Regulation (EU) 2019/2175 of the European Parliament and of the Council of 18 December 2019 amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority), Regulation (EU) No 1094/2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), Regulation (EU) No 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority), Regulation (EU) No 600/2014 on markets in financial instruments, Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds, and Regulation (EU) 2015/847 on information accompanying transfers of funds (Text with EEA relevance) (Text with EEA relevance)

REGULATION (EU) 2019/2175 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 18 December 2019

amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority), Regulation (EU) No 1094/2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), Regulation (EU) No 1095/2010 establishing a European Supervisory Authority (European Securities and Markets Authority), Regulation (EU) No 600/2014 on markets in financial instruments, Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds, and Regulation (EU) 2015/847 on information accompanying transfers of funds

(Text with EEA relevance)

Article 1

Amendments to Regulation (EU) No 1093/2010

Regulation (EU) No 1093/2010 is amended as follows:

(1) Article 1 is amended as follows: (a) paragraphs 2 and 3 are replaced by the following: ‘2. The Authority shall act within the powers conferred by this Regulation and within the scope of Directive 2002/87/EC, Directive 2008/48/EC (¹), Directive 2009/110/EC, Regulation (EU) No 575/2013 (2), Directive 2013/36/EU (³), Directive 2014/49/EU (4), Directive 2014/92/EU (⁵), Directive (EU) 2015/2366 (6) of the European Parliament and of the Council and, to the extent that those acts apply to credit and financial institutions and the competent authorities that supervise them, within the relevant parts of Directive 2002/65/EC, including all directives, regulations, and decisions based on those acts, and of any further legally binding Union act which confers tasks on the Authority. The Authority shall also act in accordance with Council Regulation (EU) No 1024/2013 (⁷). The Authority shall also act within the powers conferred by this Regulation and within the scope of Directive (EU) 2015/849 of the European Parliament and of the Council (8) and of Regulation (EU) 2015/847 of the European Parliament and of the Council (⁹) to the extent that that Directive and Regulation apply to financial sector operators and the competent authorities that supervise them. For that purpose only, the Authority shall carry out the tasks conferred by any legally binding Union act on the European Supervisory Authority (European Insurance and Occupational Pensions Authority), established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council (10) or on the European Supervisory Authority (European Securities and Markets Authority), established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council (^*11). When carrying out such tasks, the Authority shall consult those European Supervisory Authorities and keep them informed of its activities concerning any entity which is a “financial institution” as defined in point (1) of Article 4 of Regulation (EU) No 1094/2010 or a “financial market participant” as defined in point (1) of Article 4 of Regulation (EU) No 1095/2010.

(b) paragraph 5 is amended as follows: (i) the first subparagraph is amended as follows: — the introductory part is replaced by the following: ‘5. The objective of the Authority shall be to protect the public interest by contributing to the short-, medium- and long-term stability and effectiveness of the financial system, for the Union economy, its citizens and businesses. The Authority shall, within its respective competences, contribute to:’; — points (e) and (f) are replaced by the following: ‘(e) ensuring that the taking of credit and other risks are appropriately regulated and supervised; (f) enhancing customer and consumer protection;’; — the following points are added: ‘(g) enhancing supervisory convergence across the internal market; (h) preventing the use of the financial system for the purposes of money laundering and terrorist financing.’; (ii) the second subparagraph is replaced by the following: ‘For those purposes, the Authority shall contribute to ensuring the consistent, efficient and effective application of the acts referred to in paragraph 2 of this Article, foster supervisory convergence, and provide opinions in accordance with Article 16a to the European Parliament, to the Council, and to the Commission.’; (iii) the fourth subparagraph is replaced by the following: ‘When carrying out its tasks, the Authority shall act independently, objectively and in a non-discriminatory and transparent manner, in the interests of the Union as a whole and shall respect, where relevant, the principle of proportionality. The Authority shall be accountable and act with integrity and shall ensure that all stakeholders are treated fairly.’; (iv) the following subparagraph is added: ‘The content and form of the Authority’s actions and measures, in particular guidelines, recommendations, opinions, questions and answers, draft regulatory standards and draft implementing standards, shall fully respect the applicable provisions of this Regulation and of the legislative acts referred to in paragraph 2. To the extent permitted and relevant under those provisions, the Authority’s actions and measures shall, in accordance with the principle of proportionality, take due account of the nature, scale and complexity of the risks inherent in the business of a financial institution, undertaking, other subject or financial activity, that is affected by the Authority’s actions and measures.’; (c) the following paragraph is added: ‘6. The Authority shall establish, as an integral part thereof, a Committee advising it as to how, in full compliance with applicable rules, its actions and measures should take account of specific differences prevailing in the sector, pertaining to the nature, scale and complexity of risks, to business models and practice as well as to the size of financial institutions and of markets to the extent that such factors are relevant under the rules considered.’;

