Basel Committee Issues WOCCU urged Covid-19 Regulatory Relief

The Basel Committee on Banking Supervision released technical guidance setting out additional measures to alleviate the impact of Covid-19 on the global banking system.


  1. Expected credit loss accounting:  The Basel Committee notes that regarding the SICR assessment, relief measures to respond to the adverse economic impact of Covid-19 such as public guarantees or payment moratoriums, granted either by public authorities, or by banks on a voluntary basis, should not automatically result in exposures moving from a 12-month ECL to a lifetime ECL measurement. 
  2. Expected credit loss accounting transitional arrangements:  The Basel committee is allowing for the implementation of several transitional arrangements including applying exiting transitional arrangements even if those were not implemented initially.  Additionally, a 2 year period comprising the years 2020 and 2021, jurisdictions may allow banks to add-back up to 100% of the transitional adjustment amount to CET1. The “add-back” amount must then be phased-out on a straight line basis over the subsequent 3 years. 
  3. Capital treatment of non-performing loans, loans subject to moratorium, or past due:  The Basel Committee also provided treatment for a loan that might otherwise be considered troubled or in default  noting that jurisdictions can apply relief criterion for payment moratorium periods (public or granted by banks on a voluntary basis) relating to the Covid-19 outbreak such that they can be excluded by banks from the counting of days past due. Another criterion used is whether a bank considers that the borrower is unlikely to pay its credit obligations. The Committee has agreed that this assessment should be based on whether the borrower is unlikely be able to repay the rescheduled payments. 
  4. Non-centrally cleared derivatives: The Committee and the International Organization of Securities Commissions have agreed to defer the final two implementation phases of the framework for margin requirements for non-centrally cleared derivatives by one year.
WOCCU has urged this regulatory flexibility during the Covid-19 crisis.  A copy of the guidance can be viewed here.

BIS Addresses Public Concern Regarding Viral Transmission Through Cash

The Bank for International Settlements released a bulletin entitled, Covid-19, cash, and the future of payments, which addresses growing public concerns and questions about the possibility of transmitting viruses through cash. The Covid-19 pandemic has understandably catalyzed apprehension surrounding issues of hygiene, safety and transmission of the virus; and it logically follows that the public will have concerns about the physical use of cash. BIS’ bulletin establishes from the onset that its key takeaways are the following:

  • “The Covid-19 pandemic has fanned public concerns that the coronavirus could be transmitted by cash.
  • Scientific evidence suggests that the probability of transmission via banknotes is low when compared with other frequently-touched objects, such as credit card terminals or PIN pads.
  • To bolster trust in cash, central banks are actively communicating, urging continued acceptance of cash and, in some instances, sterilising or quarantining banknotes. Some encourage contactless payments.
  • Looking ahead, developments could speed up the shift toward digital payments. This could open a divide in access to payments instruments, which could negatively impact unbanked and older consumers. The pandemic may amplify calls to defend the role of cash – but also calls for central bank digital currencies.”

The BIS bulletin further reports the increase of media inquiries and internet searches regarding the safety of handling cash, with countries such as Australia, France, Singapore, Switzerland, Ireland, the United Kingdom, Canada, the United States, Jamaica and Kenya leading with the highest number of searches on this topic as of the publication of this bulletin on April 3, 2020. The bulletin concludes by placing emphasis on the value of central bank digital currencies (CBDCs), but with the caveat that they must be accessible to the underbanked with contact-free technical surfaces appropriate for the entire population. “The pandemic may hence put calls for CBDCs into sharper focus, highlighting the value of having access to diverse means of payments, and the need for any means of payments to be resilient against a broad range of threats.”

WOCCU will continue to follow finance and financial regulatory issues surrounding the Covid-19 pandemic as they develop.

Bank of International Settlements

Basel Committee Delays Basel III Implementation to assist with COVID-19

The Basel Committee's oversight body, the Group of Central Bank Governors and Heads of Supervision (GHOS), provided relief to help financial institutions respond to the impact of Covid-19 on the global banking system by delaying deadlines for the implementation of the Basel III framework.

The following changes were adopted by the GHOS to the implementation timeline of the outstanding Basel III standards:

  • The implementation date of the Basel III standards finalised in December 2017 has been deferred by one year to 1 January 2023. The accompanying transitional arrangements for the output floor has also been extended by one year to 1 January 2028.
  • The implementation date of the revised market risk framework finalised in January 2019 has been deferred by one year to 1 January 2023.
  • The implementation date of the revised Pillar 3 disclosure requirements finalised in December 2018 has been deferred by one year to 1 January 2023.
A copy of the press release can be viewed here.

