The Financial Stability Board (FSB) recently published a report on the use of supervisory (SupTech) and regulatory (RegTech) technology by FSB members and regulated institutions. The report finds that technology and innovation are transforming the global financial landscape, presenting opportunities, risks and challenges for regulated institutions and authorities alike. The opportunities offered by SupTech and RegTech have been created by the substantial increase in availability and granularity of data, and new infrastructure such as cloud computing and application programming interfaces. These allow large data sets to be collected, stored and analysed more efficiently. Authorities and regulated institutions have both turned to these technologies to help them manage the increased regulatory requirements that were put in place after the 2008 financial crisis. Continue reading…

by Massimo Balducci

The amount of resources to be mobilised by the EU Resilience and Recovery Fund (and connected funds) is huge. It is comparable with the amount of resources triggered off by the Marshall Plan after World War II. Compared with the GDP in some countries, the EU will invest more resources than the Marshall Plan did. In the case of Italy, the Marshall Plan invested about 12% of the Italian GDP. The EU will invest around 19% of the Italian GDP in Italy. Will the EU investment have an impact comparable with the one of the Marshall Plan? Or will it mostly be a positive impact and have negative unanticipated consequences that outweighs any positive outcome? Compliance shall possibly be called upon to play a key role to curb any negative unintended outcome. Here, the experience of the Marshall Plan can provide us with a useful frame of reference. A negative (i.e. what should be done differently in comparison to the Marshall Plan) point of reference and a positive one (i.e. what the EU should try to do following the Marshall Plan).   Continue reading…

Watching speeches is an unusual experience when we’re limited to communicating virtually. It is strange to give them in this way, too. Especially as in this case it is my last opportunity before I step down as interim chief executive of the FCA. But the next few minutes do allow me to take stock and also offer some brief thoughts on the future of regulation. First of all, what lessons can we take from Covid-19 so far? In terms of society, technology and the manner in which we regulate?

Second, how the FCA itself might change to meet some of these challenges, and what constants may remain? And third, given the backdrop of the UK’s exit from the EU, what’s the kind of regulation we need?

Continue reading…

Mr. Yves Mersch, Member of the Executive Board of the European Central Bank and Vice-Chair of the Supervisory Board of the European Central Bank, recently gave a speech at the Eurofi Financial Forum, Berlin on 11 September 2020. He reflected on two issues: our role in the extraordinary measures taken to keep economies afloat since the outbreak of the current crisis, and the limits of the ECB’s prudential mandate. The pandemic has dealt an unprecedented peacetime blow to the European economy. In spring, a great number of our businesses went into full lockdown. Crucially, however, banks in the euro area were able to offer vital support. To this end, ECB Banking Supervision provided far-reaching capital and operational relief, making record levels of lending possible during this exceptional time. Continue reading…

Judicial authorities in Germany are conducting an in-depth fraud investigation on the use of more than 200,000 diesel ‘defeat devices’ in cars produced by an international automotive group and international commercial vehicle manufacturer, as well as their subsidiaries. Coordinated searches to gather evidence are being carried out in Germany, Italy and Switzerland. The action was planned and coordinated with the support of Eurojust to ensure secure and efficient information exchanges between involved judicial and law enforcement authorities, agree on joint prosecutorial strategies and prepare operational actions, including today’s searches. The Frankfurt am Main Prosecution Service – Center for Commercial Criminal Matters – is leading the investigation in Germany against a number of responsible people working in the international automotive group. The investigation is focused on the suspicion that diesel engines installed in several car models sold by the company would be equipped with an illegal defeat device.  Continue reading…

by Frank Staelens

I would like to explain the regulation’s broad impact and to offer guidance for compliance. Most listed companies and large public organisations already consider whistleblowing management as an important governance mechanism with, in most cases, boards/audit committees being accountable to measure its effectiveness. This group is now moving toward the use of whistleblowing systems beyond reporting wrongdoing and starting to understand that instilling a transparent, “speak up” culture is perceived by stakeholders as a sign of good health. However, many other organisations still have a different position on the subject. But keep in mind, within the EU all member states have until December 17, 2021 to transpose the new whistleblower protection rules into national law.  Continue reading…

by Alex Movchan

We recently had an opportunity to speak with a man named Edmund Saunders, CICA, CFE (President of Institute for Internal Controls Europe, ex-advisor from the UK government to Polish officials in the banking sector). He is also very experienced and dedicated in the following fields of internal control, fraud, internal auditing, risk management, international banking and anti-fraud and anti-corruption – identification, avoidance and combatting techniques. Dear Edmund, thank you for finding time for the interview. I know that you have a lot of experience in building internal control systems, mostly in financial institutions, all around the world (in UK, Switzerland, USA, Poland, etc.). In your opinion, what should be the core focus, the main 2-3 objectives to focus on, while building an effective control system within an organisation? Continue reading…

The European Commission recently recommended that Member States do not grant financial support to companies with links to countries that are on the EU’s list of non-cooperative tax jurisdictions. Restrictions should also apply to companies that have been convicted of serious financial crimes, including, among others, financial fraud, corruption, non-payment of tax and social security obligations. The aim of today’s recommendation is to provide guidance to Member States on how to set conditions to financial support that prevent the misuse of public funds and to strengthen safeguards against tax abuse throughout the EU, in line with EU laws. By coordinating restrictions on financial support, Member States would also prevent mismatches and distortions within the Single Market.  Continue reading…

by Francesco Salerno

This is the second part in a series of two articles written by me about government control of investments in strategic enterprises following the Covid-19 outbreak. The first part can be found in the related items section. Taking into account the guidance outlined in the first part and to guard against the risks of predatory acquisitions of strategic national enterprises, various European countries, including Italy, France, Spain and Germany, have taken action with regard to the screening of foreign direct investments. Continue reading…

by Francesco Salerno

This article is the first of two parts written by me concerning governmental control of investments in strategic enterprises following the Covid-19 pandemic. The articles will be published on two consecutive days. The Covid-19 outbreak has been followed by a raft of measures to lessen its impact on the world of production. Indeed, the majority of countries have intervened in various branches of the law ‒ starting with contract, company and insol­ven­cy/bankruptcy rules ‒ with the stated intent of supporting the economy. Among the many other forms of intervention, changes have been made to the rules on the control of companies operating in strategic sectors. This is because companies often tumble in value in crisis situations, making it easier for them to be snapped up “cheaply”: hence the special attention paid to rules that give governments the power to control investments in strategic enterprises.  Continue reading…