Insights

In this issue:

• MFSA advises financial services entities on giveaway marketing ploys
• Awareness campaign by the MFSA on Online Banking
• 2021 EU-wide stress test results are out!
• EBA revises the technical standards on resolution planning reporting
• EBA is seeking feedback on the role of AML/CFT compliance officers
• EBA clarifies queries under the Payment Services Directive (PSD2)
• MFSA’s capital market strategy- Pillar II ‘Revisiting the Regulatory Framework’
• EU Commission proposes legislative overhaul to the AML CFT rules
• MFSA issues cross-sectoral questionnaire on the management of exposures related to ICT and Cybersecurity

MFSA advises financial services entities on giveaway marketing ploys

In its role to safeguard consumer rights, the local regulator advises on ‘Marketing campaigns in relation to financial products or services linked to rewards to giveaways’. Through this communication, the MFSA states reminds financial service provider of their duty in ensuring consumer protection in their marketing campaigns specifically targeting the general public to purchase financial products which are not necessarily required or to provide personal details, with the possibility of winning prizes or rewards in cash. Furthermore, the regulator has also published a set of guidelines in view of setting out the parameters within which such advertising models can be used by any regulated entity.

Awareness campaign by the MFSA on Online Banking

The MFSA has announced that it will be launching an educational campaign on Digital/Online Banking through which it strives to raise awareness on the safe use of online banking and its advantages. After the increase in importance and use of online banking due to the COVID-19 pandemic, the MFSA has decided to set up this campaign, which shall also reach those who still queue for services that are already easily offered digitally through online banking services including acquiring information on account balances, bank statements, transactions, and transferring funds to third parties to make payments such as rent and bill payments.

This campaign shall consist of educational videos and posters which shall be published online and distributed throughout local bank branches which shall inform the public of the digital banking services available and to provide several tips to be taken up by consumers in using any digital banking services.

Link for more details on digital banking

2021 EU-wide stress test results are out!

The EBA has published the results of the 2021 EU-wide stress test, with 50 banks participating from 15 EU and EEA countries covering 70% of the assets of the EU banking sector. As part of its obligations in ensuring the proper functioning and integrity of financial markets and the stability of the European financial system, the EBA conducts this EU-wide stress test analysis as one of its main supervisory tools in monitoring and analysing the markets and the financial sector. In fact, through this test, the EBA tries to consistently assess EU Banks’ resilience over a three-year period under two scenarios: baseline scenarios and an adverse scenario, with the latter relating to severe shocks felt by the banking sector especially considering the impact of COVID-19. The individual bank results encourage market discipline and are used in the supervisory decision-making process.

Further information about the EBA’s EU-Wide Stress Test can be found here, and a summary of the key results of such test can be found here.

EBA revises the technical standards on resolution planning reporting

The EBA has published the draft implementing technical standards (the “ITS”) amending the ITS on provision of information for the purposes of resolution plans (Implementing Regulation (EU) 2018/1624). The aims of these amendments are twofold:

• To bring the ITS in line with the provisions of the Bank Recovery and Resolution Directive (Directive 2014/59/EU) (the “BRRD”) the changes introduced by the second BRRD (Directive 2019/879/EU) relating to the minimum requirement for own funds and eligible liabilities; and
• To remove some encumbrances to compliance at a technical level.

The amended ITS are set to come into force for the first time on 31 December 2021.

Link to final report

EBA is seeking feedback on the role of AML/CFT compliance officers

The EBA has launched a public consultation on new Guidelines addressing the complete Anti-Money Laundering and Countering the Financing of Terrorism (the “AML/CFT”) governance set up, which has never been done so comprehensively at EU level. In particular, the guidelines deal with the role, tasks and responsibilities of AML/CFT compliance officers and the management body, and their interactions with each other, including at group level. These Guidelines, once in adoption, shall apply to all operators across the financial sector that are within the scope of the AML Directive (Directive (EU) 2015/849). Anyone who wishes to subject their comments on the draft Guidelines may do so through the EBA’s consultation page until 2 November 2021.

Link to the consultation paper

EBA clarifies queries under the Payment Services Directive (PSD2)

The EBA has published its clarifications to the sixth set of issues raised by participants of its Working Group (the “WG”) on Application Programming Interfaces (the “APIs”) under the Payment Services Directive (Directive (EU) 2015/2366) (the “PSD2”). This working group, established by the EBA in January 2019, is comprised of 30 individuals acting as representatives of market participants who aim to facilitate industry preparedness for the Regulatory Technical Standard on Strong Customer Authentication and Common and Secure Communication and to support the development of high-performing and customer-focused APIs under PSD2. In particular, the clarifications deal with the authentication of electronic signatures, biometrics and authentication of mobile apps, the prevention of social engineering fraud, and the complexity of the authentication process, amongst other issues.

Link to the EBA’s responses

MFSA’s capital market strategy- Pillar II ‘Revisiting the Regulatory Framework’:

The MFSA, as part of the second pillar of its Capital Markets Strategy titled ‘Revisiting the Regulatory Framework’ and following its proposal to revise the Maltese regulatory framework for Capital Markets, has published a circular outlining the amendments to the Financial Markets Act (Chapter 345 of the Laws of Malta) (the “Act”). by Act XLVI of 2021. The main objectives of the MFSA in revising the Maltese regulatory framework for capital markets and amending the Act were to enhance its functions as the Competent Authority and its supervisory and investigatory powers in view of the requirements of the Prospectus Regulation from a capital markets perspective.

Consequently, the MFSA announces that the Listing Rules for Main Market and the Wholesale Securities Markets and the Listing Authorities Policies are being amended in order to implement the amendments made to the main Act into such rules and policies, aligning them with the provisions of the main Act. These amendments have become effective upon the publication of this circular.

Link to circular

EU Commission proposes legislative overhaul to the AML CFT rules

The MFSA has published a circular to inform Financial Market Participants and Financial Advisors of the legislative measures proposed by the European Commission on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing that were published on 20 July 2021. This overhaul of the AML/CFT Rules would encompass the following measures:

1. A new single EU AML Rulebook which would harmonise customers due to diligence requirements across the internal market;
2. A legislative proposal for the establishment of an AML EU Agency which shall have a direct and/or indirect supranational supervisory function at EU level;
3. A Sixth Directive on AML./CFT (the “AMLD6”) replacing Directive 2015/849/EU (AMLD4 as amended by AMLD5); and
4. The proposal for a Regulation on information accompanying transfers of funds and certain crypto-assets.

Link to circular

MFSA issues cross-sectoral questionnaire on the management of exposures related to ICT and Cybersecurity

The MFSA, as part of a cross-sectoral thematic desk-based analysis on ICT and Cybersecurity Risks has issued a Self-Assessment Questionnaire to Virtual Financial Assets Service Providers covering several topics, including ICT Governance and Strategy, ICT and Security Risk Management, Information Security, ICT Operations Management, amongst others. The MFSA will be circulating an email to licence holders with any required information in carrying out this questionnaire, which submission is mandatory within six (6) weeks from receipt of the same email.

Link to MFSA’s circular