MIL Publishing Engine 1

Source: European Banking Authority

The European Banking Authority (EBA) today published its fourth Report on the functioning of anti-money laundering and countering the financing of terrorism (AML/CFT) colleges. The Report finds that competent authorities continued to improve the functioning of AML/CFT colleges in 2023. Nevertheless, further progress is needed especially in two key areas, namely: adjusting the functioning of AML/CFT colleges to the money laundering and terrorist financing (ML/TF) risks to which the underlying firm is exposed, and discussing the need for a common approach or joint action.

This Report sets out findings and observations from EBA staff’s monitoring of AML/CFT colleges in 2023, which suggest that, overall, competent authorities continued to improve the effectiveness of AML/CFT colleges. The EBA, nevertheless, identified two key areas in which the progress made by competent authorities was seen as insufficient, namely:

• Implementing the risk-based approach to the organisation of colleges.

The EBA found that the functioning of colleges (especially the frequency of meetings and form in which the information is exchanged) was not sufficiently adapted to the risks to which the firms were exposed and to their specificities. This meant that competent authorities could not allocate their resources in a sufficiently strategic manner.

• Ensuring that discussions on the need for a common approach are meaningful and systematic.

One of the main purposes of AML/CFT colleges is to allow competent authorities to identify common ML/TF risks and AML/CFT issues, and to coordinate the actions they take to address those risks and issues. The EBA found that few colleges had meaningful discussions on these aspects. As a result, competent authorities were rarely able to identify whether there were risks and/or issues that should be addressed in a coordinated manner.

The Report includes targeted recommendations to help competent authorities improve in these two key areas.

In addition, through its thematic monitoring of colleges, the EBA identified a number of ML/TF risks to which firms of the banking, payment and e-money sectors with a technology-oriented business model could be particularly exposed. The Report encourages competent authorities to take these risks into consideration when supervising such firms.

Legal basis and background

• Directive (EU) 2018/843 (AMLD) introduced an explicit requirement for competent authorities to cooperate with each other but did not provide a framework of how this cooperation should happen in practice.
• The ESAs Guidelines (JC 2019 81) on cooperation and information exchange between competent authorities supervising credit and financial institutions published in December 2019 provide details on how competent authorities should give effect to the cooperation requirements set out in AMLD, by establishing a framework for AML/CFT colleges.
• AML/CFT colleges are permanent structures that serve to enhance cooperation between different supervisors involved in the supervision of cross-border institutions. As of 31/12/2023, competent authorities reported 264 established colleges, 34 of which were set up in 2023.

Source: Government of the Netherlands

News item | 10-12-2024 | 10:00

A year of regulated sales

On 15 December 2023, regulated weed and hash sales began in Tilburg and Breda coffee shops. Since 17 June of this year, all coffee shops in all ten participating municipalities have been allowed to sell regulated products alongside tolerated products to consumers. After nearly a year of regulated supply, 70 of the total 75 participating coffee shops have sold regulated weed and hash.

Experimental phase

The next phase of the experiment is the experimental phase, which starts on 7 April 2025. From this date, coffee shops in the ten participating municipalities will only be allowed to sell regulated products. This phase is set to last four years in principle. With a final date in sight, growers now have clarity on when they can begin full production. This will allow the supply of regulated weed and hash to be further tailored to demand from coffee shop owners. The fifth, sixth and seventh growers are also expected to be ready to supply in April. This will benefit both the choice of coffee shops and the consistency of supply

Research

The ‘Closed Coffee Shop Chain Experiment’ aims to investigate whether it is possible to have a regulated chain producing, distributing and selling cannabis. A team of researchers, under the guidance of an independent Monitoring and Evaluation Committee, will also study the effects on public health, crime, safety and public nuisance. The research outcomes may contribute to decision-making on future cannabis policy in the Netherlands.

Source: European Banking Authority

The European Banking Authority (EBA) today published a Report on liquidity measures, which monitors and evaluates the liquidity coverage requirements currently in place in the EU. Between June 2023 and June 2024, EU banks’ liquidity coverage ratio (LCR) increased by 3 percentage points to reach 167%. Within that period, we observed changes in the composition of banks’ funding deposits while banks’ holdings of liquid assets steadily increased. EU banks’ average LCR in USD and in GBP improved during the period under review, to exceed 100% as of June 2024.

