CUBE RegNews: 3rd May

Eva Dauberton

Eva Dauberton

News Editor

Due to UK public holidays, there will be no RegNews published on 6 May.

We will be back on 7 May 2024.

FCA releases second set of draft Q&A on UK EMIR reporting  

The Financial Conduct Authority (FCA) has released its first set of final Q&As on UK EMIR reporting and is now seeking feedback on the second set. 

Some context  

On 24 February 2023, the FCA issued a joint policy statement (PS)23/2 with the Bank of England, confirming changes to the derivative reporting framework under UK EMIR. Most of the new requirements will be effective from 30 September 2024, with a transition period for some aspects. 

During the initial consultation process, the FCA received requests for additional guidance on how the updated UK derivatives reporting framework will be implemented. As a result, in March 2024, the FCA published the first set of UK EMIR reporting Q&As for consultation.  

Key takeaways  

The Q&A covers 11 topics, with the final first set covering the initial five topics, including: 

  • Transitional Arrangements 
  • Reconciliations 
  • Errors and Omissions 
  • Derivative Identifiers 
  • Action and Events.  

The remaining topics that are being consulted on are: 

  • Venues 
  • Exchange Traded Derivatives 
  • Margin and Collateral 
  • Clearing 
  • Position Level Reporting 
  • Asset Class and Product Specific 

Some additional Q&As under the topics of transitional arrangements, derivative identifiers, and action and events are also being consulted on. 

Next steps 

The final first set of Q&As will be effective from 30 September 2024. The deadline for feedback on the proposed second set is 12 June 2024. 


Click here to read the full RegInsight on CUBE’s RegPlatform   


EBA will collect information on natural persons for AML/CFT purposes from May 2024 

The European Banking Authority (EBA) has announced that it will begin collecting information on natural persons through its anti-money laundering and countering the financing of terrorism (AML/CFT) database, EuReCA, starting in May 2024.  

EuReCA is the central database on AML/CFT established by the EBA, under article 9a (1) and (3) of the EBA Regulation and Regulation (EU) No 1093/2010 of 9 November 2023. Following the publication of the Regulation in the Official Journal on 16 February 2024, EuReCA is now authorised to begin the collection of personal data.  

Supervisors in the European Union (EU) will have the ability to report the names of individuals to EuReCA, but only in case of significant non-compliance with AML/CFT requirements. This ensures that the processing of data is limited in scope and proportionate to what is necessary. 


Click here to read the full RegInsight on CUBE’s RegPlatform   


Complaints up by a fifth in H2 2023 reports FOS 

The UK’s Financial Ombudsman Service (FOS), the entity which provides an alternative resolution court process for complaints by individuals about financial services, has reported a 20% increase in the number of complaints received for the period 1 July 2023 to 31 December 2023 compared to the same period in the previous year. The FOS data shows: 

  • 95,349 complaints were recorded between 1 July and 31 December 2023, compared to 79,921 in the same period in 2022, with 62,139 new banking and credit complaints, 22,845 new general insurance/pure protection complaints, 3,877 new mortgages and home finance complaints, 3,996 new decumulation life and pension complaints, 2,311 new complaints about investments and 181 new complaints about funeral planning. 
  • Banking and credit complaints were the primary drivers of this rise, with current accounts and credit cards constituting over 40% of cases. 
  • Current account complaints were predominantly centered on disputes over fraud and scams. 
  • Credit card complaints reached an all-time high in the last quarter of 2023 due to perceived unaffordable and irresponsible lending practices. 
  • General insurance cases also saw an increase, particularly in car or motorcycle insurance complaints, attributed to delays in claims processing and insurer valuations. 
  • In the last six months of 2023, 36% of complaints were upheld in favour of consumers, compared to 34% in the second half of 2022. 


Click here to read the full RegInsight on CUBE’s RegPlatform   


SEBI issues two circulars addressed to portfolio managers 

The Securities and Exchange Board of India (SEBI) has issued two circulars to all portfolio managers and the Association of Portfolio Managers in India (APMI). These circulars aim to facilitate ease in the digital onboarding process for clients, enhance transparency through disclosures, and enable collective oversight of distributors for Portfolio Management Services (PMS) through APMI.  

Facilitating ease in digital onboarding process for clients and enhancing transparency through disclosures 

The first circular includes provisions that ease the digital onboarding process for clients of portfolio managers. It also requires the provision of a fee calculation tool and additional fee disclosures. These provisions will become effective from 1 October 2024.  

Facilitating collective oversight of distributors for Portfolio Management Services (PMS) through APMI 

The second circular states that any person or entity involved in the distribution of portfolio management services must obtain registration with APMI from 1 January 2025. APMI will issue the criteria for registration of distributors by 1 July 2024. 

SEBI has also issued a circular for all registered investment advisers, research analysts, and recognised stock exchanges. This circular outlines the framework for the administration and supervision of research analysts and investment advisers and will become effective from 25 July 2024. 


