The global financial regulatory landscape is constantly shifting, with recent publications from authorities worldwide introducing major updates and consultations. These changes aim to enhance the effectiveness, compliance, and transparency of financial regulations.
Our blog delves into these updates, offering organizations practical insights to navigate the dynamic regulatory environment, achieve compliance, and maintain robust operations.
Business Line | Country | Regulator | Rule/ Regulation | Summary |
All | Australia | AUSTRAC | Second stage consultation on reforming Australia’s AML/CTF regime | The Australian government has initiated the second stage consultation on reforming the country’s anti-money laundering and counter-terrorism financing (AML/CTF) regime, with the Attorney-General’s Department releasing consultation papers outlining detailed proposals for reform. These reforms aim to extend the existing legislation to high-risk services such as those provided by lawyers, accountants, real estate agents, and dealers in precious metals and stones. The proposed changes seek to simplify and modernize the regime in alignment with international standards, reduce regulatory burdens on industries, and enhance resilience against exploitation by serious organized criminals. The first round of consultation revealed broad support for the reforms, with stakeholders advocating for clearer obligations and simplified requirements. The Department is inviting feedback from all stakeholders to shape the proposed reforms, with submissions due by June 13, 2024. |
Bermuda | BMA | Digital Asset Business (Custody of Client Assets) Rules 2024 | The Bermuda Monetary Authority has introduced the Digital Asset Business (Custody of Client Assets) Rules 2024 under the Digital Asset Business Act 2018, establishing regulations for the custody of client assets by digital asset businesses in Bermuda. The rules define client assets, outline obligations for segregation and proper accounting, and specify procedures for handling client assets in various scenarios, including defaults and pooling events. Digital asset businesses are required to keep client assets separate from their own, maintain proper records, conduct annual reviews of client asset controls, and notify clients and the authority of any pooling events. The rules aim to ensure the protection of client assets and uphold fiduciary responsibilities. | |
Europe | Moneyval | Poland improved its AML/CFT guidance and feedback for reporting institutions | Poland has made significant improvements in its anti-money laundering and counter-terrorist financing (AML/CFT) measures, according to a recent report by MONEYVAL. The focus was on enhancing compliance with FATF Recommendations 15 and 34, particularly in providing guidance and feedback to reporting institutions. Since December 2021, Poland has been actively offering guidance and feedback to reporting institutions and has taken significant steps to strengthen measures in the virtual asset service providers (VASP) sector, including the introduction of a registration regime and “fit and proper” requirements for individuals involved in VASP activities. While Recommendation 15 remains partly compliant, Poland has been re-rated from partially compliant to largely compliant on Recommendation 34. Overall, Poland has made notable progress in addressing technical compliance shortcomings identified in its 2021 Mutual Evaluation Report. Out of the 40 Recommendations, Poland currently has 2 rated as compliant, 22 as largely compliant, and 16 as partially compliant. Poland is expected to report further progress to MONEYVAL by December 2024. | |
European Union | European Commission | The European Commission has welcomed the newly published guidance on the interoperability between European and international sustainability reporting standards, provided by EFRAG and ISSB. This guidance aims to assist companies in complying with both sets of standards, particularly focusing on climate reporting. The Commission collaborated with international standards setters to ensure that European standards align effectively with global ones while maintaining the EU’s transparency goals. The guidance highlights that EU companies adhering to European standards can also meet global standards with minimal additional effort, reflecting the Commission’s commitment to reducing the reporting burden on companies. Commissioner Mairead McGuinness emphasized the importance of interoperable reporting frameworks to alleviate the reporting burden for EU companies in addressing global challenges like climate change. The EU’s sustainability disclosure rules aim to furnish investors and stakeholders with comprehensive information on companies’ impacts on people, the environment, and financial risks related to sustainability. The Corporate Sustainability Reporting Directive (CSRD) mandates the first companies to report against ESRS in 2025 for the financial year 2024. | ||
