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

Current coverage period: Through January 31, 2019

CURRENT REGULATIONS:

Australian Prudential Regulation Authority (APRA):
Prudential Standard APS 910 Financial Claims Scheme (APS 910) Requirements And Operational Preparedness
Publication Date: January 10th 2019

Risks Covered: Operational Risk

Business Processes Impacted: Fraud and Financial Crime

The agency has requested that authorized deposit-taking institutions (ADIs) should carry out self-assessment against the themes and observations prescribed and prepare a detailed action plan to strengthen their Financial Claims Scheme (FCS) operational preparedness by May 31, 2019.1

Financial Conduct Authority (FCA):

Securitisation Regulation Implementation (Fees for Third Party Verifiers) Instrument 2019
Publication Date: January 3rd 2019

Risks Covered: Third Party Risk / Vendor Risk

Business Processes Impacted: Data Privacy
The regulator’s Securitisation Regulation Implementation (Fees for Third-Party Verifiers) Instrument 2019, amends the Glossary of definitions and the Fees manual of the FCA Handbook. The Instrument entered into force on January 3, 2019.2

Financial Industry Regulatory Authority (FINRA):
New OTC Threshold List Data Download and API Guidelines (Effective January 14, 2019)

Publication Date: January 8th 2019
Risks Covered: Compliance Risk

Business Processes Impacted: Data Privacy
The agency has implemented improved interfaces to retrieve data and has established naming conventions that follow industry standards. This change should promote consistency in column names, both in the file download feature and API access. This change came into effect on January 14, 2019.3

Monetary Authority of Singapore (MAS):
Prevention of Money Laundering and Countering the Financing of Terrorism – Holders of Money-Changer’s Licence and Remittance Licence

Publication Date: January 9th 2019
Risks Covered: Regulatory Risk

Business Processes Impacted: Fraud and Financial Crime
The agency issued the updated “MAS Notice 3001” (Prevention of Money Laundering and Countering the Financing of Terrorism – Holders of Money-Changer’s Licence and Remittance Licence). Effective January 10, 2019, with the exception of paragraph 8A relating to the foreign currency exchange transactions which takes effect on April 8, 2019.4

Prudential Regulation Authority (PRA):
Application of the Senior Managers and Certification Regime to firms in the temporary permissions regime: clarification of the PRA’s and FCA’s proposals

Publication Date: January 7th 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Training & Development
The agency has published a note clarifying its proposals for applying the Senior Managers and Certification Regime (SM&CR) to firms in the temporary permissions regime (TPR) as outlined in paragraphs 7.8 to 7.12 of Consultation Paper (CP) 26/18 “UK withdrawal from the EU: Changes to PRA Rulebook and onshored Binding Technical Standard.”5

BaFin (German Federal Financial Supervisory Authority):
Information sheet on the specialised procedure – PRIIPs Regulation
Publication Date: January 7th 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Business Continuity Management
The agency has published an information sheet outlining how entities can submit data requested by BaFin in accordance with the Packaged Retail and Insurance-based Investment Products Regulation (PRIIPs Regulation) via the MVP portal.6

International Financial Reporting Standards (IFRS):
New Standard on Leases now Effective
Publication Date: January 8th 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Reporting
The IFRS 16 Leases was issued in January 2016 and is effective for annual reporting periods starting on or after January 1, 2019. It replaces International Accounting Standards (IAS) 17 Leases and related Interpretations.7

Insurance Europe (IE):
Europe’s largest reinsurers explain the supervisory benefits of using internal models
Publication Date: January 9th 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Reporting
The Insurance Europe Reinsurance Advisory Board (RAB) has published “Internal models: a reinsurance perspective,” an overview of the benefits pertaining to the use of internal models.8

International Association of Insurance Supervisors (IAIS):
Public Consultation: Holistic Framework for Systemic Risk in the Insurance Sector
Publication Date: January 8th 2019
Risks Covered: Systemic Risk
Business Processes Impacted: Business Continuity Management
The agency has requested feedback on its draft holistic framework to assess and mitigate systemic risk in the insurance sector. Comments were to be submitted by January 25, 2019.9

European Banking Authority (EBA); European Securities and Markets Authority (ESMA); European Insurance and Occupational Pensions Authority (EIOPA):
ESAs announce Multilateral Agreement on the exchange of information between the ECB and AML/CFT Competent Authorities
Publication Date: January 15th 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Business Continuity Management
This agreement is aimed at defining the practical conditions for the exchange of information between the European Central Bank and the Competent Authorities, where such information is necessary for both parties to complete the relevant tasks.10

European Central Bank (ECB):
ECB publishes single Code of Conduct for high-level officials
Publication Date: January 16th 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Data Privacy
The agency published a single Code of Conduct for all European Central Bank (ECB) decision-makers and high-level officials, effective January 1, 2019. It is part of the ECB’s efforts to further bolster and improve its good governance and integrity frameworks.11

