Global Financial Regulations: A Guide to Compliance

As the global financial landscape continues to evolve, regulatory bodies around the world are implementing new rules and standards to ensure stability, transparency, and accountability in the financial sector. In 2017, Luxembourg was at the forefront of these efforts, with numerous regulations coming into effect or undergoing significant changes.

Common Reporting Standard (CRS)

The CRS is a global standard for the automatic exchange of financial information between governments. As of 2017, many jurisdictions have implemented the CRS, which requires financial institutions to report certain information about their clients to tax authorities. Luxembourg, in particular, has been at the forefront of CRS implementation, with strict reporting requirements and penalties for non-compliance.

European Market Infrastructure Regulation (EMIR)

EMIR is a European regulation aimed at improving transparency and reducing systemic risk in the financial sector. The regulation requires counterparties to report certain securities financing transactions (SFTs) to trade repositories and introduces measures to prevent rehypothecation. Luxembourg has been an early adopter of EMIR, with many financial institutions already reporting SFTs under the regulation.

Securities Financial Transactions Regulation

This European regulation aims to enhance financial stability by ensuring that information on securities financing transactions is efficiently reported to trade repositories and investors in collective investment undertakings. Improved transparency would prevent financial intermediaries from attempting to circumvent regulation by shifting parts of their activities to the less-regulated shadow banking sector.

Solvency II/Omnibus

Solvency II is a new solvency regime for all EU insurers and reinsurers, which also covers insurance operations of bancassurers. The regulation aims to implement solvency requirements that better reflect the risks companies face and deliver a supervisory system that is consistent across all member states.

Single Resolution Board (SRB)/Bank Recovery and Resolution Directive (BRRD)

The BRRD sets out new resolution rules for all EU banks, requiring financial institutions to prepare recovery plans in case of distress. The regulation also ensures that preventative steps are taken to deal with bank failure, while a single resolution fund will be set up to ensure the financing of bank resolution.

Single Supervisory Mechanism (SSM)

The SSM is a new system of banking supervision made up of the ECB and national supervisory authorities. The regulation aims to deliver robust and consistent supervision by strengthening the Supervisory Review and Evaluation Process (SREP) and embedding forward-looking supervision.

UCITS V

UCITS V is the most recent evolution of the UCITS legal framework, which reinforces depositary liabilities along and beyond the lines of AIFMD. In addition, requirements for remuneration of key personnel as well as a sanctions regime complete this new regulation.

Conclusion

As financial institutions navigate these complex regulations, it is essential to stay up-to-date with the latest developments and ensure compliance with all relevant regulatory requirements. Deloitte Luxembourg offers expert guidance and support to help you address the challenges and opportunities brought forward by these regulations.