European Union | European Union | Key Amendments Introduced in Recent Corrigendum to EU Regulation on Crypto-Asset Markets | The recent corrigendum to Regulation (EU) 2023/1114 of the European Parliament and of the Council introduces critical amendments to the original regulation concerning markets in crypto-assets. Notable adjustments include clarifications regarding liquidity stress testing requirements for issuers of significant asset-referenced tokens and the authority of the European Banking Authority (EBA). Moreover, modifications are made to criteria for assessing client knowledge and competence, the development of regulatory technical standards by the European Securities and Markets Authority (ESMA), and the timeline for Member States to notify relevant rules to the Commission, EBA, and ESMA. These changes are aimed at ensuring precision and consistency within the regulatory landscape. | |
European Union | European Union | EU Parliament Adopts Corporate Sustainability Due Diligence Directive in First Reading | The newly ratified EU Directive on Corporate Sustainability Due Diligence, which also amends Directive (EU) 2019/1937, signifies a major legislative advancement aimed at integrating sustainability deeply into corporate governance. Adopted following a series of negotiations and agreement across EU bodies, this directive sets a precedent by requiring companies to conduct thorough due diligence on their environmental and human rights impacts. This encompasses not only their direct operations but also extends through their entire value chains, including both suppliers and distributors. The directive emphasizes enhanced transparency and accountability, obligating companies to identify, prevent, and mitigate potential negative impacts, while also ensuring effective remediation strategies are in place. With its comprehensive scope, the directive is poised to enhance sustainable practices and bolster regulatory compliance across the EU, aligning corporate activities with broader societal values of environmental stewardship and human rights protection. | |
European Union | European Union | EU Parliament Adopts First-Reading Position on Anti-Money Laundering Regulation | The latest developments in the European Union’s legislative framework to combat money laundering and terrorist financing have culminated in the formal adoption of a new regulation, as detailed in the information note from the General Secretariat of the Council to the Permanent Representatives Committee/Council. This regulation significantly overhauls the existing directives, aiming to close gaps and strengthen enforcement through the direct applicability of its provisions. Key highlights include the enhanced role of the European Commission in overseeing and ensuring uniform application across member states, the integration of stricter requirements, and the creation of an authority specifically dedicated to anti-money laundering and countering the financing of terrorism (AMLA). This regulatory update is a strategic response to the evolving landscape of financial crimes and underscores the EU’s commitment to safeguarding the financial system from misuse. | |
European Union | European Union | The Sixth Anti-Money Laundering Directive, adopted by the European Parliament on April 24, 2024, marks a significant advancement in the EU’s legislative efforts to prevent the misuse of the financial system for malevolent purposes. This directive not only revises and repeals the earlier Directive (EU) 2015/849 but also incorporates amendments that address identified weaknesses, ensuring a more robust, transparent, and cooperative regulatory environment across member states. The enhanced directive emphasizes stricter requirements for beneficial ownership transparency, introduces comprehensive checks on the sources of funds, and mandates closer cross-border cooperation, including the establishment of an Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA). These measures are set to fortify the EU’s defences against financial crimes and align with international standards set by the Financial Action Task Force (FATF), thereby reinforcing the integrity of the internal market and protecting the financial system from criminal exploitation. | ||
European Union | European Union | Specialized Authority for Anti-Money Laundering and Counter-Terrorist Financing | The recent legislative resolution by the European Parliament marks a significant advancement in the European Union’s commitment to combat money laundering and terrorist financing. On April 24, 2024, the Parliament adopted a proposal for a regulation to establish the Authority for Anti-Money Laundering and Countering the Financing of Terrorism. This new Authority is set to amend and strengthen previous regulations by creating a centralized body with direct supervisory powers over certain high-risk entities and indirect oversight over a broader spectrum. The regulation aims to unify and enhance the effectiveness of the EU’s anti-money laundering and counter-terrorism financing measures by introducing standardized practices and methodologies. This effort not only seeks to address and mitigate systemic risks but also aligns with international standards, enhancing cooperation between Financial Intelligence Units (FIUs) and ensuring a more resilient financial system across member states. | |