EU banks’ LCR buffers remain comfortably above the minimum requirement. In the second half of 2023 the average LCR increased sharply due to a marked decline in the net outflows (the denominator of the LCR) and a simultaneous increase of High-Quality Liquid Assets (HQLAs) (the nominator of the LCR). The observed decline in net outflows is mostly explained the shifting of retail deposits to categories that are exempted from the calculation of the outflows. This move reversed in the first half of 2024, when net outflows increased by more than HQLAs and the average LCR declined. The increase in net outflows is explained by a drop in deposits exempted from the calculation of outflows which was not fully offset by the increase in outflows from other categories.

The composition of EU banks’ liquidity buffer has changed in June 2024 compared to June 2023. The increase in Level 1 securities, mainly sovereign bonds, exceeded the decline in Level 1 cash and central bank reserves. As a result, HQLAs increased in the period from June 2023 to June 2024.

The reduction in Level 1 cash and central bank reserves occurred for all banks. However, banks in the euro area that repaid targeted longer-term refinancing operations (TLTRO) loans in the first half of 2024 reported sharper declines. These repayments resulted in a drop in the LCR by -4 percentage points for the affected banks on average, while banks with no such liabilities increased their LCR by 0.64 p.p. on average. At the end of June 2024, euro area banks reported EUR 197bn of remaining TLTRO balances.

As it has been the case in previous years, EU banks continue to hold lower liquidity buffers in foreign currencies. The LCR in US dollar improved during the period of review from June 2023 to June 2024. Over the same period, the LCR in GBP also improved for the total sample (but declined for the common sample of banks reporting positions in GBP at all reference dates). The ability of banks to access the market for currency swaps may become constrained during periods of stress. Therefore, banks and competent authorities need to pay attention to any shortfalls in foreign currency LCRs to avoid unforeseen liquidity mismatches during volatile market conditions.

Finally, the Report also includes an assessment of the impact of the LCR on the banks’ lending activities. It also assesses the effect of deposits exempted from the calculation of the outflows on banks’ LCR, the impact of TLTRO repayments made between June 2023 and June 2024 on the liquidity profile of euro area banks, and the impact of the ongoing reduction of central bank liquidity on central bank assets and exposures over time.

Note to the editors

1. This Report has been drafted in accordance with Article 509(1) of the Capital Requirements Regulation (CRR).
2. Article 412(1) of the Capital Requirements Regulation (CRR) foresees the possibility of monetising liquid assets during times of stress (resulting in an LCR below 100%), as maintaining the LCR at 100% under such circumstances could produce undue negative effects on the credit institution and other market participants.
3. The CRR does not foresee a minimum requirement for LCR in foreign currencies. However, article 8(6) of the LCR Delegated Regulation requires banks to ensure that the currency denomination of their liquid assets is consistent with the distribution by currency of their net liquidity outflows. The same article also includes a discretion to competent authorities to require credit institutions to restrict currency mismatches by setting limits on the proportion of net liquidity outflows in a currency that can be met during a stress period and by holding liquid assets not denominated in that currency.
4. The results of the Report on liquidity measures are presented separately for G-SIIs, O-SIIs and “other banks” (non G-SIIs or O-SIIs). Some figures are presented by country.

Source: European Banking Authority

The European Banking Authority (EBA) today published the findings from its fourth and final round of reviews of competent authorities’ approaches to tackling money laundering and terrorist financing (ML/TF) risks in the banking sector. With this round, the EBA has now assessed all competent authorities that are responsible for the AML/CFT supervision in thirty EU/EEA member states.

The EBA’s findings indicate that anti-money laundering and counter terrorism financing (AML/CFT) supervisors have taken important steps to implement a risk-based approach to AML/CFT and, since the first round of reviews in 2018, the EBA has seen significant developments in competent authorities’ approaches to supervision. The Report highlights good practices, for example in relation to cooperation and risk assessments, which reflect the positive changes in supervisory approaches.

Nonetheless, the EBA continued to find weaknesses in competent authorities’ risk assessment methodologies and enforcement processes not being fully effective or deterrent. Additionally, the EBA found divergent approaches in the way prudential supervisors consider and address ML/TF risks. In the absence of AML/CFT colleges, cooperation was limited, and it was still lacking with tax authorities. The EBA, therefore, recommended actions tailored to each competent authority to support their approach.

