This newsletter summarizes recent regulatory changes impacting Banking, Capital Markets & Insurance firms.

Current coverage period: Through December 31, 2018

CURRENT REGULATIONS:

European Banking Authority (EBA); European Securities and Markets Authority (ESMA); European Insurance and Occupational Pensions Authority (EIOPA):
Disclosure requirements for EU Securitisations and consolidated application of Securitisation Rules
Publication Date: November 30th 2018

Risks Covered: Operational Risk
Business Processes Impacted: Clearing & Settlement – Exchange Traded & OTC
A number of regulators have published a statement in response to the concern voiced by the industry relating to severe operational challenges.1

European Commission (EC):
Completing the Banking Union: Commission welcomes political agreement to further reduce risks in the EU Banking sector
Publication Date: December 4th 2018

Risks Covered: Compliance Risk
Business Processes Impacted: Business Continuity Management
The agency has announced that the European Parliament and the Council of the European Union have reached a provisional political agreement on the banking package.2

Her Majesty’s Treasury (HMT):
Credit Institutions and Insurance Undertakings Reorganisation and Winding Up (Amendment) (EU Exit) Regulations 2018

Publication Date: November 30th 2018
Risks Covered: Credit Risk
Business Processes Impacted: Business Continuity Management
The agency has published the amendments to UK legislation pertaining to the reorganization and winding up of credit institutions and insurers to be laid under the European Union (Withdrawal) Act 2018.3

Hong Kong Monetary Authority (HKMA):
Update on the Processing of Virtual Banking Applications

Publication Date: December 7th 2018
Risks Covered: Regulatory Risk
Business Processes Impacted: Business Continuity Management
The agency has announced that one-third of the virtual banking applications will be shortlisted for the next stage of assessment and the regulator aims to start granting virtual banking license(s) in the first quarter of 2019.4

Prudential Regulation Authority (PRA):
Guidelines for Completing Regulatory Reports

Publication Date: December 5th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Reporting
The agency has published an update to Supervisory Statement (SS) 34/15 containing guidelines for completing regulatory reports, adding effective dates for the following: (i) PRA101-103 instructions, effective December 5, 2018; (ii) Data items and instructions, effective January 1, 2019; and (iii) PRA110 instructions, effective July 1, 2019.5

Insurance Europe (IE):
Global Insurance industry letter on IFRS 17 follow up on IASB November Board Meeting
Publication Date: December 7th 2018
Risks Covered: Operational Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has published a follow-up letter from eleven insurance bodies containing concerns about the International Financial Reporting Standards (IFRS) 17, which relates to insurance contracts.6

Insurance Europe (IE):
Insurance Europe response to the ESA’s Joint Consultation paper concerning amendments to the PRIIPs KID
Publication Date: December 10th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Consumer/Investor Protection
The agency states that it is gravely concerned by what it considers a quick-fix approach adopted by the European Supervisory Authorities in their amendments to the Key Information Document for Packaged Retail and Insurance-based Investment Products (PRIIPs), and does not believe it will benefit consumers.7

Insurance Europe (IE):
Comments on amendments to Solvency II Delegated Regulation
Publication Date: December 11th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Reporting
The regulator has published its response to a consultation by the European Commission on its draft proposals for the 2018 review of the Solvency II Delegated Regulation.8

Swiss Financial Market Supervisory Authority (FINMA):
FinTech Licence: FINMA sets out details of Anti-Money Laundering Due Diligence requirements
Publication Date: December 10th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Data Quality Management
The agency has released the updated FINMA Anti-Money Laundering Ordinance. The changes will came into effect on January 1, 2019.9

Financial Conduct Authority (FCA):
Milestone for insurers as they come under the Senior Managers and Certification Regime
Publication Date: November 12th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Training & Development
The agency announced that the Senior Managers and Certification Regime (SM&CR) was being extended to all insurers regulated by the FCA and the Prudential Regulation Authority beginning December 10, 2018.10

International Financial Reporting Standards (IFRS):
Proposed general improvements to the IFRS Taxonomy 2018
Publication Date: December 6th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
The IFRS Foundation has published IFRS Taxonomy 2018—Proposed Update 2 General Improvements for public consultation.11

