for Anti-Money Laundering purposes.
  • The Financial Industry Regulatory Authority has published Part II of a three-part series on Common Cybersecurity Program deficiencies.
  • The Prudential Regulation Authority has issued an update on Supervisory Statement for Completing Regulatory Reports.
  • The European Insurance and Occupational Pensions Authority has published consultation on its first set of advice to the European Commission on specific items in the Solvency II Delegated Regulation.
  • Insurance Europe has issued a joint letter to express concerns over the stakeholder consultation for Article 29 of Working Party data protection guidelines.

 

Current coverage period: Through July 31, 2017

Note: Anticipated business impact for covered regulations is shown using the following rating legend:       (*Low) (** Medium) (*** High)

 

Financial Industry Regulatory Authority (FINRA) (***):
Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Update Rule Cross References and Make Non-Substantive Technical Changes to FINRA Rules
Publication Date: July 13th 2017

Risks Covered: Operational Risk, Compliance Risk

Business Processes Impacted: Business Continuity Management, Reporting

The agency has filed for immediate effectiveness the FINRA’s proposal to update the cross reference in FINRA Rule 6730(a)(1) to clarify that Reportable Trade Reporting and Compliance Engine (TRACE) Transactions in US Treasury Securities are not subject to the 15-minute reporting requirement, and technical changes to FINRA Rule 6810 (definitions) reflecting FINRA Manual style convention changes.1

Federal Deposit Insurance Corporation (FDIC) (**):
Recordkeeping Requirements for Qualified Financial Contracts
Publication Date: July 18th 2017

Risks Covered: Operational Risk, Strategic Risk

Business Processes Impacted: Business Continuity Management, Reporting
The agency is amending its regulations regarding Recordkeeping Requirements for Qualified Financial Contracts (Part 371), which require Insured Depository Institutions (IDI) in a troubled condition to keep records relating to Qualified Financial Contracts (QFC) to which they are party.2

Financial Conduct Authority (FCA) (**):
FG17/6: The Treatment of Politically Exposed Persons for Anti-Money Laundering purposes
Publication Date: July 6th, 2017

Risks Covered: Compliance Risk, Liquidity Risk

Business Processes Impacted: Fraud & Financial Crime
The FCA has published final guidance with regard to politically exposed persons (PEPs) under section 333U of the Financial Services and Markets Act 2000.3

Financial Stability Board (FSB) (**):

Guiding Principles on the Internal Total Loss-Absorbing Capacity of G-SIBs (‘Internal TLAC’)

Publication Date: July 6th 2017
Risks Covered: Operational Risk

Business Processes Impacted: Capital Adequacy & Capital Planning

The agency has published guiding principles on the Internal Total Loss-Absorbing Capacity of global systemically important banks (G-SIBs) (‘Internal TLAC’).4

Financial Industry Regulatory Authority (FINRA) (***):
Cybersecurity – Part II
Publication Date: July 17th 2017

Risks Covered: Cyber Security Risk

Business Processes Impacted: Reporting, Data Privacy
The FINRA has released the second part of a three-part series on common cybersecurity program deficiencies.5

Australian Prudential Regulation Authority (APRA) (*):
Strengthening Banking System Resilience – Establishing Unquestionably Strong Capital Ratios
Publication Date: July 19th 2017
Risks Covered: Operational Risk, Strategic Risk

Business Processes Impacted: Capital Adequacy & Capital Planning
The APRA has released an information paper titled, “Strengthening banking system resilience – establishing unquestionably strong capital ratios,” and which sets out APRA’s conclusions with respect to the quantum of additional capital that might reasonably be expected to be required for the Australian banking sector to have capital ratios that are considered strong.6

Prudential Regulation Authority (PRA) (***):
Guidelines for Completing Regulatory Reports – SS34/15 UPDATED
Publication Date: July 20th 2017
Risks Covered: Operational Risk, Business Cycle Risk

