Volume 9, Number 9
January 7, 2020

Basel Committee Finalizes First Non-Draft Version of the Consolidated Basel Framework

In response to feedback received to the consultation regarding proposed changes to the consolidated Basel framework, the Basel Committee on Banking Supervision (Basel Committee) published a finalized version of the framework available in a new section of their website found here. The Basel Framework includes 14 standards divided into chapters based on definitive topics. The framework also addresses inconsistencies and ambiguities found in the draft version of the Basel requirements, which prompted the Basel Committee’s consultation that the current version of the framework now acknowledges. An overview of the Basel Framework can be found here; and the full text of the “Launch of the consolidated Basel Framework” can be found here. WOCCU notes that the final Consolidated Basel Framework does make some technical changes, however, the substantive framework as adopted remains intact.  Notably, the standard includes the WOCCU advocated direction on proportionality for national-level regulators.

AML/CFT Cooperation Guidelines Include ENCU Supported Recommendations

The European Supervisory Authorities (ESA), comprised of The European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA), and European Securities and Markets Authority (ESMA), published joint guidelines on information exchange and cooperation between the authorities regarding anti-money laundering and counter financing of terrorism (AML/CFT). “The Guidelines are broadly based on, and consistent with, the framework of colleges of prudential supervisors of banks, but the scope of these Guidelines is much wider and encompasses all financial sectors in a proportionate manner.” This is the first time colleges of AML/CFT supervisor have been established in the EU for this purpose.  

The European Network of Credit Unions commented on these guidelines and encouraged prudential regulators to utilize the improved communication with an eye towards reducing regulatory burden on credit unions.  ENCU is pleased to see that many of the adopted guidelines, including the mapping guidelines, were adopted with proportionality in mind and should not significantly increase regulatory burdens on credit unions while at the same time.  Further, the framework should increase the effectiveness of AML/CFT supervision.  

The ESA’s hope to address long standing compliance failures attributed to cross border AML/CFT crimes that were able to occur due to a failure in communication between AML/CFT supervisors. The guidelines aim to establish a “formal cooperation framework” between supervisors in various Member States in order to maintain effective supervision of firms operating on a cross-border basis. Included is this framework, is an outline for establishing AML/CFT colleges when a firm operates in more than three Member States. Additional information on the ESA joint guidelines and a copy of the guidelines can be found here.

Preliminary Agreement on Rules for Crowdfunding

Finland’s presidency of the European Council and Parliament reached a preliminary political agreement on a crowdfunding framework, which upon finalization of the technical work, will be submitted to the EU ambassadors for endorsement. The framework was constructed to make it easier for crowdfunding platforms to operate on a cross-border basis “by harmonising the minimum requirements when operation in their home market and other EU countries", as well as the implementation of investor protection rules that aim to improve legal certainty while considering compliance costs for providers.  The preliminary framework agreement will encompass crowdfunding campaigns up to EUR 5 million over a 12-month period. The prospectus regulation and MiFID will regulate the larger crowdfunding operations, however, crowdfunding supported by reward and/or donations are not within the scope of the framework.

“The text sets outs common prudential, information and transparency requirements. It also includes specific requirements for non-sophisticated investors. At the same time, the rules for EU crowdfunding businesses will be tailored depending on whether they provide their funding in the form of a loan or an investment (through shares and bonds issued by the company that raises funds).”

WOCCU will continue to monitor this issue as it is submitted for endorsement to the EU ambassadors and the proposed regulation is adopted. Additional information on the Presidency and Parliaments’ preliminary crowdfunding rules can be found here.

 

Andrew T. Price
VP of Advocacy
World Council of Credit Unions (WOCCU)
99 M St., SE, Washington, DC 20003 USA
Office: +1-202-843-0704 | Mobile: +1-850-766-5699
aprice@woccu.org | www.woccu.org

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