(2) Article 2 is amended as follows: (a) paragraph 1 is replaced by the following: ‘1. The Authority shall form part of a European system of financial supervision (ESFS). The main objective of the ESFS shall be to ensure that the rules applicable to the financial sector are adequately implemented to preserve financial stability and to ensure confidence in the financial system as a whole, and effective and sufficient protection for the customers and consumers of financial services.’; (b) paragraph 4 is replaced by the following: ‘4. In accordance with the principle of sincere cooperation pursuant to Article 4(3) of the Treaty on European Union (TEU), the parties to the ESFS shall cooperate with trust and full mutual respect, in particular in ensuring the flow of appropriate and reliable information among them and from the Authority to the European Parliament, to the Council and to the Commission.’; (c) in paragraph 5, the following subparagraph is added: ‘Without prejudice to national competences, references in this Regulation to supervision shall include all relevant activities of all competent authorities to be carried out pursuant to the legislative acts referred to in Article 1(2).’;

(3) Article 3 is replaced by the following: ‘Article 3 Accountability of the Authorities

(4) Article 4 is amended as follows: (a) point (1) is replaced by the following: ‘(1) “financial institution” means any undertaking that is subject to regulation and supervision pursuant to any of the legislative acts referred to in Article 1(2);’; (b) the following point is inserted: ‘(1a) “financial sector operator” means an “entity” as referred to in Article 2 of Directive (EU) 2015/849, which is either a financial institution as defined in point (1) of this Article or in point (1) of Article 4 of Regulation (EU) No 1094/2010 or a “financial market participant” as defined in point (1) of Article 4 of Regulation (EU) No 1095/2010;’; (c) point (2) is replaced by the following: ‘(2) “competent authorities” means: (i) competent authorities as defined in point (40) of Article 4(1) of Regulation (EU) No 575/2013, including the European Central Bank with regard to matters relating to the tasks conferred on it by Regulation (EU) No 1024/2013; (ii) with regard to Directive 2002/65/EC, the authorities and bodies competent for ensuring compliance with the requirements of that Directive by financial institutions; (iii) with regard to Directive (EU) 2015/849, the authorities and bodies that supervise financial sector operators and are competent for ensuring their compliance with the requirements of that Directive; (iv) with regard to deposit guarantee schemes, bodies which administer deposit guarantee schemes pursuant to Directive 2014/49/EU or, where the operation of the deposit guarantee scheme is administered by a private company, the public authority supervising those schemes pursuant to that Directive, and relevant administrative authorities as referred to in that Directive; (v) with regard to Directive 2014/59/EU of the European Parliament and of the Council (¹²) and to Regulation (EU) No 806/2014 of the European Parliament and of the Council (13), the resolution authorities designated in accordance with Article 3 of Directive 2014/59/EU, the Single Resolution Board established by Regulation (EU) No 806/2014, and the Council and the Commission when taking actions under Article 18 of Regulation (EU) No 806/2014, except where they exercise discretionary powers or make policy choices; (vi) “competent authorities” as referred to in Directive 2014/17/EU of the European Parliament and of the Council (¹⁴), in Regulation (EU) 2015/751 of the European Parliament and of the Council (15), in Directive (EU) 2015/2366, in Directive 2009/110/EC of the European Parliament and of the Council (¹⁶), and in Regulation (EU) No 260/2012 of the European Parliament and of the Council (17); (vii) “bodies and authorities” as referred to in Article 20 of Directive 2008/48/EC.

