comply5, Author at FiveComply

29 March

Temporary Suspension of RTS 27

Directive (EU) 2021/338 of 16 February 2021 was introduced to amend Directive 2014/65/EU (‘MiFID II’), as regards information requirements, product governance and position limits, and Directives 2013/36/EU and (EU) 2019/878 as regards their application to investment firms, to help the recovery from the COVID-19 crisis.

One of the most important amendments introduced was the temporary suspension of the RTS 27 reporting requirements, as they were deemed “not to enable investors and other users to make any meaningful comparisons on the basis of the information they contain” (Recital 9 of the Directive (EU) 2021/338).

Thus, in Article 27(3) of the MiFID II, the following subparagraph has been added:

“The periodic reporting requirement to the public laid down in this paragraph shall not apply until 28 February 2023. The Commission shall comprehensively review the adequacy of the reporting requirements laid down in this paragraph and submit a report to the European Parliament and the Council by 28 February 2022”.

The Directive (EU) 2021/338 has entered into force on 27 February 2021.

It remains to be seen how CySEC will implement those amendments on a national level, as EU Directives are not directly effective but need to be enacted by national legislation. However, it is expected that all EU regulators will adopt this.

Our team of experts at FiveComply will keep you posted on any updates.

23 March

Regulatory

Deadline for the GoAML Registration of Reporting Entities with the FIU Seychelles

Reporting Entities under the First Schedule of the Anti-Money Laundering and Countering the Financing of Terrorism Act 2020 (‘AML/CFT Act’) have an obligation until 1 April 2021 to register with the Seychelles Financial Intelligence Unit (‘FIU’) registration system, GoAML.

Pursuant to Section 31 of the AML/CFT Act and Regulation 7 of the Anti-Money Laundering and Countering the Financing of Terrorism Regulations 2020 (‘AML/CFT Regulations’), all Reporting Entities have an obligation to register with the Financial Intelligence Unit (‘FIU’) within 60 days of the coming into force of the AML/CFT Regulations or commencement of its business (i.e. 1 April 2021).

The link to access the online GoAML platform can be found here; it includes guidelines on the registration process and other relevant details/information on how to register.

Our team at FiveComply may help you with your registration and to stay compliant with the regulatory requirements imposed by the Financial Services Authority Seychelles.

18 March

Regulatory

Circular C430: Requirements of the Portuguese Securities and Exchange Commission (‘the CMVM’) regarding the promotion, distribution and marketing of PRIIPs in the territory of Portugal

The Cyprus Securities and Exchange Commission (‘CySEC’) with Circular C430, wishes to inform CIFs as to the current revised CMVM’s regulatory framework applicable with regards to promoting, distributing, marketing and/or making packaged retail investment and insurance products (the “PRIIPs”) available in Portugal and/or to investors in Portugal. The new regulatory framework introducing four Regulations, was published on 10 November 2020 by the CMVM and reduces the duties of regular reporting of information to the CMVM; the simplified reporting obligations will take effect, as of 1^st of July 2021. With regards to the obligation to provide investors with key information documents (KIDs) and the obligations of PRIIPs marketing communications, the following CMVM requirements shall apply:

A. PRIIPS (KIDS)

CIFs must proceed with the prior submission of the relevant KID(s) to the CMVM, at least two days in advance of the date in which the KID(s) and/or PRIIPs are intended to be made available in Portugal and/or investors in Portugal;
The obligation under point 1 above, is also applicable for KIDs produced and/or prepared and/or reviewed before the date of entry into force of the CMVM Regulation No.8/2018 (i.e. 10 December 2020);
The submission of KIDs to the CMVM should be completed through CMVM’s Extranet subject to the CMVM Regulation No 3/2016 and articles 5(6) and 8(3) of the CMVM Regulation No. 8/2018. At this point it shall be noted that, the forms of reporting/upload of information are changed (CMVM Regulation No. 6/2020) and will take effect from 1 July 2021. In the event that the submission is made through alternative means (e.g. email), CIFs must provide an explanation and, as soon as possible, to successfully complete the submission through the Extranet (as per article 10(2) of CMVM Regulation 3/2016). Therefore, CIFs are required to be connected to the Extranet by filling the appropriate request form and by sending the request form to the CMVM (as per article 6(3) and Annex of the CMVM Regulation No. 3/2016).

