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Source: Government of the Netherlands

News item | 28-11-2023 | 14:49

Bank accounts and insurance

Sex workers who want to apply for a business bank account are now often refused due to the risk of money laundering. Taking out insurance is also not a matter of course for sex workers. The approach has brought sex workers, banks and insurers together to make agreements on opening business bank accounts and insurance for sex workers.  

Prejudices 

Prejudices play a major role in the daily lives of sex workers. For instance, doctors sometimes without any reason encourage sex workers to quit their work, or medical complaints are wrongly linked to their work. With the online course ‘help and care for sex workers’ offered to healthcare providers, these prejudices should be eliminated.  

Sex workers also do not always feel taken seriously by the police due to prejudice. Partly because of this, only one in five sex workers report violence while working. That is why the police are developing a teaching module for officers in training that should increase knowledge about sex workers, so that prejudices are eliminated. In addition, sex workers are better informed about their rights and obligations when reporting violence. We also focus on increasing knowledge about sex workers among municipal officials to eliminate prejudice. Together we must ensure prejudices about sex work disappear.

Source: European Banking Authority

The European Banking Authority (EBA) today extended its risk-based anti-money laundering and countering the financing of terrorism (AML/CFT) supervision guidelines to AML/CFT supervisors of crypto-asset service providers (CASPs). The new guidelines set clear expectations of the steps supervisors should take to identify and manage money laundering and terrorism financing (ML/TF) risks in this sector and are an important step forward in the EU’s fight against financial crime.

CASPs can present high ML/TF risks. They also operate across borders. This is why a common supervisory approach to tackling ML/TF risks in that sector is important. By extending the scope of its AML/CFT Supervision Guidelines to supervisors of CASPs, the EBA fosters a common understanding, across all Member States, of the risk-based approach to the AML/CFT supervision of CASPs and how it should be applied.

Today’s amendments include guidance on the sources of information competent authorities should consider when assessing ML/TF risks associated with CASPs. They highlight the importance of a consistent approach in setting supervisory expectations, where multiple competent authorities are responsible for the supervision of the same institutions. They also emphasise the importance of training so that staff from competent authorities have the technical skills and expertise necessary to carry out their roles.

The EBA will issue AML/CFT guidance for CASPs through forthcoming amendments to the EBA’s ML/TF Risk Factors Guidelines, and new Guidelines to prevent the abuse of fund and crypto-asset transfers for ML/TF purposes.

Legal basis, background and next steps

Directive (EU) 2015/849 puts the risk-based approach at the centre of Europe’s AML/CFT regime. The requirements in this Directive were complemented by the mandate given to the EBA under Article 48(10) of the same Directive requiring the EBA to issue guidelines to competent authorities on the characteristics of a risk‐based approach to AML/CTF supervision.

Article 36 of Regulation (EU) 2023/1113 requires the EBA to issue Guidelines addressed to competent authorities on the characteristics of a risk-based approach to supervision of CASPs and the steps to be taken when conducting such supervision.

Additionally, Regulation (EU) 2023/1114 will bring crypto-asset services and activities within the EU regulatory scope and will ensure that CASPs become subject to EU AML/CFT obligations and supervision. This will ensure that the AML/CTF regulatory and supervisory framework is aligned with international recommendations and that the ML/TF risks associated with this sector are addressed and effectively managed.

The amending Guidelines will be translated into the official EU languages and published on the EBA website. A consolidated version will also be published on the EBA website. The deadline for competent authorities to report whether they comply with the Guidelines will be two months after the publication of the translations. The amending Guidelines will apply from 30 December 2024.

Source: European Banking Authority

The European Banking Authority (EBA) today launched a public consultation on new Guidelines on preventing the abuse of funds and certain crypto-assets transfers for money laundering and terrorist financing purposes. These ‘travel rule’ Guidelines specify the steps that Payment Service Providers (PSPs), Intermediary PSPs (IPSPs), crypto-asset service providers (CASPs) and Intermediary CASPs (ICASPs) should take to detect missing or incomplete information that accompanies a transfer of funds or crypto-assets. They also detail the procedures all these providers should put in place to manage a transfer of funds or a transfer of crypto-assets that lacks the required information. These Guidelines aim at forging a common understanding to ensure the consistent application of EU law as well as a stronger anti-money laundering and countering the financing of terrorism (AML/CFT) regime. The consultation runs until 26 February 2024.

The main objective of these Guidelines is to prevent the abuse of funds and crypto-assets transfers for terrorist financing and other financial crime purposes. The Guidelines also ensure that relevant authorities can fully trace such transfers where this is necessary to prevent, detect or investigate money laundering and terrorist financing. To achieve this, the EBA promotes the development of a common understanding by PSPs, IPSPs, CASPs and ICASPs and competent authorities across the EU, of what are the effective procedures to detect and manage the transfer of funds and crypto-assets lacking the required information on the payer/originator and the payee/beneficiary, and how they should be applied.

