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

Current coverage period: Through May 31, 2018

CURRENT REGULATIONS:

Securities and Exchange Commission (SEC):
Amendments to Forms and Schedules to Remove Provision of Certain Personally Identifiable Information
Publication Date: May 14th 2018

Risks Covered: Operational Risk

Business Processes Impacted: Consumer/Investor Protection

The agency has issued a final rule adopting revisions to forms filed under the Securities Exchange Act of 1934 to eliminate the portion of those forms that request filers to furnish certain Personally Identifiable Information (PII) of natural persons, including Social Security numbers.1

European Central Bank (ECB):

ECB publishes European framework for Testing Financial Sector Resilience to Cyber Attacks
Publication Date: May 2nd 2018
Risks Covered: Compliance Risk

Business Processes Impacted: Information Technology
The agency has published the European Framework for Threat Intelligence-based Ethical Red Teaming (TIBER-EU). The TIBER-EU is the first Europe-wide framework for controlled and bespoke tests against cyber attacks in the financial markets.2

Australian Prudential Regulation Authority (APRA):
ADI licensing: Restricted ADI Framework
Publication Date: May 4th 2018
Risks Covered: Compliance Risk

Business Processes Impacted: Reporting
The agency has issued an information paper to prescribe the new Restricted ADI framework, effective May 4, 2018.3

European Central Bank (ECB):
Risk Sharing in the Euro Area
Publication Date: May 11th 2018
Risks Covered: Conduct Risk

Business Processes Impacted: Audit, Legal & Compliance
The agency has published an article on the concept of risk sharing in the Euro zone. The article discusses the notion that economic agents will attempt to smooth out their consumption as a result of economic shocks.4

Federal Reserve (The Fed):
Federal Financial Institutions Examination Council Examination Procedures on Customer Due Diligence and Beneficial Ownership Rule
Publication Date: May 11th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Payments
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, including banks with $10 billion or less in consolidated assets, and that are defined as covered institutions. As for the Federal Financial Institutions Examination Council (FFIEC), they recently issued examination procedures for the Financial Crimes Enforcement Network (FinCEN) rule, and Customer Due Diligence Requirements for Financial Institutions.5

Insurance Europe (IE):
Response to EIOPA consultation on Solvency II reporting and disclosure ITS
Publication Date: May 14th 2018
Risks Covered: Strategic Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has published a position paper in response to the EIOPA consultation on corrections and amendments to Implementing Technical Standards (ITS) on reporting and disclosure. Key elements of the paper, among others, is the introduction of more than 300 new validations.6

International Financial Reporting Standards (IFRS):
May 2018 TRG for IFRS 17 meeting summary and podcast available
Publication Date: May 14th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Business Continuity Management
The Transition Resource Group for IFRS 17 Insurance Contracts held a meeting on May 2, 2018.7

European Insurance and Occupational Pensions Authority (EIOPA):
Launch of the Fourth EU-Wide Insurance Stress Test
Publication Date: May 14th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Data Privacy
The agency has launched its 4th Stress Test for the European Insurance sector. This regular exercise aims to assess insurers’ vulnerabilities and is not a pass-or-fail-exercise.8

European Insurance and Occupational Pensions Authority (EIOPA):
EIOPA calls upon national supervisory authorities to ensure that insurers properly address all risks to their Solvency position in light of the withdrawal of the United Kingdom from the European Union
Publication Date: May 18th 2018
Risks Covered: Market Risk
Business Processes Impacted: Audit, Legal & Compliance
The objective of this opinion is to call upon national supervisory authorities to ensure that all risks to the solvency position of insurers arising from the UK’s withdrawal from the European Union are properly addressed.9

Insurance Europe (IE):
GDPR is around the corner: Time for final checks by Insurers
Publication Date: May 17th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
An overview of insurers’ obligations under the General Data Protection Regulation (GDPR).10

Commodity Futures Trading Commission (CFTC):
Advisory with respect to Virtual Currency Derivative Product Listings
Publication Date: May 21st 2018
Risks Covered: Operational Risk
Business Processes Impacted: Compliance Risk
The agency has published an advisory notice that provides guidance to exchanges and clearing houses on certain enhancements when listing a derivative contract based on virtual currency pursuant to CFTC Regulations 40.2 or 40.3.11