(5) Article 8 is amended as follows: (a) paragraph 1 is amended as follows: (i) point (a) is replaced by the following: ‘(a) based on the legislative acts referred to in Article 1(2), to contribute to the establishment of high-quality common regulatory and supervisory standards and practices, in particular by developing draft regulatory and implementing technical standards, guidelines, recommendations, and other measures, including opinions;’; (ii) point (aa) is replaced by the following: ‘(aa) to develop and maintain an up-to-date Union supervisory handbook on the supervision of financial institutions in the Union which is to set out supervisory best practices and high-quality methodologies and processes and takes into account, inter alia, changing business practices and business models and the size of financial institutions and of markets;’; (iii) the following point is inserted: ‘(ab) to develop and maintain an up-to-date Union resolution handbook on the resolution of financial institutions in the Union which is to set out best practices and high-quality methodologies and processes for resolution, taking into account the work of the Single Resolution Board, and changing business practices and business models and the size of financial institutions and of markets;’; (iv) point (b) is replaced by the following: ‘(b) to contribute to the consistent application of legally binding Union acts, in particular by contributing to a common supervisory culture, ensuring consistent, efficient and effective application of the legislative acts referred to in Article 1(2), preventing regulatory arbitrage, fostering and monitoring supervisory independence, mediating and settling disagreements between competent authorities, ensuring effective and consistent supervision of financial institutions, ensuring a coherent functioning of colleges of supervisors and taking actions, inter alia, in emergency situations;’; (v) points (e) to (h) are replaced by the following: ‘(e) to organise and conduct peer reviews of competent authorities, and, in that context, to issue guidelines and recommendations and to identify best practices, with a view to strengthening consistency in supervisory outcomes; (f) to monitor and assess market developments in the area of its competence including where relevant, developments relating to trends in credit, in particular, to households and SMEs and in innovative financial services duly considering developments relating to environmental, social and governance related factors; (g) to undertake market analyses to inform the discharge of the Authority’s functions; (h) to foster, where relevant, depositor, consumer and investor protection, in particular with regards to shortcomings in a cross-border context and taking related risks into account;’; (vi) the following point is inserted: ‘(ia) to contribute to the establishment of a common Union financial data strategy;’; (vii) the following point is inserted: ‘(ka) to publish on its website, and to update regularly, all regulatory technical standards, implementing technical standards, guidelines, recommendations and questions and answers for each legislative act referred to in Article 1(2), including overviews that concern the state of play of ongoing work and the planned timing of the adoption of draft regulatory technical standards and draft implementing technical standards.’; (viii) the following point is added: ‘(l) to contribute to the prevention of the use of the financial system for the purposes of money laundering and terrorist financing, including by promoting consistent, efficient and effective application of legislative acts referred to in Article 1(2) of this Regulation, Article 1(2) of Regulation (EU) No 1094/2010 and Article 1(2) of Regulation (EU) No 1095/2010 respectively with regard to the prevention of the use of the financial system for the purpose of money laundering or terrorist financing.’; (b) in paragraph 1a, point (b) is replaced by the following: ‘(b) with due regard to the objective to ensure the safety and soundness of financial institutions, take fully into account the different types, business models and sizes of financial institutions; and’; (c) in paragraph 1a, the following point is added: ‘(c) take account of technological innovation, innovative and sustainable business models, and the integration of environmental, social and governance related factors.’; (d) paragraph 2 is amended as follows: (i) the following point is inserted: ‘(ca) issue recommendations, as laid down in Article 29a;’; (ii) the following point is inserted: ‘(da) issue warnings in accordance with Article 9(3);’; (iii) point (g) is replaced by the following: ‘(g) issue opinions to the European Parliament, to the Council, or to the Commission as provided for in Article 16a;’; (iv) the following points are inserted: ‘(ga) issue answers to questions, as laid down in Article 16b; (gb) take action in accordance with Article 9c;’; (e) paragraph 2a is replaced by the following: ‘3. When carrying out the tasks referred to in paragraph 1 and exercising the powers referred to in paragraph 2, the Authority shall act based on and within the limits of the legislative framework and shall have due regard to the principle of proportionality, where relevant, and better regulation, including the results of cost-benefit analyses in accordance with this Regulation. The open public consultations referred to in Articles 10, 15, 16 and 16a shall be conducted as widely as possible to ensure an inclusive approach towards all interested parties and shall allow reasonable time for stakeholders to respond. The Authority shall publish a summary of the input received from stakeholders and an overview of how information and views gathered from the consultation were used in a draft regulatory technical standard and a draft implementing technical standard.’;

(6) Article 9 is amended as follows: (a) paragraph 1 is amended as follows: (i) point (a) is replaced by the following: ‘(a) collecting, analysing and reporting on consumer trends, such as the development of costs and charges of retail financial services and products in Member States;’; (ii) the following points are inserted: ‘(aa) undertaking in-depth thematic reviews of market conduct, building a common understanding of market practices in order to identify potential problems and analyse their impact; (ab) developing retail risk indicators for the timely identification of potential causes of consumer harm;’; (iii) the following points are added: ‘(e) contributing to a level playing field in the internal market where consumers and other users of financial services have fair access to financial services and products; (f) fostering further developments in terms of regulation and supervision which could facilitate deeper harmonisation and integration at the Union level; (g) coordinating mystery shopping activities of competent authorities, if applicable.’; (b) paragraph 2 is replaced by the following: ‘2. The Authority shall monitor new and existing financial activities and may adopt guidelines and recommendations with a view to promoting the safety and soundness of markets, and convergence and effectiveness of regulatory and supervisory practices.’; (c) paragraphs 4 and 5 are replaced by the following: ‘4. The Authority shall establish, as an integral part thereof, a Committee on consumer protection and financial innovation, which brings together all relevant competent authorities and authorities responsible for consumer protection with a view to enhancing consumer protection, achieving a coordinated approach to the regulatory and supervisory treatment of new or innovative financial activities, and providing advice for the Authority to present to the European Parliament, to the Council and to the Commission. The Authority shall closely cooperate with the European Data Protection Board established by Regulation (EU) 2016/679 of the European Parliament and of the Council (^*18) to avoid duplication, inconsistencies and legal uncertainty in the sphere of data protection. The Authority may also invite national data protection authorities as observers in the Committee.