Office of the Comptroller of the Currency (OCC); Federal Reserve; Federal Deposit Insurance Corporation (FDIC):
Regulatory Capital Rule: Implementation and Transition of the Current Expected Credit Losses Methodology for Allowances and Related Adjustments to the Regulatory Capital Rule and Conforming Amendments to Other Regulations
Publication Date: December 21st 2018
Risks Covered: Credit Risk
Business Processes Impacted: Clearing & Settlement – Exchange Traded & OTC
Multiple agencies are adopting a final rule to address changes to credit loss accounting under U.S. Generally Accepted Accounting Principles (GAAP), including banking organizations’ implementation of the Current Expected Credit Losses (CECL) methodology.12

Securities and Exchange Commission (SEC):
Disclosure of Hedging by Employees, Officers and Director
Publication Date: December 20th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Data Privacy
The regulator has published final rules, to describe any practices or policies it has adopted regarding the ability of its employees (consisting of officers) or directors to purchase financial instruments, or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of equity securities granted as compensation, or held directly or indirectly by the employee or director.13

Financial Conduct Authority (FCA):
Approach to final Regulatory Technical Standards and EBA guidelines under the revised Payment Services Directive (PSD2)
Publication Date: December 19th 2018
Risks Covered: Credit Risk
Business Processes Impacted: Payments
The agency has published a policy statement (PS) concerning revisions to the second Payment Services Directive (PSD2).14

Financial Conduct Authority (FCA):
Implementation of the EU Securitisation Regulation and the amendment to the Capital Requirements Regulation (including DEPP and EG changes) – Final and near-final rules
Publication Date: December 19th 2018
Risks Covered: Regulatory Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The agency has issued a policy statement concerning the Securitisation Regulation and the amendment to the Capital Requirements Regulation (CRR Amendment). These changes took effect on January 1, 2019.15

European Banking Authority (EBA):
EBA to run its next EU-wide Stress Test in 2020
Publication Date: December 17th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Risk Management & Stress Testing
The agency is expected to carry out its next EU-wide stress test in 2020. The agency is expected to perform its regular annual transparency exercise in 2019.16

Swiss Financial Market Supervisory Authority (FINMA):
SST Survey 2018
Publication Date: December 21st 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Risk Management & Stress Testing
The agency has published a report on the Swiss Insurance Market setting out an overview of the 2018 Swiss Solvency Test (SST) survey results. The report contains five sections according to sector, namely life, health, general insurance, reinsurance and reinsurance captive.17

European Insurance and Occupational Pensions Authority (EIOPA):
Digital Technologies in Insurance and Pensions continue to grow alongside Cross-selling Practices and the sale of Add-on Insurance
Publication Date: December 20th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has published its 7th Consumer Trends Report, which outlines the key developments for the pensions and insurance sectors that impact consumers in Europe.18

International Association of Insurance Supervisors (IAIS):
IAIS Publishes Public Consultation Document on Holistic Framework for Systemic Risk in the Insurance Sector
Publication Date: November 14th  2018
Risks Covered: Compliance Risk
Business Processes Impacted: Data Quality Management
The agency published a press release on a public consultation document concerning a proposed Holistic Framework for Systemic Risk in the Insurance Sector.20

Department of the Treasury (U.S.):
Joint Statement on Signing the Bilateral Agreement on Prudential Measures Regarding Insurance and Reinsurance
Publication Date: December 19th 2018
Risks Covered: Strategic Risk
Business Processes Impacted: Business Continuity Management
The agency has stated that the United States (U.S.) and the United Kingdom (UK) signed the Bilateral Agreement on Prudential Measures Regarding Insurance and Reinsurance (U.S.-UK Covered Agreement). This is an important step in providing regulatory certainty and market continuity as the United Kingdom prepares to leave the European Union.21

FORTHCOMING REGULATIONS:

Commodity Futures Trading Commission (CFTC)
CFTC Seeks Public Comments on Crypto-asset Mechanics and Markets

The agency is seeking public comment and feedback in order to better inform the CFTC’s understanding of the technology, mechanics, and markets for virtual currencies beyond Bitcoin, namely Ether and its use on the Ethereum Network.22

The Board Of Governors Of The Federal Reserve System (The Fed)
SR 18-10: Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing

The Division of Supervision and Regulation of the Board of Governors of the Federal Reserve System has issued a letter to banks supervised by the Federal Reserve encouraging banks to consider, evaluate and, where appropriate, responsibly implement innovative approaches to meet their Bank Secrecy Act/anti-money laundering compliance obligations.23

Department of the Treasury (U.S.)
Treasury, USTR Finalize Bilateral Agreement With the UK on Prudential Measures Regarding Insurance and Reinsurance

The agency has announced its intent to sign the Bilateral Agreement between the USA and the UK on Prudential Measures Regarding Insurance and Reinsurance (U.S.-UK Covered Agreement).24