Office of the Comptroller of the Currency (OCC):
OCC Report Highlights Key Risks for Federal Banking System
Publication Date: May 24th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Data Privacy
In its Semiannual Risk Perspective for Spring 2018, the agency has reported that credit, operational, compliance and interest rate risks are key themes for the federal banking system.12

Financial Conduct Authority (FCA):
Handbook Notice 55
Publication Date: May 25th 2018
Risks Covered: Operational Risk
Business Processes Impacted: Reporting
The agency has published a notice introducing updates to its Handbook. The changes are related to the General Data Protection Regulation, the Data Protection Act 2018 (DPA 2018), the Insurance Distribution Directive Instrument 2018 (FCA 2018/25), and Supervision Manual (Reporting No 8) Instrument 2018 (FCA 2018/26).13

Federal Reserve (The Fed):
Federal Reserve Board asks for comment on Proposed Rule to Simplify and Tailor Compliance Requirements relating to the “Volcker rule”
Publication Date: May 30th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Audit, Legal & Compliance
The agency has asked for comment on a proposed rule to simplify and tailor compliance requirements relating to the “Volcker rule.”14

Office of the Comptroller of the Currency (OCC); Federal Deposit Insurance Corporation (FDIC):
Securities Transaction Settlement Cycle
Publication Date: May 31st 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Payments
Both agencies are adopting a final rule to shorten the standard settlement cycle for securities purchased or sold by national banks, federal savings associations, and FDIC-supervised institutions.15

International Financial Reporting Standards (IFRS):
International Accounting Standards Board (IASB) meeting
Publication Date: May 22nd 2018
Risks Covered: Strategic Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
The agency has focused on the implementation of Insurance Contracts IFRS17 Standard.16

French Prudential Supervision and Resolution Authority (ACPR):
The ACPR launches its Task Force on Artificial Intelligence
Publication Date: May 29th 2018
Risks Covered: IT Risk
Business Processes Impacted: Data Privacy
The agency has launched a Task Force to tackle the opportunities and challenges raised by Artificial Intelligence in the financial sector.”17

European Insurance and Occupational Pensions Authority (EIOPA):
Stress Test 2018
Publication Date: May 14th 2018
Risks Covered: Market Risk
Business Processes Impacted: Risk Management & Stress Testing
The regulator has launched its 2018 resilience assessment exercise of the European insurance sector.18

Actuarial Association of Europe (AAE):
IFRS 17 Endorsement in Europe
Publication Date: May 30th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
IFRS 17 Endorsement in Europe: Meeting between European Financial Reporting Advisory Group (EFRAG) Board and the Actuarial Association of Europe (AAE).19

 

FORTHCOMING REGULATIONS:

Securities and Exchange Commission (SEC)
Regulation Best Interest
The agency is proposing a new rule under the “Exchange Act” establishing a standard of conduct for broker-dealers and natural persons who are associated persons of a broker-dealer when making a recommendation on any securities transaction or investment strategy involving securities to a retail customer.20

Office of Thrift Supervision (OTS); Financial Crimes Enforcement Network (FinCEN); Office of the Comptroller of the Currency (OCC); Federal Reserve; Federal Deposit Insurance Corporation (FDIC)
Regulatory Capital Rules: Implementation and Transition of the Current Expected Credit Losses Methodology for Allowances and Related Adjustments to the Regulatory Capital Rules and Conforming Amendments to Other Regulations
The multiple agencies are inviting public comment on a joint proposal to address changes to U.S. Generally Accepted Accounting Principles described in Accounting Standards Update No. 2016-13, Topic 326, Financial Instruments—Credit Losses (ASU 2016-13), including banking organizations’ implementation of the current expected credit losses methodology.21

Monetary Authority of Singapore (MAS)
Strengthening the AI Ecosystem in Singapore’s Financial Sector
The agency will collaborate with the Economic Development Board (EDB), Infocomm Media Development Authority (IMDA), and the Institute of Banking and Finance (IBF) to accelerate the adoption of Artificial Intelligence (AI) in Singapore’s financial sector and foster a thriving AI ecosystem.22

European Financial Reporting Advisory Group (EFRAG)
Your input wanted on the impact of IFRS 17
The agency encourages constituents to provide their views/responses on the impact of IFRS 17 by close of business on Thursday May 31, 2018.23