Application of IFRS 9 Financial Instruments During Covid-19 Pandemic

The IFRS Foundation published a document entitled “IFRS 9 and Covid-19, Accounting for expected credit losses applying IFRS 9 Financial Instruments in the light of current uncertainty resulting from the covid-19 pandemic”, which was created to address IFRS 9 application questions during this pandemic. The document outlines applicable accounting standards related to expected credit losses (ECL) that may arise during the Covid-19 pandemic.

Of note, the document outlines that extensions of payment holidays to all borrowers in particular classes of financial instruments should not automatically result in all those instruments being considered to have suffered an SICR.  It also notes that it is likely difficult at this time to incorporate the specific effects of covid-19 and government support measures on a reasonable and supportable basis into expected loss calculations but urges post-model overlays or adjustments to be considered at appropriate times. 

The document suggests the use of “all reasonable and supportable information available” when determining ECL and lifetime losses. It further characterizes IFRS 9 as flexible, suggesting that during these times it may be necessary to adjust “approaches to forecasting and determining when lifetime losses should be recognized to reflect the current environment.” The Foundation also recommends deferring to guidance provided by prudential and securities regulators, including guidance issued by the European Banking Authority, the European Central Bank, the European Securities and Market Authority, the Prudential Regulation Authority and the Malaysian Accounting Standards Board.


EU Ministers of Finance Enabling Flexibility on COVID-19 Response

The European Union (EU) Ministers of Finance of the Member States of the EU jointly with the EU Commission have taken decisive action to allow appropriate reaction to the effects on the financial sector due to the COVID-19 crisis. 

The action issued today will ensure the needed flexibility to take all necessary measures for supporting the health and civil protection systems and to protect our economies, including through further discretionary stimulus and coordinated action, designed, as appropriate, to be timely, temporary and targeted, by Member States.

Ministers remain fully committed to the respect of the Stability and Growth Pact but the action today will allow the Commission and the Council to undertake the necessary policy coordination measures within the framework of the Stability and Growth Pact, while departing from the budgetary requirements that would normally apply, in order to tackle the economic consequences of the pandemic.  This is in anticipation of a severe economic downturn expected as a result of the crisis.

WOCCU continues to urge this flexibility in allowing our credit unions to appropriately respond to the crisis.  

The press release of today's action can be viewed here.

European Commission

Basel Committee Issues Covid-19 Statement

The Basel Committee on Banding Supervision (Basel Committee) is coordinating policy and supervisory response to the COVID-19 (Coronavirus) crisis and has issued a statement on their efforts.  The Basel Committee notes that member jurisdictions are pursuing a range of regulatory and supervisory measures to alleviate the financial stability impact of Covid-19. including measures targeting the provision of lending by banks to the real economy and facilitate banks' ability to absorb losses in an orderly manner.  The Committee notes that supervisory authorities also have additional flexibllity to undertake further measures if needed.  

In particular, the Basel III framework includes capital and liquidity buffers that are designed to be used in periods of stress. These include the capital conservation buffer and, by extension, the countercyclical capital buffer and buffers for systemically important banks. They also include banks' stock of high-quality liquid assets (HQLA). Using capital resources to support the real economy and absorb losses should take priority at present over discretionary distributions. HQLA stocks should be used to meet liquidity demands. Many supervisors are already encouraging banks to make use of these tools, which allow for flexibility in responding to the current circumstances. 

For credit unions, WOCCU is also urging national-level regulators to take note of this guidance and similarly allow for flexibility that will allow credit unions to serve their members during the crisis.  WOCCU's resource page can be viewed here.

A copy of the Basel Committee statement can be viewed here.


FSB Encouraging Flexibility in COVID-19 Response

The Financial Stablity Board (FSB) is encouraging authorities and financial institutions to make use of the flexibility within existing international standards to provide continued access to funding for market participants and for businesses and households facing temporary difficulties from COVID-19, and to ensure that capital and liquidity resources in the financial system are available where they are needed.

The FSB notes that many authorities have already taken action to release available capital and liquidity buffers, in addition to actions to support market functioning and accommodate business continuity plans.

