EBA Updates Guidance On Assessing Non-EU Confidentiality Regimes

May 5, 2022
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The European Banking Authority (EBA) has widened the scope and purpose of assessing the equivalence of professional secrecy and confidentiality regimes of third-country authorities.

The European Banking Authority (EBA) has widened the scope and purpose of assessing the equivalence of professional secrecy and confidentiality regimes of third-country authorities.

In its updated guidelines, the EBA says it is widening the scope and purpose of the equivalence assessment of third-country authorities.

The move is intended to facilitate cooperation within the remit of banking, payment services, anti-money laundering and counter-terrorism financing (AML/CTF) supervision and resolution matters.

Under EU regulations, third countries' supervisory authorities may participate in EU supervisory colleges, vehicles through which supervisory activities are coordinated, “where appropriate and subject to confidentiality requirements that are equivalent, in the opinion of all competent authorities”.

In addition, other EU regulations including the revised Payment Services Directive (PSD2), the Anti-Money Laundering Directives (AMLDs) and the Bank Recovery and Resolution Directive (BRRD) encourage EU authorities to enter into cooperation arrangements with third-country authorities.

A key precondition for such arrangements is that the professional secrecy and confidentiality regime of the third-country authority is deemed equivalent to its EU counterpart, which prohibits all officials and servants of its institutions from disclosing information received in their official capacity.

To support cooperation, the EBA has carried out equivalence assessments evaluating the professional secrecy and confidentiality regimes applicable to third-country authorities and provided a list of authorities that had been deemed equivalent.

The current list includes central banks of the UK, Australia, Japan, as well as the UK's Financial Conduct Authority, US federal financial regulators, the New York State Department of Financial Services and authorities from numerous other countries.

The guidelines set out the EBA's view of appropriate supervisory practices within the EU and of how EU law should be applied in a particular area. By widening the scope and purpose of the assessment, the updated guidance will facilitate the functioning of supervisory colleges and cooperation between EU and non-EU authorities in various areas, according to the EBA.

Along with the guidelines, the EBA has also published an updated version of its principles that guide its evaluation.

The document sets out four principles that are considered to be the key characteristics of the EU professional secrecy regime, each of which was considered when assessing the legal regimes applicable to third-country authorities.

The principles are:

  • Principle 1: the regime contains the notion of confidential information.
  • Principle 2: the regime contains specifications on the existence of professional secrecy obligations.
  • Principle 3: the regime restricts the use of confidential information.
  • Principle 4: the regime establishes restrictions on the transfer of confidential information.

The guidelines will apply two months after publication, by which time competent authorities will have to report on the state of their compliance in relation to the guidelines.

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