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 26 February 2024. 

The EBA will hold a virtual public hearing on the consultation paper on 17 January 2024 from 14:00 to 16:00 Paris time. The EBA invites interested stakeholders to register using this link by 3 January  2023 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, background

In July 2021 the European Commission issued a legislative package with four proposals to reform the EU’s legal and institutional AML/CFT framework. It included a proposal for a recast of Regulation (EU) 2015/847, now published in the Official Journal of the European Union since June 2023 as Regulation (EU) 2023/1113. The recast brings the EU’s legal framework in line with the Financial Action Task Force (FATF)’s standards by extending the obligation to include information about the originator and beneficiary to CASPs – the so-called “travel rule”. It also amends Directive (EU) 2015/849 to subject CASPs, which are authorized in accordance with the Regulation (EU) 2023/1114 to the same AML/CFT requirements and AML/CFT supervision as credit and financial institutions.

Article 36 (first and second subparagraphs) of Regulation (EU) 2023/1113 and Article 19a(2) of Directive (EU) 2015/849 mandate the EBA to issue guidelines to competent authorities, PSPs and CASPs on: (a) the measures those providers should take to comply with certain articles of Regulation (EU) 2023/1113; (b) the technical aspects of the application of this Regulation to direct debits; and (c) the measures, including the criteria and means for identification and verification of the identity of the originator or beneficiary of a transfer made to or from a self-hosted address.

The EBA is proposing to deliver this mandate by repealing the 2017 Joint European supervisory authorities (ESAs)’s Guidelines under Article 25 of Regulation (EU) 2015/847 on the measures payment service providers should take to detect missing or incomplete information on the payer or the payee, and the procedures they should put in place to manage a transfer of funds lacking the required information (JC/GL/2017/16) and replace them with new Guidelines.

Source: European Banking Authority

The European Banking Authority (EBA) today published its final draft Regulatory Technical Standards (RTS) on the assessment methodology under which competent authorities verify institutions’ compliance with the requirements applicable to their internal models under the Fundamental Review of the Trading Book (FRTB) rules. These RTS are part of the phase 4 deliverables of the EBA roadmap on market risk and counterparty credit risk approaches. Today’s final draft RTS represent a significant milestone in the implementation of the FRTB internal models in the EU.

The RTS provide clarity on the assessment performed by competent authorities when granting an internal model approval under the FRTB framework. In particular, they set out a framework for competent authorities to assess the FRTB requirements and focus on three central themes: governance, the internal risk-measurement model – covering the expected shortfall, and the stress scenario risk measure – and the internal default risk model.

The RTS include assessment techniques that the competent authorities must apply, while other techniques remain optional depending on the situation of the institution, for example, on the basis of proportionality considerations. As a result, these RTS provide clarity regarding the nature of requests institutions can expect to receive from competent authorities during the investigation phase.

Legal basis and background

These draft RTS have been developed according to Article 325az(8)(b) of Regulation (EU) No 575/2013 (Capital Requirements Regulation – CRR), which mandates the EBA to specify the assessment methodology under which competent authorities verify an institution’s compliance with the requirements applicable to internal models.

One of the prerequisites for an institution to use the new internal model approach (IMA) for calculating its own funds requirements for market risk is the approval from its competent authority. To obtain such an approval, the institution is subject to a thorough and comprehensive assessment of its internal model by the competent authority to ensure it complies with the relevant regulatory provisions.

Source: Government of the Netherlands

News item | 21-11-2023 | 15:00

Minister Mark Harbers (Infrastructure and Water Management): “One of the big challenges in the North Sea is space. Every country wants space for ships, but also sustainable energy, sufficient space for sustainable fisheries and a healthy habitat for birds, fish and mammals. I see that together we can tackle these challenges much more efficiently, for example by ensuring that we do not build a wind farm at our border if Germany plans a shipping lane on their side. Today’s agreements are a first step towards optimizing the available space.”

International example

The Netherlands, Belgium, France, Germany, Denmark, Norway, Ireland, Sweden and the UK signed multiple working agreements. Under the name Greater North Sea Basin Initiative (GNSBI), they organize their government structures in such a way that both countries and sectors can find each other faster and better. This will make it easier to share knowledge. For instance about future prospects of fishing or about the combined effect of wind farms, sand extraction and shipping for the North Sea.

Previously, the European Commission indicated that GNSBI is an example to the rest of Europe on how spatial planning can be optimized internationally.

