Take the Plunge!
Volume 11, Number 2
February 24, 2021
Advocacy News You Can Use
World Council recently issued its 2021 Global Regulatory Update. It is designed to look ahead or prognosticate on what the main regulatory issues will be for credit unions. This year was particularly difficult to compile, mainly because of the uncertainty of the many regulatory relief items that have been put in place due to COVID-19 and trying to contemplate how regulatory bodies will provide for an orderly withdrawal of those measures. On top of that, it seems somewhat cruel to discuss other regulatory changes when many credit unions, their employees and their members are overwhelmed trying to cope with the pandemic.
But if anything, this crisis has taught us all how to be agile and creative so that we can come out of this together—and probably even stronger and better than ever. We know things will be different and that our old ways will not work. Burying our heads in the sand is not the answer on how to overcome our trials and tribulations.
So, go ahead, dive in, take the plunge. Check out the 2021 Global Regulatory Update and read up on upcoming changes in Sustainable Finance, Digitization, AML/CFT, Payments and more.
IFRS Foundation Trustees Meet to Address Questions on Sustainability Reporting
In December of 2020, the IFRS requested comment on their Consultation Paper on Sustainability Reporting. The Trustees met on February 1, 2021 to review the responses to the first three questions in the consultation paper:
- Is there a need for a global set of internationally recognized sustainability reporting standards? (a) If yes, should the IFRS Foundation play a role in setting these standards and expand its standard-setting activities into this area?
- Is the development of a sustainability standards board (SSB) to operate under the governance structure of the IFRS Foundation an appropriate approach to achieving further consistency and global comparability in sustainability reporting?
- Do you have any comment or suggested additions on the requirements for success as listed in paragraph 31 (including on the requirements for achieving a sufficient level of funding and achieving the appropriate level of technical expertise)?
Upon review of the feedback, it was clear that there is a “growing and urgent demand to improve the global consistency and comparability in sustainability reporting, as well as strong recognition that urgent steps need to be taken and broad demand for the IFRS Foundation to play a role in this.” As a response, the Trustees have committed to forming a Trustee Steering Committee, as well as continued analysis of the consultation responses to determine whether to establish a new board. It is expected that the Trustees will draft a proposal including a roadmap and timeline by the end of September 2021, with a possible announcement of a sustainability standards board at the United Nations Climate Change Conference in November 2021.
Why this matters to your credit union: How sustainability requirements will filter into the financial system is an emerging and complex issue. The development of recognized sustainability reporting standards will ultimately impact reporting requirements for credit unions.
European Council Plans Update to ePrivacy Rules
As innovation in technology increases, so does the demand on individual privacy rights. The European Council has now taken steps to manage the relationship between privacy and new technology “such as Voice over IP, web-based email and messaging services, and techniques for tracking users’ online behavior”, by updating the ePrivacy Directive of 2002. On February 10, 2021, “member states agreed on a negotiating mandate for revised rules on the protection of privacy and confidentiality in the use of electronic communications services.”
The Commission’s draft regulation on ePrivacy will not only repeal the current ePrivacy directive, but it will “complement” the GDPR by filling in gaps, for example, including provisions applicable to both natural and legal persons. The Council’s mandate, in short, will apply to electronic communications content transmitted using publicly available services and networks, metadata related to the communication and machine-to-machine data transmitted via a public network.
More details on the draft ePrivacy mandate and what it covers can be found here.
Why this matters to your credit union: Privacy rules continue to evolve at a rapid pace around the world with a shift to allowing more control of personal data in the hands of consumers. The EU GDPR has been at the forefront of this shift and so amendments to the privacy framework may ultimately inform other countries’ rulebooks. Credit unions may ultimately see compliance changes as a result.
BIS Innovation Hub Announces Key Priorities to Advance Financial Technology
On January 22, 2021, the Bank for International Settlements Innovation Hub (BISIH) announced a work programme focusing on six key areas to address “international collaboration among central banks on innovative financial technology.” These areas include: suptech and regtech; next-generation financial market infrastructures; central bank digital currencies; open finance; green finance and cyber security.
In addition to launching the Innovation Network to support their priorities, BISIH plans to launch a series of projects including:
- “a proof-of-concept” solution for a regulatory reporting platform employing data analytics and data visualisation to provide supervisors with deeper and more timely insights to address risks;
- a proof-of-concept platform using multiple wholesale CBDCs to explore the feasibility of faster and cheaper cross-border payments;
- a technological research project and associated prototype(s) for tiered retail CBDC distribution architectures; and
- a distributed ledger technology prototype for distribution of tokenised green bonds to retail investors.”
More information regarding the Bank for International Settlements Innovation Hub work programme and the Innovation Network can be found here.
Why this matters to your credit union: Regtech and suptech are a focus of international standard setters and will bring changes to financial market infrastructures and many other areas. These innovations will ultimately bring changes to how credit unions are regulated and supervised.
Andrew T. Price, Esq.