knowledge | 18 May 2021 |

Financial Services Regulatory Update – April 2021 Round Up


General Updates

Anti-Money Laundering

The Criminal Justice (Money Laundering and Terrorist Financing) Amendment Act 2021 (the "2021 Act") was commenced by the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 (Commencement Order) 2021.

The 2021 Act makes a number of changes to the 2010 Act including, in particular, broadening its scope of application and introducing new requirements regarding customer due diligence.

The European Union (Anti-Money Laundering: Beneficial Ownership of Trusts) Regulations 2021 entered into force on 24 April.  Pursuant to the Regulations, in-scope trustees of relevant trusts will be required to keep and report beneficial ownership information to the Central Register of Beneficial Ownership of Trusts. See our related briefings here and here.

Consumer Credit

The European Commission has published an updated webpage providing information and findings on a mini-sweep of consumer credit websites (here).

A "sweep" is a set of checks carried out on websites simultaneously to identify breaches of EU consumer law in a particular sector. It involves a two step process which involves:

  • screening websites to identify breaches of consumer law in a given online market;
  • enforcement in which national authorities ask traders to take corrective actions.

The primary objective of the mini-sweep was to check on various technical devices (PC, tablets, smartphones), whether traders are; a) complying with EU consumer rules on standard information in online advertising of consumer credit, b) presenting consumer credit offers in a way which cannot mislead consumers, and c) making offers that do not aggressively exploit consumer vulnerabilities.  In total, the authorities swept 118 websites and flagged potential irregularities in 42 instances. Participating authorities will follow up on the flagged cases based on their national investigation and enforcement rules.

Corporate Disclosure

ESMA published its annual report on enforcement and regulatory activities related to corporate reporting in the European Economic Area (here) on 6 April. The Report provides an overview of the 2020 activities of ESMA and of European accounting enforcers when examining compliance of financial and non-financial statements of European issuers.

EMIR – Equivalence of Designated Contract Markets ("DCMs") in USA

Commission Implementing Decision (EU) 2021/583 of 9 April 2021 amending Implementing Decision (EU) 2016/1073 on the equivalence of designated contract markets in the United States of America in accordance with EMIR was published in the EU’s Official Journal (“OJ”) on 12 April (here) (the “CID”).  It came into force on 15 April 2021.

EMIR defines OTC derivatives as derivative contracts the execution of which does not take place on an EU regulated market (an “RM”) or on a third country market considered as equivalent to a RM. Commission Implementing Decision 2016/1073 recognises certain US DCMs as equivalent to a RM under EMIR. The CID amends the earlier decision by recognising additional DCMs as equivalent.

Securities Financing Transactions Regulation – LEI Requirements

On 13 April, ESMA published an updated statement on the implementation of LEI requirements for third country issuers under the SFTR reporting regime (here). 

The updated LEI statement maintains ESMA’s position as described in its previous statement on 6 January 2020 and provides an extended timeline for the reporting of LEIs of third country issuers of securities used in securities financing transactions until 10 October 2022. The updated statement also sets out the expectations towards trade repositories and counterparties, as well as the relevant supervisory actions to be carried out by authorities.

Sustainable Finance – SFDR – New Regulations

The European Union (Sustainability-related Disclosures in the Financial Services Sector) Regulations 2021 (here) amend the Central Bank Act 1942 and give effect to Articles 14 and 17 of the Sustainable Finance Disclosure Regulation 2019/2088 (the "SFDR"). They also require the Central Bank to monitor compliance with the requirements of SFDR by financial market participants and financial advisers, with certain exceptions.

