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The European Banking Authority (EBA) and the other supervisory authorities outline improvements needed for national competent authorities.
The three European supervisory authorities (ESAs) — the EBA, European Insurance and Occupational Pension Authority and European Securities and Markets Authority — have published their reports on national competent authorities for the EU’s 27 member states.
The reports were broadly satisfactory of the processes that the national competent authorities have in place. However, they noted divergent approaches taken by different member state-level regulators.
For example, when it comes to operational independence, although the vast majority of national competent authorities are established as independent bodies, a few are established under the umbrella of a ministry. In addition, some are required to reply to requests made by certain public bodies, such as ministries.
Not all competent authorities reported being in a position to hire staff at the level needed for the fulfilment of their supervisory tasks. However, almost all competent authorities notified the ESAs that their funding is adequate.
There are also differences among the regulators when it comes to the personal independence of staff. This includes aspects such as terms of office and removal conditions for national competent authorities’ senior management and board members, management of conflicts of interest, cooling-off periods and legal protection for staff.
Competent authorities did, however, score well for transparency.
“CAs [competent authorities] typically ensure public transparency through the publication of documents, such as annual reports or financial statements, disclosing supervisory measures taken, and through duties to report periodically on their activities to a government entity or democratic assembly,” the ESAs pointed out, continuing that some publish documents in English as a way to enhance transparency.
The ESAs will now use these findings to establish next steps. Some considerations touted by the ESAs include greater convergence in how national competent authorities monitor conflicts of interest, the establishment of common EU-wide criteria for supervisory independence, as well as the possibility of benchmarking.
“The EBA could then use the principles and criteria established to benchmark or assess the extent to which the criteria are met,” the EBA said in its report. “This could be done through dedicated peer review exercises when assessing the adequacy of resources, degree of independence and governance arrangements as part of other peer reviews, and in exercises such as the EBA’s AML/CTF [anti-money laundering/counter-terrorist financing] implementation reviews of CA approaches to AML/CTF supervision.”
In March, the banking watchdog launched a consultation on its revised guidelines for AML/CTF supervision.
Concluding in June this year, the EBA’s consultation proposed changes to address what it feels are the key obstacles to effective AML/CTF supervision.
This included the effective use of different supervisory tools to meet the supervisory objectives.