The Authority shall review the decision referred to in the first subparagraph at appropriate intervals and at least every six months. Following at least two consecutive renewals, and based on proper analysis which aims to assess the impact on the customer or consumer, the Authority may decide on the annual renewal of the prohibition. A Member State may request the Authority to reconsider its decision. In that case, the Authority shall decide, in accordance with the procedure set out in the second subparagraph of Article 44(1), whether to maintain that decision. The Authority may also assess the need to prohibit or restrict certain types of financial activity or practice and, where there is such a need, inform the Commission and the competent authorities in order to facilitate the adoption of any such prohibition or restriction.

(7) the following articles are inserted: ‘Article 9a Special tasks related to preventing and countering money laundering and terrorist financing

(a) collecting information from competent authorities relating to weaknesses identified during ongoing supervision and authorisation procedures in the processes and procedures, governance arrangements, fitness and propriety, acquisition of qualifying holdings, business models and activities of financial sector operators in relation to preventing and countering money laundering and terrorist financing as well as measures taken by competent authorities, in response to the following material weaknesses affecting one or more requirements of the legislative acts referred to in Article 1(2) of this Regulation, Article 1(2) of Regulation (EU) No 1094/2010 and Article 1(2) of Regulation (EU) No 1095/2010 and of any national laws transposing them, respectively, with regard to the prevention and countering the use of the financial system for the purpose of money laundering or of terrorist financing: (i) a breach or a potential breach by a financial sector operator of such requirements, (ii) the inappropriate or ineffective application by a financial sector operator of such requirements, or (iii) the inappropriate or ineffective application by a financial sector operator of its internal policies and procedures to comply with such requirements. Competent authorities shall provide all such information to the Authority in addition to any obligations under Article 35 of this Regulation and shall keep the Authority informed in due time about any subsequent developments relating to the information provided. The Authority shall coordinate closely with EU Financial Intelligence Units (FIUs) as referred to in Directive (EU) 2015/849, while respecting their status and obligations and without any unnecessary duplication. Competent authorities may share, in accordance with national law, any additional information that they deem relevant to the prevention and countering of the use of the financial system for the purpose of money laundering or terrorist financing with the central database referred to in paragraph 2; (b) coordinating closely, and, where appropriate, exchanging information, with competent authorities, including the European Central Bank with regard to matters relating to the tasks conferred on it by Regulation (EU) No 1024/2013, and with authorities entrusted with the public duty of supervising obliged entities listed in points (1) and (2) of Article 2(1) of Directive (EU) 2015/849 as well as with FIUs, while respecting the status and obligations of the FIUs under Directive (EU) 2015/849; (c) developing common guidance and standards for preventing and countering money laundering and terrorist financing in the financial sector and promoting their consistent implementation in particular by developing draft regulatory and implementing technical standards, in line with the mandates laid down in the legislative acts referred to in Article 1(2), guidelines, recommendations, and other measures, including opinions which shall be based on the legislative acts referred to in Article 1(2); (d) providing assistance to competent authorities, following their specific requests; (e) monitoring market developments and assessing vulnerabilities and risks in relation to money laundering and terrorist financing in the financial sector. By 31 December 2020, the Authority shall develop draft regulatory technical standards specifying the definition of weaknesses as referred to in point (a) of the first subparagraph, including the corresponding situations where weaknesses may occur, the materiality of weaknesses and the practical implementation of the information collection by the Authority as well as the type of information that should be provided pursuant to point (a) of the first subparagraph. In developing those technical standards, the Authority shall consider the volume of the information to be provided and the need to avoid duplication. It shall also set out arrangements to ensure effectiveness and confidentiality. Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the second subparagraph of this paragraph in accordance with Articles 10 to 14.

By 31 December 2020, the Authority shall develop draft regulatory technical standards specifying how information is to be analysed and made available to competent authorities on a need-to-know and confidential basis. Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the second subparagraph of this paragraph in accordance with Articles 10 to 14.

For the purposes of the first subparagraph of this paragraph, the Authority, through the internal committee established under paragraph 7 of this Article, shall develop and apply methods to allow for an objective assessment, as well as a high- quality and consistent review of the assessments and the application of the methodology and to ensure a level playing field. That internal committee shall carry out the quality and consistency review of the risk assessments. It shall prepare the draft risk assessments for adoption by the Board of Supervisors in accordance with Article 44.