European Union | European Union | In a landmark regulatory update, the European Union has significantly revamped its approach to risk management in the banking sector, emphasizing a more granular and risk-sensitive framework. Adopted on April 24, 2024, this regulation amends EU Regulation No 575/2013, introducing new requirements that address credit risk, credit valuation adjustment risk, operational risk, market risk, and the output floor. This comprehensive reform aims to enhance the resilience of banks by aligning the EU’s regulatory framework more closely with the Basel III standards. Key modifications include recalibrated risk weights for credit exposures and a more stringent output floor that ensures internal risk models do not underestimate potential losses. These changes are designed to fortify the banking system against future financial crises by improving risk sensitivity and ensuring a level playing field in the global banking landscape. | ||
European Union | European Union | EU’s Directive on Enhanced Supervisory Powers and ESG Risk Management | The European Union has significantly revised its supervisory and regulatory approach towards financial institutions with the latest directive, which amends Directive 2013/36/EU. This directive introduces enhanced supervisory powers for regulators, stringent sanctions, and explicit regulations regarding third-country branches and the management of Environmental, Social, and Governance (ESG) risks. Notably, the directive places a strong emphasis on integrating ESG considerations into the risk management frameworks of banks, reflecting a growing recognition of the financial risks posed by environmental and social challenges. The changes aim to harmonize practices across the EU, ensuring a robust oversight mechanism that can effectively mitigate risks while fostering a sustainable financial environment. This directive represents a proactive step in aligning the financial sector with broader EU sustainability goals, such as the European Green Deal and the commitments under the Paris Agreement. | |
Global | FSB | The Financial Stability Board’s Regional Consultative Group for Asia (RCG Asia) convened in Colombo, focusing on key financial market developments and vulnerabilities. Members explored strategies to bolster the implementation of the FSB regulatory framework for crypto-assets and examined the implications of artificial intelligence’s expanding role in the financial sector for stability. Additionally, discussions centred on progress in addressing financial risks associated with climate change, emphasizing the importance of transition plans. RCG Asia also delved into initiatives aimed at enhancing cross-border payments, seeking to make them faster, cheaper, and more transparent. Collaboration between the public and private sectors was highlighted as crucial for advancing these objectives in the region. | ||
Global | ICMA | Guidance Released for Sustainable Sukuk by ICMA, IsDB, and LSEG | The International Capital Market Association (ICMA), the Islamic Development Bank (IsDB), and LSEG (London Stock Exchange Group) have collaborated to publish guidance on green, social, and sustainability sukuk, termed “sustainable sukuk.” Initiated at COP28, the guidance aims to assist issuers and market participants in aligning sukuk with the ICMA Principles, providing practical examples and best practices. With over $47 billion in issuance since 2017, including $13.4 billion in 2023 alone, the guidance reinforces the broad applicability of the principles across the global sukuk market, promoting consistency and integrity. Stakeholder engagement is planned to ensure widespread adoption of the guidance, with updates to follow as needed. | |
Malta | MFSA | Information Sharing Arrangements under EU Regulation 2022/2554 | The Malta Financial Services Authority (MFSA) issues an update on Regulation (EU) 2022/2554 on Digital Operational Resilience for the Financial Sector, specifically addressing Chapter VI concerning Information-sharing Arrangements. Authorised Persons within scope are now obligated to notify competent authorities of their voluntary participation in such arrangements. These arrangements facilitate the exchange of cyber threat information and intelligence. While participation is encouraged, notification will become mandatory for relevant Authorised Persons as of 17 January 2025. | |
