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Source: Government of the Netherlands

News item | 11-12-2023 | 09:00

To this end, Justice and Security Minister Yeşilgöz-Zegerius today put into (internet) consultation a bill to increase the maximum sentences on hard drug offences. Stocking hard drugs presently carries a maximum prison sentence of 6 years. The bill changes that to a maximum prison sentence of 8 years. For deliberate trafficking and production of hard drugs, the maximum prison sentence increases from 8 to 12 years, for importing and exporting hard drugs from 12 to 16 years and for committing preparatory acts for hard drugs offences from 6 to 8 years.

“Penalties for hard drug offences have remained virtually unchanged in recent times. Meanwhile, the Netherlands has developed into a major producer of synthetic drugs and transit country of hard drugs. This has a pull effect on internationally operating crime and puts pressure on our national security. These are criminals for whom extortion, intimidation and murder are part of the business model. Hard drugs involve big money and criminal gangs will do anything to take their illegal trade further. By updating the maximum penalty for hard drugs, we will send a strong signal that this type of crime will not be tolerated and strong action will be taken,” says Minister Yeşilgöz-Zegerius.

According to Minister Yeşilgöz-Zegerius, punishment is the final piece in tackling organised crime. This government is investing heavily in preventing young people from being recruited and our economic infrastructure from being abused by criminals. Investigative services are dealing hard blows in disrupting and breaking up criminal networks thanks to cracking encrypted communication services, such as EncroChat, SkyECC and Exclu.

At the same time, it can be seen that in cases against the most severe category of drug criminals, the public prosecution service’s sentencing demands are now at the upper end of the legal maximum prison sentences. Courts also impose very high sentences in such cases, sometimes up to the legal maximum. Usually, those accused of serious drug offences are also on trial for other offences, such as participation in a criminal organisation, threats, possession of automatic firearms and money laundering. The maximum sentences for these types of related offences in organised crime have already been increased over the years.

By now also raising the maximum sentence for hard drug offences, more room and flexibility will be given to determine what sentence or sentence demand is appropriate given the circumstances of specific cases. Also, by increasing the maximum sentences for hard drug offences, the Netherlands will be more in line with surrounding countries when it comes to the criminal law approach to serious drug crime, often committed in the context of a criminal organisation.

Source: Government of the Netherlands

News item | 13-12-2023 | 16:32

On 19 September, Azerbaijan launched offensive operations against the ethnically Armenian enclave Nagorno-Karabakh. As a result, more than 100,000 people were forced to flee their homes, nearly all of whom found refuge in Armenia. Those from Nagorno-Karabakh taken in represent about 3% of the Armenian population.

The sudden population increase has put a great deal of pressure on the country’s social services, labour market and overall economy. Taking in so many people also entails considerable costs. To help Armenia in this regard, the Netherlands is contributing €10 million to the Global Concessional Financing Facility.

Lower interest rates and longer repayment periods

The Global Concessional Financing Facility was established in 2016 to support countries taking in large numbers of refugees. It offers middle-income countries the opportunity to borrow from multilateral development banks, such as the World Bank and the European Bank for Reconstruction and Development, on concessional terms. For example, at lower interest rates and with longer repayment periods. Middle-income countries usually do not have access to this type of concessional financing from multilateral development banks, which tends to be reserved for the poorest nations.

The Global Concessional Financing Facility is hosted by the World Bank and uses contributions from Supporting Countries, such as the Netherlands, Canada and Denmark. Such contributions enable countries to borrow more for development projects in this area.

Education, healthcare and shelter

Since its establishment, the GCFF has provided loans for development projects in Colombia, Costa Rica, Ecuador, Jordan, Lebanon, Moldova and, in the near future, will be funding projects in Armenia. Armenia plans to use this funding to strengthen education and healthcare, and to provide shelter and safety to those who need it.

Shelter and safety in the region

The Netherlands is a major Supporting Country of the Global Concessional Financing Facility and, as of this week, is also co-chair of the GCFF. For the Netherlands it is important that people fleeing their homes are treated humanely and provided with shelter and safety in the region. In contrast to long-term stays in refugee camps, this allows them the opportunity to rebuild their lives until they are able to return to their homes. This also limits the likelihood that refugees will feel compelled to flee to destinations farther away, such as in Europe.

