Regulatory Reporting / AML

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THE AGILE METHODOLOGY

WHAT IS ANACREDIT?

In order to further the Single Supervisory Mechanism, the ECB decided to put together a central register of granular data on the exposure to credit of all funded institutions in relation to loans in the Member States.

AnaCredit is therefore a database with the objective of storing all the information on all the credits granted by these same institutions in the Euro zone in order to harmonize all the information collected and to allow their use for future measures economic and financial situation of the ECB or the central banks of the Member States.

On the other hand, the data collected by AnaCredit will help to improve the supervision and regulation of the banking sector, as well as help in decision-making by the ECB on its policies.

The information to be reported at AnaCredit is characterized by being much more granular, that is, more detailed, with information on all contracts. In this way, AnaCredit will collect information on all loans and other credits from all institutions.

WHAT IS SOLVENCY II

On 25 November 2009, the European Parliament and the Council of the European Union adopted Directive 2009/138 / EC, the Solvency II scheme, which aims to restructure the legal framework for the European insurance industry. The Solvency II Directive aims to bring together, in a single mechanism, all the directives regulating the sector, allowing insurers to improve their performance between capital requirements and the risks inherent in the sector.

The EIOPA (European Insurance and Occupational Pensions Authority), an insurance supervisory authority, requires a better legal framework for European markets, which will provide insurers with the tools needed to make the internal market work better.

In this way, EIOPA intends to approximate the laws of all EU Member States, eliminating divergences in national regulators.

Solvency II replaces its predecessor, Solvency I, which was implemented in the 1970s and which already required major restructuring in solvency, valuation, risk analysis and supervision of regulators and insurers themselves.

The original requirements of Solvency I enabled the European Union to implement one of the most competitive insurance markets in the world. The different Member States regulated the market autonomously, but always according to some rules spread throughout the EU. This freedom given to each national regulator made the control exercised by the authorities less rigorous as regards the analysis and assessment of obligations. On the other hand, the capital requirements appropriate to the risk of the insurers were rather rudimentary, with no provision for risk revisions.

Although it paved the way for minimum capital requirements, Solvency I has become obsolete and has not been able to keep up with developments in European markets, giving room for a new set of more stringent rules to come into force.

Solvency II aims at complementing and replacing some of the methodologies and requirements that undermined Solvency I, in particular at the level of a more economic, rather than an accounting, view, allowing better management of the insurance market, encouraging a more efficient supervision of risks inherent in this industry. The main objective is to abandon the different solvency restrictions, adopted individually, and to have a single economic structure based on risk. This need arises from the fact that the risk is inherent in all operations in the insurance market, being dependent on many internal factors as well as on capital itself and its valuation.

Thus, with the entry into force of Solvency II, European insurers are forced to look at their results and implement financial measures to enable more reliable and transparent information to be obtained. A novelty in the face of Solvency I is the introduction of the so-called stress tests, which aim to improve the overall management of insurers as well as determining their capital needs.

With the passage from Solvency I to Solvency II, the EIOPA (European Insurance and Occupational Pensions Authority) aims to:

  • Promote greater harmonization and transparency;
  • Increase supervision and regulation;
  • Improve consumer protection;
  • Increase competitiveness;
  • Implement adequate capital requirements;

To this end, EIOPA intends to ensure that insurers meet all the necessary conditions to be able to carry on business throughout the EU without any obstacles on the part of regulators regarding the provision of services by foreign insurers in their national territory. In this way, the harmonization introduced with Solvency II will allow better cooperation and recognition between all supervisory bodies in the Member States, ensuring that there is a single system.

