EU third country blacklist

In February 2019, the European Commission came up with a proposal to include all countries that are not doing enough to fight money laundering and terrorism financing on a blacklist. This is the first time the European Commission has embarked on such initiative.

The decision requires EU banks to carry out detailed customer vetting. More specifically, all EU banks that handle payments connected to the blacklisted countries would have to conduct enhanced due diligence on any money moving to or from the jurisdiction on the blacklist. Also, EU banks would be obliged to act on suspicion by staying away from questionable transactions and reporting to the authorities.

The EU blacklist list is a living document. Countries can come clean if they improve their legislation and fulfil European standards. Other countries can be added to the list if the review of their respective legislation show deficiencies.

EU to Advance with Bank Regulation

aviationIn 2018, the European Commission will introduce initiatives for the development of secondary markets for Non-Performing Loans (NPLs) and the protection of secured creditors from borrowers’ default. This comes against the alarming accumulation of NPLs. The sheer volume of NPLs have overstretched the administrative capacities of the European systemic banks, contributing to inefficiencies, reduced management flexibility and increased transaction costs. Therefore, the European Commission’s initiative is aimed at the development of a harmonized EU framework whereby services such as credit restructuring, collateral administration and debt collection can be efficiently delegated to secondary private market entities.

The above initiative goes in tandem with the need for protection of secured creditors from borrowers’ default. This second part of the initiative, aims to remedy the fragmentation of Member States laws and develop fair and adequate measures to recover value from secured loans when the debtor is in risk of default, which in turn will avert the risk of mounting anew NPLs. This new initiative will allow banks to acquire ownership of encumbered assets in an accelerated, extra- judicial in nature procedure. The new, sovereign backed security, will offer all parties increased access to finance as well as more credible options for creditors to secure their loans.

The expected proposals have already stirred opposition especially over financial protection and judicial oversight. Therefore, the shape of the final rules will depend on the negotiations and amendments prior the proposals are launched and during the decision-making phase.

EU to unionize cross-border payments

international paymentEarlier this year, the European Commission published the Consumer Financial Service Action Plan. Its objective is to improve transparency, and to address price inequalities in cross–border payments in currencies other than the Euro.

Currently, the Single Euro Payment Area (“SEPA”) Regulation harmonizes all cross–border electronic payments, and ensures that all bank transfers denominated in Euro are subject to the same conditions as domestic payments.

A public consultation is now gathering feedback from interested stakeholders. The consultation is open until end October 2017. We expect a legislative proposal to follow at the beginning of 2018, which will aim at removing the remaining barriers in the single market for financial services, and enhance competition amongst financial service providers within the EU.