WOCCU continues to urge flexibility by regulators to keep credit union operations functioning and able to finance the needs of their members.

A copy of the FSB release can be viewed here, and WOCCU's recommendations for purdential regulators can be viewed here

Financial Stability Board

ENCU Comments on Commission’s Initiative on Improving Resilience Against Cyberattacks

ENCU responded to a request for feedback to the European Commission’s public consultation regarding their initiative on improving resilience against the increasing number of cyberattacks. The European Supervisory Authorities (ESA) “advised the Commission to propose targeted improvements to the EU financial regulatory framework to develop a single regulatory and supervisory rulebook” for information communication technology (ICT) operational resilience in the financial sector. The Commission’s objective is to harmonize applicable rules to make the financial sector more secure and resilient through the reduction of compliance and administrative burdens.

In addition to the questionnaire which included questions on several topics including ICT systems and operational resilience, ENCU urged the Commission to consider risk-based and proportional requirements that are tailored to credit unions. Credit unions do not pose the same cybersecurity risks that banks do, and therefore require less stringent requirements in order to support the Commission’s goal to combat cyberattacks. ENCU also requested consideration for non-mandatory guidelines instead of hard rules to address digital operational resilience and cybersecurity issues. Flexibility to apply necessary strategies instead of overburdensome requirements will help alleviate cost and depletion on much needed resources that credit unions rely upon. Finally, ENCU asked that the Commission appoint only one prudential regulator for consistency in enforcement and regulation. A copy of the comment letter can be found here.

European Commission, Comment Letter


Credit Unions and financial cooperatives around the world stand ready to serve their members and provide needed financial services during the Coronavirus (COVID-19) pandemic.  Credit unions have proven many times that they provide much needed stability and essential services during market hardships. The coronavirus crisis will undoubtedly have significant effects on the broader economy by placing downward pressure on net income and lower net worth ratios. Credit unions, nonetheless, stand ready to play a significant role in helping members meeting their financial needs during this crisis, while operating in a safe and sound manner.  The following list includes suggested recommendations for prudential regulators to consider for assisting credit unions with their financial challenges:

  • Encourage credit unions to make loans with special terms and reduced documentation to affected members;
  • Reschedule routine exams or provide flexibility on reporting deadlines;
  • Guarantee lines of credit for credit unions through the relevant liquidity provider such as a central bank or deposit guarantee fund;
  • Make loans to meet liquidity needs of credit unions through the appropriate national liquidity facility;
  • Allow for the temporary provision of financial services to non-members, including emergency financial services check cashing, access to ATM networks or other services to meet short-term emergency needs (without the imposition of charges for such services that exceed its direct costs);
  • Ease restrictions to allow services by correspondent banks to credit unions;
  • Provide short-term grants to credit unions affected by the crisis for the purpose of emergency assistance in adjusting their operations;
  • Allow flexibility for any regulation/law requiring the credit union to be open during certain days or times;
  • Allow flexibility for credit unions to conduct management, board, or membership meetings via electronic means or video conference.

WOCCU acknowledges that all suggestions may not be appropriate in every jurisdiction and should be left to the discretion of the national-level regulator. WOCCU further acknowledges that all credit unions will continue to have responsibilities for any AML/CFT requirements and responsibilities.  WOCCU urges regulatory flexibility for credit unions to assist the public during this crisis.

If you have questions about our comments, please feel free to contact Andrew T. Price, Esq., VP of Advocacy at

ENCU Responds to European Commission’s Initiative to Combat AML/CFT

The European Network of Credit Unions (ENCU) responded to a request for feedback on the European Commission’s (Commission) action plan on money laundering & terrorism financing. According to the Commission, “Recent money laundering scandals put pressure on the EU to have a close look at the adequacy of the EU anti-money laundering framework.”[1] This initiative by the Commission aims to address areas of needed improvement in the money laundering and terrorism finance EU framework through new proposals. ENCU responded to this request for feedback and emphasized its support for this initiative while urging the Commission to consider “a risk-based approach, proportional requirements, national-level discretion to tailor regulations, and clear guidance to national level regulators on how to apply proportional regulations so that credit unions can continue its mission to improve financial inclusion and provide affordable and necessary services to the underserved European Union community.” ENCU’s comment letter to the Commission can be found here.