Business Processes Impacted: Reporting, Data Privacy, Data Quality Management
The PRA has published an update to its Supervisory Statement (SS34/15) following the publication of its policy statement PS18/17. SS34/15 sets out the following effective dates: PRA101-103 effective from 1 October 2017 and PRA104-108 is effective from 1 January 2018.7

Bank of England (BOE) (***):
Bank of England Settlement Accounts
Publication Date: July 19th 2017
Risks Covered: Compliance Risk, Cyber Security Risk

Business Processes Impacted: Fraud and Financial Crime, Payments
The bank has issued a Policy Statement confirming the Bank’s policy for providing settlement services to payment systems, for providing settlement accounts in sterling in the Bank’s Real Time Gross Settlement (RTGS) system and for granting access to intraday liquidity.8

The Board of Governors of The Federal Reserve System (The Fed) (**):
Procedures for a Banking Entity to Request an Extension of the One-Year
Publication Date: July 24th 2017
Risks Covered: Conduct Risk, Operational Risk
Business Processes Impacted: Funding & Liquidity Management
The Federal Reserve is issuing a letter to provide state member banks with information on the procedures for submitting an application for an extension of the one-year seeding period for a hedge fund or private equity fund.9

Financial Conduct Authority (FCA) (***):
CASS 7A and the Special Administration Regime review – Feedback to CP17/2 and final rules
Publication Date: July 25th 2017
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal and Compliance
The FCA has published a policy statement summarizing feedback received to a Consultation Paper (CP17/2) which outlines proposed changes aiming to speed up the distribution of client assets, improve consumer outcomes and reduce the market impact of an investment firm failure.10

European Insurance and Occupational Pensions Authority (EIOPA) (**):
Consultation Paper on EIOPA’s first set of advice to the European Commission on specific items in the Solvency II Delegated Regulation
Publication Date: July 4th 2017
Risks Covered: Compliance Risk
Business Processes Impacted: Risk Management & Stress Testing
The EIOPA has published a consultation on its first set of advice to the European Commission on specific items in the Solvency II Delegated Regulation.11

Insurance Europe (IE)(**):
Comments on EIOPA Consultation on 2.2.0 Public Working Draft release of the EIOPA Solvency II DPM and XBRL taxonomy
Publication Date: July 4th 2017
Risks Covered: Conduct Risk, Compliance Risk
Business Processes Impacted: Audit, Legal and Compliance, Reporting
Insurance Europe’s comments stress that EIOPA should ensure that changes to currently used taxonomy are published on time and that unexpected changes to the taxonomy scope should be avoided, in addition to further clarifying the reporting format for disclosure Quantitative Reporting Templates (QRTs).12

Monetary Authority of Singapore (MAS) (***):
Guidance on Insurers’ Own Risk and Solvency Assessments
Publication Date: July 19th 2017
Risks Covered: Compliance Risk
Business Processes Impacted: Business Continuity Management, Reporting
The MAS has published an information paper titled “Guidance On Insurers’ Own Risk and Solvency Assessments.” (ORSA). The information paper covers the MAS’ key observations from a focused review of ORSA reports submitted by direct life, general, composite insurers, and reinsurers. It also includes detailed observations from MAS’ review, sound practices for performing ORSA, and questions to guide board level deliberations when considering the ORSA.13

Insurance Europe (IE) (***):
Big Data Analytics: An insurance (r)evolution
Publication Date: July 27th 2017
Risks Covered: Cyber Security Risk, Residual Risk
Business Processes Impacted: Capital Adequacy & Capital Planning, Data Quality Management
Insurance Europe has published an insight briefing on the use of big data analytics and predictive modeling which allow insurers to cover new risks, to offer products better tailored to consumers’ needs and to provide better loss prevention advice.14

