The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, recently published a call for evidence on digital finance. The call for evidence aims to gather relevant information on particular issues including value chains, platforms and groups’ provision of financial and non-financial services. The feedback will contribute to ESMA’s technical advice to the European Commission. Digital transformation and the application of innovative technologies in the EU financial sector bring a host of opportunities, including better financial services to a wider range of businesses and investors, possibly at a lower cost.
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by Frank Staelens

Although the global amount spent on combating financial crime went above $1,3 billion, 2020 saw a record number of enforcement actions in numerous global jurisdictions. Furthermore, estimates suggest between $800 billion and $2 trillion of criminal money flows went through the financial system in 2020, while an overwhelming majority of it remained undetected. In other words, the Financial Crime combat status at the average financial institution today is too high in spending, and too low on results. Although regulators around the world always allowed for financial institutions to design their own risk based approach, review procedures are often copied from one institution to another and/or are standardised by using fixed checklists and risk weights. For instance, the risk weight for involvement with real estate activities is usually the same for all clients, while the specifics around the nature of the real estate activities (professional/private person, renting/promotion/project development, number of transactions and amounts concerned, the regions of activity, risk mitigating factors …) are best taken into account to avoid either over- or under qualification of risks. 
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The Financial Stability Board (FSB) Regional Consultative Group (RCG) for Europe held a virtual meeting recently to discuss global and regional macroeconomic and financial market developments, and their potential impact on European economies. The group exchanged views on financial stability issues during the recovery from the COVID-19 pandemic, including potential threats to regional financial stability arising from the pandemic. Members also discussed authorities’ considerations in exiting from temporary public support measures, when conditions allow. Continue reading…

The uneven economic impact of the pandemic means that financial stability risks are concentrated in specific sectors and countries, often with higher pre-existing vulnerabilities, concludes the May 2021 Financial Stability Review (FSR) of the European Central Bank (ECB). “As the euro area emerges from the third wave of the pandemic, risks to financial stability remain elevated and have become more unevenly distributed. A higher corporate debt burden in countries with larger services sectors could increase pressure on governments and banks in these countries,” said Luis de Guindos, Vice-President of the ECB. “Extensive policy support, particularly for corporates, could gradually move from being broad-based to more targeted,” he added. Continue reading…

Five members of a Slovak organised crime group (OCG) have been sentenced in the United Kingdom for up to eight years in prison for the exploitation of fellow nationals in a case of modern slavery and money laundering. Between 2008 and 2017, the victims were forced to work under appalling circumstances in British restaurant kitchens and car wash facilities, receiving only approximately EUR 25 for working weeks of up to 80 hours a week. In 2019, Eurojust organised and supported coordinated actions of the UK and Slovak authorities that led to the arrest of the five perpetrators. Continue reading…

Eurojust has supported an operation against large-scale VAT fraud, money laundering and forgery of documents, which have cost the Spanish tax authorities EUR 26 million in missed revenues. In record time, the Agency coordinated the judicial cooperation with Slovakia, Belgium and the Netherlands to halt the fraud scheme. The scammers had set up a series of fake companies to avoid paying VAT within the internal market. During an action day, 22 suspects were arrested and 24 places were searched. A total of 13 properties and 16 vehicles were seized, and tens of bank accounts were frozen. Continue reading…

Nikhil Rathi, CEO to Association of Foreign Banks recently delivered a speech at the Association of Foreign Banks – CEO Programme 2021 – on 6 May 2021. Given the events of the last couple of years, it’s no surprise that so many of the financial services industry’s events at the moment have ‘post’ in the title. We may have finally gone from ‘post-financial crisis’ to ‘post-Brexit’ and, hopefully very soon, ‘post-Covid’. But of course, the really interesting question for regulators and for industry is always what comes next, and how we can shape that and prepare ourselves for it. I’m looking forward to discussing some of the most significant issues and how we’re approaching them. Of course, at this stage, I can’t promise you with certainty as to how these issues will be resolved – but we want to be as open and clear as possible in explaining our perspective, our approach, and the outcomes that we are working towards. Continue reading…

by Michal Pleticha

Whistleblowing is back in the spotlight, ready to ignite heated debates later this year. Why? The 17th of December 2021 marks the expiration of the transposition period of the EU Whistleblower Directive1. To put it simply, every EU Member State should have the effective law on the protection of whistleblowers by the end of this year, which means that the internal compliance systems of many public and private entities is about to change. Let’s have a closer look at the preparations in two EU countries, Germany and the Czech Republic who share the similar model of whistleblower protection: partial and fragmented. Continue reading…

The EU will come forward with a proposal in the WTO focusing on:

clarifying and facilitating the use of compulsory licences in crisis times like this pandemic;
supporting the expansion of production;
trade facilitation and limiting export restrictions.

All G20 members also acknowledged the need to address the funding gap of the ACT-Accelerator, a global collaboration to accelerate development, production, and equitable access to COVID-19 tests, treatments, and vaccines, and launched by the WHO, the European Commission, France and the Bill & Melinda Gates Foundation. And agreed to extend its mandate to the end of 2022.
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The FCA has recently set out plans for a new Consumer Duty, which will set a higher level of consumer protection in retail financial markets for firms to adhere to. Firms are already bound by FCA rules and principles to treat customers fairly and many firms are delivering the right outcomes for consumers, including good products and services at fair prices, supported by high standards of customer service and clear communications. The FCA has seen evidence of practices that cause consumer harm, including firms providing information which is misleadingly presented or difficult for consumers to understand, hindering their ability to properly assess the product/service. This may provide some insight into why 1 in 4 respondents to the FCA’s 2020 Financial Lives Survey said they lack confidence in the financial services industry and only 35% of respondents agreed that firms are honest and transparent in their dealings with them. Continue reading…