Issue: 03/2022


Through Circular C486, issued on 8 February 2022, CySEC informs the Regulated Entities regarding the Commission Delegated Regulation (EU) 2021/70 amending Delegated Regulation (EU) 2018/1229 (the "Delegated Regulation"), which supplements the Central Securities Depositories Regulation (EU) 909/2014 (the "CSDR") with regard to regulatory technical standards on settlement discipline, was published in the Official Journal of the European Union (OJ). This Circular is following Circular C387 which had been issued on 21 May 2020.

CySEC adopted the Guidelines on standardised procedures and messaging protocols under Article 6(2) of CSDR on improving securities settlement in the EU and on CSDs as supplemented by Article 2 of Commission Delegated Regulation (EU) 2018/1229 by incorporating them into its supervisory practices.

CIFs must take the necessary action to ensure their compliance with the requirements of Article 6(2) of the Regulation, as clarified with Article 2 of the Delegated Regulation.

Through Circular C487, issued on 10 February 2022, CySEC informs the Regulated Entities regarding the redefined threshold criteria determining which CIFs are considered a 'significant CIF' for the purposes of the Investment Services and Activities and Regulated Markets Law of 2017, as amended, ('The Investment Services Law') considering a new prudential framework for investment firms (IFR/IFD). The Circular updates and replaces C228 which was issued on 26 July 2017.

A CIF shall be considered as a 'significant CIF' for the purposes of the Investment Services Law where its on and off-balance sheet assets are on average greater than EUR 100 million over the four-year period immediately preceding the given financial year.

CIFs should within four months from the end of their financial year assess whether they meet the threshold to become a 'significant CIF' and must take all appropriate measures to comply with the relevant requirements, inform CySEC and submit their new organizational structure through CySEC's portal.

Through Circular C488, CySEC informs Regulated Entities about the updated procedures in force regarding the receipt of reports of infringement pursuant to article 32 of the Regulation (EU) No 596/2014 of the European Parliament and of the Council, of April 2014, on market abuse (market abuse regulation).

The Circular provides information in what relates to the receipt of reports of infringements, which contains the below:

  • The duties of the dedicated staff members of the competent department
  • Communication channels
  • Explanation of the procedure after CySEC receives the report of infringements

The Circular also clarifies that the report of infringement can be submitted either by name or anonymously by completing the "Whistleblowing External Disclosure Form" (Appendix) and notifies the reporting person that CySEC may need to disclose information under the following circumstances:

  1. In the content of a civil or criminal or other legal proceeding or in the content of arbitration or out of court settlement
  2. In the content that CySEC lodges complaints to any other competent authorities, associations, organizations or bodies in the Republic or abroad
  3. In the content of the right to be heard of the reported person or any other person who is invited to representations to CySEC, giving access to such person to the information of the relevant administrative file.

Through Circular C489, issued on 25 February 2022, CySEC reminds Regulated Entities of their obligation to implement all relevant restrictive measures imposed by the Council of the European Union (EU) and competent organizations as part of the targeted restrictive measures against Russia in response to the crisis in Ukraine.

CySEC expects all Regulated Entities to take the following actions:

1. Follow the notifications outlined in the Section entitled "Sanctions/Restrictive Measures" on CySEC's website and ensure that the Sanctions/Restrictive Measures contained therein are implemented.

2. Assess or reassess money laundering and financing of terrorism risks in all business relationships with persons subject to Sanctions/Restrictive Measures.

3. Avoid the commencement of any business relationship with persons subject to Sanctions/Restrictive Measures.

4. In the case of a person that is an existing customer/business relationship and is subject to Sanctions/Restrictive Measures, Regulated Entities must thoroughly examine the actions/measures that must be implemented, in accordance with the relevant EU Council's Decisions and Regulations.

It is been reminded to Regulated Entities to monitor on a regular basis the Section entitled "Sanctions/Restrictive Measures" on CySEC's website for further notifications and any additional EU Council's Restrictive Measures and ensure full compliance with the Law and relevant CySEC's Circulars( Circular 474).

Investment Services & Regulated Markets

On 2 February 2022, the European Securities sand Markets Authority (ESMA) published a Supervisory Briefing to ensure convergence across the European Union (EU) in the supervision of firms using tied agents and in particular those based outside the EU.

