European Parliament | Finance 20/20
The EU’s Whistleblowing Directive
Alexandra KeenanPosted on December 9, 2019
On November 26, Directive (EU) 2019/1937 of the European Parliament (EP) and of the Council of October 23 (the “Directive“) on the protection of persons who report breaches of Union law was published in the Official Journal.
In light of recent information scandals including Cambridge Analytica, the Panama Papers and Luxleaks, the European Commission (EC) sought to introduce a unified measure granting protection to persons who report breaches of Union Law. These scandals have highlighted how crucial whislteblowers can be in uncovering unlawful activities, and the European Union (EU) has introduced the Directive to strengthen the enforcement of Union law and protect the freedom of expression of the whistleblower when interviewed on this topic, as explained by Maria Mollica, the EU Commission’s Policy Officer. While various Member States have addressed whistleblower protection in their own national legislation, the protection is often restricted to specific areas and thus the Directive attempts to unify and harmonize the approach taken by all Member States.
Protection is afforded to whistleblowers to the extent they fall within the definition of “reporting person,” a natural person who reports or publicly discloses information on breaches acquired in the context of his or her work-related activities (Article 5(7)). In turn, this disclosure extents to information “including reasonable suspicions, about actual or potential breaches, which occurred or are very likely to occur in the organization in which the reporting person works or has worked or in another organization with which the reporting person is or was in contact through his or her work, and about attempts to conceal such breaches.” “Breaches” refers to any act or omission that is unlawful and relate to the Union or defeat the object or purpose of the rules in the Union (Article 5(1) and (2)).
It applies to businesses which employ at least 50 employees and they are required to implement internal channels to facilitate the reporting.
In terms of its scope, the Council of the European Union (EUCO) explains in a press release that “the new rules will cover areas such as public procurement, financial services, prevention of money laundering, public health, etc. For legal certainty, a list of all EU legislative instruments covered is included in an annex to the directive.” Further, regarding the protection awarded to reporting persons, it is stated that “the rules introduces safeguards to protect whistle-blowers from retaliation, such as being suspended, demoted and intimidated. Those assisting whistle-blowers, such as colleagues and relatives, are also protected. The directive also includes a list of support measures which will be put in place for whistleblowers.”
On November 26, the directive was published in the Official Journal and it will enter into force on December 16. Member States then have two years from that date to implement its terms and transpose its requirements into national legislation. Press Release. Legislative Text.
Posted in Europe	Tagged European Commission (EC), European Parliament, European Union	
European Parliament Publishes Erratum to ECON Report on Proposed Regulation on Facilitating Cross-Border Distribution of Collective Investment Funds
On January 22, the European Parliament published an erratum (A8-0431/2018/err01) to a report of its Economic and Monetary Affairs Committee (“ECON“) on the proposal for a Regulation on facilitating cross-border distribution of collective investment funds (2018/0045(COD)).
It amends Recital 6 and Article 10, as well as inserting new Recitals 7a, 7b and 7c. It explains that these amendments were adopted by ECON but were missing from the text sent for translation. It should be noted that the changes affect all language versions of the report.
The erratum can be found here.
Posted in Europe, Industry Developments	Tagged Article 10, ECON, European Parliament, Recital 6	
On January 14, the European Court of Auditors (“ECA“) published a communication to the European Parliament on the European Central Bank’s (“ECB“) position on the ECA’s access to audit documents and information relating to its banking supervision role under the single supervisory mechanism (“SSM“). READ MORE →
Posted in Europe, Industry Developments	Tagged Council of the EU, ECA, ECB, European Commission, European Parliament, mou, SRB, SSM, TFEU	
Posted in Europe, Industry Developments	Tagged European Parliament, MLD5, Office Journal of the EU	
Capital Markets Union: Council Formally Adopts Securitization Regulation and CRR Amendment Regulation
The General Affairs Council formally adopted at first reading the European Commission proposal for a Regulation of the European Parliament (“EP“) and of the Council amending Regulation (EU) 575/2013 on prudential requirements for credit institutions and investment firms (CRR Amendment Regulation) and a proposal by the Commission for a Regulation of the EP and of the Council laying down common rules on securitization and creating a European framework for simple, transparent and standardized securitization (Securitization Regulation) on November 20, 2017.
Both Regulations were adopted as an A item, meaning that they could be formally adopted without requiring a debate. This was expected, taking into consideration the undertaking given by the Council representative by letter of June 28, 2017 to approve the EP’s first reading position on both draft Regulations without further amendments. The EP formally adopted the two Regulations on October 26, 2017.
The new rules laid down in these two Regulations are part of the EU’s plan to develop a fully functioning Capital Markets Union by the end of 2019. The EU believes developing a securitization market will help create new investment possibilities and provide an additional source of finance, particularly for SMEs and start-ups.
The Commission adopted its proposals for these two Regulations on September 30, 2015.
Posted in Europe, Industry Developments	Tagged CRR Amendment Regulation, European Parliament, Securitization Regulation	
European Commission Outlines Work Program for 2018
The European Commission published a communication on October 24, 2017, which outlined its work program for 2018. The communication included numerous annexes and outlined a number of initiatives which are intended to be the focus of the European Commission for the coming year.
The communication goes into further detail in a number of annexes that, for example, set out 10 political priorities, including the completion of the capital markets union and the banking union, as well as create a permanent and accountable European Minister of Economy and Finance.
The annexes also set out priority-pending proposals on which the European Commission wants the European Parliament and Council of the EU to prioritize while also listing a number of proposals which it intends to withdraw and legislation it intends to repeal.
The communication, addressed to the European Parliament, the Council of the EU, the European Economic and Social Committee and the Committee of the Regions, is available here.
Posted in Europe, Industry Developments	Tagged European Commission, European Parliament	
European Parliament to Consider Report on Retail Financial Services
The European Parliament procedure file indicates that the report outlining the European Commission’s action plan on retail financial services will be considered in mid-November.
The action plan, published in March 2017, forms part of the European Commission’s goal of establishing a capital markets union. It aims to increase consumer trust, empower consumers and reduce legal and regulatory obstacles, whilst supporting innovation in the industry.
Following publication of the action plan, the European Parliament’s Committee on Economic and Monetary Affairs published a draft report on the action plan which contained a motion for a Parliament resolution. The draft report is available here; however, the final version, which will be discussed in Parliament, has not yet been published.
Posted in Europe, Industry Developments	Tagged European Parliament	
Mitigating Risks Associated with SFTs: European Commission Publishes Report
The European Commission has published a report to both the European Parliament and the Council of the EU under Article 29(3) of the Regulation on reporting and transparency of securities financing transactions ((EU) 2015/2365), (the “SFTR“).
Pursuant to Article 29(3) of the SFTR, the Commission is required to report on progress in international efforts to mitigate the risks linked with securities financing transactions.
The report provides a brief assessment of European securities financing transaction markets as well as discusses the Financial Stabilities Board’s (the “FSB“) recommendations aimed at mitigating securities financing transaction risks.
The report concludes that the FSB’s recommendations have been addressed in the EU through specific provisions within various financial services legislation and guidelines and the adoption of the SFTR.
Posted in Europe	Tagged Council of the EU, European Commission, European Parliament	