Each institution, authority and body referred to in the first subparagraph shall nominate an alternate representative from its staff, who may replace the member where that person is prevented from attending. Member States where more than one authority is competent for ensuring compliance with Directive (EU) 2015/849 for financial sector operators may nominate one representative for each competent authority. Irrespective of the number of competent authorities represented in the meeting, each Member State shall have one vote. That committee may establish internal working groups on specific aspects of its work with a view to preparing draft decisions of that committee. Those groups shall be open for participation to staff from all competent authorities represented in that committee and from the Authority, the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority (European Securities and Markets Authority).

(a) financial institutions as defined in point (1) of Article 4 of Regulation (EU) No 1094/2010 or any of the competent authorities supervising them, or (b) financial market participants as defined in point (1) of Article 4 of Regulation (EU) No 1095/2010 or any of the competent authorities supervising them, the Authority may only take the decision in agreement with the European Supervisory Authority (European Insurance and Occupational Pensions Authority), in the case of point (a), or of the European Supervisory Authority (European Securities and Markets Authority), in the case of point (b). The European Supervisory Authority (European Insurance and Occupational Pensions Authority) or the European Supervisory Authority (European Securities and Markets Authority) shall notify their views to the Authority within 20 days from the date of the draft decision by the committee referred to in paragraph 7. Where they do not notify their views to the Authority within 20 days nor request a duly justified prolongation for notifying such views the agreement shall be presumed.

Article 9b

Request for investigation related to the prevention and countering of money laundering and of terrorist financing

Article 9c

No action letters

(a) the Authority considers that provisions contained in such act may directly conflict with another relevant act; (b) where the act is one of the legislative acts referred to in Article 1(2), the absence of delegated or implementing acts that would complement or specify the act in question would raise legitimate doubts concerning the legal consequences flowing from the legislative act or its proper application; (c) the absence of guidelines and recommendations as referred to in Article 16 would raise practical difficulties concerning the application of the relevant legislative act.

In the cases referred to in points (a) and (b) of paragraph 1, the Authority shall provide the Commission with an opinion on any action it considers appropriate, in the form of a new legislative proposal or a proposal for a new delegated or implementing act, and on the urgency that, in the Authority’s judgment, is attached to the issue. The Authority shall make its opinion public. In the case referred to in point (c) of paragraph 1 of this Article, the Authority shall evaluate as soon as possible the need to adopt relevant guidelines or recommendations in accordance with Article 16. The Authority shall act expeditiously, in particular with a view to contributing to the prevention of the issues referred to in paragraph 1, whenever possible.

(8) Article 10 is amended as follows: (a) paragraph 1 is amended as follows: (i) the first subparagraph is replaced by the following: ‘1. Where the European Parliament and the Council delegate power to the Commission to adopt regulatory technical standards by means of delegated acts pursuant to Article 290 TFEU in order to ensure consistent harmonisation in the areas specifically set out in the legislative acts referred to in Article 1(2) of this Regulation, the Authority may develop draft regulatory technical standards. The Authority shall submit its draft regulatory technical standards to the Commission for adoption. At the same time, the Authority shall forward those draft regulatory technical standards for information to the European Parliament and to the Council.’; (ii) the third subparagraph is replaced by the following: ‘Before submitting them to the Commission, the Authority shall conduct open public consultations on draft regulatory technical standards and shall analyse the potential related costs and benefits, unless such consultations and analyses are highly disproportionate in relation to the scope and impact of the draft regulatory technical standards concerned or in relation to the particular urgency of the matter. The Authority shall also request the advice of the Banking Stakeholder Group referred to in Article 37.’; (iii) the fourth subparagraph is deleted; (iv) the fifth and the sixth subparagraphs are replaced by the following: ‘Within three months of receipt of a draft regulatory technical standard, the Commission shall decide whether to adopt it. The Commission shall inform the European Parliament and the Council in due time where the adoption cannot take place within the three-month period. The Commission may adopt the draft regulatory technical standard in part only, or with amendments, where the Union’s interests so require. Where the Commission intends not to adopt a draft regulatory technical standard or to adopt it in part or with amendments, it shall send the draft regulatory technical standard back to the Authority, explaining why it does not adopt it or explaining the reasons for its amendments. The Commission shall send a copy of its letter to the European Parliament and to the Council. Within a period of six weeks, the Authority may amend the draft regulatory technical standard on the basis of the Commission’s proposed amendments and resubmit it in the form of a formal opinion to the Commission. The Authority shall send a copy of its formal opinion to the European Parliament and to the Council.’; (b) paragraph 2 is replaced by the following: ‘2. Where the Authority has not submitted a draft regulatory technical standard within the time limit set out in the legislative acts referred to in Article 1(2), the Commission may request such a draft within a new time limit. The Authority shall inform the European Parliament, the Council and the Commission, in due time, that it will not comply with the new time limit.’; (c) in paragraph 3, the second subparagraph is replaced by the following: ‘The Commission shall conduct open public consultations on draft regulatory technical standards and analyse the potential related costs and benefits, unless such consultations and analyses are disproportionate in relation to the scope and impact of the draft regulatory technical standards concerned or in relation to the particular urgency of the matter. The Commission shall also request the advice of the Banking Stakeholder Group referred to in Article 37.’; (d) paragraph 4 is replaced by the following: ‘4. The regulatory technical standards shall be adopted by means of regulations or decisions. The words “regulatory technical standard” shall appear in the title of such regulations or decisions. Those standards shall be published in the Official Journal of the European Union and shall enter into force on the date stated therein.’;

