April 2015

The European Banking Authority (EBA) has updated its compliance table showing which jurisdictions comply, or intend to comply, with its June 2014 guidelines on global systemically important institutions.

With regards to the UK, the PRA has indicated that it intends to partially comply as it does not see a rationale for requiring large subsidiaries of non-EU headquartered banks to complete the template, not least because it is anticipated that in most cases their parent will complete and disclose the template at the group level.

The European Commission (the Commission) has published two communications it has sent to the European Parliament concerning the position of the Council of the EU (the Council) on the adoption of the Fourth Money Laundering Directive and the Wire Transfer Regulation.

In both communications, the Commission confirms that the position of the Council reflects the political agreement reached between the European Parliament and the Council on 16 December 2014 and confirms that it supports the result of the trialogue negotiations in each case and accepts the Council’s position at first reading.

The Investment Association (IA), formerly the Investment Management Association, has published a Statement of Principles for investment managers (the Statement).

The Statement sets out what the responsibility of managing clients’ money means in practice for corporate culture and individual mind-set. The Statement goes further than the regulatory requirement of “treating customers fairly” and expresses the

The Financial Services Compensation Scheme (FSCS) has announced that its levy for 2015/16 will be £319 million. Admittedly this is £32 million more than the estimated levy that was projected by the FSCS in January 2015, when it consulted on its 2015/16 plan and budget. The reason is largely due to a rise in claims relating to self-invested personal pensions schemes.

Other developments include that:

  • the general insurance intermediation sector will not be receiving a levy bill in 2015/16 for payment protection insurance claims, which have continued to decline;
  • the FSCS expects to pay compensation costs totally £28 million for Alpari (UK) Limited in 2015/16; and
  • investment intermediation firms will see a decrease in their levy bill, due to a fall in the costs relating to other investment defaults, and an expected increase in recovery forecasts for the coming year.

On April 22 and 23, 2015, CFTC staff issued two no-action letters and one guidance letter applicable to swap execution facilities (SEFs). These letters are likely to be an early installment in a broader set of actions from the CFTC intended to improve the new SEF regulatory framework and encourage trading on SEFs.

Correcting Errors

On April 21, 2015, Kevin Piccoli, the deputy director of examinations for the Division of Swap Dealer and Intermediary Oversight (“DSIO”) at the Commodity Futures Trading Commission (“CFTC”) spoke at SIFMA’s Compliance and Legal Division lunch. In his remarks, he provided insight on the DSIO’s examination priorities and process, and how the staff coordinates with

On April 9, 2015, the Federal Reserve Board announced that it was broadening the applicability of its policy on the formation and expansion of small bank holding companies from $500 million in total consolidated assets to $1 billion, and extending the policy to savings and loan holding companies. The amendments to the policy are

The Basel Committee on Banking Supervision (BCBS) has issued an updated progress report on its members’ implementation of Basel II, Basel 2.5 and Basel III. It details the state of play as at the end of March 2015.

The progress report focuses on the status of adoption by BCBS member jurisdictions of the risk-based capital requirements, requirements for global and domestic systemically important banks, the liquidity coverage ratio and the leverage ratio.

The FCA has published Finalised Guidance 15/7: Guidance on financial crime systems and controls (FG15/7).

FG15/7 follows Guidance Consultation 14/7: Proposed guidance on financial crime systems and controls (GC14/7) in which the FCA proposed to update its financial crime guide with examples of good practice which would help illustrate what some firms have done to identify, assess and manage financial crime risk.

FG15/7 notes that the FCA has decided to proceed with the proposed revisions to the financial crime guide, which include:

The FCA has updated its webpage on money laundering to include a statement on derisking and its expectations on banks’ management of money laundering risk.

The FCA states that it is aware that, due to legal and regulatory obligations in the UK and abroad, some banks are no longer offering financial services to entire categories of customers that they associate with higher money-laundering risk, such as money transmitters, charities and FinTech companies, as well as withdrawing from providing correspondent banking services.

The FCA states that where a bank does not believe that it can manage the money-laundering risk associated with a business relationship effectively, it should not enter into, or maintain, that business relationship. However, the FCA adds that the risk based approach does not require banks to deal generically with whole categories of customers or potential customers: instead the FCA expects banks to recognise that the risks associated with different individual business relationships within a single broad category varies, and to manage that risk appropriately.