The supervisory briefing presents ESMA and National Competent Authorities' common understanding on the supervision of firms using tied agents to provide investment services and/or activities. The monitoring that ESMA performed of the activities of market participants from the United Kingdom in the EU has shown that such a briefing will contribute to the development of a convergent EU supervisory culture and will foster improved investor protection.

The supervisory briefing covers the below aspects:

  • The supervisory expectations when firms appoint tied agents
  • The supervisory expectations on firms using tied agents in their on-going activities.

It provides indications to market participants of compliant implementation of the MiFID II provisions in relation to tied agents and focuses to cases where tied agents are legal persons and also to cases where the tied agents are controlled by or have close links to other entities, including third-country entities.

On 8 February 2022, the European Securities and Markets Authority (ESMA) launched a common supervisory action (CSA) with national competent authorities (NCAs) on the application of MiFID II costs and charges disclosure rules across the European Union (EU).

The CSA will be conducted during 2022 and will allow ESMA and NCAs to assess the application by firms of the MiFID II requirements on costs and charges. This action will be focused on information provided to retail clients. NCAs, particularly, will review how firms ensure that these disclosures:

  • are provided to clients in a timely manner
  • are fair, clear and not misleading
  • are based on accurate data reflecting all explicit and implicit costs and charges, and
  • adequately disclose inducements.

ESMA's belief is that this initiative and the related sharing of practices across NCAs will help ensure consistent implementation and application of EU rules and increase the protection of investors according to ESMA's objectives.

The CSA contributes to fulfilling ESMA's mandate on building a common supervisory culture among NCAs to promote sound, efficient, and consistent supervision throughout the EU. ESMA's promotion of supervisory convergence is done in close cooperation with NCAs.

ESMA published a list of Q&As on this subject, and these will serve as input to this CSA.

On 21 February 2022, the European Commission started a consultation on options to enhance the suitability and appropriateness assessments. Following the 2020 capital markets union (CMU) action plan, the Commission is preparing a retail investment strategy, aiming to take a holistic view of investor's protection rules. One of the main purposes is to make the European Union (EU) an even safer place for individuals to save and invest long-term and to increase participation of retail investors in capital markets.

In the answers received to the 2021 public consultation on the Commission's retail investment strategy for Europe, many stakeholders, on the industry and consumer's side, called to simplify, improve, automate and standardize the way investor's profiles are currently assessed. Some have, as well, expressed support for more focus on the overall investor portfolio composition rather than on individual products.

Taking account of these results, the Commission's Services are currently exploring different ways to improve the suitability and appropriateness regimes to address the afore-mentioned issues. By mean of this targeted consultation, the Commission Services intend to complement the 2021 public consultation exploring the feasibility of a new retail investor-centric assessment.

The deadline for a reply is on 21 March 2022.

Anti Money Laundering (AML) & Financial Crime

On 17 February 2022, the Council of the European Union published an opinion of the European Central Bank (ECB) on a proposal for a regulation establishing the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLAR).

Overall, the ECB welcomes the package of four legislative proposals, including AMLAR, published by the Commission on 20 July 2021, aiming the strengthening of the European Union's rules concerning AML/CFT.

On 17 February 2022, the Council of the European Union published an opinion of the European Central Bank on a proposal for a directive and a regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.

Overall, the ECB welcomes the package of four legislative proposals, including AMLAR, published by the Commission on 20 July 2021, aiming the strengthening of the European Union's rules concerning AML/CFT.

On 21 February 2022, the Commission Delegated Regulation (EU) 2022/229, which amends Delegated Regulation (EU) 2016/1675 on the list of high-risk third countries with strategic AML and CTF deficiencies under the Fourth Money Laundering Directive, was published in the Official Journal of the European Union.

The Delegated Regulation:

  1. adds Burkina Faso, Cayman Islands, Haiti, Jordan, Mali, Morocco, the Philippines, Senegal and South Sudan to the list, and
  2. removes the Bahamas, Botswana, Ghana, Iraq and Mauritius from the list.

The Delegated Regulation will enter into force on the twentieth day following the day of its publication in the Official Journal.