New Zealand | FMA | Comprehensive Guide on Enhanced Customer Due Diligence for AML/CFT Compliance | Enhanced Customer Due Diligence Guideline serves as an essential resource for implementing stringent Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) practices. This document elaborates on the necessity of enhanced customer due diligence (CDD) in situations presenting higher risks of money laundering and terrorism financing, as stipulated by the AML/CFT Act 2009. It details various scenarios requiring enhanced CDD, such as dealings with politically exposed persons, customers from countries with insufficient AML/CFT measures, and complex corporate structures. The guideline emphasizes the importance of verifying customers’ source of wealth and source of funds to ensure transparency and mitigate potential risks. Furthermore, it outlines specific requirements and procedures for ongoing due diligence and account monitoring to adapt to any changes in the customer’s risk profile or transaction patterns. This comprehensive approach aids businesses in effectively managing and prioritizing responses to AML/CFT risks, ensuring regulatory compliance while maintaining the flexibility afforded by a risk-based assessment approach. | |
New Zealand | FMA | The April 2024 Beneficial Ownership Guideline issued by AML/CFT supervisors provides crucial clarification and support for reporting entities required to perform customer due diligence (CDD) on beneficial owners under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. With updates following new regulations effective July 31, 2023, the guideline highlights the importance of identifying the beneficial owners of customers, particularly those who are legal persons or arrangements, to appropriately assess and mitigate associated ML/TF risks. This document outlines the procedural steps for establishing beneficial ownership, which include both ownership and control elements, and emphasizes the need for thorough verification processes tailored to the risk level of the customer. The guideline is instrumental for entities in ensuring comprehensive compliance practices, providing examples and scenarios to aid understanding and implementation of these critical regulatory requirements. | ||
United Kingdom | PSR | CP24/6 Securing compliance: proposed extensions and exemptions guidance | The Payment Systems Regulator (PSR) has introduced a consultation paper titled “Securing Compliance: Proposed Extensions and Exemptions Guidance” as of May 2024, aiming to streamline the process of granting extensions and exemptions under specific circumstances. This guidance is crucial for regulated parties that may face genuine challenges in meeting compliance deadlines or specific regulatory requirements due to unforeseen circumstances. The PSR outlines several factors that will influence their decision-making, including potential impacts on payment systems users, the burden of compliance on the party, and the alignment with PSR’s strategic objectives. Importantly, the guidance stresses that such flexibility will be granted only in limited scenarios to ensure the integrity and effectiveness of regulatory directives. By clarifying these conditions, the PSR aims to maintain a balance between strict compliance requirements and practical flexibility, thereby fostering a more effective and cooperative regulatory environment. This approach not only enhances transparency but also ensures that the regulatory framework remains robust while accommodating necessary adjustments in response to practical challenges faced by regulated entities. | |
Banks | European Union | ECB | European Central Bank (ECB) updated its guidelines on risk data aggregation and reporting, highlighting the ongoing challenges in managing risk data with accuracy and timeliness, particularly during stress scenarios like global pandemics. The guide responds to the deficient risk data aggregation and reporting (RDARR) capabilities observed among significant financial institutions, stressing the need for robust data governance frameworks and enhanced IT infrastructure. By aligning with the Basel Committee on Banking Supervision’s BCBS 239 principles, the ECB emphasizes substantial and timely improvements in RDARR processes, underscoring the critical role of effective data management in mitigating financial risks and enhancing the resilience of the financial sector. The ECB intends to increase supervisory scrutiny and enforce compliance to ensure these improvements are implemented effectively. | |
Global | BIS | Basel Committee Consults on Counterparty Credit Risk Management Guidelines | The Basel Committee on Banking Supervision released a consultative document on 30 April 2024, proposing new guidelines for counterparty credit risk (CCR) management. This initiative aims to update the existing practices established back in 1999 regarding banks’ interactions with highly leveraged institutions. The updated guidelines emphasize essential practices for robust CCR management, including thorough due diligence of counterparties, both during initial onboarding and continuously thereafter, developing comprehensive credit risk mitigation strategies, employing diverse metrics to measure, control, and limit CCR, and establishing a strong governance framework. These guidelines are a response to the significant deficiencies observed in banks’ management of CCR, highlighted by recent distress in non-bank financial intermediaries. The Basel Committee is soliciting feedback from various stakeholders by 28 August 2024, aiming for a risk-based and proportional application of these guidelines across banks’ diverse counterparty exposures. | |