Overall, while the EBA continued to identify issues and shortcoming in this last round of reviews, the progress made since the first round suggests that the effectiveness of AML/CFT supervision will facilitate the effective implementation of the new AML/CFT package. This is the result of the actions taken by competent authorities following the EBA’s recommendations.

Legal basis, background and next steps

The EBA’s implementation reviews have been conducted in accordance with Articles 1, 8(1), 9a and 29(1) and (2) of the EBA Regulation, which confers on the EBA a duty to ensure effective and consistent supervisory practices, to contribute to the consistent and effective application of Union law and to contribute to preventing the use of the EU’s financial system for ML/TF purposes. To this effect, the EBA can carry out peer reviews and investigate potential breaches of Union law, and it can take other measures such as staff- led implementation reviews to assess NCAs’ responses to specific compliance challenges.

The EBA assessed all competent authorities that are responsible for the AML/CFT supervision in thirty EU/EEA MS.

The EBA will conduct a final review in 2025 of all the actions taken by competent authorities to take stock of the current state of AML/CFT supervision of banks and publish a final report as part of the EBA’s handover to AMLA. 

Source: European Banking Authority

The European Banking Authority (EBA) today published a Report to facilitate awareness of tokenised deposits, as well as assess their potential benefits and challenges. The Report also aims to promote convergence in the classification of tokenised deposits in contrast with electronic money tokens (EMTs) issued by credit institutions under the Markets in Crypto-Assets Regulation (MiCAR).

As part of the EBA’s 2024-25 priorities on innovative applications, the EBA has analysed approaches to the tokenisation of deposits by credit institutions and their potential benefits and challenges. The tokenisation of a deposit – in the narrow sense of recording the deposit claim of a depositor against the credit institution on the distributed ledger technology (DLT) instead of a traditional ledger – does not per se alter the fundamental nature of the claim and thus its regulatory qualification as a deposit.

To-date, the EBA has identified very few cases of tokenised deposits. Meanwhile, interest from credit institutions appears to be growing. Potential benefits include programmability and automation of transfers, while potential challenges include issues relating to consumer protection, operational risk, and the application of the anti-money laundering and countering the financing of terrorism framework.

In this light, the EBA will continue to monitor market developments and promote discussion on potential benefits and challenges, as well as on issues relating to regulatory classification as compared to EMTs, which are in scope of MiCAR.

Background and next steps

The EBA has a statutory duty to monitor and assess market developments, including technological innovation and innovative financial services in accordance with Article 9(2) of its Founding Regulation (Regulation (EU) 1093/2010). The EBA’s priorities on innovative applications for 2024-25 included the monitoring of tokenisation, specifically with regard to tokenised deposits.

The acceptance of deposits and other repayable funds from the public characterises the activity of credit institutions in the EU and the consequent regulatory treatment under the Capital Requirements Directive and Regulation (Directive (EU) 2013/36/EU and Regulation (EU) 575/2013). Therefore, activities involving tokenised deposits, since already regulated, are excluded from the scope of MiCAR.

The EBA, together with the other European Supervisory Authorities, are tasked to promote convergence on the classification of crypto-assets, including those excluded from the scope of MiCAR, as per Article 97 of that Regulation.

The EBA will continue to monitor market developments as part of its ongoing monitoring of innovative activities in the EU banking and payments sector.

Source: Government of the Netherlands

News item | 12-12-2024 | 19:14

The Human Rights Tulip

The Human Rights Tulip is an annual award presented by the Dutch Ministry of Foreign Affairs to a human rights defender to support them in their work advancing, protecting and raising awareness about human rights around the world. The winner of the Human Rights Tulip receives a bronze tulip sculpture and €100,000 – money that the winner can use to continue and expand their human rights work.

Community Peacemaker Teams’ work in Iraqi Kurdistan

Community Peacemaker Teams – Iraqi Kurdistan (CPT-IK) supports people in conflict areas and works with local communities affected by violence, injustice or repression. As a human rights organisation, CPT-IK speaks out about military activities in the Kurdistan Region and promotes nonviolent methods of conflict resolution and peacebuilding. CPT-IK’s work rests on a foundation of reliable data, which it believes is necessary for honest dialogue on sensitive issues.

Although the team consists of only three people, it has proved capable of documenting and verifying a great number of human rights violations – thanks to an extensive network of reliable partners.

