The Financial Stability Board (FSB) recently published a consultation report on Effective Practices for Cyber Incident Response and Recovery, which was sent to G20 Finance Ministers and Central Bank Governors for their virtual meeting. The toolkit of effective practices aims to assist financial institutions in their cyber incident response and recovery activities. Cyber incidents pose a threat to the stability of the global financial system. In recent years, there have been a number of major cyber incidents that have significantly impacted financial institutions and the ecosystems in which they operate. A major cyber incident, if not properly contained, could seriously disrupt financial systems, including critical financial infrastructure, leading to broader financial stability implications. Continue reading…

The European Ombudsman, Emily O’Reilly, made a statement on May 11 that the European Banking Authority (EBA) should have disallowed Adam Farkas, its previous Executive Director, from assuming the position of CEO of the Association for Financial Markets in Europe (AFME), which is one of the main lobbyist groups of the financial sector. An investigation into this matter was subsequently launched after receiving complaints made by several MEPs and the Change Finance coalition. The European Ombudsman is an independent authority that examines complaints made against the EU. As such, Emily O’Reilly has found that the EBA should have rejected Adam Farkas’s move from the EBA to the AFME. Continue reading…

Past events in history have shown that another pandemic may come about some time in the near future. However, there are measures that can be taken to reduce the risks as stated by a newspaper by the Institute of Economic Affairs. As the human population continues to increase, so too will viruses and diseases. Today, there are quite a few outbreaks that have remained and settled permanently among humans, though they have not quite reached the extent of the Covid-19 pandemic. However, when comparing Covid-19 to other major viruses and diseases that have spread, it is relatively moderate. Adding on to a growing population, economic integration, long supply chains, traveling and a change in how health care systems are operated and structured have all made the impact of an infectious disease significantly greater compared to 50-60 years ago. Continue reading…

The Financial Stability Board (FSB) recently published a public consultation report on ‘Guidance on financial resources to support CCP resolution and on the treatment of CCP equity in resolution’.  The guidance will assist central counter party (CCP) resolution authorities. Continue reading…

The French financial market authority (Autorité des marchés financiers – AMF) announced last month that 110,571,163 Altran shares have been tendered in connection with the final reopening of the friendly tender offer of Capgemini for Altran Technologies. Paul Hermelin, Chairman and Chief Executive Officer of the Capgemini Group and Aiman Ezzat (see photo), the next Chief Executive Officer of the Capgemini Group following the May 20, 2020 Annual General Meeting, stated: “We are satisfied with the outcome of this friendly tender offer, whose success allows us to hold more than 98% of the share capital, giving us access to all the value creation levers. We would like to thank all the Altran shareholders who tendered their shares, thus validating the soundness of our strategy and the industrial project we are proposing. Once again, we would like to welcome the 50,000 Altran employees with whom we will be working in order to begin the integration process and to implement synergies.” 
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In its judgment pronounced today, the Second Senate of the Federal Constitutional Court granted several constitutional complaints directed against the Public Sector Purchase Programme (PSPP) of the European Central Bank (ECB). The Court found that the Federal Government and the German Bundestag violated the complainants’ rights under Art. 38(1) first sentence in conjunction with Art. 20(1) and (2), and Art. 79(3) of the Basic Law (Grundgesetz – GG) by failing to take steps challenging that the ECB, in its decisions on the adoption and implementation of the PSPP, neither assessed nor substantiated that the measures provided for in these decisions satisfy the principle of proportionality. In its Judgment of 11 December 2018, the Court of Justice of the European Union (CJEU) has taken a different stance in response to the request for a preliminary ruling from the Federal Constitutional Court; however, this does not merit a different conclusion in the present proceedings. The review undertaken by the CJEU with regard to whether the ECB’s decisions on the PSPP satisfy the principle of proportionality is not comprehensible; to this extent, the judgment was thus rendered ultra vires. As regards the complainants’ challenge that the PSPP effectively circumvents Art. 123 TFEU, the Federal Constitutional Court did not find a violation of the prohibition of monetary financing of Member State budgets. The decision published today does not concern any financial assistance measures taken by the European Union or the ECB in the context of the current coronavirus crisis.  Continue reading…

The Dutch Compliance Officers Association, abbreviated VCO, asked Geert Vermeulen to answer a number of questions about the COVID-19 crisis. Geert Vermeulen is a well-known Compliance Officer in the Netherlands, he also gives lectures and he teaches. Last year, he was the winner of the National Compliance Award 2019 (see photo). This prize is awarded annually with the aim of stimulating developments in the field of compliance, professionalising the compliance function and improving integrity within organisations. Geert was asked only three questions, but he answered them very thoroughly and extensively.  Continue reading…

by Muel Kaptein

Since the corona crisis, the agenda of compliance officers has changed considerably. But what will the agenda of compliance officers look like when the (semi) lockdown is phased out and organizations start working on their recovery? The recovery phase brings all kinds of new issues and work with it for the compliance function. Below I briefly describe eleven new items for the compliance agenda after the lockdown. Are there items that you think are not addressed in this list or ones that you see differently? In random order, I see the following eleven new items for the compliance agenda.
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by Lieve Lowet

This is the last part of the series of three articles about my in-depth investigation of the aforementioned measures as a result of the corona crisis. All the above actions, mentioned in the two previous articles, we although, prima facie and probably well intended, carry nevertheless a very heavy price. I will focus on the insurance sector by naming five topics.
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by Lieve Lowet

This is part two of the series of three articles about my investigation into the recent measures taken by European authorities as a result of the situation that has arisen. This article is more specifically about Solvency II. For insurers, there is no equivalent measure to Article 141 CRD. There is no such legal base in the Solvency II framework directive to ‘urge’ not to distribute. Article 71(1)(l)(i) of the Solvency II Delegated Regulation refers indirectly to the cancellation of distribution (dividends) in case of non-compliance with the SCR or where the distribution would lead to such non-compliance when legal or contractual arrangements allow for such cancellation. But it does so in the context of the classification of tier 1 basic own funds. In the past, EIOPA has referred to the cancellation or referral of dividend distribution when the validity of the business model is at risk: this was a recommendation to national supervisors e.g. after the 2016 stress test to address the vulnerability identified in the exercise. And in its recent consultation paper on the Solvency II review (EIOPA-BOS_19-465-CP-0pinion 2020), EIOPA’s draft advice links the potential by supervisors to limit or withhold dividend payments and other voluntary capital distribution to a sustainable solvency position when insurers use e.g. long-term guarantee measures. It also touches upon the prohibition of payments of dividends outside the EEA as another method of group supervision or as an alternative for the capital surcharge in case of systemic risk. Pious wishes?
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