B. PRIIPS (Marketing Communications)

CIFs are required to comply with the legal and regulatory framework applicable to marketing communications, promoting or advertising materials.
Relevant for compliance with the above are, Article 9 of the Regulation (EU) No. 1286/2014, Article 4 of the Portuguese Law No. 35/2018 of 20 July, article 7(4) and 292 of the Portuguese Securities Code and articles 14-17 of CMVM Regulation No.8/2018, regarding requirements for information sources and expression of restricted use in marketing communications, minimum content, marketing communications with links to other websites and electronic trading platforms.
Advertising messages and/or marketing communications related to PRIIPs are subject to prior approval by the CMVM, which will decide within seven working days after receiving the fully instructed request;
The advertising approval request of point 5 above, must be accompanied by the following, in accordance with article 4 of the Portuguese Law No. 35/2018, of 20 July:
1. Application to request prior approval of advertising relating to PRIIPs (can be accessed through the link here);
2. The draft advertising message;
3. The material elements related to the media through which the advertising message is expected to be disseminated;
4. The fundamental information document related to the PRIIP to be advertised, except when it has been previously notified;
The advertising message can be used within six months after the date of its approval.

CySEC expects all CIFs that promote, distribute, market and/or make PRIIPs available in Portugal and/or to investors in Portugal to take, where necessary, appropriate actions and measures to adhere to the aforementioned requirements of the CMVM.

11 March

Regulatory

Implementing the 5th AML Directive into Cyprus legislation: the implications for the crypto-industry

On the 18^th of February 2021, the House of Representatives in Cyprus has voted in favour of the transposition of the 5^th AML Directive (‘AMLD5’) into national legislation. As a result, on the 23^rd of February 2021, Law 13(I)/2021 was published in the Official Government Gazette, amending the current AML legislative scheme in Cyprus (‘the AML Law’).

This is considered as a huge step towards the recognition of crypto-assets which have been approached with caution due to the lack of a clear legislative approach within the EU.

In summary, the implementation of the AMLD5 into national legislation will affect the approach taken towards cryptocurrencies, due to the following regulatory developments:

The scope of the crypto-asset activity is now defined.
Crypto-asset service providers dealing with exchanges between crypto assets or exchanges between crypto assets and fiat currencies, custodian wallet providers and other financial services related to crypto-assets are now considered ‘obliged entities’ and are subject to the AML Law. This will enable monitoring and consequently a higher degree of transparency.
Initiation of a Public Registry relating to crypto-asset service providers that will be operated and kept by the Cyprus Securities and Exchange Commission (‘CySEC’). Relevant service provides shall file an application with CySEC, as per the applicable requirements.
Registered crypto-asset providers will be able to offer their services in Cyprus and/or from Cyprus.
To combat the risks related to the anonymity, Financial Intelligence Units (FIUs like MOKAS) should be able to obtain information allowing them to associate cryptocurrency addresses to the identity of the owner of cryptocurrencies.

The introduction of the abovementioned legislative provisions will also have an impact on the way banks treat crypto-assets within Cyprus and in general, within the EU. Until now, most of the EU credit institutions had policies of rejecting crypto-asset service providers with the latter being deprived of access to the bank system.

However, this is about to change, as crypto-asset service providers shall now be treated as ‘obliged entities’ under the AML Law, and therefore, merely the fact that, crypto-asset activities are being offered, does not constitute a reason for rejection anymore. The notion will be that, each case will be assessed on a case-by-case basis with crypto-assets service providers to be able to access the bank system, once they show compliance with the AML legislation.

23 February

Regulatory

Deadline for the renewal of registration in the Public Register of Certified Persons

Certified persons that are registered in the CySEC Public register should renew their registration for 2021, until 28 February 2021.

The renewal procedure must be performed online through the CySEC website, by completing the Renewal application and paying to CySEC the annual renewal fee of eighty euro (€80).

Certified persons must confirm on the renewal application, that they have completed by the end of 2020, continued professional training seminars that relate directly to their duties of:

ten (10) hours for persons registered in the Public register for the basic examination;
fifteen (15) hours for persons registered in the Public register for the advanced examination;
ten (10) hours for persons registered in the public register for AML compliance officers.

For the persons that are registered both in the public register for the basic examination and the AML compliance officers’ register, they must confirm that they have completed by the end of 2020, seminars of a duration of five (5) hours for persons registered in the public register for the basic examination, plus ten (10) hours for persons registered in the public register for AML compliance officers – being a total of fifteen (15) hours for both renewals.

For the persons that are registered both in the public register for the advanced examination and the AML compliance officers register, they must confirm that they have completed by the end of 2020, seminars of a duration of ten (10) hours for persons registered in the public register for the advanced examination plus ten (10) hours for persons registered in the public register for AML compliance officers – being a total of twenty (20) hours for both renewals.

09 February

Regulatory

New Prudential framework for investment firms

CySEC on 2^nd February 2021, issued Circular C426 which analyses the new prudential framework that the investment firms will be subject to. More specifically, on 26^th June 2021, the Investment Firms Regulation (EU) 2019/2033 (‘IFR’) and Investment Firms Directive (EU) 2019/2034 (‘IFD’) comes into force, thus, all CIFs should comply with the new prudential regime which is different and independent from the Regulation EU No. 575/2013 (CRR) and Directive DI144-2014-14 which are applicable today.