(9) in Article 13(1), the second subparagraph is deleted;

(10) Article 15 is amended as follows: (a) paragraphs 1 and 2 are replaced by the following: ‘1. Where the European Parliament and the Council confer implementing powers on the Commission to adopt implementing technical standards by means of implementing acts pursuant to Article 291 TFEU, in the areas specifically set out in the legislative acts referred to in Article 1(2) of this Regulation, the Authority may develop draft implementing technical standards. Implementing technical standards shall be technical, shall not imply strategic decisions or policy choices and their content shall be to determine the conditions of application of those acts. The Authority shall submit its draft implementing technical standards to the Commission for adoption. At the same time, the Authority shall forward those technical standards for information to the European Parliament and to the Council. Before submitting draft implementing technical standards to the Commission, the Authority shall conduct open public consultations and shall analyse the potential related costs and benefits, unless such consultations and analyses are highly disproportionate in relation to the scope and impact of the draft implementing technical standards concerned or in relation to the particular urgency of the matter. The Authority shall also request the advice of the Banking Stakeholder Group referred to in Article 37. Within three months of receipt of a draft implementing technical standard, the Commission shall decide whether to adopt it. The Commission may extend that period by one month. The Commission shall inform the European Parliament and the Council in due time where the adoption cannot take place within the three-month period. The Commission may adopt the draft implementing technical standard in part only, or with amendments, where the Union’s interests so require. Where the Commission intends not to adopt a draft implementing technical standard or intends to adopt it in part or with amendments, it shall send it back to the Authority explaining why it does not intend to adopt it or explaining the reasons for its amendments. The Commission shall send a copy of its letter to the European Parliament and to the Council. Within a period of six weeks, the Authority may amend the draft implementing technical standard on the basis of the Commission’s proposed amendments and resubmit it in the form of a formal opinion to the Commission. The Authority shall send a copy of its formal opinion to the European Parliament and to the Council. If, on the expiry of the six-week period referred to in the fourth subparagraph, the Authority has not submitted an amended draft implementing technical standard, or has submitted a draft implementing technical standard that is not amended in a way consistent with the Commission’s proposed amendments, the Commission may adopt the implementing technical standard with the amendments it considers relevant or reject it. The Commission shall not change the content of a draft implementing technical standard prepared by the Authority without prior coordination with the Authority, as set out in this Article.

(b) in paragraph 3, the second subparagraph is replaced by the following: ‘The Commission shall conduct open public consultations on draft implementing technical standards and analyse the potential related costs and benefits, unless such consultations and analyses are disproportionate in relation to the scope and impact of the draft implementing technical standards concerned or in relation to the particular urgency of the matter. The Commission shall also request the advice of the Banking Stakeholder Group referred to in Article 37.’; (c) paragraph 4 is replaced by the following: ‘4. The implementing technical standards shall be adopted by means of regulations or decisions. The words “implementing technical standard” shall appear in the title of such regulations or decisions. Those standards shall be published in the Official Journal of the European Union and shall enter into force on the date stated therein.’;

(11) Article 16 is amended as follows: (a) paragraphs 1 and 2 are replaced by the following: ‘1. The Authority shall, with a view to establishing consistent, efficient and effective supervisory practices within the ESFS, and to ensuring the common, uniform and consistent application of Union law, issue guidelines addressed to all competent authorities or all financial institutions and issue recommendations to one or more competent authorities or to one or more financial institutions. Guidelines and recommendations shall be in accordance with the empowerments conferred by the legislative acts referred to in Article 1(2) or in this Article.

(b) the following paragraph is inserted: ‘2a. Guidelines and recommendations shall not merely refer to, or reproduce, elements of legislative acts. Before issuing a new guideline or recommendation, the Authority shall first review existing guidelines and recommendations, in order to avoid any duplication.’; (c) paragraph 4 is replaced by the following: ‘4. In the report referred to in Article 43(5), the Authority shall inform the European Parliament, the Council and the Commission of the guidelines and recommendations that have been issued.’;

(12) the following articles are inserted: ‘Article 16a Opinions

Article 16b

Questions and answers

Before submitting a question to the Authority, financial institutions shall consider whether to address the question in the first place to their competent authority. Before publishing answers to admissible questions, the Authority may seek further clarification on questions asked by the natural or legal person referred to in this paragraph.