Kamaran Othman of CPT: ‘How, with only three people, can you collect all this information? The answer is simple: We have tea with people. A lot of tea. This is how we can collect data, amplify the voices of the unheard and gain support for our work.’

CPT advocates for victims of military violence in the Kurdistan Region by supporting displaced families, reporting damage caused by military attacks and fighting for compensation and protection for civilian victims. CPT-IK also helps journalists and activists working nonviolently to give people better lives.

The prize money will enable the organisation to further expand its efforts to promote peace, security and justice in the Kurdistan Region of Iraq.

Kamaran Othman of CPT: ‘This award is not just about recognising the work of Community Peacemaker Teams – Iraqi Kurdistan but about the people who, despite suffering extraordinary and painful circumstances, continue to resist through nonviolent means back home in Iraqi Kurdistan.’

Other nominees

This year four other candidates were nominated for the Human Rights Tulip as well: Wilker Dias (a human rights defender in Mozambique), Stella Maris Martínez (Chief Public Defender of Argentina), Vasile Micleusanu (an LGBTIQ+ human rights defender in Moldova) and Blert Morina (an LGBTIQ+ activist in Kosovo).

Source: Government of the Netherlands

News item | 11-12-2024 | 10:49

On 10 December, during International Human Rights Day, we celebrate the fundamental freedoms that everyone is entitled to, such as the right to safety, the right to work and the right to go to school.  Unfortunately, these rights are not available to everyone everywhere. In an increasing number of countries, human rights are under pressure, including in Ukraine, where people are subjected to human rights violations every day.

‘The stories that we have been told are truly sickening’, says Danielle Bell, head of the UN Human Rights Monitoring Mission in Ukraine. ‘We spoke to people that had been subjected to torture, ill-treatment, and sexual violence. Sometimes on a daily basis. We are seeing an increase in civilian casualties from glide bombs and first-person view drones. In occupied territory, we see the indoctrination of schools, where children are not allowed to speak Ukrainian, and forced to learn the Russian curriculum and work for military groups.’

UN Human Rights Monitoring Mission in Ukraine

HRMMU reports on the human rights situation in Ukraine. The aim of the mission is to strengthen and protect human rights in Ukraine and ensure that those who commit human rights violations are held responsible.

The Netherlands stands for a world in which human rights are respected and perpetrators are held responsible for their actions. Only then, people can live in peace and security. That’s why the Netherlands is committed to supporting the UN Human Rights Monitoring Mission in Ukraine (HRMMU). Yesterday, Erica Schouten, Special Envoy for Ukraine, announced that over the next two years the Netherlands will be making €8 million available for this mission.  

‘HRMMU’s investigative work is of great importance to Ukraine’, Schouten explains. ‘Their work is impartial, accurate, credible and reliable, and their findings are used in national and international investigations into violations of human rights and international law. HRMMU makes a crucial contribution to establishing the truth and preventing impunity.’

Disturbing trends

Since the large-scale Russian invasion, more than 10,000 Ukrainian civilians have been killed and more than 20,000 have been injured. Entire neighbourhoods and villages have been destroyed, and hospitals, schools and infrastructure lie in ruins. Large-scale attacks on power plants cause power outages and limit people’s access to water, heating and the internet.

In 2024, HRMMU recorded a dramatic increase in Ukrainian citizens that were killed or were injured by the war, says Bell. ‘This year, civilian casualties have increased by 30%. In September, we recorded the highest number of causalities since mid-2022. A disturbing trend that we are seeing in Ukraine is the usage of new weapons, and weapons that are used more destructively. This causes a dramatic increase in civilians that are harmed.’

The situation is also dire in detention facilities in occupied territories and in the Russian Federation, Bell continues. ‘We spoke to prisoners of war that had been beaten with metal rods. They showed us where their bones had been broken. And they showed scars on their body, where they had been bitten by dogs, or burned by a cigarette. Each person we interview, adds another layer of the horror that is unfolding in these detention facilities everyday.’

Bear witness

HRMMU teams are in Ukraine to document such human rights violations and infringements of international humanitarian law. Their reports can be used as evidence in court cases and give the international community reliable insight into the human rights situation in Ukraine.

HRMMU has done more than 300 missions this year, including more than 100 to frontline areas. ‘We talk to people in their homes about what is happening to them. About the everyday realities of war’, Bell explains. ‘This means that my team can put on public record what is unfolding every day as a consequence of this horrible conflict.’

