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Dear all,

Complying with new regulations may require from financial institutions to adapt and/or transform their organization, operating models and information systems. More specifically, in the field of regulatory reporting, management of data quality, which appears to be a major challenge for financial institutions and insurance companies across Europe, may lead to new IT investments and major reengineering projects. Therefore, when regulations happen to be postponed (e.g. Solvency II for the Insurance industry), organizations may take advantage of the “extra time” given to continue their transformation projects and strengthen their data quality initiatives. In this context, managers show a pragmatic approach and try not to increase internal resources and developments but to call for “market solutions” which can meet regulatory requirements and support business strategy. Beyond regulatory compliance, transformation projects will enable financial institutions and insurance companies to make their business model more robust and sustainable.

Fabrice Lepeltier

Focus on...

Solvency II – European Insurance Regulation

  • Context: The Solvency II Directive (2009/138/EC) aims to take into account current developments in insurance, risk management and international financial reporting and prudential standards, streamline the way that insurance groups are supervised, recognize the economic reality of how groups operate, strengthen the power of the group supervisor (ensuring that group-wide risks are not overlooked) and ensure greater cooperation between European regulators.
  • Legal instruments and scope: Focus on Pillar 3
  • Timing:
    • Oct. 16th – Dec. 17th 2012: insurance companies from the 9 selected participating countries (among which France) will participate to the Quantitative Impact Study (QIS) n°6 (mainly focusing on insurers of long term risks such as retirement)
    • March 2013: EIOPA is to publish QIS 6 results
    • Jan. 2015 or 2016: entry into force of Solvency II
  • Update: On Oct. 17th 2012, EIOPA’s Chairman Gabriel Bernardino declared that the implementation of Solvency II was not possible before 2015 or 2016. This announcement follows the failure of the trialogue about the Omnibus 2 Directive, which is a prerequisite to the transposition of Solvency II in national laws of EU members. EIOPA claims for a clear and credible roadmap, as the current Solvency I regulation does not enable regulators to have an accurate picture of insurers’ risks.



Anti-Money Laundering – New due diligence and reporting   

  • Reminder: The European Third Money Directive 2005/60/CE was published on Nov. 25th 2005 and transposed in national law in Jan. 2009 with the following objectives: provide a common European basis for implementing the revised FATF recommendations on Money laundering issued in June 2003, reinforce customer due diligence provisions and recognize risk-based approach to anti-money laundering, take into account new risks and practices, introduce more obligations to have systems for AML risk management and compliance.
  • News: The Decree n°2012-1125 relating to due diligence and reporting for the prevention of the use of the financial system for money laundering and terrorist financing has been published on Oct. 5th 2012. This Decree amending the French Monetary and Financial Code, describes the application measures following the European 2005/60/CE directive transposition. It notably clarifies and reinforces the viligilance usage conditions towards customers.

Foreign Account Tax Compliance Act (FATCA)

  • Reminder: The Foreign Account Tax Compliance Act (FATCA) is part of the Hiring Incentives to Restore Employment Act (HIRE Act). It has been enacted by US Congress in March 2010 to prevent offshore tax abuses by U.S. persons. FATCA is intended to increase transparency for the Internal Revenue Service (IRS) on US accounts i.e. accounts held by Specified US Persons or US Owned Foreign Entity.
  • News: On Sept. 14th 2012, the US and the UK announced the signing of a bilateral agreement (the UK IGA) setting out the reporting and withholding requirements applicable to UK financial institutions under the Foreign Account Tax Compliance Act.
  • Timing: implementation scheduled for January 2013

Financial products commercialization regulation – MiFID I and term deposits

  • News:
    • The Autorité des Marchés Financiers (AMF) published on Oct. 5th 2012 its Position 2012-13 "Suitability requirements for financial services and products provided to clients". The AMF applies all the guidelines published by ESMA on the Markets in Financial Instruments Directive (MiFID I), transposed into national Law in 2007. Those guidelines aim at clarifying the suitability requirements provided in the MiFID directive and contribute to establishing consistent supervisory practices.
    • The Autorité de Contrôle Prudentiel (ACP) published on Oct 12th 2012 its Recommendation 2012-R-02 on term deposits management, aiming at improving commercialization, management closing transparency.

Financial Transaction Tax (FTT)

  • Reminder: The European Commission has adopted on Sept. 28th 2011 a proposal for a Council directive on a common system of financial transaction tax and amending Directive 2008/7/EC. The European Parliament on May 23th 2012 adopted an opinion supporting the Commission's proposal on Financial Transaction Tax (FTT).
  • News: The European Commission adopted on Oct. 23rd 2012 a proposal for a Council decision to authorize the enhanced cooperation in the area of Financial Transaction Tax. The Council will have to decide after consent of the European Parliament. A subsequent Commission proposal for a Directive implementing the enhanced cooperation in the area of financial transaction tax should follow in due course.


    Contact : Adlen Bouchenafa

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