EBA’s Report Includes Crypto, Payments and AML as 2022 Priorities

The European Banking Authority (EBA) published on Wednesday, June 15, its Annual Report which describes in detail the activities and achievements of the Authority in 2021 and provides an overview of the key priorities for the coming year.

The strategic priorities for 2022 include purely banking topics like the review of the stress-testing framework for banks, but it also includes how to implement recently adopted EU legislation to strengthen the resilience of IT systems in the financial sector, how to prepare the institution for the regulatory and potential supervisory mandates of crypto assets and how to undertake an assessment of the current legal framework for the digitalization of payment services and electronic money.

Digital Operational Resilience Act (DORA)

On May 11, 2022, the EU Parliament and the EU council reached an agreement on DORA. The new law, which will soon be applicable across Europe, sets uniform requirements for the security network and information systems of companies and organizations operating in the financial sector as well as critical third-party providers (CTPPs).

The EBA will coordinate with other regulators for the implementation of this law. One particular role that the EBA will have under this new law: Lead Overseer for CTPPs, which includes cloud services providers of significant importance, like Amazon or Microsoft. This doesn’t mean that the EBA will directly supervise how CTPPs provide those services to financial entities or oversee their full range of activities. The scope of the oversight, according to the EBA, will be limited to the ICT services CTPPs provide to financial entities.

Markets in Crypto Assets (MiCA)

Just as with DORA, the EBA will, in 2022, continue to prepare for the potential supervision and policy tasks under MiCA. While the text is still being negotiated between the three EU institutions, namely the Commission, the Parliament and the Council, and changes are still possible, the draft text foresees that the EBA will be granted supervisory functions of issuers of stablecoins that are “significant” or of those who voluntary submit to EU-level supervision.

Most of the remaining supervisory powers over crypto asset providers will likely fall under the remit of the European and Securities Market Authority (ESMA).

Payment Service Directive 2 (PSD2)

EBA will have an advisory role to the European Commission in the review of the PSD2, and in particular in technical issues regarding the impact of digitalization of payment services, the potential expansion of data sharing to promote open finance or the need to clarify security requirements, namely Strong Customer Authentication (SCA).

Anti-Money Laundering (AML)

The EBA will continue to coordinate and monitor the fight against financial crime in the EU’s financial sector. For 2022, the EBA will focus on completing the AML policy framework with guidance on issues including the role of AML compliance officers, the use of remote customer onboarding solutions, de-risking and financial inclusion.

The regulator will also provide capacity building for EU officials, and it will identify, assess and disseminate information about money laundering based on the information from the EBA’s new central, AML database.

Another important area for the EBA is the establishment of the EU’s new AML authority (AMLA) and its integration into the existing institutions, which will require a strong cooperation with the EBA.

On this issue, members of the EU Parliament discussed on Wednesday, June 15, plans to create the new agency. The proposal to establish AMLA aims to improve coordination and information exchange between national financial intelligence units, which act as intermediaries between financial entities and law enforcement.

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