New Zealand | RBNZ | The May 2024 Financial Stability Report by the Reserve Bank of New Zealand presents a comprehensive analysis of the resilience of New Zealand’s financial system amidst ongoing economic challenges. The report highlights the system’s robustness despite high interest rates and above-target inflation, which have moderated but continue to pose vulnerabilities, particularly for heavily indebted households and businesses. It discusses the impact of global disinflation trends and lower projected policy rates, and the resultant financial conditions which could tighten unexpectedly if inflation does not decline as anticipated. Additionally, it delves into specific risks, such as pressures in commercial real estate and the weak housing market in China, but notes that the spillovers from these sectors have been contained so far. The report also outlines the Reserve Bank’s proactive measures to bolster the financial system’s resilience, including advancing the regulatory framework for prudential supervision and the upcoming implementation of the Depositor Compensation Scheme, set for mid-2025. | ||
UAE | Dubai FSA | Consultation Paper No. 159: Interest Rate Risk in the Banking Book and Risk Appetite Statement | The Dubai Financial Services Authority (DFSA) issued Consultation Paper No. 159 on May 3, 2024, presenting proposals to update the regulatory framework regarding interest rate risk in the Non-Trading Book (IRRBB) and introduce a new requirement for a risk appetite statement, aligning with Basel III standards. Targeted at existing firms licensed for deposit-taking and credit provision, potential applicants, advisors, and industry stakeholders, the paper invites comments until August 1, 2024, through an online response form. After the consultation period, the DFSA will review submissions, implement relevant changes to the DFSA Rulebook, and notify stakeholders via their website. It’s advised not to act on the proposals until formal changes are made. | |
Banks, Insurers | United States | SEC | The Internal Revenue Service (IRS) has finalized regulations concerning the election to transfer certain tax credits under the Inflation Reduction Act of 2022, effective July 1, 2024. These regulations aim to streamline the process for transferring eligible tax credits between taxpayers, introducing rules that encompass a required IRS pre-filing registration process, and stipulate special rules for partnerships and S corporations. The new guidelines address significant shortcomings identified in the previous management of counterparty credit risk (CCR), by enforcing comprehensive due diligence and establishing a structured credit risk mitigation strategy. Key updates include specific provisions to prevent excessive credit transfers and conditions for credit recapture events, reflecting the IRS’s commitment to tightening compliance and enhancing transparency in credit transactions. These regulations are crucial for taxpayers who are eligible to transfer credits and their transferees, guiding them in navigating the complexities of credit elections and transfers effectively. | |
Insurance | Bermuda | BMA | The Bermuda Monetary Authority (BMA) has announced the publication of the Insurance (Prudential Standards) (Recovery Plan) Rules 2024, exercising authority granted by the Insurance Act 1978. These rules are designed to ensure insurers are prepared for adverse situations, aiding them in taking effective measures during crises without undue pressure. Applicable solely to Bermuda commercial insurers, the rules are seen as essential for bolstering the BMA’s prudential framework. They will be effective from May 1, 2025. | |
United Kingdom | FCA | PS17/3: Payment protection insurance complaints: feedback on CP16/20 and final rules and guidance | Policy Statement PS17/3 outlines the final rules and guidance on payment protection insurance (PPI) complaints following the consultation process initiated in Consultation Paper 15/39 and continued in Consultation Paper 16/20. The statement confirms the deadline of 29 August 2019 for consumers to complain about the mis-selling of PPI, introduces a consumer communications campaign, and imposes a fee on certain firms to fund this campaign. Additionally, it includes new rules and guidance regarding the handling of PPI complaints in light of the Supreme Court’s decision in Plevin v Paragon Personal Finance Limited. The statement addresses feedback received during the consultation process and specifies the next steps, including the effective dates for the new rules and guidance. It emphasizes the importance of prompt complaint resolution and outlines the regulatory expectations for firms in this regard. | |