European Financial Reporting Advisory Group (EFRAG)
EFRAG board meeting December 2018

The agency has announced that it will hold its EFRAG Board meeting on IFRS 17, goodwill and impairment.25

Hong Kong Monetary Authority (HKMA)
Supervision for Bank Culture

The agency has issued a circular to prescribe the supervisory measures for bank culture which includes requiring Authorized Institutions (AIs) to review and report their governance arrangements as well as policies and procedures in relation to corporate culture; conducting focus reviews; and undertaking culture dialogues.26

Office of the Comptroller of the Currency (OCC)
Amendments to the Stress Testing Rules for National Banks and Federal Savings Associations

The agency is requesting comment on a proposed rule that would amend the OCC’s company-run stress testing requirements for national banks and federal savings associations, consistent with section 401 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).27

European Insurance and Occupational Pensions Authority (EIOPA)
EIOPA calls for input on Solvency II reporting and disclosure requirements
The agency has launched a call for input with regard to Solvency II reporting and disclosure requirements.28

Danish Financial Supervisory Authority (Finanstilsynet)
Consultation on the proposed amendments to the Money Laundering Act and the Financial Business Act

The agency has published a consultation concerning amendments to the Money Laundering Act and the Financial Business Act.29

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

References:

  1. “Disclosure requirements for EU securitisations and consolidated application of securitization rules for EU credit institutions,” European Banking Authority; European Securities and Markets Authority; European Insurance and Occupational Pensions Authority, November 30, 2018. Access at: Disclosure requirements for EU Securitisations and consolidated application of Securitisation Rules.
  2. “Completing the Banking Union: Commission welcomes political agreement to further reduce risks in the EU banking sector,” European Commission, December 4, 2018. Access at: Completing the Banking Union: Commission welcomes political agreement to further reduce risks in the EU Banking sector.
  3. “Credit Institutions and Insurance Undertakings Reorganisation and Winding Up (Amendment) (EU Exit) Regulations 2018,” HM Treasury, November 30, 2018. Access at: Credit Institutions and Insurance Undertakings Reorganisation and Winding Up (Amendment) (EU Exit) Regulations 2018.
  4. “Update on the Processing of Virtual Banking Applications,” Hong Kong Monetary Authority, Press release, December 7, 2018. Access at: Update on the Processing of Virtual Banking Applications.
  5. “Guidelines for completing regulatory reports,” Prudential Regulation Authority, December 5, 2018. Access at: Guidelines for Completing Regulatory Reports.
  6. “Global insurance industry letter on IFRS 17 follow up on IASB November board meeting,” Insurance Europe, December 7, 2018. Access at: Global Insurance industry letter on IFRS 17 follow up on IASB November Board Meeting.
  7. “Insurance Europe response to the ESA’s joint consultation paper concerning amendments to the PRIIPs KID,” Insurance Europe, Position paper, December 10, 2018. Access at: Insurance Europe response to the ESA’s Joint Consultation paper concerning amendments to the PRIIPs KID.
  8. “Insurance Europe comments on amendments to Solvency II Delegated Regulation,” Insurance Europe, Position paper, December 11, 2018. Access at: Comments on amendments to Solvency II Delegated Regulation.
  9. “FinTech licence: FINMA sets out details of anti-money laundering due diligence requirements,” Swiss Financial Market Supervisory Authority, Press release, December 10, 2018. Access at: FinTech Licence: FINMA sets out details of Anti-Money Laundering Due Diligence requirements.
  10. “Milestone for insurers as they come under the Senior Managers and Certification Regime,” Financial Conduct Authority, November 12, 2018. Access at: Milestone for insurers as they come under the Senior Managers and Certification Regime.
  11. “Proposed general improvements to the IFRS Taxonomy 2018,” International Financial Reporting Standards, December 6, 2018. Access at: Proposed general improvements to the IFRS Taxonomy 2018.
  12. “Regulatory Capital Rule: Implementation and Transition of the Current Expected Credit Losses Methodology for Allowances and Related Adjustments to the Regulatory Capital Rule and Conforming Amendments to Other Regulations,” Office of the Comptroller of the Currency; Federal Reserve System; Federal Deposit Insurance Corporation, Final rule, December 21, 2018. Access at: Regulatory Capital Rule: Implementation and Transition of the Current Expected Credit Losses Methodology for Allowances and Related Adjustments to the Regulatory Capital Rule and Conforming Amendments to Other Regulations.
