News Update Financial Regulatory
Developments on remuneration, AML/CFT compliance and PSD2
4 juli 2022
In this News Update, we discuss the Act on additional remuneration measures for financial enterprises that will enter into force on 1 January 2023, the European Banking Authority's ("EBA") Guidelines on the role and responsibilities of the anti-money laundering and countering the financing of terrorism ("AML/CFT") compliance officer and the management body of credit or financial institutions, and EBA's response to the European Commission’s call for advice on the review of the Payment Services Directive ("PSD2"). We further highlight some other financial regulatory publications issued since our last News Update was published.
Act on additional remuneration measures for financial enterprises enters into force on 1 January 2023After the House of Representatives and the Senate passed the Bill, the Act on additional remuneration measures for financial enterprises (the "Act") was published in the Bulletin of Acts and Decrees (Staatsblad, only in Dutch) on 13 June 2022. By Royal Decree (only in Dutch) of 14 June 2022, the effective date was set at 1 January 2023.
The Act amends the Financial Supervision Act (Wet op het financieel toezicht, "FSA") on several points regarding remuneration. Directors and employees of financial enterprises are obliged to retain shares that are part of the fixed remuneration for a minimum period of five years. In their remuneration policies, financial enterprises must account for the relationship between the remuneration of directors, supervisory directors and employees of the enterprise and their social function, and for the method used to establish that relationship. The Act also limits the possibilities to use the exception ground in the FSA to deviate from the bonus cap for staff not subject to a collective labour agreement (collectieve arbeidsovereenkomst), as the legislator found that this exception is often used for staff for whom this exception is not intended. From 1 January 2023, the use of this exception will only be possible in special cases. Proprietary traders, on the other hand, will be exempt from the bonus cap, which is in line with European legislation for investment firms. Furthermore, financial enterprises will be obliged to report to the supervisor on an annual basis if they use the exception to deviate from the bonus cap. The Act also contains more technical amendments to the remuneration rules in the FSA.
EBA | Guidelines on the role and responsibilities of the AML/CFT compliance officer and the management body of credit or financial institutionsOn 14 June 2022, EBA published its Guidelines specifying the role and responsibilities of the anti-money laundering and countering the financing of terrorism ("AML/CFT") compliance officer and the management body of credit or financial institutions. The Guidelines aim to ensure a common interpretation and adequate implementation of AML/CFT internal governance arrangements across the EU in line with the requirements of the Anti-Money Laundering Directive ("AMLD").
The Guidelines set expectations on the role, tasks, and responsibilities of the AML/CFT compliance officer and the management body. Credit or financial institutions should appoint one member of their management body who will ultimately be responsible for implementing the AML/CFT obligations. The Guidelines clarify the tasks and functions of the appointed person. They also describe the roles and responsibilities of the AML/CFT compliance officer when this person is appointed by the management body pursuant to the proportionality criteria. When the credit or financial institution is part of a group, the Guidelines prescribe that a group AML/CFT compliance officer should be appointed and clarify this person’s tasks and responsibilities.
The Guidelines complement other relevant EBA guidelines on wider governance arrangements and suitability checks. They will be translated into the official EU languages and published on the EBA website. Competent authorities must report whether they comply with the Guidelines within six months after the translations are published. The Guidelines will apply from 1 December 2022.
EBA | Response to call for advice on the review of the Payment Services DirectiveOn 23 June 2022, EBA published its response to the European Commission’s call for advice on the review of the Payment Services Directive ("PSD2"). EBA put forward more than 200 proposals that would contribute to the development of the single EU retail payments market and ensure a harmonised and consistent application of the legal requirements across the EU. The proposed amendments include:
- merging PSD2 and the Electronic Money Directive;
- clarifying the application of strong customer authentication ("SCA") and the transactions in scope;
- addressing new security risks for customers, such as social engineering fraud where customers are tricked into initiating a payment transaction;
- addressing concerns about authentication approaches that have excluded certain groups of society from using payment services online;
- addressing underlying issues and obstacles when providing payment initiation services ("PIS") and account information services ("AIS"), including proposals for (i) AIS providers to apply their own SCA with their customers instead of relying on authentication procedures by banks, (ii) empower customers to remain in control of their data; and (iii) support the development of high-quality interfaces across the EU;
- moving from 'Open banking’ to ‘Open finance’ (or otherwise expanding access to payment accounts data towards access to other types of financial data) and the opportunities and potential challenges associated with it based on the PSD2 experience;
- addressing the enforcement shortcomings that concern implementing and applying SCA for e-commerce card-based transactions and removing obstacles when providing AIS and PIS;
- addressing unwarranted de-risking practices by banks affecting payment and e-money institutions; and
- adjusting the prudential requirements, particularly concerning initial capital, own funds, the use of professional indemnity insurance, the proposal for recovery and wind-down for significant payment institutions and possible consolidated group supervision.
We also discuss this subject in our June 2022 News Update.
Other financial regulatory publicationsWe have highlighted a selection of other publications by legislatures and regulators for the financial markets and financial supervision since our June 2022 News Update.
Ministry of Finance
- Decree (only in Dutch) setting the date of entry into force of the Implementing Act for the Covered Bonds Directive (Implementatiewet richtijn gedekte obligaties) and the Implementing Decree for the Covered Bonds Directive (Implementatiebesluit richtlijn gedekte obligaties)
- Consultation on the Regulation on indexation exemption limits Solvency II Basic (Regeling indexatie vrijstellingsgrenzen Solvency II Basic, only in Dutch)
Dutch Authority for the Financial Markets
- News release on the mortgage benchmark interest rate for the third quarter of 2022
Dutch Central Bank (De Nederlandsche Bank)
- Consultation on the Amendment Regulation on the Regulation on specific provisions CRD and CRR 2019 (Wijzigingsregeling Regeling specifieke bepalingen CRD en CRR 2019, only in Dutch)
- News release (only in Dutch) on cancelling PSD2 fraud reporting
- Occasional study 'A macroprudential perspective on cyber risk'
European Supervisory Authorities
- Final Report on EMIR regulatory technical standards ("RTS") amending the bilateral margin requirements with regards to intragroup contracts
- Opinion on the European Commission request for technical advice on issues related to the Mortgage Credit Directive
- Draft Principles that should be applied in ensuring representativeness of the IRB-relevant data impacted by the COVID-19 pandemic and related measures
- Consultation Paper on draft RTS on the identification of a group of connected clients
- Annual Report 2021
European Insurance and Occupational Pensions Authority
- Consultation Paper on Supervisory Statement on exclusions in insurance products related to risks arising from systemic events
- Consultation Paper on Supervisory Statement on management of non-affirmative cyber underwriting exposures
- Consultation Paper on the advice on the review of the securitisation prudential framework in Solvency II
- Feedback Statement on Open Insurance: accessing and sharing insurance-related data
- Report on EIOPA's supervisory activities in 2021
- Financial Stability Report June 2022
- Annual Report 2021
European Securities and Markets Authority
- Annual Report 2021
Single Resolution Board
- Annual Report 2021
Basel Committee on Banking Supervision
- Principles for the effective management and supervision of climate-related financial risks
If you have any financial regulatory questions, please do not hesitate to contact Berry van Wijk and Roel Theissen. For questions related to Investment Management, you can also contact our colleagues Oscar van Angeren and Marthe Bollen.