Financial Crime World

EU Banking Union Regulators Team Up for Supervision and Sanctions

The European System of Financial Supervisors (ESFS) is a group of key regulators that work together to ensure the stability and soundness of the financial system in Europe. The ESFS consists of several regulators, including:

  • Commission de Surveillance du Secteur Financier (CSSF)
  • European Central Bank (ECB)
  • Banque Centrale du Luxembourg (BCL)
  • Commissariat aux Assurances (CAA)

Supervision

The CSSF is responsible for supervising:

  • Credit institutions
  • Payment institutions
  • Electronic money institutions
  • The Luxembourg insurance sector through its subsidiary, the CAA

The ECB plays a central role in the supervision of credit institutions within the framework of the Single Supervisory Mechanism (SSM). The BCL implements the decisions taken by the ECB in Luxembourg and is responsible for monetary policy operations.

Sanctions

The ECB has the power to impose sanctions on financial institutions that fail to comply with EU prudential requirements. These sanctions can include:

  • Fines
  • Periodic penalty payments

The CSSF also has the authority to impose administrative penalties, including:

  • Pecuniary penalties up to 10% of an institution’s total annual net turnover

Current Priorities

The CSSF’s current priorities include:

  • Preparing for the upcoming visit of the Financial Action Task Force (FATF) to Luxembourg
  • Addressing the impact of Brexit on the financial sector

The regulator has organized conferences with the Luxembourg Bankers’ Association to raise awareness about the FATF visit and its methodology. In response to Brexit, the Luxembourg legislature passed two laws aimed at ensuring the continuity of existing contracts and the orderly functioning of financial markets.

Engagement with the Banking Sector

The regulators engage with the banking sector through various channels, including:

  • Conferences
  • Seminars
  • Regular meetings

The CSSF has also established a “Dialogue Platform” to facilitate communication between the regulator and the industry.

Conclusion

In conclusion, the ESFS plays a crucial role in ensuring the stability and soundness of the financial system in Europe. Through its member regulators, it oversees credit institutions, payment systems, and insurance sectors, and enforces EU prudential requirements. The CSSF’s current priorities highlight the importance of preparing for international assessments and addressing the impact of major events like Brexit on the financial sector.