Insurance Europe (IE) (**):
Joint letter to express concerns about the Stakeholder Consultation for Article 29 Working Party Data Protection Guidelines
Publication Date: July 13th 2017
Risks Covered: Compliance Risk, Operational Risk
Business Processes Impacted: Data Quality Management, Reporting
The 10 EU trade associations (including Insurance Europe) expressed their concerns about the short stakeholder consultations during the development of guidelines under the EU General Data Protection Regulation (GDPR).15

FORTHCOMING REGULATIONS:

Consumer Financial Protection Bureau (CFPB)
Amendments to Federal Mortgage Disclosure Requirements under the Truth in Lending Act (Regulation Z)
The CFPB is proposing to amend Federal mortgage disclosure requirements under the Real Estate Settlement Procedures Act and the Truth in Lending Act that are implemented in Regulation Z.16

Financial Conduct Authority (FCA)
Markets in Financial Instruments Directive II Implementation – Policy Statement II
The FCA has released a policy statement which sets out final rules on the conduct of business, client assets and final rules and guidance on other matters.17

Prudential Regulation Authority (PRA)
Responses to CP2/17 ‘Occasional Consultation Paper’
The PRA published Policy Statement PS19/17, which contains the PRA’s feedback to responses on its Occasional Consultation Paper CP2/17. The PRA received three responses in relation to CP2/17 Chapters: 2 Credit risk mitigation “secured guarantees,” Remuneration committees and deferral periods, and Ring-fencing residual reporting requirements for ring-fenced bodies.18

International Association of Insurance Supervisors (IAIS)
IAIS Releases ICS Version 1.0 for Extended Field Testing
The IAIS has announced the release of Insurance Capital Standard (ICS) Version 1.0 for extended field testing which represents an important step towards the development of ICS Version 2.0 by late-2019.19

International Financial Reporting Standards (IFRS)
IFRS 17 Measurement essentials
The IASB has published webcast and associated slides regarding the future implementation of IFRS 17 concerning the essentials of the new measurement model for insurance contracts and what it means for investors in the insurance industry.20

 

Visit www.accenture.com/RegulatoryCompliance for latest insights on regulatory remediation and compliance transformation.

 

References:

1.  “Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Update Rule Cross-References and Make Non-Substantive Technical Changes to FINRA Rules, Financial Industry Regulatory Authority, July 13, 2017. Access at: Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Update Rule Cross References and Make Non-Substantive Technical Changes to FINRA Rules.

2.  “Recordkeeping Requirements for Qualified Financial Contracts,” Federal Deposit Insurance Corporation, July 18, 2017. Access at: Recordkeeping Requirements for Qualified Financial Contracts.

3.  “FG17/6: The treatment of politically exposed persons for anti-money laundering purposes,” Financial Conduct Authority, July 6, 2017. Access at: FG17/6: The Treatment of Politically Exposed Persons for Anti-Money Laundering purposes.

4.  “Guiding Principles on the Internal Total Loss-Absorbing Capacity of G-SIBs (‘Internal TLAC’),” Financial Stability Board, July 6, 2017. Access at: Guiding Principles on the Internal Total Loss-Absorbing Capacity of G-SIBs (‘Internal TLAC’) .

5.  “Cybersecurity – Part II,” Financial Industry Regulatory Authority, July 17, 2017. Access at:  Cybersecurity – Part II.

6.  “Strengthening banking system resilience – establishing unquestionably strong capital ratios,” Australian Prudential Regulation Authority, July 19, 2017. Access at: Strengthening Banking System Resilience – Establishing Unquestionably Strong Capital Ratios.

7.  “Guidelines for completing regulatory reports,” Prudential Regulation Authority, July 20, 2017. Access at: Guidelines for Completing Regulatory Reports – SS34/15 UPDATED.

8.  “Bank of England Settlement Accounts,” Bank of England, July 19, 2017. Access at: Bank of England Settlement Accounts.