‘HRMMU’s work is not just about collecting data and evidence. It’s also about the stories behind the numbers’, Schouten adds. ‘These are stories that need to be heard. We owe it to the victims and their families. These crimes must be documented, because justice is also about acknowledgement: “This is what happened.” And we, the international community, must bear witness.’

Support for justice in Ukraine

The Netherlands, as lead nation on restoring justice, point 7 of the Ukrainian Peace Formula actively supports Ukraine in ensuring accountability. Since the beginning of the Russian war, the Netherlands has made more than €105 million available for that purpose.  The Netherlands also supports the investigations of international crimes conducted by the International Criminal Court and the prosecution service of Ukraine, and it is working to facilitate international coordination and information sharing, for example via the Dialogue Group on Accountability for Ukraine.

The Netherlands is also the host state of the Register of Damage for Ukraine and the International Centre for the Prosecution of the Crime of Aggression against Ukraine (ICPA), which are based in The Hague. The Netherlands also supports the establishment of a special tribunal for the crime of aggression and has offered to host this tribunal in The Hague.

Source: European Banking Authority

The three European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) today published joint Guidelines intended to facilitate consistency in the regulatory classification of crypto-assets under MiCAR. The Guidelines include a standardised test to promote a common approach to classification as well as templates market participants should use when communicating to supervisors the regulatory classification of a crypto-asset.

To support market participants and supervisors in adopting a convergent approach to the classification of crypto-assets the templates for explanations and legal opinions provide descriptions of the regulatory classification of crypto-assets in the following cases:

• Asset-referenced tokens (ARTs): The white paper for the issuance of ARTs must be accompanied by a legal opinion that explains the classification of the crypto-asset – in particular, the fact it is not an electronic money token (EMT) nor a crypto-asset excluded from the scope of MiCAR.
• Crypto-assets that are not ARTs or EMTs under MiCAR: The white paper for the crypto-asset must be accompanied by an explanation of the classification of the crypto-asset – in particular, the fact that it is not an EMT, an ART or crypto-asset excluded from the scope of MiCAR.

The overall aim of these Guidelines is to promote convergence in classification for the consistent application of MiCAR across the EU. In turn, this is intended to contribute to enhancing consumer/investor protection, securing a level playing field, and mitigating risks of regulatory arbitrage.  These guidelines will be translated into the official EU languages and published on the ESAs’ websites. The guidelines will apply from three months after the publication of the translations.

Standardised test for crypto-assets

Background and next step

The Guidelines have been developed in accordance with Article 97(1) of the Regulation on Markets in Crypto-assets (MiCAR) (Regulation (EU) 2023/1114) which requires the ESAs, by 30 December 2024, to jointly issue Guidelines in accordance with Article 16 of the ESA Founding Regulations (Regulation (EU) No 1093/2010, Regulation 1094/2010, Regulation 1095/2010) to specify the content and form of the explanation accompanying the crypto-asset white paper referred to in Article 8(4), and the legal opinions on the qualification of asset-referenced tokens (ARTs) referred to in Article 17(1), point (b)(ii), and Article 18(2), point (e) of MiCAR. The Guidelines are required to include a template for the explanation and the opinion and a standardised test for the classification of crypto-assets. This is the only joint ESA policy mandate under MiCAR.

MiCAR establishes regimes for regulating the issuance, offering to the public, and admission to trading of ARTs and EMTs and other crypto-assets. The Regulation also establishes a framework for crypto-asset service provision.

The regime for ARTs and EMTs established by MiCAR entered into application at the end of June 2024, with other parts of the Regulation (issuance of other types of crypto-assets, and crypto-asset service provision) entering into application at end-2024.

Source: Government of the Netherlands

News item | 09-12-2024 | 19:10

Contrary to disinformation currently circulating, the Ministry of Foreign Affairs emphasises that it was in no way involved in organising this event or in facilitating the participation of invited speakers. Furthermore, no speakers were received by or present at the Ministry of Foreign Affairs.

Source: Government of the Netherlands

News item | 09-12-2024 | 18:36

Contrary to disinformation currently circulating, the Ministry of Foreign Affairs emphasises that it was in no way involved in organising this event or in facilitating the participation of invited speakers. Furthermore, no speakers were received by or present at the Ministry of Foreign Affairs.