[1] See, Roadmap, Context, available at:

European Commission, Comment Letter

Basel Committee Discusses Banking System Risks, Supervisory Initiatives and Basel III Implementation

Between February 26-27, the Basel Committee on Banking Supervision (Basel Committee) met to discuss supervisory initiatives, review banking system risks, and promote Basel III implementation. During that meeting the Basel Committee discussed, among several topics, their strategic review, which consists of consulting members and stakeholders on their priorities, structure, and processes. The Basel Committee hopes to finalize this review this year. Among the many subject matters discussed and reviewed during this meeting, here are some of the highlights:

  • The Committee reviewed collateralized loan obligations (CLOs) and leveraged loan vulnerabilities in the areas of “members' supervisory approaches to measuring and mitigating risks; the current regulatory treatment of these exposures; and the need to further quantify banks' direct and indirect exposures.”    
  • The Committee discussed the banks preparation for LIBOR (London interbank offered rate) alternatives. While waiting on the Financial Stability Board to submit survey results on LIBOR exposures and related supervisory measures to G20 Finance Ministers and Central Bank Governors in July, the Basel Committee “stressed the need for banks to dedicate the necessary resources to understanding the impact of benchmark rate reforms on their business and making the necessary preparations for a smooth transition.” The Committee’s newsletter on benchmark rate reforms and regulatory and supervisory implications can be viewed here.
  • The Task Force on Climate-related Financial Risks discussed their workplan and deliverables consisting of “[a] set of analytical reports on climate-related financial risks, including a literature review, and reports on the transmission channels of such risks to the banking system and on measurement methodologies…” and "[t]he development of effective supervisory practices to mitigate climate-related financial risks."
  • The Committee reviewed the implementation status of Basel III across its member jurisdictions and discussed the progress of Basel III implementation.
  • The Committee considered the effects of the coronavirus on financial stability. “The Committee encourages banks and supervisors to remain vigilant in light of the evolving situation and notes the importance of effective cross-border information sharing and cooperation when dealing with such shocks.”

More information on this Basel Committee meeting and a comprehensive list of the topics covered can be viewed here.

ENCU Comments on EBA Draft ITS on MREL and TLAC

ENCU responded to the European Bank Authority’s consultation regarding their Draft Implementing Technical Standards (ITS) on Disclosure and Reporting of MREL and TLAC. The draft ITS consisted of the EBA’s proposals for MREL/TLAC templates and tables that implement disclosure and reporting requirements. The EBA hopes to “optimise efficiency by institutions when complying with their disclosure and reporting obligations, to facilitate the use of information by authorities and market participants, and to promote market discipline.” The EBA requested feedback on the necessity, discrepancies, and clarity of specified tables and templates. ENCU emphasized its support for the EBA’s efforts to “to maximise efficiency by institutions when complying with their disclosure and reporting obligations, and to facilitate the use of information by authorities and market participants.” ENCU’s comments on this draft ITS can be found here.

European Banking Authority, Comment Letter, ENCU

FSB Chair Writes G20 Finance Ministers and Central Bank Governors

In anticipation of a February 22-23rd meeting in Riyadh, Saudi Arabia, the Financial Stability Board (FSB) Chair, Randal K. Quarles, drafted a letter to G20 Finance Ministers and Central Bank Governors regarding challenges and changes to the global financial system in the areas of technology, supervisory and regulatory coordination to benefit the non-bank sector, market fragmentation, and other issues surrounding supervisory and regulatory issues. The FSB will contribute to the Saudi Arabian G20 by working on issues such as the LIBOR transition, technology, stablecoins, cross-border payments, non-bank financial intermediation, evaluation of post crisis regulatory framework, and implementation monitoring. For more information on Quarles’ letter and FSB’s G20 strategy can be found here.

FCA Responds to ISDA with Letter on Non-Representative LIBOR

In December 2019, the International Swaps and Derivatives Association (ISDA) responded to a November 2019 letter from the Financial Stability Board’s (FSB) Official Sector Steering Group (OSSG) asking the ISDA to add a pre-cessation trigger in company with the cessation trigger as standard language in the definitions for new derivatives. The OSSG believes “[t]his would help to reduce systemic risk and market fragmentation by ensuring that as much of the swaps market as possible falls back to alternative rates in a coordinated fashion.” The ISDA requested a statement from the Financial Conduct Authority (FCA), and the ICE Benchmark Administration stating “ that the “reasonable period” during which a “non-representative” LIBOR would be published would be minimal (i.e., a number of months not years) after the FCA announces that LIBOR is no longer representative.”