Insurance Europe (IE)
Bold Policymaker Action is Vital to Close Global Protection Gaps
The agency has published an article on the federation’s 10th International Insurance Conference (in Madrid) focusing on ways to overcome underinsurance and reduce the harm caused to economies and individuals by gaps in protection.24

European Insurance and Occupational Pensions Authority (EIOPA)
Opinion on the Solvency position of Insurance and Reinsurance undertakings in light of the Withdrawal of the United Kingdom from the European Union
The agency has published an opinion regarding the solvency position of insurance and reinsurance undertakings in light of the withdrawal of the United Kingdom from the European Union.25

European Commission (EC)
Sustainable Finance Initiative: Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on disclosures relating to Sustainable Investments and Sustainability Risks and Amending Directive (EU) 2016/2341
The agency has issued a Proposal for a Regulation of the European Parliament and of the council on disclosures relating to sustainable investments and sustainability risks, and amending Directive (EU) 2016/2341. The proposals are intended to implement the European Union’s (EU) Action Plan on Sustainable Finance and involve the financial sector in the EU’s fight against climate change and aid in its implementation of the Paris Agreement.26

Federal Reserve (The Fed)
Regulatory Capital Rules: Regulatory Capital, Enhanced Supplementary Leverage Ratio Standards for U.S. Global Systemically Important Bank Holding Companies and Certain of Their Subsidiary Insured Depository Institutions; Total Loss-Absorbing Capacity Requirements for U.S. Global Systematically Important Bank Holding Companies
The Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency have published a proposal to modify the enhanced supplementary leverage ratio standards for U.S. top-tier bank holding companies identified as global systemically important bank holding companies (GSIBs) and some of their insured depository institution subsidiaries.27

 

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

 

References:

  1. “Amendments to Forms and Schedules To Remove Provision of Certain Personally Identifiable Information” Securities and Exchange Commission, Final rule, May 14, 2018. Access at: Amendments to Forms and Schedules to Remove Provision of Certain Personally Identifiable Information.
  2. “ECB publishes European framework for testing financial sector resilience to cyber attacks,” European Central Bank, Press release, May 2, 2018. Access at: ECB publishes European framework for Testing Financial Sector Resilience to Cyber Attacks.
  3. “Information paper – ADI licensing: Restricted ADI Framework,” Australian Prudential Regulation Authority, May 4, 2018. Access at: ADI licensing: Restricted ADI Framework.
  4. “Risk sharing in the euro area,” European Central Bank Economic Bulletin, May 11, 2018. Access at: Risk Sharing in the Euro Area.
  5. “SR 18-3: Federal Financial Institutions Examination Council Examination Procedures on Customer Due Diligence and Beneficial Ownership Rule,” Board of Governors of the Federal Reserve System, May 11, 2018. Access at: Federal Financial Institutions Examination Council Examination Procedures on Customer Due Diligence and Beneficial Ownership Rule.
  6. “Response to EIOPA consultation on Solvency II reporting and disclosure ITS,” Insurance Europe, May 14, 2018. Access at: Response to EIOPA consultation on Solvency II reporting and disclosure ITS.
  7. May 2018 TRG for IFRS 17 meeting summary and podcast available, International Financial Reporting Standards, May 2, 2018. Access at: May 2018 TRG for IFRS 17 Meeting Summary and Podcast available 
  8. “EIOPA Launches The Fourth EU-Wide Insurance Stress Test,” European Insurance and Occupational Pensions Authority, May 14, 2018. Access at: Launch of the Fourth EU-Wide Insurance Stress Test.
  9. “EIOPA Calls Upon National Supervisory Authorities to Ensure That Insurers Properly Address All Risks To Their Solvency Position In Light Of The Withdrawal Of The United Kingdom From The European Union,” European Insurance and Occupational Pensions Authority, Press release, May 18, 2018. Access at: EIOPA calls upon national supervisory authorities to ensure that insurers properly address all risks to their Solvency position in light of the withdrawal of the United Kingdom from the European Union.
  10. “GDPR is around the corner: time for final checks by insurers,” Insurance Europe, May 17, 2018. Access at: GDPR is around the corner: Time for final checks by Insurers.
  11. “Advisory with respect to Virtual Currency Derivative Product Listings,” U.S. Commodity Futures Trading Commission, May 21, 2018. Access at: Advisory with respect to Virtual Currency Derivative Product Listings.
  12. “OCC Report Highlights Key Risks for Federal Banking System,” Office of the Comptroller of the Currency, Press release, May 24, 2018. Access at: OCC Report Highlights Key Risks for Federal Banking System.
  13. “Handbook Notice No. 55,” Financial Conduct Authority, May 25, 2018. Access at: Handbook Notice 55.
  14. “Federal Reserve Board asks for comment on proposed rule to simplify and tailor compliance requirements relating to the “Volcker rule”,” Board of Governors of the Federal Reserve System, Press release, May 30, 2018. Access at: Federal Reserve Board asks for comment on Proposed Rule to Simplify and Tailor Compliance Requirements relating to the “Volcker rule”.
  15. “Securities Transaction Settlement Cycle,” Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Final rule May 31, 2018. Access at: Securities Transaction Settlement Cycle
  16. “Insurance Contracts IFRS17”, International Financial Reporting Standards, May 22, 2018. Access at: International Accounting Standards Board (IASB) meeting.
  17. “The ACPR launches its Task Force on Artificial Intelligence,” French Prudential Supervision and Resolution Authority, May 29, 2018. Access at: The ACPR launches its Task Force on Artificial Intelligence.
  18. “Stress Test 2018,” European Insurance and Occupational Pensions Authority, May 14, 2018. Access at: Stress Test 2018.
  19. “IFRS 17 Endorsement in Europe – Meeting with EFRAG Board 30 May 2018,” Actuarial Association of Europe, May 30, 2018. Access at: IFRS 17 Endorsement in Europe.
  20. “Regulation Best Interest,” Securities and Exchange Commission, Proposed rule, April 18, 2018. Access at: Regulation Best Interest.
  21. “Implementation and Transition of the Current Expected Credit Losses (CECL) Methodology for Allowances and Related Adjustments to the Regulatory Capital Rules and Conforming Amendments to Other Regulations,” Federal Deposit Insurance Corporation, Financial Institution Letter, May 4, 2018. Access at: Regulatory Capital Rules: Implementation and Transition of the Current Expected Credit Losses Methodology for Allowances and Related Adjustments to the Regulatory Capital Rules and Conforming Amendments to Other Regulations.
  22. “Strengthening the AI ecosystem in Singapore’s financial sector,” Monetary Authority of Singapore, Media release, May 7, 2018. Access at: Strengthening the AI Ecosystem in Singapore’s Financial Sector.
  23. “EFRAG encourages constituents to provide their views on the impact of IFRS17,” European Financial Reporting Advisory Group, May 4, 2018. Access at: Your input wanted on the impact of IFRS 17.
  24. “Bold policymaker action is vital to close global protection gaps,” Insurance Europe, May 24, 2018. Access at: Bold Policymaker Action is Vital to Close Global Protection Gaps.
  25. “Opinion on the solvency position of insurance and reinsurance undertakings in light of the withdrawal of the United Kingdom from the European Union,” European Insurance and Occupational Pensions Authority, May 18, 2018. Access at: Opinion on the Solvency position of Insurance and Reinsurance undertakings in light of the Withdrawal of the United Kingdom from the European Union.
  26. “Regulation of the European Parliament and of the Council on disclosures relating to sustainable investments and sustainability risks and amending Directive (EU) 2016/2341,” European Commission (EC), May 24, 2018. Access at: Sustainable Finance Initiative: Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on disclosures relating to Sustainable Investments and Sustainability Risks and Amending Directive (EU) 2016/2341.  
  27. “Regulatory Capital Rules: Regulatory Capital, Enhanced Supplementary Leverage Ratio Standards for U.S. Global Systemically Important Bank Holding Companies and Certain of Their Subsidiary Insured Depository Institutions; Total Loss-Absorbing Capacity Requirements for U.S. Global Systemically Important Bank Holding Companies,” Federal Reserve System, Office of the Comptroller of the Currency, May 25, 2018. Access at: Regulatory Capital Rules: Regulatory Capital, Enhanced Supplementary Leverage Ratio Standards for U.S. Global Systemically Important Bank Holding Companies and Certain of Their Subsidiary Insured Depository Institutions; Total Loss-Absorbing Capacity Requirements for U.S. Global Systematically Important Bank Holding Companies.

 

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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