Sustainable Finance and EU Taxonomy

On 21 April, the European Commission a package of measures (here) designed to improve the flow of money towards sustainable activities, comprising:

  • The EU Taxonomy Climate Delegated Act, which introduces the first set of technical screening criteria to define which activities contribute substantially to the following two of the environmental objectives under the Taxonomy Regulation: climate change adaptation and climate change mitigation;
  • A proposal for a Corporate Sustainability Reporting Directive. This proposal aims to make sustainability reporting by companies more consistent, so that financial firms, investors and the broader public can use comparable and reliable sustainability information;
  • Six amending Delegated Acts on fiduciary duties, investment and insurance advice, which seek to ensure that financial firms, e.g. advisers, asset managers or insurers, include sustainability in their procedures and their investment advice to clients.
Capital Requirements/Credit Institutions

Capital Requirements –  Specialised Lending Exposures

On 14 April, Commission Delegated Regulation (EU) 2021/598 of 14 December 2020 supplementing the Capital Requirements Regulation with regard to RTS for assigning risk weights to specialised lending exposures was published in the OJ. It will apply from 14 April 2022.

Securitisation Regulation

On 6 April, Regulations 2021/557 and 2021/558 were published in the OJ (here) and (here) and became effective on 9 April. The Regulations:

  • extend the simple, transparent and standardised (“STS”) securitisation regime for balance sheet synthetic securitisations, to allow banks to transfer certain risks to the market, thus allowing a bank to benefit from a prudential treatment reflecting the real risk of these instruments; and
  • remove the regulatory impediments to allow for the securitisation of non-performing loans (NPLs).

Until the date of the application of the RTS specifying the content and the format of STS notifications for synthetic securitisations, originators can make the necessary information available to ESMA in writing. ESMA has published interim templates to allow originators to notify ESMA of synthetic securitisations that meet the STS criteria.

Single Supervisory Mechanism

On 19 April, the ECB published a report containing the results of its targeted review of internal models (“TRIM”) (here).  The TRIM was launched by the ECB in 2016 and aims to assess whether the internal models used by significant institutions in the Single Supervisory Mechanism comply with regulatory requirements and whether their results are reliable and comparable.

Section 4 of the ECB’s report contains a summary of findings and key observations.  The ECB identified a number of deficiencies, some of a high severity, that need to be remedied.  In a related press release (here), the ECB states that binding supervisory measures to take corrective action have been issued. It also emphasises that banks need to continue to invest in the development and maintenance of their internal models.

Insurance / Insurance Distribution

Insurance – Climate Change Risk

EIOPA has published an opinion on the supervision of climate change risk scenarios in the own risk and solvency assessment (ORSA) (here), which aims to enhance supervisory convergence in this area.

According to EIOPA, National Competent Authorities (“NCAs”) should expect insurers to integrate climate change risks in their system of governance, risk-management system and ORSA, similar to all risks to which undertakings are or could be exposed.

In the ORSA, insurers should do an assessment to identify material climate change risk exposures and subject the material exposures to a risk assessment.  Insurers are expected to increase the sophistication of the scenario analyses, taking into account the size, nature and complexity of their climate change risk exposures. The opinion provides guidance on how to select and use climate change scenarios.

Insurance Distribution Directive

EIOPA has launched its Insurance Distribution Directive single rulebook (here).  It has also published a user guide for the rulebook (here).

IORP II transposed

The European Union (Occupational Pension Schemes) Regulations 2021 amend the Pensions Act 1990 to transpose requirements of the IORP II Directive into Irish law.  The Regulations introduce increased governance, investment and disclosure requirements for trustees of pension schemes and significantly increased oversight and intervention powers for the Pensions Authority. The Regulations also remove some obstacles to cross-border provision of pension services and the cross-border transfer of schemes.

Recovery Plan requirements for insurers

The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Recovery Plan Requirements for Insurers) Regulations 2021 (here) commenced on 19 April 2021 and require (re)insurers to:

  • prepare a pre-emptive recovery plan that addresses specified areas;
  • review and, if necessary, update the recovery plan at least every 12 months for High and Medium-High impact firms and at least every 24 months for Medium-Low and Low impact firms or after any material change to the legal or organisational structure of the (re)insurer, its business or its financial position; and
  • provide a copy of the recovery plan to the Central Bank on request.

The deadline for preparation of a recovery plan under the regulations is 31 March 2022 (or within 12 months of authorisation where the (re)insurer is newly authorised on or after the date on which the Regulations come into operation).