9.  “Procedures for a Banking Entity to Request an Extension of the One-Year Seeding Period for a Covered Fund,” The Board of Governors of The Federal Reserve System, July 24, 2017. Access at: Procedures for a Banking Entity to Request an Extension of the One-Year.

10. “CASS 7A & the Special Administration Regime Review, Feedback to CP 17/2 and final rules,” Financial Conduct Authority, July 25, 2017. Access at: CASS 7A and the Special Administration Regime review – Feedback to CP17/2 and final rules.

11. “Consultation Paper on EIOPA’s first set of advice to the European Commission on specific items in the Solvency II Delegated Regulation,” European Insurance and Occupational Pensions Authority, July 4, 2017. Access at: Consultation Paper on EIOPA’s first set of advice to the European Commission on specific items in the Solvency II Delegated Regulation.

12. “Comments on EIOPA consultation on 2.2.0 Public Working Draft release of the EIOPA Solvency II DPM and XBRL taxonomy,” Insurance Europe, July 4, 2017. Access at: Comments on EIOPA Consultation on 2.2.0 Public Working Draft release of the EIOPA Solvency II DPM and XBRL taxonomy.

13. “Guidance on Insurers’ Own Risk and Solvency Assessments,” Monetary Authority of Singapore, July 19, 2017. Access at: Guidance on Insurers’ Own Risk and Solvency Assessments.

14. “Big data analytics: An insurance (r)evolution,” Insurance Europe, July 27, 2017. Access at: Big Data Analytics: An insurance (r)evolution.

15. “Joint letter to express concerns about the stakeholder consultation for Article 29 Working Party data protection guidelines,” Insurance Europe, July 13, 2017. Access at: Joint letter to express concerns about the Stakeholder Consultation for Article 29 Working Party Data Protection Guidelines.

16. “Amendments to Federal Mortgage Disclosure Requirements under the Truth in Lending Act (Regulation Z),” Consumer Financial Protection Bureau, July 6, 2017. Access at: Amendments to Federal Mortgage Disclosure Requirements under the Truth in Lending Act (Regulation Z).

17. “Markets in Financial Instruments Directive II Implementation – Policy Statement II,” Financial Conduct Authority, July 1, 2017. Access at: Markets in Financial Instruments Directive II Implementation – Policy Statement II.

18. “Responses to CP2/17 ‘Occasional Consultation Paper’,” Prudential Regulation Authority, July 1, 2017. Access at: Responses to CP2/17 ‘Occasional Consultation Paper’.

19. “IAIS Releases ICS Version 1.0 for Extended Field Testing – IAIS Attention turns to ICS Version 2.0,” International Association of Insurance Supervisors, July 21, 2017. Access at: IAIS Releases ICS Version 1.0 for Extended Field Testing.

20. “IFRS 17, Insurance Contracts, Measurement essential Part 1 and 2,” International Financial Reporting Standards, July 30, 2017. Access at: IFRS 17 Measurement essentials.

 

About the Monthly Regulatory Tracker

The “Regulatory Reform” newsletter is the monthly initiative aimed at updating the Finance & Risk community with the most recent regulatory changes impacting Banking, Capital Markets & Insurance firms. We track more than 70 regulatory & industry bodies covering North America, Europe and Asia-Pacific. Every month, we will highlight approximately 20 regulations shortlisted on the basis of geography of coverage and anticipated business impacts. Our summaries will highlight the risks covered and business processes affected by the regulatory reforms.

 

Disclaimer

This blog is intended for general informational purposes only, does not take into account the reader’s specific circumstances, may not reflect the most current developments, and is not intended to provide advice on specific circumstances. Accenture disclaims, to the fullest extent permitted by applicable law, all liability for the accuracy and completeness of the information in this blog and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professional.

 

About Accenture:

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 373,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Its home page is www.accenture.com.

 

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Accenture, its logo, and High Performance Delivered are trademarks of Accenture. This document is produced by Accenture as general information on the subject. It is not intended to provide advice on your specific circumstances.

 

 

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