Source: European Banking Authority

The European Banking Authority (EBA) today published its annual risk assessment of the European banking system. The Report is accompanied by the publication of the 2023 EU-wide transparency exercise, which provides detailed information, in a comparable and accessible format, for 123 banks from 26 countries across the European Union (EU) and the European Economic Area (EEA).

Highlights of the EBA risk assessment:

• The EU banking sector has proven to be resilient in the aftermath of the banking turmoil in March.
• Capitalisation remains high with an average common equity tier 1 (CET1) ratio at its highest reported point (16%). Underlying profitability has supported banks’ payouts.
• Elevated interest rate levels have so far supported widening interest margins, but this might have reached its turning point.
• Asset quality remains robust, yet subdued economic growth and elevated interest rate levels create pockets of risks.
• Liquidity remains high but it started normalising from its pandemic highest levels.
• Market funding costs have increased in line with interest rates, yet deposits rates have remained comparatively low but might rise going forward.

	CET1 ratio (transitional)	CET1 ratio (fully loaded)	Leverage ratio	Liquidity coverage ratio	NPL ratio	Share of Stage 2 loans	RoE
Jun-23	16%	15.9%	5.7%	160.9%	1.8%	9.1%	11%
Jun-22	15.2%	15%	5.3%	164.9%	1.8%	9.5%	7.9%

Notes to editors

The transparency exercise is part of the EBA’s ongoing efforts to foster transparency and market discipline in the EU financial market, and complements banks’ own Pillar 3 disclosures, as laid down in the EU Capital Requirements Directive (CRD). Along with the dataset (over 1.2 million data points, with on average more than 10,000 data points per bank), the EBA also provides a wide range of interactive tools that allow users to compare and visualise data across time and on a country and a bank-by-bank level.

The exercise results are based on the supervisory data submitted to the EBA via the European Centralised Infrastructure of Data (EUCLID) platform. This platform has been developed by the EBA to gather and analyse regulatory data from a wide range of financial institutions. It covers supervisory, resolution, remuneration and payments data. Thanks to EUCLID, the public will be able to gain a wider access to EU banking and financial data. 

Source: European Banking Authority

This is the first EBA’s peer review focussing on conduct and consumer protection issues. The review assessed conduct supervision of seven competent authorities and examined whether the steps they have taken effectively ensure that consumers in payment difficulties benefit from reasonable forbearance by creditors, taking into account the EBA Guidelines on arrears and foreclosures (EBA/GL/2015/12) and its Opinion on good practices for mortgage creditworthiness assessments and arrears and foreclosure. Peer reviews aim to strengthen consistency and effectiveness in supervisory outcomes across the EU and so do not look at the level of compliance by financial institutions, such as MCD creditors. National supervision of credit servicers was also outside the scope of this peer review. The latter are not subject to MCD requirements but will have to comply with  the Credit Servicers Directive from 30 December 2023.

Overall, the EBA found that the competent authorities under review have implemented the Guidelines in their entirety. However, the review identified some differences, including with regard to:

• the organisational set-up for the supervision of this area, with some competent authorities allocating significant resources exclusively to conduct, while others focus primarily on prudential supervision;
• the level of engagement with supervised MCD creditors to ensure their reasonable exercise of forbearance measures, with some competent authorities implementing different conduct supervisory tools and regular and/or ad-hoc communication channels, while others having a more limited intrusiveness;
• the effectiveness of procedures and/or policies to ensure preparedness from a conduct perspective for dealing with an increase in arrears or foreclosures as a result of changing economic conditions and/or market developments, with some competent authorities adopting a close engagement with MCD creditors, while others implementing a different level of supervisory intensity.

The EBA set out follow-up measures which are applicable to all competent authorities and not just those that were reviewed (unless stated otherwise), and which it will review in two years’ time. While maintaining effective prudential supervision such as in the area of management of non-performing exposures, such improvements in conduct supervision can and should be implemented. The report also sets out some follow-up measures, which might benefit all competent authorities, in particular:

• the adoption of policies clearly indicating internal unit responsibilities, so to facilitate the cooperation and information sharing among different teams involved in the supervision of creditors’ treatment of mortgage borrowers in arrears;
• the establishment of formal written procedures as regards the supervision of this area, including in relation to competent authorities’ engagement with MCD creditors, that foresee a margin of flexibility to adapt to changing circumstances;
•  the enhancing supervision of MCD creditors’ preparedness for dealing with potential arrears related to market conditions by further engaging with them and providing guidance in what supervisory expectations are from Article 28 of the MCD.