The letter from FCA responding to ISDA’s request included reference to relevant laws and how FCA “intends to apply them”. The FCA’s letter also clarified that its, “preference is for an orderly cessation of LIBOR in which its discontinuation is pre-announced, market participants have prepared for this, and publication of a non-representative LIBOR is avoided.” The FCA’s response to the ISDA can be found here. More information regarding the chronicle of events surrounding group responses regarding the pre-cessation trigger can be found here.

Financial Stability Board

European Banking Authority Releases Consultation on Revised AML/CFT Guidelines

The European Banking Authority (EBA) issued a public consultation on its draft Guidelines regarding revised money laundering and terrorist financing (ML/FT) risk factors. “This update takes into account changes to the EU Anti Money Laundering and Counter Terrorism Financing (AML/CFT) legal framework and new ML/TF risks, including those identified by the EBA’s implementation reviews.” The Guidelines provide factors for institutions to consider when assessing ML/FT risks, guidance on how to adjust due diligence measures to mitigate ML/FT risks once they’re identified, and support supervision efforts to assess a competency of financial institutions risk assessments and AML/CFT policies and procedures. Some of the key changes to the EBA’s guidance includes enhanced due diligence for high-risk third countries, as well as guidance on crowdfunding, corporate finance, PISPs and AISPs and currency exchange activities. The EBA’s press release on this consultation can be found here.

European Banking Authority

World Council Urges Basel Committee to Consider Credit Union Difference in AML/CFT Guidance

The Basel Committee on Banking Supervision (Basel Committee) released a consultation requesting feedback on their Consultative Document: Introduction of Guidelines on Interaction and Cooperation Between Prudential and AML/CFT Supervision (Consultative Document). The Basel Committee’s goal is “[t[o] enhance the effectiveness of supervision on banks’ ML/FT risk management, the Committee proposes to provide further guidelines on interaction and cooperation between prudential supervision and anti-money laundering and countering financing of terrorism (AML/CFT) supervision.” World Council supported this objective, but urged the Basel Committee to not only consider the unique structure of credit unions when determining how to assess an institution’s money laundering and financing terrorism risks, but to give clear guidance to national-level regulators on how to appropriately and proportionately assess risk for credit unions. World Council further suggested that both prudential and AML/CFT supervisors outline a coordinated proportional approach to the enforcement, management, and assessment of credit unions based on their unique organization structure, as well as consideration for privacy concerns surrounding information sharing with supervisors, and confidentiality concerns with observers that may participate in colleges or other attendees participating on an ad hoc basis. WOCCU’s response to the Consultative Document can be found here.

Basel, Comment Letter

IFRS for SMEs Under Review by IASB

The International Accounting Standards Board (IASB) is undergoing a comprehensive review for the purposes of updating the IFRS for SMEs Standard.  This simplified accounting standard for small and medium entities is used by some jurisdictions as the basis for the requirements of implementing IFRS 9 for Financial Instruments and the expected loss calculations.  Although the standard is intended for "publicly accountable entities", WOCCU has supported its use for credit unions as a means of simplifying the accounting and reporting requirements of IFRS 9 for credit unions.  WOCCU intends to look at ways that the standard and approaches can be aligned with IFRS 9.

A copy of the consultation can be viewed here.

International Accounting Standards Board

Financial Conduct Authority Chair Touts Need for Sustainable Community Based Finance

On January 17, 2020, Financial Conduct Authority (FCA) Chair, Charles Randell, delivered a speech at the National Credit Union Forum in Penrith. Entitled, “Is this the decade of the credit union?”, Randell, a member of his local credit union in South London, encouraged the room to “be the leaders and advocates for growing and well-governed community based lending and saving.” Randell emphasized the need for community based financing, the responsibility of regulators to support their growth through regulation, and the obligation of credit unions to change to meet growth and expansion.

Highlights of his speech included:

  • “Community based lending as a key part of growing the supply of affordable credit.
  • Acceleration of growth in credit union membership requires a transformation of the sector.
  • Credit unions need governance that’s equal to this transformation challenge, while continuing to protect consumers and prevent financial crime.”

