Criminal Justice (Money Laundering and Terrorist Financing) Act 2010
The Third Anti-Money Laundering Directive was transposed into Irish law on 5 May, 2010 by the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (the "CJA 2010") and has been effective as of 15 July, 2010.
The period of consultation in respect of the final draft of the industry Core Money Laundering Guidance Notes closed on the 23 February, 2011. Once the Core Guidance Notes have been published, it is expected that the process of finalising the Sectoral Guidance Notes will commence.
On the 25 March, 2011 Council Regulation (EU) No 296/2011 amending Regulation EU No 204/2011 came into effect. This concerns restrictive measures to be applied in view of the situation in Libya. Designated persons are required to have appropriate procedures in place to meet with the requirements of this Regulation.
If you would like further information on anti-money laundering requirements or any changes arising out of the CJA 2010, Dillon Eustace regularly advises on all aspects thereof and provides training sessions on this topic. Training can be held either at Dillon Eustace's office at 33 Sir John Rogerson's Quay, Dublin 2 or in house training can be provided at a venue of your choosing.
Solvency II Framework Directive - 2009/138/EC
On the 17 December, 2009, the definitive text of the Solvency II Directive (2009/138/EC) ("Solvency II") was published in the Official Journal. The Directive aims to strengthen the supervision and prudential regulation of insurance and reinsurance companies, particularly through the imposition of new solvency and governance requirements. It also establishes a new framework for EU regulation through the recasting of 13 insurance directives into a single text.
On the 19 January, 2011 the draft text of the Omnibus II Directive ("Omnibus II") was published. This Directive, if adopted, will amend the Solvency II Directive.
Omnibus II is designed to make Solvency II consistent with the new European regulatory architecture for financial supervision. The directive proposal contains a limited set of amendments to Solvency II. These amendments include:
The provision of more specific tasks for the European Insurance and Occupational Pensions Authority ("EIOPA") such as ensuring harmonized technical approaches on the use of ratings in relation to the Solvency Capital Requirements; Extension of the implementation date by two months to ensure better alignment with the end of the financial year for the majority of insurance and reinsurance undertakings; Member states are required to apply Solvency II from 1 January, 2013 (based on amendments to articles 309-311); Enabling the Commission to specify transitional measures in certain areas if deemed necessary. Any transitional requirements will be at least equivalent to the requirements under existing (Solvency I) insurance and reinsurance directives and should encourage insurers/reinsurers to move towards compliance with the full Solvency II requirements as soon as possible. The draft directive also provides the maximum transitional periods (although these periods can be reduced in the transitional measures themselves). The draft text of the Omnibus II Directive will be considered for approval at the European Council and European Parliament. When approved, the amendments will be incorporated into the Solvency II Directive which will be effective from 1 January, 2013. Insurers/reinsurers that fall within the scope of the Solvency II Directive will be affected by amendments introduced by the Omnibus II Directive.
Central Bank Update on Solvency II
In January, 2011 the Central Bank of Ireland ("the Central Bank") issued the third edition of Solvency II Matters. Topics covered include an update on the –
Quantitative Impact Assessment 5 (QIS5) process; Equivalence Update Quantitative Impact Assessment 5 (QIS5) process
The Central Bank received 220 submissions as part of the QIS 5 exercise, which is an excellent response. The aim of this exercise was to increase the level of preparedness of both industry and supervisors. QIS5 results will be used to calibrate the Level 2 Implementing Measures and will also be used to assess the needs and contents of the Level 3 guidance relating to Pillar 1.
On the 14 March, 2011 EIOPA issued its report on QIS5. The study was conducted during the second half of 2010 in order to asses the impact and practicability of the potential quantitative requirements under Solvency II.
There was a 68% participation rate covering all 30 EEA member countries with an increase noted since QIS4 in small undertakings and reinsurers participating. As confirmed by the Central Bank the number of Irish undertakings that participated in QIS5 was 220.
The report shows that 15% of the participants did not fully cover the Solvency Capital Requirement and 5% of the participants did not fully cover the Minimum Capital Requirement.
QIS5 has also identified a number of areas where complexity should be reduced, particularly around the sub-modules used in the calculation of the Solvency Capital Requirement. Examples include simplifying the approach to counterparty default risk, reducing the complexity of the non-life catastrophe sub-module, standardizing the health catastrophe scenarios.
In relation to the valuation of technical provisions, EIOPA has identified a number of areas where further guidance is required to deal with risk margins, contract boundaries and illiquidity premium. Further work will be done on these and other areas to ensure consistency in the final guidance.
In October, 2010, the European Commission requested EIOPA to carry out equivalence assessments for Bermuda and Switzerland in relation to Article 172 (Reinsurance), Article 227 (Group Solvency) and Article 260 (Group Supervision) and for Japan in relation to Article 172 (Reinsurance).
Arising from this EIOPA has:
Assembled a team of regulators who will be tasked with assessing the equivalence of Bermuda, Switzerland & Japan. The Central Bank has contributed resources to this team. Invited all interested parties...