Source: Government of the Netherlands

News item | 20-11-2023 | 13:31

Participants of this yearly ministerial meeting are: Belgium, Denmark, France, Germany, Ireland, Luxembourg, the Netherlands, Norway, Sweden, and the European Commission. The United Kingdom attended as a guest. During the past year, the Netherlands, alongside the European Commission, was chairman of the North Seas Energy Cooperation (NSEC).

Actions

As co-chair, The Netherlands was keen to translate national ambitions to European actions. The agreements which are recorded in the Action Agenda bring the European Wind Power Package (recently presented by the European Commission) to the next phase. At the conference in the Hague, Minister Jetten handed the Action Agenda to the new NSEC chairman Denmark.

As part of this ambition, a collective NSEC tender planning is launched. The tender planning translates NSEC countries’ broad ambitions into tangible progress, auctioning around 15 GW every year, awarding almost 100 GW between this year and 2030. This will increase the predictability in the wind power sector and allow for better collaboration. For example, it will facilitate of better cooperation and coordination on cables, pipes, harbour infrastructure and access to resources. This helps the European wind power sector with their mid- and long-term (financial) planning. Moreover, the countries will better coordinate their infrastructure planning at sea. In January 2024 the European Network of Transmission System Operators for Electricity (ENTSO-E), will publish a shared plan for infrastructure in the North Sea, with input from NSEC countries. This is an important step on the road to a European integrated energy system in 2050. This plan takes into account the need for a fair balance with other sectors and users in the North Sea, such as the fishing- and transport industry.

Commissioner for Energy Kadri Simon: “Europe’s energy mix is becoming cleaner and greener, and offshore renewables will have an indispensable part in the future energy mix. The North Sea is leading the way in their deployment, and has the potential to become Europe’s “Green Power Plant”. Our discussions today showed the joint determination and commitment to continue the work to deliver on our offshore ambitions, and to take the work forward to boost the competitiveness of this vital sector. I want to thank the Netherlands for hosting this year’s meeting in the Hague, and for the impressive work brought forward under the NSEC co-presidency.”

Minister for Climate and Energy Rob Jetten: “In recent years, North Sea countries shared ambitious plans for sustainable offshore wind energy development. Now, it is time to bring these ambitions into action. We all share the responsibility to develop the North Sea offshore energy plans in a responsible manner, in coordination with other North Sea-users and minimizing ecological impact. Close collaboration is the only way to successfully reach our energy ambitions. Today we start with the joint actions to take the sector to the next phase.”

Challenges

The development of offshore wind energy must take place in balance with other sea users and minimize negative ecological impact. Furthermore, the offshore wind sector increasingly experiences challenges such as high inflation and increased resource prices, limited availability of labour, and complex licensing systems. For a healthy offshore energy sector and an energy-independent Europe, closer cooperation amongst Member States and the industry is required.

This is echoed by a new study carried out by Royal HaskoningDHV (commissioned by NSEC), highlighting the critical role harbours take in the development, maintenance, and system integration of offshore wind energy. The study indicates that without additional common action, the current and planned capacity of harbours surrounding the North Seas is insufficient to reach the targets of 2030. It shows the bottlenecks for harbour development and makes several concrete recommendations. One of these recommendations is working on a shared European tender planning, as foreseen under the European Wind Power Action Plan.

Source: European Banking Authority

The EBA publishes final templates to collect climate-related data from EU banks

17 November 2023

Source: European Banking Authority

• Expected credit loss (ECL) models now lead to timelier recognition of loss provisions. However, most findings confirm previously raised issues and some divergence with the EBA’s expectations on IFRS 9 implementation.
• Overlays are becoming an integral part of the ECL framework and therefore, more efforts are needed to reduce the high degree of judgment for their calibration. Their usage under robust methodological and sound governance frameworks needs to be better framed.
• Backtesting is a key area that requires further investments by institutions to enlarge scope and robustness of the analysis and to improve the use of the backtesting results for the periodic review of IFRS 9 models.

The European Banking Authority (EBA) today published its second Report on the International Financial Reporting Standard (IFRS) 9 implementation by EU institutions complementing the observations already included in the last IFRS 9 Monitoring Report, published in November 2021. This Report focuses on high default portfolios (HDPs) and aims to promote further improvements in the ECL model practices among EU institutions by providing transparency on the major areas of concern identified by the EBA.  In line with the IFRS 9 Roadmap, the EBA will continue monitoring and promoting the consistent application of IFRS 9.

Main observations

Since the date of the first implementation of IFRS 9, institutions have made significant progress in the implementation of their ECL impairment models despite a challenging environment. According to benchmarking analyses, the existence of a variety of practices – as a result of the principle-based nature of the standard – might explain part of the variability observed among institutions on the final ECL fig­ures of HDPs. Some of these practices continue to raise prudential concerns and are expected to be promptly addressed by EU institutions.