Notably, Randell articulated the visible growth of credit unions within the last decade, showing positive changes to increase available services, however, this growth may require credit unions to “offer a broader range of products and services.” He further suggested that, “Treasury should consider if there is value in a review of credit union and society legislation” and “…any provisions that would enable credit unions to grow or provide new products and services would need to be accompanied by an appropriate and robust regulatory regime.” However, Randell, placed the responsibility of growth on credit unions, as well, by imploring them to invest in technology in order to improve risk management skills and technology systems to reach new members and provide new products and services. Randell’s full speech can be viewed here

ENCU Responds to EBA Consultation on Draft Implementing Technical Standard for Pillar 3 Disclosures

The European Banking Authority (EBA) released two public consultations on the Implementing Technical Standard (ITS) for financial institutions’ public disclosure and on supervisory reporting for CRR2. The Draft [ITS] on public disclosures by institutions of the information referred to in Titles II and III of Part Eight of Regulation (EU) No 575/2013 was developed to create uniform disclosure formats under the regulation, as well as update EBA’s policies on the Pillar 3 disclosures, “in order to foster the role of institutions’ disclosures in promoting market discipline through… the development of a comprehensive implementing technical standard (ITS) on disclosure.” The European Network of Credit Unions (ENCU) applauded the EBA’s priority to honor Basel 3’s proportionate approach to small and non-complex institutions by decreasing the number or required disclosures and allowing them to focus only on key metrics. ENCU, however, urged the EBA to provide more detailed guidance within their templates, tables and accompanying instructions regarding which disclosures specifically apply to small and non-complex institutions. For more information on the Draft ITS on supervisory reporting for CRR2 and backstop regulation, check out our blog post here. ENCU's response to the EBA's Draft Implementing Technical Standard for Financial Institutions' Public Disclosure can be found here

The Draft [ITS] on public disclosures by institutions of the information referred to in Titles II and III of Part Eight of Regulation (EU) No 575/2013 can be downloaded here.

European Banking Authority, Comment Letter, ENCU

ENCU Responds to EBA Consultation on Draft Implementing Technical Standard on Supervisory Reporting

The European Banking Authority (EBA) solicited comment on their Draft Implementing Technical Standards on supervisory reporting requirements for institutions under Regulation (EU) No 575/2013 (Draft ITS), which addresses “institutions’ compliance with prudential requirements as put forward by the CRR and related technical standards as well as additional financial information required by supervisors to perform their supervisory tasks.” Additionally, the EBA the Draft ITS revised reporting modules to adhere to two amendments to the CRR made in 2019  regarding liquidity, leverage and large exposures; and amending the’ backstop regulation’ “which sets out uniform minimum levels of coverage to ensure that institutions have sufficient loss coverage for future non-performing exposures (NPEs)” The European Network of Credit Unions (ENCU) stated its support for the EBA’s updates and revisions to its Draft ITS, and the incorporation of proportionality in the reporting requirements, however, ENCU urged EBA to encourage finalization of the Basel standards using proportionality in the reporting requirements.  This consultation ran parallel with the EBA’s consultation on ITS on public disclosures; and for more information on ENCU’s response to this consultation, please see our blog post here. ENCU's response to the EBA Consultation on Draft Implementing Technical Standards on Supervisory Reporting can be viewed here

The Draft [ITS] on supervisory reporting requirements for institutions under Regulation (EU) No 575/2013, can be downloaded here.

European Banking Authority, Comment Letter, ENCU

ENCU Urges Proportionality in EBA's Reporting Requirements for Market Risk

The European Network of Credit Unions (ENCU) responded to the European Banking Authority's public consultation regarding specific supervisory reporting requirements for market risk. These requirements are the initial elements of the Capital Requirements Regulation's (CRR2) launch of the Fundamental Review of the Trading Book. The consultation serves to "include proposals for a thresholds template, providing insights into the size of institutions’ trading books and the volume of their business subject to market risk, and a summary template, reflecting the own funds requirements under the ‘Alternative Standardised Approach’ for market risk (MKR-ASA)." In a comment letter, ENCU responded directly to the EBA’s Draft Implementing Technical Standards on specific reporting requirements for market risk, and stated its support their Draft Standards, but urged the EBA to finalize these standards with consideration for credit unions by implementing proportional requirements that recognize the limited resources of smaller financial institutions. ENCU’s comment letter can be viewed here.