Legal basis and background

Article 30 of the EBA Regulation requires the EBA to periodically conduct peer reviews of some or all of the activities of competent authorities within its remit, to further strengthen consistency and effectiveness in supervisory outcomes. Peer reviews identify follow-up measures to achieve this, together with best practices seen in competent authorities. After two years, the EBA is required to assess the adequacy and effectiveness of actions taken by competent authorities in response to the follow-up measures.

The peer review has been performed by an ad hoc Peer Review Committee made up of EBA and competent authorities’ staff in accordance with the EBA peer review work plan for 2023-2024 and following the process in Article 30 of the EBA Regulation and EBA peer review methodology.

The exercise covered the competent authorities from seven EU Member States (Cyprus, Greece, Hungary, Lithuania, the Netherlands, Portugal and Slovakia). Six competent authorities were selected on the basis of objective criteria that indicate the relevance of the requirements in Article 28 of the MCD and the EBA Guidelines on arrears and foreclosure in a given Member State. These criteria were supplemented by considerations aimed at ensuring a fair representation of different types of real estate markets, geographies, jurisdiction sizes, cultures, and socio-economic policies, all of which shape and have shaped each national mortgage market. Two of the CAs under review volunteered to participate in the peer review, with one being already under the scope for application of the objective criteria.

The peer review assessed the seven competent authorities’ supervisory practices in the supervision of creditors’ treatment of mortgage borrowers in arrears and initiating of foreclosure proceedings over a maximum of six-year period from 21 March 2016.

Source: European Banking Authority

The three European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) today published a Report on innovation facilitators, a term encompassing innovation hubs and regulatory sandboxes. The Report identifies a number of benefits and challenges relating to the operation and design of such innovation facilitators and presents recommendations and considerations towards national competent authorities (NCAs), the ESAs and the European Commission to further enhance the role and efficiency of innovation facilitators in the financial sector across the European Economic Area (EEA).

Since the last Report in 2019, innovation hubs in the EEA have undergone improvements in their operations while maintaining their focus on enhancing firms’ understanding of the regulation and supervisory expectations. Regulatory sandboxes have offered the FinTech sector a safe environment to test their business ideas and allowed NCAs to stay abreast of emerging innovations in the financial sector and to better identify cases where a reassessment of regulatory perimeters may be needed.

To further improve the operation of innovation facilitators and to enhance the experience for participating firms, the NCAs are invited to:

• improve their understanding of the concerns and interests of participating firms;
• broaden the scope of innovations captured, including at the cross-sectoral level;
• ensure an effective collaboration among NCAs;
• continuously evaluate the functioning of innovation hubs and regulatory sandboxes.

Through the European Forum for Innovation Facilitators (EFIF) framework, the ESAs can provide recommendations for future EU-wide initiatives that focus on experimentation. To improve the functioning of this framework the ESAs should:

• re-evaluate the procedural framework for cross-border testing established by the EFIF in 2021, 
• formalise the EFIF’s process to raise co-legislators’ attention to issues identified via innovation hubs or regulatory sandboxes.

Finally, the ESAs propose that the European Commission undertake a comprehensive reflection on the EU-wide strategy to support financial innovation and the operation of innovation facilitators, in particular regulatory sandboxes.

Background

The EFIF provides a platform for supervisors to regularly share experiences from their engagement with firms through innovation facilitators, to exchange technological expertise, and to reach common views on the regulatory treatment of innovative products, services and business models.

The EFIF was established following the 2019 Joint ESAs report on regulatory sandboxes and innovation hubs which identified the need for greater coordination and cooperation between innovation facilitators to support the scaling up of FinTech across the EU single market. Members of the EFIF include representatives of each innovation hub and regulatory sandbox established by national and European supervisors within the EEA. The EFIF unites representatives from all 30 countries in the EEA, covering the banking/payments, insurance and securities/markets sectors.