FINTRAC fines The Toronto-Dominion Bank CA$9,185,000 

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) announced that it has imposed an administrative monetary penalty on The Toronto-Dominion Bank (the Bank) for not complying with Part 1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its associated Regulations. The Bank was fined CA$9,185,000 on 9 April 2024. According to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, administrative monetary penalties are meant to encourage businesses to change their non-compliant behaviour and are not intended to be punitive.   

What happened? 

After conducting a compliance examination in 2023, the Bank was found to have committed the following administrative violations:  

  • Failure to submit suspicious transaction reports where there were reasonable grounds to suspect that transactions were related to a money laundering or terrorist activity financing offence.  
  • Failure to assess and document money laundering/terrorist activity financing risks.  
  • Failure to take the prescribed special measures for high risk - Failure to conduct ongoing monitoring of business relationships - Failure to keep a record of the measures taken and information obtained when conducting ongoing monitoring of business relationships.   

For context, in 2023-24, FINTRAC issued 12 Notices of Violation for non-compliance to businesses, totalling CA$26,115,999.50. Since receiving the legislative authority to issue penalties in 2008, FINTRAC has imposed more than 140 penalties across most business sectors. 


Click here to read the full RegInsight on CUBE’s RegPlatform   


EIOPA’s IORP risk dashboard highlights market risks as key concern for occupational pension funds 

The European Insurance and Occupational Pensions Authority (EIOPA) has published the second edition of its Occupational Pensions Risk Dashboard (Dashboard). 

This Dashboard is based on individual occupational pensions regulatory reporting data. It summarises the main risks and vulnerabilities in the Institutions for occupational retirement provisions (IORPs) sector of the European Economic Area (EEA) for defined contributions (DC) and defined benefits (DB) pension schemes.   

Key takeaways 

The Dashboard shows that the exposure of IORPs to market & asset return risks remains at a high level due to market volatility and real estate market vulnerabilities. Annual indicators such as portfolio return (based on 2022) do not yet capture the positive market performance of 2023. 

  • Macro risks are at a medium level, with macroeconomic indicators showing signs of positive developments, such as a decline in forecasted inflation and improvements in the GDP growth outlook. Economic growth, nevertheless, remains relatively weak. 
  • Liquidity risks are at a medium level but show a decreasing trend compared to the previous quarter, driven by developments in derivative positions. The net asset value of IORP’s derivative positions, which are typically used to hedge against a drop in interest rates, shifted closer to zero from earlier negative readings due to lower market interest rates in Q4-2023. 
  • Reserve and funding risks remain unchanged at a medium level, with a slight deterioration in the financial positions of defined benefit IORPs due to lower interest rates. 

All other risk categories are currently assessed at a medium level, with increases expected in the risk level for digitalisation and cyber risks over the next 12 months. 


Click here to read the full RegInsight on CUBE’s RegPlatform   


EIOPA issues peer review report on the prudent person principle supervision 


The European Insurance and Occupational Pensions Authority (EIOPA) has released a peer review on the supervision of the Prudent Person Principle (PPP) for insurance and reinsurance companies under Solvency II in accordance with Article 30 of the EIOPA Regulation. This final report outlines recommended actions for different National Supervisory Authorities (NSAs) to improve the supervision of the PPP. 


Click here to read the full RegInsight on CUBE’s RegPlatform   

OCC updates list of CRA evaluations 

The Office of the Comptroller of the Currency has provided the latest Community Reinvestment Act (CRA) performance evaluations for April 2024 which looks at 13 banking entities.  


The CRA is a US federal law that requires banks to meet the credit needs of the communities in which they operate, particularly low- and moderate-income neighbourhoods, through lending, investment, and service activities. It aims to prevent discriminatory lending practices and encourage financial institutions to help meet the credit needs of all segments of their communities, including those traditionally underserved.  

One bank – a large entity in Los Angeles – is rated ‘needs to improve’ whilst 11 are rated ‘satisfactory’. Only one is rated ‘outstanding’.  


Click here to read the full RegInsight on CUBE’s RegPlatform   


CFTC Commissioner advocates for AI regulation 


In a statement to the Technology Advisory Committee (TAC), Commodity Futures Trading Commission's (CFTC) Commissioner Kristin Johnson's spoke about the CFTC’s evolving approach to regulating artificial intelligence (AI) in financial markets. 

Overview of CFTC's Initiatives 

Johnson began by discussing recent developments aimed at assessing AI's role in financial markets. 

  • The CFTC’s request for comment on the use of AI in regulated markets. 
  • Her own proposals (elaborated on below): 
  • A principles-based framework to evaluate the risks associated with integrating AI technologies into financial markets. 
  • Heightened penalties for deliberate misuse of AI technologies. 
  • The establishment of an inter-agency task force comprising market and prudential regulators to address AI-related risks holistically. 
  • The appointment of the CFTC’s first chief AI officer. 