Financial Conduct Authority (FCA):
Conduct of Business Sourcebook (Retirement Outcomes Review) Instrument 2019
Publication Date: January 28th 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Data Privacy
The agency has published the Conduct of Business Sourcebook (Retirement Outcomes Review) Instrument 2019, which makes amendments to the FCA’s Glossary and Conduct of Business Sourcebook (COBS). The amendments go into effect November 1, 2019, except for Part 2 of Annex B, which takes effect on April 6, 2020.12

Indonesian Financial Services Authority (OJK):
New Basel III Market Risk Calculation
Publication Date: January 15th 2019
Risks Covered: Regulatory Risk
Business Processes Impacted: Pricing & Valuation
The agency issued a press release about the revised minimum capital requirements for market risks which further refines requirements on including clear barriers between trading books and banking books and a more risk-sensitive calculation approach.13

Office of the Comptroller of the Currency (OCC):
Expanded Examination Cycle Eligibility: Final Rule
Publication Date: January 17th 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Training & Development
The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation published an inter-agency final rule that was adopted without change on August 29, 2018, with the interim final rule amending the regulations governing eligibility for the 18-month on-site examination cycle.14

Monetary Authority of Singapore (MAS):
FATF Guidance for a Risk-Based Approach for the Life Insurance Sector
Publication Date: January 18th 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Reporting
The agency has announced that the Financial Action Task Force (FATF) issued the “Guidance for a Risk-Based Approach for the Life Insurance Sector.” The Guidance supports the implementation of risk-based approaches and provides examples of indicators of suspicious activities in the life insurance sector.15

Prudential Regulation Authority (PRA):
Regulatory transactions: Changes to notification and application forms
Publication Date: January 17th 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Reporting
The agency has issued a policy statement providing the final rules and forms to its Consultation Paper (CP) 21/18 “Regulatory transactions: Changes to notification and application forms.” The final rules and accompanying forms went into effect on January 19, 2019.16

Swiss Financial Market Supervisory Authority (FINMA):
Fact Sheet: Virtual Currencies (Updated)
Publication Date: January 1st 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Data Quality Management
The agency has published an updated version of its fact sheet on virtual currencies. This document discusses the possible risks associated with the purchase and use of virtual currencies, namely uncertainties concerning the currency issuer, price fluctuations virtual currencies are exposed to, and the risks of money laundering and terrorism financing.17

FORTHCOMING REGULATIONS:

Japan Financial Services Agency (JFSA)
Partial Revision (Draft) of the Notification on Capital Adequacy Ratio Regulation (First Pillar / Third Pillar)

The agency has announced the partial revision (draft) of the notification on Capital Adequacy Ratio Regulation (First Pillar/Third Pillar). Comments and opinions on this proposal were to be received by February 8, 2019.18

European Commission (EC)
Commission delegated regulation amending Delegated Regulation (EU) 2017/565 as regards the integration of Environmental, Social and Governance (ESG) considerations and preferences into the investment advice and portfolio management

The agency has published draft amendments to the integration of Environmental, Social and Governance (ESG) considerations, as well as the preferences regarding investment advice and portfolio management.19

Prudential Regulation Authority (PRA)
Credit Risk Mitigation: Eligibility of Financial Collateral

The agency has published a consultation paper setting out the proposed changes to Supervisory Statement (SS) 17/13 “Credit risk mitigation.” The document clarifies the PRA’s expectations in respect to the eligibility of financial collateral as funded credit protection under Part Three, Title II, Chapter 4 (Credit risk mitigation) of the Capital Requirements Regulation (575/2013) (CRR).20

European Commission (EC)
Evaluation of the Consumer Credit Directive

The agency issued a staff working document to evaluate the Consumer Credit Directive. The aim of this evaluation is to assess the effectiveness, efficiency, coherence, relevance and added value of the Consumer Credit Directive.21

Hong Kong Monetary Authority (HKMA)
FRTB: Revised Market Risk Standards

The amendments include clarifying the assignment of certain instruments between the banking book and trading book; enhancing risk sensitivity and re-calibrating risk weights; revising the tests used to assess model eligibility and clarifying the process to identify risk factors that are eligible for internal modeling; and introducing a simplified and standardized approach that can be used by banks with small/non-complex trading book portfolios.22

International Financial Reporting Standards (IFRS)
Comment on the proposed general improvements to the IFRS Taxonomy 2018 by Monday 4 February
In December 2018, the IFRS Foundation published IFRS Taxonomy 2018—Proposed Update 2 General Improvements for public consultation. The proposed changes aim to improve the quality of tagged data and to make the IFRS Taxonomy easier to use.23

Insurance Europe (IE)
Comments on the EDPB guidelines on the GDPR Territorial Scope

The agency has issued a position paper commenting on the European Data Protection Board (EDPB) draft guidelines pertaining to the territorial scope of the General Data Protection Regulation (GDPR).24

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

 

References:

  1. “Prudential Standard APS 910 Financial Claims Scheme (APS 910) Requirements and Operational Preparedness,” Australian Prudential Regulation Authority, January 10, 2019. Access at: Prudential Standard APS 910 Financial Claims Scheme (APS 910) Requirements And Operational Preparedness.
  2. “Securitisation Regulation Implementation (Fees for Third Party Verifiers) Instrument 2019,” Financial Conduct Authority, January 3, 2019. Access at: Securitisation Regulation Implementation (Fees for Third Party Verifiers) Instrument 2019.
  3. “New OTC Threshold List Data Download and API Guidelines (Effective January 14, 2019),” Financial Industry Regulatory Authority, January 8, 2019. Access at: New OTC Threshold List Data Download and API Guidelines (Effective January 14, 2019).
  4. “MAS Notice 3001 (Amendment) 2019,” Monetary Authority of Singapore, January 9, 2019. Access at: Prevention of Money Laundering and Countering the Financing of Terrorism – Holders of Money-Changer’s Licence and Remittance Licence.
  5. “Application of the Senior Managers and Certification Regime to firms in the temporary permissions regime: clarification of the PRA’s and FCA’s proposals,” Prudential Regulation Authority, January 7, 2019. Access at: Application of the Senior Managers and Certification Regime to firms in the temporary permissions regime: clarification of the PRA’s and FCA’s proposals.
  6. Update on PRIIPs Regulation, BaFin (German Federal Financial Supervisory Authority), January 7, 2019. Access at: Information Sheet on the Specialised Procedure – PRIIPs Regulation
  7. “New Standard on leases now effective,” International Financial Reporting Standards, January 8, 2019. Access at: New Standard on Leases now Effective.
  8. “Europe’s largest reinsurers explain the supervisory benefits of using internal models,” Insurance Europe, January 9, 2019. Access at: Europe’s largest reinsurers explain the supervisory benefits of using internal models.
  9. “Public Consultation: Holistic Framework for Systemic Risk in the Insurance Sector,” International Association of Insurance Supervisors, January 8, 2019. Access at: Public Consultation: Holistic Framework for Systemic Risk in the Insurance Sector.
  10. “Multilateral Agreement on the Practical Modalities for Exchange of Information Pursuant to Article 57a(2) of Directive (EU) 2015/849,” European Banking Authority; European Securities and Markets Authority; European Insurance and Occupational Pensions Authority, January 15, 2019. Access at: ESAs announce Multilateral Agreement on the exchange of information between the ECB and AML/CFT Competent Authorities.
  11. “ECB publishes single Code of Conduct for high-level officials,” European Central Bank, January 16, 2019. Access at: ECB publishes single Code of Conduct for high-level officials.
  12. “Conduct of Business Sourcebook (Retirement Outcomes Review) Instrument 2019,” Financial Conduct Authority, January 28, 2019. Access at: Conduct of Business Sourcebook (Retirement Outcomes Review) Instrument 2019.
  13. “OJK Apply the Latest Basel III Market Risk Calculation,” Indonesian Financial Services Authority, January 15, 2019. Access at: New Basel III Market Risk Calculation.
  14. “Expanded Examination Cycle Eligibility,” Office of the Comptroller of the Currency, January 17, 2019. Access at: Expanded Examination Cycle Eligibility: Final Rule.
  15. “FATF Guidance for a Risk-Based Approach for the Life Insurance Sector,” Monetary Authority of Singapore, January 18, 2019. Access at: FATF Guidance for a Risk-Based Approach for the Life Insurance Sector.
  16. “Regulatory transactions: Changes to notification and application forms,” Prudential Regulation Authority, January 17, 2019. Access at: Regulatory transactions: Changes to notification and application forms.
  17. “Virtual Currencies – Fact Sheet,” Swiss Financial Market Supervisory Authority, January 1, 2019. Access at: Fact Sheet: Virtual Currencies (Updated).
  18. Partial amendment (draft) of notice on capital adequacy regulation (first pillar/third pillar), Japan Financial Services Agency, January 9, 2019. Access at: Partial Revision (Draft) of the Notification on Capital Adequacy Ratio Regulation (First Pillar / Third Pillar).
  19. “Amending Delegated Regulation (EU) 2017/565 as regards the integration of Environmental, Social and Governance (ESG) considerations and preferences into the investment advice and portfolio management,” European Commission, January 4, 2019. Access at: Commission delegated regulation amending Delegated Regulation (EU) 2017/565 as regards the integration of Environmental, Social and Governance (ESG) considerations and preferences into the investment advice and portfolio management.
  20. “Credit risk mitigation: Eligibility of financial collateral,” Prudential Regulation Authority, January 10, 2019. Access at: Credit Risk Mitigation: Eligibility of Financial Collateral.
  21. “Evaluation of the Consumer Credit Directive,” European Commission, January 14, 2019. Access at: Evaluation of the Consumer Credit Directive.
  22. “FRTB: Revised Market Risk Standards,” Hong Kong Monetary Authority, January 17, 2019. Access at: FRTB: Revised Market Risk Standards.
  23. “Comment on the proposed general improvements to the IFRS Taxonomy 2018 by Monday 4 February,” International Financial Reporting Standards, January 16, 2019. Access at: Comment on the proposed general improvements to the IFRS Taxonomy 2018 by Monday 4 February.
  24. “Comments on the EDPB guidelines on the GDPR territorial scope,” Insurance Europe, January 17, 2019. Access at: Comments on the EDPB guidelines on the GDPR Territorial Scope.

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.

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