The Report published today updates the findings of the 2019 Joint ESAs Report on the same topic by taking stock of innovative developments that take place within innovation facilitators in EEA financial markets, analysing the activities of existing innovation facilitators, and identifying related challenges and limitations.

More information about the EFIF can be found here.

Source: Government of the Netherlands

News item | 10-12-2023 | 12:15

However, without robust standards and safeguards, the use of carbon credits can undermine climate action and cause environmental or social harm. Low prices, a lack of transparency and the absence of clear guidance, currently risk delaying the urgent near-term mitigation that the market could in fact provide.

That’s why a group of European countries today propose joint recommendations to improve the integrity of the voluntary carbon market. These recommendations aim to ensure full transparency, high-quality credits and credible claims. They are designed to help companies make choices in line with Paris. They can be adopted immediately by the market – in the long run they serve as input for frameworks at the EU-level. The group consists of the Netherlands, Germany, France, Spain, Finland, Belgium and Austria.

The recommendations are to:

1.  Map direct and indirect emissions and draw up a climate plan with clear emission reduction targets in line with Paris.
2. Prioritize emission reductions in own organization and value chains, before looking at the use of carbon certificates.
3. Formulate clear claims in response to the use of carbon certificates while providing sufficient details to avoid misleading. And indicate whether the certificates are used to meet own climate goals (offset claim) or contribute to meeting climate goals in the host country (contribution claim), to avoid double claiming.
4. Buy certificates of high quality that represent real, additional and permanent mitigation.
5. Pay attention to the situation in the host country and how the purchase of carbon certificates there contributes to sustainable development goals.
6. Report and provide transparency on the use of carbon certificates.

Minister of Climate and Energy Rob Jetten: “Greenwashing is detrimental for trust in companies, the functioning of markets and for the climate. This is why today we are proposing a framework to improve the integrity of voluntary carbon markets. Our concrete recommendations give guidance to the market and direction to further EU discussions.”

H.E. Agnès Pannier-Runacher, Minister for the Energy Transition, France
“Following the launch, with Spain and the Commission, of the “Call to action for Paris aligned Carbon Markets” at the Finance Summit organised in Paris last June, today’s Joint Statement is an important milestone towards a higher level of integrity in carbon markets. Its focus on the demand-side claims is innovative and very much needed to bring trust in the carbon markets.”

H.E. Teresa Ribera, Deputy Prime Minister of the Government of Spain and Minister for Ecological Transition and Demographic Challenge, Spain
“Voluntary Carbon Markets can and must play an important complementary role in the fight against Climate Change. With these recommendations we are providing the right direction to the private sector to align their efforts with the long term goals of the Paris Agreement. The EU is committed to provide clear guidelines for VCM and is currently working on a set of regulations that help to build trust and give long-term signals to the private sector.”

H.E. Robert Habeck, Federal Minister Federal Minister for Economic Affairs and Climate Action, Germany
“In order to mobilize the urgently needed investments for a transformation in line with the Paris Agreements goal of keeping 1,5 within reach, we need to establish a carbon market that excludes funding for acitivities that are not aligned with this goal and encourage companies for investments which serve the 1,5-degree pathway. We can‘t afford fictitious transactions. The joint statement on Voluntary Carbon Market gives guidance for corporates on the use of carbon credits.  In a time of high uncertainty its purpose is to boost integrity both on supply and demand side of the voluntary carbon market by ensuring that climate actions contribute to ambition raising and transformational change.”

H.E. Kai Mykkänen, Minister of Climate and the Environment, Finland
“The voluntary carbon market has potential to significantly contribute to Paris Agreement’s goals and provide much-needed finance for global decarbonisation. High environmental integrity of units and true, transparent and reliable claims made on the basis of their use are imperative to unlock this potential. We are happy to have worked with the Netherlands to develop this additional guidance. We hope this guidance increases trust in high-integrity voluntary carbon markets and offers useful tools for market practitioners.”

H.E. Leonore Gewessler, Federal Minister for Climate Action, Environment, Energy, Mobility, Innovation and Technology, Austria
“The private sector plays a vital role on our way to climate neutrality – voluntary carbon markets can support and advance this transition. For them to be reliable and useful we need clear standards and common rules, to avoid greenwashing. This is what we are pushing for together.”