European Banking Authority, Comment Letter, ENCU

Preliminary Agreement on Rules for Crowdfunding

Finland’s presidency of the European Council and Parliament reached a preliminary political agreement on a crowdfunding framework, which upon finalization of the technical work, will be submitted to the EU ambassadors for endorsement. The framework was constructed to make it easier for crowdfunding platforms to operate on a cross-border basis “by harmonising the minimum requirements when operation in their home market and other EU countries", as well as the implementation of investor protection rules that aim to improve legal certainty while considering compliance costs for providers.  The preliminary framework agreement will encompass crowdfunding campaigns up to EUR 5 million over a 12-month period. The prospectus regulation and MiFID will regulate the larger crowdfunding operations, however, crowdfunding supported by reward and/or donations are not within the scope of the framework.

“The text sets outs common prudential, information and transparency requirements. It also includes specific requirements for non-sophisticated investors. At the same time, the rules for EU crowdfunding businesses will be tailored depending on whether they provide their funding in the form of a loan or an investment (through shares and bonds issued by the company that raises funds).”

WOCCU will continue to monitor this issue as it is submitted for endorsement to the EU ambassadors and the proposed regulation is adopted. Additional information on the Presidency and Parliaments’ preliminary crowdfunding rules can be found here.

Council of the European Union

Basel Committee Finalizes First Non-Draft Version of the Consolidated Basel Framework

In response to feedback received to the consultation regarding proposed changes to the consolidated Basel framework, the Basel Committee on Banking Supervision (Basel Committee) published a finalized version of the framework available in a new section of their website found here. The Basel Framework includes 14 standards divided into chapters based on definitive topics. The framework also addresses inconsistencies and ambiguities found in the draft version of the Basel requirements, which prompted the Basel Committee’s consultation that the current version of the framework now acknowledges. An overview of the Basel Framework can be found here; and the full text of the “Launch of the consolidated Basel Framework” can be found here. WOCCU notes that the final Consolidated Basel Framework does make some technical changes, however, the substantive framework as adopted remains intact.  Notably, the standard includes the WOCCU advocated direction on proportionality for national-level regulators.


AML/CFT Cooperation Guidelines Include ENCU Supported Recommendations

The European Supervisory Authorities (ESA), comprised of The European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA), and European Securities and Markets Authority (ESMA), published joint guidelines on information exchange and cooperation between the authorities regarding anti-money laundering and counter financing of terrorism (AML/CFT). “The Guidelines are broadly based on, and consistent with, the framework of colleges of prudential supervisors of banks, but the scope of these Guidelines is much wider and encompasses all financial sectors in a proportionate manner.” This is the first time colleges of AML/CFT supervisor have been established in the EU for this purpose.  

The European Network of Credit Unions commented on these guidelines and encouraged prudential regulators to utilize the improved communication with an eye towards reducing regulatory burden on credit unions.  ENCU is pleased to see that many of the adopted guidelines, including the mapping guidelines, were adopted with proportionality in mind and should not significantly increase regulatory burdens on credit unions.  Further, the framework should increase the effectiveness of AML/CFT supervision.  

The ESA’s hope to address long standing compliance failures attributed to cross border AML/CFT crimes that were able to occur due to a failure in communication between AML/CFT supervisors. The guidelines aim to establish a “formal cooperation framework” between supervisors in various Member States in order to maintain effective supervision of firms operating on a cross-border basis. Included is this framework, is an outline for establishing AML/CFT colleges when a firm operates in more than three Member States. Additional information on the ESA joint guidelines and a copy of the guidelines can be found here.

European Banking Authority, ENCU

European Council Adopts Conclusions on Strategic Priorities on AML/CFT

The European Council (The Council) adopted anti-money laundering and counter terrorism financing conclusions in response to their 2019-2024 strategic agenda aimed at strengthening terrorism and cross border crime preventions, and improving cooperation and information sharing. The “Council urges for the swift transposition of all AML legislation into national law and for the strengthening of their effective implementation.” Furthermore, The Council has invited the European Commission (EC) to take action on the existing AML regulatory framework by considering:

  • “ways of ensuring a more robust and effective cooperation between the relevant authorities and bodies involved in anti-money laundering and terrorist financing, including through addressing impediments on exchange of information between them;
  • whether some aspects could be better addressed through a regulation;
  • possibilities, advantages and disadvantages of conferring certain supervisory responsibilities and powers to an EU body.”

WOCCU will continue to monitor The Council and the EC’s AML/CFT regulatory enhancements and any action or input the EC may provide. The “Council conclusions on strategic priorities on anti-money laundering and countering the financing of terrorism”, can be found here.

Council of the European Union