(13) Article 17 is amended as follows: (a) paragraph 2 is amended as follows: (i) the first subparagraph is replaced by the following: ‘2. Upon request from one or more competent authorities, the European Parliament, the Council, the Commission, the Banking Stakeholder Group, or on its own initiative, including when this is based on well- substantiated information from natural or legal persons, and after having informed the competent authority concerned, the Authority shall outline how it intends to proceed with the case and, where appropriate, investigate the alleged breach or non-application of Union law.’; (ii) the following subparagraphs are added: ‘Without prejudice to the powers laid down in Article 35, the Authority may, after having informed the competent authority concerned, address a duly justified and reasoned request for information directly to other competent authorities whenever requesting information from the competent authority concerned has proven, or is deemed to be, insufficient to obtain the information that is deemed necessary for the purpose of investigating an alleged breach or non-application of Union law. The addressee of such a request shall provide the Authority with clear, accurate and complete information without undue delay.’; (b) the following paragraph is inserted: ‘2a. Without prejudice to powers under this Regulation and before issuing a recommendation as set out in paragraph 3, the Authority shall engage with the competent authority concerned, where it considers such engagement appropriate in order to resolve a breach of Union law, in an attempt to reach agreement on actions necessary for the competent authority to comply with Union law.’; (c) paragraphs 6 and 7 are replaced by the following: ‘6. Without prejudice to the powers of the Commission pursuant to Article 258 TFEU, where a competent authority does not comply with the formal opinion referred to in paragraph 4 of this Article within the period specified therein, and where it is necessary to remedy, in a timely manner, such non-compliance in order to maintain or restore neutral conditions of competition in the market or ensure the orderly functioning and integrity of the financial system, the Authority may, where the relevant requirements of the legislative acts referred to in Article 1(2) of this Regulation are directly applicable to financial institutions or, in the context of matters relating to the prevention and countering of money laundering and of terrorist financing, to financial sector operators, adopt an individual decision addressed to a financial institution or another financial sector operator requiring it to take all necessary action to comply with its obligations under Union law, including the cessation of any practice. In matters concerning the prevention of the use of the financial system for the purpose of money laundering or of terrorist financing, where the relevant requirements of the legislative acts referred to in Article 1(2) are not directly applicable to financial sector operators, the Authority may adopt a decision requiring the competent authority to comply with the formal opinion referred to in paragraph 4 of this Article within the period specified therein. If the authority does not comply with that decision, the Authority may also adopt a decision in accordance with the first subparagraph. To that effect, the Authority shall apply all relevant Union law, and, where that Union law is composed of Directives, national law to the extent that it transposes those Directives. Where the relevant Union law is composed of Regulations and where those Regulations explicitly grant options for Member States, the Authority shall apply also national law to the extent that such options have been exercised. The decision of the Authority shall be in conformity with the formal opinion issued by the Commission pursuant to paragraph 4.

When taking action in relation to issues which are subject to a formal opinion pursuant to paragraph 4 or to a decision pursuant to paragraph 6, competent authorities shall comply with the formal opinion or the decision, as the case may be.’;

(14) the following article is inserted: ‘Article 17a Protection of reporting persons

(15) in Article 18, paragraph 3 is replaced by the following: ‘3. Where the Council has adopted a decision pursuant to paragraph 2 of this Article and, in exceptional circumstances, where coordinated action by competent authorities is necessary to respond to adverse developments which may seriously jeopardise the orderly functioning and integrity of financial markets or the stability of the whole or part of the financial system in the Union or customer and consumer protection, the Authority may adopt individual decisions requiring competent authorities to take the necessary action in accordance with the legislative acts referred to in Article 1(2) to address any such developments by ensuring that financial institutions and competent authorities satisfy the requirements laid down in those legislative acts.’;