PHASES OF ANACREDIT

Timeline:

2011: AnaCredit project initiated by the ECB

December 2015: First model of AnaCredit regulation

18 May 2016: Adoption of Regulation (EU) 2016/867 of the ECB on the collection of granular data on credit and credit risk;

30 June 2017: First possible date for AnaCredit’s request to the national central banks of each Member State

31 March 2018: National banks transmit the first data to the ECB

September 30, 2018: First delivery of monthly and quarterly reports

Beginning in 2019: New mandatory information to be reported which may include the information of individual persons

 

Frequency:

Master Data: reported once, when the first disclosure is made

Other data: monthly, quarterly, or that have undergone some change referring to the last reference period

 

Examples of Instruments:

Deposits

Overdrafts

Credit card debts

Credit lines

Other loans

ATTRIBUTES AND REQUIREMENTS | ANACREDIT

ATTRIBUTES

AnaCredit foresees that the institutions report a set of attributes referring to three different groups:

  • Attributes of debtors
  • Attributes of creditors
  • Attributes of the credit agreement

 

REQUIREMENTS
The most important requirement in AnaCredit for the obligation of disclosure to exist is a minimum value of € 25,000 of any instrument.

With more than 100 attributes ranging from credit data, including the type of collateral, origin or maturity, most of these are related to data that had never before been requested from the institutions for reporting purposes, grouped into different data sets:

  • Counterparty reference data
  • Instrument data
  • Financial data
  • Data on the counterparty-instrument combination
  • Data on joint and several liability
  • Accounting data
  • Protection received data
  • Data related to instrument-received protection combination
  • Counterparty risk data
  • Data relating to counterparty default

BACKGROUND – ANACREDIT

Since 2014 the European Central Bank (ECB) has developed a set of supervisory measures within the Eurosystem and the European System of Central Banks (ESCB) – introducing the Single Supervisory Mechanism – with the aim of collecting data granular credit.

On the basis of Council Regulation (EC) No 2533/98 of 23 November 1988, the ECB initiated in 2011 a new project to collect in detail all data on bank loans in the euro area. This new project, AnaCredit (Analytical Credit Datasets), as the name implies, intends to aggregate the set of analytical data related to credit at the individual level.

In 2015, the first draft of the new regulations provided the scope, statistical requirements and disclosure obligations, among others, of AnaCredit. With a tight schedule, it is necessary to disseminate information monthly, quarterly or, in some cases, AnaCredit alone can become a major challenge to the need for compliance by credit institutions and financial institutions in the Member States.

 

WHAT IS CRS?

Economic and financial globalization made it easier for taxpayers to set up and manage investments through financial institutions outside their country of residence, making tax evasion easier, with large sums of money to be held offshore, which can not be taxed in the taxpayer’s home country, resulting in high costs for both financial institutions and governments themselves.

In order to have a more rigorous control of all these transactions, and since the implementation of FATCA in 2010, we have witnessed an increase in the automatic exchange of information between the various financial institutions.

Thus, in 2013, the OECD proposed a new mechanism that would allow a large increase in reported requirements and financial reporting. The Common Reporting Standard (CRS) arises, therefore, from the need for OECD governments to be able to exchange financial data that their institutions hold in relation to potential suspicions of accounts / holders.

To make this mechanism more efficient, there was a need to standardize the information to be reported by financial institutions. Thus, the quality of the information and the ease of access to it by the interested parties is guaranteed.

In order to ensure that this mechanism is as comprehensive as possible, CRS is set to reach three dimensions:

  • Financial information to be reported: different types of investments are taken into account (for example: interest, dividends, insurance, financial assets) as well as situations that lead to the belief that the taxpayer is trying to hide part of his capital so that do not be taxed;
  • Account holders subject to be reported: in addition to individual entities, CRS intends to reach companies that can serve as a front for these entities, in order to prevent taxpayers from concealing part of their income;
  • Financial institutions subject to be reported: in addition to the banks, the CRS covers a wide range of financial institutions that pass through brokers, insurance companies and collective investment vehicles;

FATCA AND PORTUGAL

The Portuguese Republic and the United States of America signed a bilateral agreement (published in Diário da República, Notice no. 101/2016), in which they intend to implement the Foreign Account Tax Compliance Act (FATCA) in Portugal. enforced in August 2016. The objective is to ensure compliance with and implementation of international fiscal rules. The most diverse financial institutions in Portugal now have to identify all clients, who are considered US persons, and send the information on the accounts held by them to the Tax and Customs Authority.

The Inter Governmental Agreement (IGA) between Portugal and the US provides for the exchange of information between both parties, and Portugal also has the right to receive information on accounts held by Portuguese taxpayers in US financial institutions.