United Kingdom | FCA | The Financial Conduct Authority (FCA) is consulting on proposed amendments to FG21/4: Guidance for insolvency practitioners on how to approach regulated firms, originally published in 2021. The purpose of the consultation is to reflect changes in the legal, regulatory, and economic landscape since the publication of the original guidance. The FCA seeks to update the guidance to ensure its relevance and address feedback received regarding clarity and the need for additional information. The proposed guidance primarily targets insolvency practitioners (IPs) overseeing firms solely authorized or registered by the FCA, with potential relevance for IPs overseeing firms regulated by both the FCA and the Prudential Regulation Authority (PRA). The consultation period has ended, and the FCA is currently reviewing responses with plans to provide an update later in the year. | ||
Investment | European Union | EBA | Commission Delegated Regulation (EU) No 151/2013 dated 19 December 2012, supplements Regulation (EU) No 648/2012 concerning OTC derivatives, central counterparties, and trade repositories. It specifies the data to be published and made available by trade repositories and establishes operational standards for aggregating, comparing, and accessing the data. The regulation outlines requirements for trade repositories to publish aggregate data on their websites or online portals, including breakdowns of open positions, transaction volumes, and values per derivative class. Additionally, it mandates trade repositories to grant immediate access to details of derivatives to specified entities and authorities. The regulation sets forth technical arrangements and standards for accessing derivative data, including secure connections and periodic access requests. It also addresses access for third-country authorities and outlines procedures for setting up access to derivative details and recording access information. The regulation entered into force on 20 December 2012 and is directly applicable in all EU Member States. | |
United Kingdom | FCA | The Policy Statement PS24/4, published on 30/04/2024, outlines the final rules and addresses feedback on proposals concerning the UK securitisation markets. The changes are part of the repeal and replacement of assimilated law, with firm-facing provisions of the UK Securitisation Regulation (UK SR) set to be integrated into the FCA and PRA rulebooks. The document summarizes feedback received on the proposals outlined in Consultation Paper CP23/17 and details the final approach to rules in the Handbook, including the Securitisation Sourcebook (SECN). The statement applies to authorised firms involved in securitisation markets, unauthorised entities, sellers of securitisation positions to retail clients, individuals in management positions at involved firms, Third Party Verifiers (TPV), and Securitisation Repositories (SR). The implementation of the new rules is scheduled for 1 November 2024, pending the revocation of the UK SR and related technical standards by the Treasury. Further consultations on securitisation rules are planned for Q4 2024/Q1 2025. | ||
United Kingdom | BOE | The Prudential Regulation Authority (PRA) has issued Policy Statement (PS) 7/24 in response to consultation paper (CP) 15/23, outlining final policy changes regarding securitisation general requirements. The PS introduces a new Securitisation Part of the PRA Rulebook and updates supervisory statement (SS) 10/18, with adjustments aimed at preserving relevant requirements while addressing known issues. Feedback from respondents led to adjustments including a 6-month implementation delay, transitional provisions for pre-transfer securitisations, and clarification on due diligence and transparency requirements. These changes, effective from 1 November 2024 pending the revocation of the Securitisation Regulation, aim to enhance clarity and alignment between PRA and FCA rules, with further consultations expected in Q4 2024/Q1 2025. | ||
United States | CFTC | The Commodity Futures Trading Commission (CFTC) has approved a final rule amending the capital and financial reporting requirements for Swap Dealers (SDs) and Major Swap Participants (MSPs). The amendments align with CFTC Staff Letters regarding capital calculation approaches and alternate financial reporting requirements. Changes include revisions to Part 23 regulations concerning the timing of notifications, approval processes for subordinated debt, and information requested on financial reporting forms. The goal is to streamline compliance with financial reporting obligations and demonstrate adherence to minimum capital requirements. The final rule will be effective 30 days after publication in the Federal Register, with a compliance date of September 30, 2024, applicable to financial reports dated September 30, 2024, or later. |
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