The EBA reiterates the importance of relying on a robust and broad set of significant increases in credit risk (SICR) indicators to assess staging transfers. The persistent lack of collective SICR as­sessment and the different approaches followed by some institutions to determine the SICR quantitative thresholds continue to be areas of concern from a prudential perspective.

Overlays, being temporary or more permanent, have allowed institutions to account for risk factors or specific circumstances not adequately captured by models. Different practices have been ob­served in terms of risks consideration, approaches followed for their calibration and level at which these overlays are applied. This may prevent reflecting any additional sources of risk.

The impact of forward-looking information and non-linearity effect remains generally modest across portfolios. Among others, this may stem from the fact that the assump­tions underlying the macroeconomic fore­casts, the use of excessively long forecasting period and some smoothening practices prevent reflecting the point in time and forward looking nature of IFRS figures.

Finally, the EBA has observed that while institutions have generally de­veloped backtesting methodologies for their ECL models, there are important differences among banks with reference to the state of their implementation, the scope of risk factors under consideration (including overlays) and the type of anal­ysis performed.  A lack of proper follow-up actions on backtesting results raises prudential concerns, es­pecially when tests performed reveal underperformances and low predictive pow­ers of the model estimates.

Next steps

The EBA will continue monitoring and promoting the consistent application of IFRS 9. The observations reported in the current and past monitoring reports will also feed future exchanges with all concerned stakeholders on IFRS 9 implementation – including any further debates on the post implementation review of IFRS 9. The benchmarking exercise will continue to be used to foster a consistent implementation of the standard. Supervisors will continue to ensure a high quality and consistent application of IFRS 9 implementation and a follow up of the main findings of the EBA reports.

Legal basis and background

This Report has been published by the EBA in line with its intention to continue scrutinising the implementation of IFRS 9 in the EU, as communicated in the IFRS 9 Roadmap, published in July 2019. In this context, this report summarises the findings from monitoring activities conducted by the EBA, specifically on HDPs. The publication complements the main findings of the previous IFRS 9 Monitoring Report, published in November 2021.

Source: Government of the Netherlands

News item | 15-11-2023 | 09:00

Expedited liquidations allow entrepreneurs to close down their business in time when the business no longer contains anything of value, for example, to sell the last stocks and use these proceeds to pay off as many debts as possible. In this way, an entrepreneur can prevent debts from mounting further if, for example, they can no longer be paid due to the loss of income. The alternative is often bankruptcy where creditors get much less of their money back. New measures should prevent potential abuse of expedited liquidations, increase transparency and offer creditors more legal protection. For example, entrepreneurs must actively inform creditors about the termination of the business.

In addition, in the event of an expedited liquidation, entrepreneurs will be required to submit financial accounts to the Chamber of Commerce. This makes it clear what the last proceeds were spent on and why more debts could not be paid. Greater transparency also makes it possible for creditors to take action against the expedited liquidation, for example by demanding access to the records, holding directors liable, or having the expedited liquidation reversed by the court. Abusing an expedited liquidation is punishable under the Economic Offenses Act and can lead to an administrative ban of up to five years. 

To quickly introduce the measures for greater transparency and legal protection, an interim act has been chosen by which the measures will apply for two years. After this period, the measures can be extended.  

Source: Government of the Netherlands

News item | 10-11-2023 | 14:48

Now that the Council of State has deliberated on the bill, it will be put to the vote in the House of Representatives. The bill focuses on participants of terrorist organisations who commit terrorist crimes punishable by life imprisonment. This includes, for example, committing acts of terrorism and other severe terrorism-related violence.

Minister Yeşilgöz-Zegerius: “Increasing the maximum sentence from 15 to 20 years sends an important signal to people who intend to join terrorist organisations that aim to impose their ideology on others through the most brutal and destructive violence. Participants are jointly culpable. As far as I am concerned, this should be accompanied by a punishment that further clarifies this message.”

The role of participants

Participants are of great importance to terrorist organisations. To achieve their objectives, terrorist organisations depend on participants. Participants in terrorist organisations make an indispensable – and indisputable – contribution to that organisation’s criminal objectives. They do so by preparing, supporting or committing acts of terrorism, for example.

Maximum penalty

At present, a maximum sentence of 15 years applies for participation in a terrorist organisation. That maximum sentence has remained unchanged since 2004, despite developments over roughly two decades. Accordingly, the Minister of Justice and Security now seeks to amend the maximum sentencing.

The maximum sentence for leading a terrorist organisation will not be increased. This is, after all, already subject to the highest maximum sentence (life imprisonment or temporary imprisonment of up to 30 years).

House of Representatives

After the House of Representatives has debated the bill, it is still to be passed through the Senate.