Source: Government of the Netherlands

News item | 09-12-2023 | 12:25

A carbon-free global economy requires the phase-out of fossil fuel subsidies. That’s why the Glasgow Climate Summit in 2021 agreed to phase out inefficient fossil fuel subsidies, on the back of a similar G20-decision dating back to 2009.
 
An analysis by the Dutch Government showed that in the Netherlands about half of all fossil benefits are tied up in international agreements. So if countries want to phase out these subsidies, they will have to join forces with other countries. Also, to prevent leakage of greenhouse gas emissions and economic activity to other places in the world. This is why the Netherlands established a coalition to phase out these benefits. The approach focuses on the following three pillars:

1. Transparency

The first step to reduce fossil subsidies is to gain insight. Member countries want to publish an overview of their fossil fuel subsidies before the next UN Climate Conference (COP29) in 2024. Cooperation between countries and international organizations (such as IMF, OECD, WTO, IEA, IMO and ICAO) is crucial for this. This includes developing a methodology that can be used by any country.

2. International agreements

The coalition is working together to identify and address international barriers to phasing out fossil subsidies. The Netherlands recently conducted an inventory showing that half of all subsidies stem from international agreements. Examples include the exemption from tax on heavy fuel oil in shipping and the exemption from tax on fuel consumption in international aviation. Other countries run into the same barriers and we need to address this together

3. National action

There will be an international dialogue to share knowledge, develop national strategies for phasing out fossil benefits, and seek joint action to minimize carbon leakage. This will also help maintain a level playing field between countries. This international dialogue can take place annually at COP meetings.

Minister for Climate and Energy Rob Jetten: “Fossil fuel subsidies have no place in a clean economy and must be phased out. This is why the Netherlands already started the phase-out for some 4.8 billion euros. At the same time, we see that half of all subsidies are tied up in international agreements and we must therefore cooperate with other countries. Therefore, I’m happy and proud to launch an international coalition to reduce fossil fuel subsidies together. We do this by creating transparency, addressing international agreements and working together on national phase-outs.”

Source: European Banking Authority

The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) launched today a public consultation on the second batch of policy mandates under the Digital Operational Resilience Act (DORA). Today’s package includes four draft regulatory technical standards (RTS), one set of draft implementing technical standards (ITS) and two sets of guidelines (GL). These policy instruments aim to ensure a consistent and harmonised legal framework in the areas of major ICT-related incident reporting, digital operational resilience testing, ICT third-party risk management and oversight over critical ICT third-party providers. The consultation runs until 4 March 2024.

Through DORA the ESAs are mandated to jointly develop a total of 13 policy instruments, presented in two batches. This second batch comprises the following:

• RTS and ITS on content, timelines and templates on incident reporting
• GL on aggregated costs and losses from major incidents
• RTS on subcontracting of critical or important functions
• RTS on oversight harmonisation
• GL on oversight cooperation between ESAs and competent authorities
• RTS on threat-led penetration testing (TLPT)

Further information on the draft policy products can be found in the introductory note.

Consultation process

Comments on this consultation can be sent to the ESAs via the consultation pages:

 Please note that the deadline for the submission for comments is 4 March 2024. All contributions received will be published following the end of the consultation, unless requested otherwise.

Public hearing

A public hearing will be organised in the form of a webinar on 23 January 2024 from 09:00 to 18:00 CET. The ESAs invite interested stakeholders to register using the Registration form by 16:00 CET on 19 January 2023. ​The dial-in details will be communicated to the registered participants in due time. 

Legal basis, background and next steps

DORA, which entered into force on 16 January 2023 and will apply from 17 January 2025, aims to enhance the digital operational resilience of entities across the EU financial sector and to further harmonise key digital operational resilience requirements for all EU financial entities.

The ESAs expect to submit the draft technical standards to the European Commission and issue the guidelines by 17 July 2024. 

Source: European Banking Authority

The three European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) today launched a second consultation related to the joint Guidelines on the system for the exchange of information relevant to fit and proper assessments. The consultation covers amendments extending the scope of the joint Guidelines to legal persons, thus ensuring the complete coverage of data subjects. These Guidelines aim to increase the efficiency of the information exchange between sectoral supervisors by harmonising practices and covering both natural and legal persons. The consultation runs until 15 January 2024.