The Central Bank has also published Recovery Plan Guidelines (here), which set out the Central Bank’s expectations regarding the recovery plan’s content and format and the factors that insurers should take into account when developing a recovery plan that is appropriate to the nature, scale and complexity of their business.

Investment Firms / MiFID


On 8 April, ESMA published its final report on the functioning of organised trading facilities (“OTFs”) (here), which sets out recommendations and possible amendments to MiFID II/MiFIR with a view to reducing the level of complexity for market participants and making the legal framework more effective. The report has been submitted to the European Commission and is expected to be taken into consideration for further legislative proposals on the MiFID II regime.

MiFID – SME Growth Markets

On 7 April, ESMA published its final report on the functioning of the SME Growth Markets (“SME GM”) regime under the MiFID II Directive (here), which contains recommendations and possible amendments to the MiFID II framework in order to improve the regime's attractiveness. The report has been submitted to the European Commission, which is expected to take it into consideration for further legislative proposals.

Investment Funds


  • On 1 April, the Central Bank published Issue 5 of its Markets Update (here). The latest issue covers among other things the Thirty-Eighth Edition of the Central Bank AIFMD Q&A, which includes two new Q&As, ID 1141 and ID 1142 relating to:
    • raising capital from investors by way of a shareholder (unitholder) loan.
    • whether an authorised AIF can enter into transactions with its investors

Performance Fees

  • The Central Bank has published Guidance on Performance Fees of UCITS and certain types of Retail Investor AIFs (here). It has also published its Feedback Statement to Consultation Paper 134 “Central Bank performance fee guidance for UCITS and certain types of retail AIFs”. The Feedback Statement responds to stakeholder’s views on the draft regulatory guidance which was the subject of consultation.  See our related briefing here.

Selected Consultations, Discussion Papers, Speeches and Reports Published

  • BCBS –  Reports on climate-related risks (14 April 2021) (here and here)
  • CBI – Consultation on proposed cross industry guidance on operational resilience (CP 140) (here).   The consultation is open until 9 July 2021.
  • CBI – Consultation on crowdfunding marketing requirements (CP 141) (here).  The consultation is open until 13 July 2021.
  • CBI – Request for views on the CBI’s Strategic Plan for 2022-2024 (here).  Comments can be made until 6 May 2021.
  • CBI – Speech at the International Fraud Prevention Conference 2021 (21 April 2021) (here).
  • EBA – Consultation on draft RTS on emerging markets and advanced economies under Article 325ap(3) of the Capital Requirements Regulation, as amended by the CRR II Regulation (here).  The consultation is open until 2 July 2021.
  • ECB -  - Advisory Groups on Market Infrastructures for Securities and Collateral and for Payments - the use of DLT in post-trade processes (here).
  • EIOPA – Consultation on a framework to address value for money risk in the EU unit-linked market (here).  The consultation is open until 16 July 2021.
  • EIOPA – Discussion paper on blockchain and smart contracts in insurance (here).
  • European Commission – Roadmap on an EU strategy for retail investors (here).  The consultation closed on 18 May 2021.
  • FSB – Questionnaire that seeks feedback on stakeholders' experience of using its questionnaire on the continuity of access to financial market infrastructures (FMIs) for firms in resolution (here).  The survey closed on 3 May 2021.
  • FSB – Final report on the evaluation of the effects of the too-big-to-fail reforms for systemically important banks (1 April 2021)(here).
  • FSB – FAQs on global securities data collection and aggregation (12 April 2021) (here)
  • Global Foreign Exchange Committee – Request for feedback on proposed amendments to the FX Global Code of Conduct and draft disclosure templates (here).  Feedback can be provided until 7 May 2021.
  • ICMA – Consultation on the role of repo in green and sustainable finance (here).  The consultation is open until 28 May 2021.

You may also be interested in:

McCann FitzGerald regularly publishes briefings on topics relevant to financial services regulation, among others. You may be interested in the following briefings:

  • Financial Services Regulatory Update – March 2021 Round Up (here)
  • Crypto-Assets: The Meteoric Rise of ‘Non-Fungible Tokens’ (here)
  • Right to Disconnect - What does it mean for Employers? (here)

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.

Key contacts