Regulatory coordination and collaboration 

Turning to the various steps the TAC subcommittee and the CFTC are taking to try to ensure the integrity and stability of our markets, Johnson stressed the significance of regulatory coordination and collaboration, citing past joint initiatives between the CFTC and other regulatory bodies. She noted the objectives of the CFTC’s Future of Finance Subcommittee which will: 

  • Focus on the “use” of AI in CFTC-regulated markets, rather than the technology itself. 
  • Prioritise the use of existing regulations to mitigate AI-related risks while encouraging the Commission to consider guidance and advisories to provide the market with clarity on the application of existing rules to this new technology. 
  • Consider formal rulemaking only where and to the extent that the existing rules do not adequately address the risks posed by the use of AI in CFTC-regulated markets. 

Johnson then elaborated on her three suggestions. 


Principles-based regulatory framework: Johnson advocated for the adoption of a principles-based regulatory framework to address AI-related risks in financial markets. She argued that such an approach, based on existing regulations and risk-management requirements, would provide adaptability and remain technology-neutral. 


Heightened penalties for misuse of AI: She proposed introducing heightened penalties for those who intentionally misuse AI technologies to engage in fraud, market manipulation, or evasion of regulations. She emphasised too the need to deter bad actors from using AI to disrupt market operations or integrity. 


Inter-agency task force: Johnson suggested creating an inter-agency task force composed of financial regulators to identify and mitigate AI-related risks across the financial system. This task force would focus on information sharing, developing guidelines, tools, and best practices for the regulation of AI in the financial services industry. 


Click here to read the full RegInsight on CUBE’s RegPlatform   


HKMA AML speech at ACAMS: “Fair winds and following seas” 


In a speech at the ACAMS APAC 2024 conference, Carmen Chu, Executive Director of Enforcement and AML at the Hong Kong Monetary Authority (HKMA), delivered a keynote address reflecting on the progress made in combating financial crime and the challenges ahead. 

Recap of previous address  

Chu began by evoking memories of her last address in 2022, amidst the turbulence of the Covid-19 pandemic. She underscored the significance of events like the ACAMS conference resuming in Hong Kong, symbolising a gradual return to business as usual in the financial services sector. 

Progress in AML/CFT efforts 

Chu set out the developments made since her last address in her personally-defined AML abbreviation: Analytics, Monitoring, and Link-up. 

  • Analytics: Notable advancements include a remarkable surge in Regtech adoption, which has empowered financial institutions with enhanced analytical capabilities and proactive risk detection mechanisms. 
  • Monitoring: Chu highlighted the efficacy of recent guidance issued by HKMA to fine-tune transaction monitoring systems, coupled with the prudent integration of artificial intelligence and machine learning technologies to bolster AML efforts. 
  • Link-up: Chu noted the pivotal role of collaborative initiatives such as the Anti-Deception Alliance, which has fostered closer cooperation between banks and law enforcement agencies to combat financial fraud effectively. She also shared success stories, including the implementation of real-time fraud monitoring systems by retail banks, resulting in the prevention of substantial sums from being deposited into fraudulent accounts. 

Such efforts, she said, have not only mitigated financial losses but also facilitated greater trust and confidence in the financial ecosystem. 

Challenges and the imperative of adaptation 

Despite notable achievements, Chu acknowledged the ever-evolving nature of financial crime, exacerbated by the digital transformation accelerated by the pandemic. She cautioned against complacency and stressed the imperative of adaptability and innovation in devising proactive strategies to counter emerging threats effectively. 

Importance of Public-Private Partnerships (PPPs) 

Chu’s view is that Public-Private Partnerships (PPPs) are significant in accelerating the efficiency and efficacy of AML/CFT efforts. Initiatives such as the Fraud and Money Laundering Intelligence Taskforce (FMLIT) illustrate successful collaborations between regulators, law enforcement agencies, and financial institutions, resulting in the identification and restraint of illicit proceeds. Chu lauded the transformative impact of PPPs in levelling the playing field against criminal networks and advocated for their continued reinforcement through ongoing investment in human capital, technological infrastructure, and systemic transformation. 

Addressing inconsistencies and promoting alignment 

Chu raised concerns in the speech about the prevailing inconsistencies across jurisdictions and sectors, emphasising the imperative of regional and global alignment in combating financial crime effectively. She called for concerted efforts to bridge the existing gaps and foster a harmonised regulatory framework that promotes transparency, accountability, and integrity across the financial landscape. Chu also urged stakeholders to embrace adaptive strategies and navigate through the complexities of combating financial crime with unwavering determination and collaboration. 

Priorities for future action 

Chu advocated three priorities: 

  • Dynamic information sharing mechanisms that adapt to evolving threats while mitigating unintended consequences. 
  • Avoiding inertia by continual system evaluation and refinement to ensure the resilience and effectiveness of AML/CFT measures in the face of evolving risks. 
  • The importance of global consistency in PPPs and information sharing practices, advocating for the adoption of best practices and standards to facilitate seamless collaboration and enhance the collective resilience against financial crime. 


In concluding, Chu expressed confidence in the APAC region's capacity to lead by example in combating financial crime and safeguarding digital economies.  

Click here to read the full RegInsight on CUBE’s RegPlatform