  13. “Disclosure of Hedging by Employees, Officers and Directors,” Securities and Exchange Commission, Final rule, December 20, 2018. Access at: Disclosure of Hedging by Employees, Officers and Director.
  14. “Approach to final Regulatory Technical Standards and EBA guidelines under the revised Payment Services Directive (PSD2),” Financial Conduct Authority, Policy Statement PS18/24, December 19, 2018. Access at: Approach to final Regulatory Technical Standards and EBA guidelines under the revised Payment Services Directive (PSD2).
  15. “Implementation of the EU Securitisation Regulation and the amendment to the Capital Requirements Regulation (including DEPP and EG changes) – Final and near-final rules,” Financial Conduct Authority, Policy statement PS18/25, December 19, 2018. Access at: Implementation of the EU Securitisation Regulation and the amendment to the Capital Requirements Regulation (including DEPP and EG changes) – Final and near-final rules.
  16. “EBA to run its next EU-wide stress test in 2020,” European Banking Authority, December 17, 2018. Access at: EBA to run its next EU-wide Stress Test in 2020.
  17. “SST 2018 Survey – FINMA Report on the Swiss Insurance Market,” Swiss Financial Market Supervisory Authority, December 21, 2018. Access at: SST Survey 2018.
  18. “Digital Technologies in Insurance and Pensions Continue to Grow Alongside Cross-Selling Practices and the Sale of Add-On Insurance,” European Insurance and Occupational Pensions Authority, Press release, December 20, 2018. Access at: Digital Technologies in Insurance and Pensions continue to grow alongside Cross-selling Practices and the sale of Add-on Insurance.
  19. “Insurance (General Provisions and Exemptions for Special Purpose Reinsurance Vehicles) Regulations 2018 – Arrangement of Regulations, Part 1, Preliminary,” Monetary Authority of Singapore, Insurance Act, December 19, 2018. Access at: Insurance (General Provisions and Exemptions for Special Purpose Reinsurance Vehicles) Regulations 2018.
  20. “IAIS Publishes Public Consultation Document on a Holistic Framework for Systemic Risk in the Insurance Sector,” International Association of Insurance Supervisors, Press release, November 14, 2018. Access at: IAIS Publishes Public Consultation Document on Holistic Framework for Systemic Risk in the Insurance Sector.
  21. “Joint Statement on Signing the Bilateral Agreement on Prudential Measures Regarding Insurance and Reinsurance,” U.S. Department of the Treasury, December 19, 2018. Access at: Joint Statement on Signing the Bilateral Agreement on Prudential Measures Regarding Insurance and Reinsurance.
  22. “CFTC Seeks Public Comments on Crypto-asset Mechanics and Markets,” U.S. Commodity Futures Trading Commission, Release Number 7855-18, December 11, 2018. Access at: CFTC Seeks Public Comments on Crypto-asset Mechanics and Markets.
  23. “SR 18-10: Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing,” The Board of Governors of the Federal Reserve System, Supervision and regulation letters, December 3, 2018. Access at: SR 18-10: Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing.
  24. “Treasury, USTR Finalize Bilateral Agreement With the UK on Prudential Measures Regarding Insurance and Reinsurance,” U.S. Department of the Treasury, Press releases, December 11, 2018. Access at: Treasury, USTR Finalize Bilateral Agreement With the UK on Prudential Measures Regarding Insurance and Reinsurance.
  25. “13/12/2018 – EFRAG Board Meeting December 2018,” European Financial Reporting Advisory Group, December 13, 2018. Access at: EFRAG board meeting December 2018.
  26. “Supervision for Bank Culture,” Hong Kong Monetary Authority, December 19, 2018. Access at: Supervision for Bank Culture.
  27. “Amendments to the Stress Testing Rules for National Banks and Federal Savings Associations,” Office of the Comptroller of the Currency, December 18, 2018. Access at: Amendments to the Stress Testing Rules for National Banks and Federal Savings Associations.
  28. “EIOPA calls for input on Solvency II reporting and disclosure requirements,” European Insurance and Occupational Pensions Authority, December 19, 2018. Access at: EIOPA calls for input on Solvency II reporting and disclosure requirements.
  29. Amendments to the Money Laundering Act and the Financial Business Act, Danish Financial Supervisory Authority (Finanstilsynet), December 17, 2018. Access at: Consultation on the proposed amendments to the Money Laundering Act and the Financial Business Act.

 

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 and 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 425,000 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

Copyright © 2019 Accenture. All rights reserved.

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.

Submit a Comment

Your email address will not be published. Required fields are marked *