Welcome to Legal Shorts, a short briefing on some of the week’s developments in the financial services industry.

If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers.  

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www.cummingslaw.com

Updated privacy policy for Cummings Law

Cummings Law has updated its privacy policy in relation to the GDPR, which comes into force on the 25th May 2018.  Our privacy policy can be found on our website at the following link: https://cummingslaw.com/privacy-policy.

ESMA final report on suitability requirement guidelines under MiFID II

ESMA recently published its final report on guidelines on certain aspects of the suitability requirements under MiFID II.  The guidelines build on the text of ESMA’s 2012 guidelines and have been largely confirmed and broadened to: (i) consider technological developments of the advisory market, in particular the increasing use of automated or semi-automated systems for the provision of investment advice or portfolio management (robo-advice); (ii) build on national competent authorities’ supervisory experience on the application of suitability requirements; (iii) take into account the outcome of studies in the area of behavioural finance; and (iv) provide additional details on some aspects that were already covered under the 2012 guidelines.  ESMA has also included a good practice for firms addressing the issue raised relating to the product selection process and suitability assessment and will monitor the legislative proposals under the action plan and consider making focussed amendments to the guidelines to reflect changes to the MIFID II delegated acts on sustainability.

ESMA updates MiFID II Q&As on transparency and market structures 

ESMA recently published: (i) an updated version of its questions and answers on transparency topics under MIFID II and MiFIR. New questions have been added to section 2 (general Q&As on transparency topics) relating to pre-trade transparency requirements for request for quote systems, the requirements to publish information on post-trade data 15 minutes after publication free of charge, the publication of transactions and pre-trade transparency requirements for voice trading systems; and (ii) an updated version of its Q&As on market structures topics under MiFID II and MiFIR. A new Q&A has been added to section 4 (multilateral and bilateral systems) relating to organised trading facilities.

FCA speech on use of FinTech to detect and disrupt criminal activity

The FCA recently published a speech by Megan Butler, FCA Executive Director of Supervision – Investment Wholesale and Specialists, looking at how data and technology can help to detect and disrupt criminal activity. 

Points of interest include: (i) while the FCA recognises the benefits of firms investing in technology to deal with financial crime, Ms Butler emphasises that efficacy of any new technologies over the level of expenditure on them is key; (ii) firms should share methods, innovations and technologies aimed at combatting financial crime with the regulators; and (iii) it is important to recognise how much of the direct threat to customers from financial crime has moved online; phishing and identity theft were cited by firms as the most widespread fraud risks they now face and despite the abuse of financial services by criminals, most financial institutions are not complacent about the risk, and banks are undertaking a lot of activity to combat financial crime.

Sanctions and Anti-Money Laundering Act 2018 receives Royal Assent

On 23 May 2018, the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) received Royal Assent.  The purpose of SAMLA is to ensure that the UK is able to enact sanctions and money laundering regulations that would have previously have been made by EU directives and to enable the government to amend existing legislation, SAMLA is split into two parts. Part one concerns sanctions regulations, and empowers HM Government to create sanctions regulations to comply with a UN obligation, any other international obligation or a purpose specified in section 1(2) to: (i) further the prevention of terrorism, in the UK or elsewhere; (ii) be in the interests of national security; (iii) be in the interests of international peace and security; (iv) further a foreign policy objective of the government of the UK; (v) promote the resolution of armed conflicts or the protection of civilians in conflict zones; (vi) provide accountability for or be a deterrent to gross violations of human rights, or otherwise promote compliance with international human rights law, respect for human rights, or international humanitarian law; (vii) contribute to multilateral efforts to prevent the spread and use of weapons and materials of mass destruction; and (viii) promote respect for democracy, the rule of law and good governance.  Part two of SAMLA concerns money laundering, and enables HM Government to make regulations for: (i) the detection or investigation of money laundering or terrorist financing, or the prevention of both and (ii) the implementation of standards published by the Financial Action Task Force.