Consultation process

ESAs invite comments only on the inclusion of legal persons in the scope of the Guidelines and the information to be exchanged in relation to them. Other comments will not be taken into account as they are in the scope of the first consultation that is now closed. 

Comments to this second consultation can be sent by clicking on the “send your comments” button on the EBA’s consultation page.

The deadline for submission of comments is 15 January 2024.

All contributions received will be published following the end of the consultation, unless requested otherwise.

Legal basis and next steps

The draft joint Guidelines have been developed in accordance with Article 31(a) of ESAs Founding Regulations, which mandates the ESAs to jointly establish a system for the exchange of information relevant to the assessment of the fitness and propriety of holders of qualifying holdings, directors and key function holders of financial institutions by competent authorities in accordance with the legislative acts referred to in Articles 1(2) of the ESAs Founding Regulations.

Source: European Banking Authority

The European Banking Authority (EBA) today published a Consultation Paper on draft regulatory technical standards (RTS) specifying the requirements for policies and procedures on conflicts of interest for issuers of asset-referenced tokens (ARTs) under the Markets in Crypto-Assets Regulation (MiCAR). These draft RTS aim at strengthening the management of conflicts of interest by issuers of ARTs and ensure convergence of requirements across the European Union.

Issuers of ARTs shall implement and maintain effective policies and procedures to identify, prevent, manage and disclose conflicts of interest.

The conflicts of interest policies and procedures should ensure that issuers of ARTs consider all the circumstances which may or may be perceived to influence or affect their ability or the ability of their connected parties to take impartial and objective decisions.

Against this backdrop, the draft RTS require issuers to pay particular attention to conflicts of interest that could arise in relation to the reserve of assets. Furthermore, they encompass specific provisions related to personal transactions and also specify that the remuneration procedures, policies and arrangements of the issuer should not create conflicts of interest.

The draft RTS underline the key role of the issuers’ management bodies, who are responsible to define and adopt the conflicts of interest policies and procedures. Finally, they set out the content of the disclosure which the issuers of ARTs should make available to the public in the relevant languages on their websites.

This publication is part of the third batch of MiCAR policy products.

Consultation process

Comments to the consultation paper can be sent by clicking on the “send your comments” button on the EBA’s consultation page. The deadline for the submission of comments is 7 March 2024. 

The EBA will hold a virtual public hearing on the consultation paper on 11 January from 9.30 to 13.00 CET. The EBA invites interested stakeholders to register using this link by 9 January 2024 at 16:00 CET. The dial-in details will be communicated to those who have registered for the meeting.

All contributions received will be published following the end of the consultation, unless requested otherwise. 

Legal basis and background

Article 32(1) of Regulation (EU) 2023/1114 on Markets in Crypto-assets requires issuers of ARTs to implement and maintain effective policies and procedures to identify, prevent, manage and disclose conflicts of interest.

The EBA has developed these draft RTS in accordance Article 32(5) of Regulation (EU) 2023/1114 which mandates the Authority to specify the requirements for the conflicts of interest policies and procedures for issuers of asset-referenced tokens as well as the details and methodology for the content of the disclosure.

The conflicts of interest concerned are the ones that could arise between the issuers of ARTs and a defined list of connected parties as well as between the issuers of ARTs and the holders of ARTs.

The mandate has been elaborated in close cooperation with the European Securities and Markets Authority (ESMA), who is mandated to develop a similar RTS for crypto-asset service providers (CASPs) under Article 72(5) of that Regulation. The present draft RTS on CoI for issuers of ARTs is closely aligned with the RTS on CoI for CASPs to provide for convergence of the requirements. Some differences nevertheless exist, which are justified by the different activities involved.

When developing these RTS, the EBA has taken into account the framework on CoI in other Union legislative acts on financial services, including Directive 2014/65/EU (MIFID) and Directive 2013/36/EU (CRD). The EBA has also drawn on the provisions of the EBA’s Guidelines on internal governance under the IFD (Directive 2019/2034) and the Guidelines on outsourcing arrangements.