EBA published its annual report on Asset Encumbrance.
As COVID-19 spread across Europe, banks made extensive use of central bank facilities to strengthen their liquidity buffers and maintain the flow of credit to the real economy. This resulted in the largest yearly rise in the asset encumbrance ratio since data is available. More than half of central bank eligible assets and collateral are now encumbered. In contrast, banks have reduced their reliance on covered bonds given the favourable conditions of central bank facilities, an increasing deposit base, and banks’ focus on the issuance of MREL eligible instruments. Increasing encumbrance ratios might pose prudential risks. Although banks exhibit comfortable liquidity buffers, as encumbrance subordinates unsecured creditors, the latter might demand higher spreads.
EBA published methodological guide to mystery shopping.
This guide has been developed based on the findings and good practices identified in the EBA report on MS activities of NCAs published earlier this year and aims to support NCAs in the design and implementation of MS activities. The guide sets out in seven steps how MS activities can be conceived and carried out, how NCAs can use the guide as a complement to other existing supervisory tools, and how to adapt such activities to the particular circumstances, goals and MS powers conferred on an NCA under national law and/or EU law, such as the EU Consumer Protection Cooperation Regulation. The guide is not mandatory and does not aim to harmonise the MS practices of NCAs or imply that all NCAs would need to adopt it as supervisory tool. Rather, the guide aims to support those NCAs that are, under their respective national legal framework, in a position to carry out MS activities in designing and implementing MS activities, thus facilitating the coordination of their MS activities and enhancing their ability to assess the retail conduct of financial institutions in their jurisdictions.
The package is part of the Commission’s commitment to protect EU citizens and the EU’s financial system from money laundering and terrorist financing. The aim is to improve the detection of suspicious transactions and activities, and close loopholes used by criminals to launder illicit proceeds or finance terrorist activities through the financial system.
Today’s package consists of four legislative proposals:
- A Regulation establishing a new EU AML/CFT Authority;
- A Regulation on AML/CFT, containing directly-applicable rules, including in the areas of Customer Due Diligence and Beneficial Ownership;
- A sixth Directive on AML/CFT (“AMLD6”), replacing the existing Directive 2015/849/EU (the fourth AML directive as amended by the fifth AML directive), containing provisions that will be transposed into national law, such as rules on national supervisors and Financial Intelligence Units in Member States;
- A revision of the 2015 Regulation on Transfers of Funds to trace transfers of crypto-assets (Regulation 2015/847/EU).