Some of the main changes that the new prudential framework shall introduce are the following:

Initial capital requirements

New initial capital requirements for the authorization of all Investment Firms required pursuant to Art.15 of Directive 2014/65/EU (section 16 of the Law) to provide any of the investment services and/or perform any of the investment activities listed below:

	Activities per Part I, Annex A of the Law (87(I)/2017)	Initial Capital
(a)	– Dealing on own account – Underwriting and/or placing on a firm commitment basis	€750,000
(b)	– Reception and transmission of orders in relation to one or more financial instruments; – Execution of orders on behalf of clients, – Portfolio management; – Investment advice and – Placing of financial instruments without a firm commitment basis and is not permitted to hold client money or securities belonging to its clients	€75,000
(c)	Investment firms other than those referred in points (a), (b) and (d)	€150,000
(d)	Operation of an Organised Trading Facility (where the investment firm engages in dealing on own account or is permitted to do so)	€750,000

The initial capital of an Investment Firm shall consist of the Common Equity Tier 1 capital (‘CET1’), Additional Tier 1 capital (‘AT1’) and Tier 2 capital (subject to certain conditions – Art. 9 of IFR).

European Banking Authority (‘EBA’) published seven final draft technical standards regarding IFD/IFR

EBA published a package of seven (7) final draft Regulatory Technical Standards (RTS) related to the implementation of IFR and IFD which have been submitted to the European Commission.

These final draft RTS, which are part of the phase 1 mandates of the EBA roadmap on investment firms, will ensure a proportionate implementation of the new prudential framework for investment firms taking into account the different activities, sizes and complexity of investments firms.

The relevant RTS can be found here.

Reporting and disclosure requirements under IFR/IFD

On 4th June 2020, the EBA issued its draft Implementing Technical Standards (ITS) on reporting requirements for investment firms under Article 54(3) of IFR and on disclosures requirements under Article 49(2) of IFR.

Along with the ITS, EBA introduced a set of templates and instructions for class 2 investment firms (Annexes I and II of the Draft ITS) and a set of templates and instructions for class 3 firms (Annexes III and IV of the Draft ITS), where the supervisory reporting framework incorporates different and tailored reporting templates with different frequencies.

The templates mentioned above can be found here.

Actions to be taken by the CIFs

CIFs are urged to study the IFR/IFD carefully, along with the final draft RTS issued, so as to:

a) Identify the class they will be categorized at from 26th June 2021,*

b) Familiarise themselves with the new templates and the way their new capital requirement will be calculated,*

c) Identify the data needed to be collected and reported, especially in regards to the calculation of K-Factors,*

d) Review their internal records and systems and make the necessary changes to ensure that the required data for the K-Factors (i.e. assets under management, daily trading flow, clients’ orders held, etc) will be available to calculate their new capital requirements. This information should be readily available at all times.

CIFs should make their own assessment on the impact that the IFR and IFD will have on their own funds, concentration risk, liquidity risk, disclosure, reporting, remuneration requirements and take the necessary early actions to ensure compliance by the date of entry into force i.e. on 26^th June 2021.

*CIFs should also consult the CySEC practical guide for the new prudential framework for Investment Firms, which can be found here.

You can contact our firm for more information and guidance.

14 January

Careers

Head of Compliance (vacancies through FiveComply)

On behalf of our client, a Group of Companies that owns regulated investment firms both EU and non EU, we are looking for an experienced Group Head of Compliance. The successful candidate will ensure that each entity within the Group implements regulations in all aspects and levels of its business activities as well as provide guidance on professional matters, with goal to preserve the Group’s integrity and high ethical standards.

Job Responsibilities

Develop and implement systems and controls to prevent or manage regulatory violations for every entity within the Group, and ensure such systems and controls remain efficient.
Draft, amend and implement policies and procedures for every entity within the Group
Prepare regulatory reports as well as reports for senior management as appropriate
Give guidance for corrective measures where necessary and inform the senior management
Collaborate with all business units and especially compliance function of each entity within the Group to monitor enforcement of internal policies and procedures
Provide advice and training to colleagues and senior management
Keep updated with relevant regulatory developments of each country that the Group’s entities are authorised to provide investment services so as to evolve best practices in compliance control
Direct communication with competent authorities
Review and draft contracts, terms and conditions and any other legal documents

Required Qualifications

Secondary Degree in Law, Economics, Finance, Accounting, or relevant field
CySEC Advanced Certification or equivalent certificate from other competent authority
4 years minimum experience in a related field
Fluency in both English and Greek languages
Ability to work under pressure and in a fast-paced environment
Excellent communication skills
Be result-oriented
Must be able to travel when deemed necessary
Experience in drafting legal documents will be considered an advantage

If you are interested in the above position please send your CV to our HR team at hr@fivecomply.com. Due to the high volume of applications we receive at FiveComply, only shortlisted candidates will be responded to.