Insights

In this issue:

• MFSA issues helpful blueprint for Source of Wealth and Source of Funds declarations
• EBA echoes the EU Commission’s call for a more efficient framework in AML and CFT
• VFA Agents get Reporting Obligations
• MFSA Circular on upcoming EU initiatives
• ESMA publishes national thresholds for shareholder identification under Revised Shareholders Directive
• EBA updates work programme following effects of COVID-19
• MFSA issues circular to credit institutions and foreign branches on Supervisory Reporting data
• ECB publishes consolidated banking data for end-date March 2020
• ECB extends liquidity line by six months
• ECB’s Governing Council publishes monetary policy decisions

MFSA issues helpful blueprint for Source of Wealth and Source of Funds declarations

The Authority just published a circular on the Guidance Note on the submission of the Source of Wealth and Source of Funds. This informative Guidance Note will assist individuals requested by the MFSA to provide a SOW/SOF declaration as it aptly outlines what the MFSA’s expectations are with respect to the contents which these documents should have.

Link to circular

EBA echoes the EU Commission’s call for a more efficient framework in AML and CFT

The European Banking Authority (“EBA”) has published its response to the European Commission’s Action Plan aimed at creating a comprehensive Union policy on the prevention of money laundering and terrorism financing, as published on 7 May 2020.

The EBA submitted a number of considerations and recommendations for the European Commission, among which the EBA suggested that the EU AML/CFT legal framework is further harmonised to reduce the risks of gaps created by divergent approaches when transposing the framework into national law.

Link to press release

VFA Agents get Reporting Obligations

On 13 August 2020, the MFSA published an updated version of Chapter 1 of the Rulebook applicable to VFA Agents. Through the amendments, VFA Agents are now subject to reporting obligations, as reflected under Sub-section 9 of Section 2 of Title 3 of the Rulebook.

Link to circular

MFSA Circular on upcoming EU initiatives

The MFSA has published a circular highlighting the legislative instruments which will come into force within the next year, as well as information on other EU initiatives.

The EU Commission has made significant progress in three areas, namely the Taxonomy Regulation, the Disclosure Regulation and the Benchmark Regulation. The Commission is also planning on publishing its Renewed Sustainable Finance Action Plan in Q3 of 2020.

In light of all this, the MFSA intends to work closely with regulated entities and financial market practitioners to prepare for the upcoming regulatory changes. The MFSA intends to consult with all stakeholders involved prior to legal obligations being enacted.

Link to circular 

ESMA publishes national thresholds for shareholder identification under Revised Shareholders Directive

On the 31 August 2020, the ESMA published a compilation of the thresholds that Member States have adopted when it comes to the identification of shareholders under Directive 2017/828 (“the Shareholders Directive”).
As one of the many ways in which the Shareholders Directive tries to encourage shareholder engagement, member states are bound to ensure that companies have a right to identify their shareholders. The Directive allows national authorities to limit this right by imposing a threshold of certain percentage of shares or voting rights which a shareholder can have, which cannot exceed 0.5%.

Link to compiled thresholds

EBA updates work programme following effects of COVID-19

The EBA has been forced to alter its work programme for 2020, due to the disruption that the COVID-19 pandemic has brought. The updated work programme seeks to provide the necessary support that banks require while alleviating the burden on banks.

A number of other changes have been done to the work programme. Data collection for the purpose of ad-hoc analysis to support policy options has been postponed until further notice. Furthermore, there will be no publication of consultation papers unless it is considered to be critical.

Link to revised programmes 

MFSA issues circular to credit institutions and foreign branches on Supervisory Reporting data

The MFSA has issued a circular regarding the implementation of updates on re-submissions of ITS on Supervisory Reporting data through the Licence Holder (LH) Portal.

Among the new updates, institutions are to be aware that when they make a submission or re-submission of Supervisory Reporting Data using the LH Portal, they must provide a reason for doing so.

This feature will go live on the 3 September 2020.

Link to circular

ECB publishes consolidated banking data for end-date March 2020

The European Central Bank has published the consolidated banking data with reference to end-March 2020. The data comprises of 324 banking groups and 2,657 credit institutions, together covering almost 100% of the EU banking sector balance sheet.

Among the published information, the data shows that the total assets of EU-headquarted credit institutions has increased by 4.9% while the EU non-performing loans ratio has dropped by 0.55 percentage points year on year to 2.98% in March 2020.

Link to full report

ECB extends liquidity line by six months

The ECB, together with Hrvatska Narodna Banka (Croatian National Bank, HNB) as well as the Banca Naţională a României (National Bank of Romania, BNR) have decided to extend their liquidity line until June 2021.

The lines were set up to counteract any possible euro liquidity needs in the presence of market dysfunctions due to the COVID-19 shock.

Press release

ECB’s Governing Council publishes monetary policy decisions

On the 7 September 2020, the ECB’s Governing Council took a number of key monetary policy decisions.

Among such decisions, the Council announced that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively.

Furthermore, its pandemic emergency purchasing process (PEPP) will continue with a total envelope of €1,350 billion.

Link to document