(16) Article 19 is amended as follows: (a) paragraph 1 is replaced by the following: ‘1. In cases specified in the legislative acts referred to in Article 1(2) and without prejudice to the powers laid down in Article 17, the Authority may assist the competent authorities in reaching an agreement in accordance with the procedure set out in paragraphs 2 to 4 of this Article in either of the following circumstances: (a) at the request of one or more of the competent authorities concerned where a competent authority disagrees with the procedure or content of an action, proposed action, or inactivity of another competent authority; (b) in cases where the legislative acts referred to in Article 1(2) provide that the Authority may assist, on its own initiative, where on the basis of objective reasons, disagreement can be determined between competent authorities. In cases where the legislative acts referred to in Article 1(2) require a joint decision to be taken by competent authorities and where, in accordance with those acts, the Authority may assist, on its own initiative, in reaching an agreement in accordance with the procedure set out in paragraphs 2 to 4 of this Article, the competent authorities concerned, a disagreement shall be presumed in the absence of a joint decision being taken by those authorities within the time limits set out in those acts.’; (b) the following paragraphs are inserted: ‘1a. The competent authorities concerned shall, in the following cases, notify the Authority without undue delay that an agreement has not been reached: (a) where a time limit for reaching an agreement between competent authorities has been provided for in the legislative acts referred to in Article 1(2), and either of the following occurs: (i) the time limit has expired; or (ii) at least two competent authorities concerned conclude that a disagreement exists, on the basis of objective reasons; (b) where no time limit for reaching an agreement between competent authorities has been provided for in the legislative acts referred to in Article 1(2), and either of the following occurs: (i) at least two competent authorities concerned conclude that a disagreement exists on the basis of objective reasons; or (ii) two months have elapsed from the date of receipt by a competent authority of a request from another competent authority to take certain action in order to comply with those acts and the requested authority has not yet adopted a decision that satisfies the request. 1b. The Chairperson shall assess whether the Authority should act in accordance with paragraph 1. Where the intervention is at the Authority’s own initiative, the Authority shall notify the competent authorities concerned of its decision regarding the intervention. Pending the Authority’s decision in accordance with the procedure set out in Article 44(3a), in cases where the legislative acts referred to in Article 1(2) require a joint decision to be taken, all competent authorities involved in the joint decision shall defer their individual decisions. Where the Authority decides to act, all the competent authorities involved in the joint decision shall defer their decisions until the procedure set out in paragraphs 2 and 3 of this Article is concluded.’; (c) paragraph 3 is replaced by the following: ‘Where the competent authorities concerned fail to reach an agreement within the conciliation phase referred to in paragraph 2, the Authority may take a decision requiring those authorities to take specific action, or to refrain from certain action, in order to settle the matter, and to ensure compliance with Union law. The decision of the Authority shall be binding on the competent authorities concerned. The Authority’s decision may require competent authorities to revoke or amend a decision that they have adopted or to make use of the powers which they have under the relevant Union law.’; (d) the following paragraph is inserted: ‘3a. The Authority shall notify the competent authorities concerned of the conclusion of the procedures under paragraphs 2 and 3 together with, where applicable, its decision taken under paragraph 3.’; (e) paragraph 4 is replaced by the following: ‘4. Without prejudice to the powers of the Commission pursuant to Article 258 TFEU, where a competent authority does not comply with the decision of the Authority, and thereby fails to ensure that a financial institution or, in the context of matters relating to the prevention and countering of money laundering or of terrorist financing, a financial sector operator complies with requirements directly applicable to it by virtue of the legislative acts referred to in Article 1(2) of this Regulation, the Authority may adopt an individual decision addressed to that financial institution or financial sector operator requiring it to take all necessary action to comply with its obligations under Union law, including the cessation of any practice. In matters concerning the prevention of the use of the financial system for the purpose of money laundering or of terrorist financing, the Authority may also adopt a decision in accordance with the first subparagraph of this paragraph where the relevant requirements of the legislative acts referred to in Article 1(2) are not directly applicable to financial sector operators. To that effect, the Authority shall apply all relevant Union law, and where such Union law is composed of Directives, national law to the extent that it transposes those Directives. Where the relevant Union law is composed of Regulations and where those Regulations explicitly grant options for Member States, the Authority shall apply also national law to the extent that such options have been exercised.’;

(17) Article 21 is amended as follows: (a) paragraph 1 is replaced by the following: ‘1. The Authority shall promote and monitor, within the scope of its powers, the efficient, effective and consistent functioning of the colleges of supervisors where established by legislative acts referred to in Article 1(2) and foster the consistency and coherence of the application of Union law among the colleges of supervisors. With the objective of converging supervisory best practices, the Authority shall promote joint supervisory plans and joint examinations, and staff from the Authority shall have full participation rights in the colleges of supervisors and, as such, shall be able to participate in the activities of the colleges of supervisors, including on-site inspections, carried out jointly by two or more competent authorities.’; (b) in paragraph 2, third subparagraph, point (b) is replaced by the following: ‘(b) initiate and coordinate Union-wide stress tests in accordance with Article 32 to assess the resilience of financial institutions, in particular the systemic risk posed by financial institutions as referred to in Article 23, to adverse market developments, and evaluate the potential for systemic risk to increase in situations of stress, ensuring that a consistent methodology is applied at national level to such tests and, where appropriate, address a recommendation to the competent authority to correct issues identified in the stress test, including a recommendation to conduct specific assessments; it may recommend competent authorities to carry out on-site inspections, and may participate in such on-site inspections, in order to ensure comparability and reliability of methods, practices and results of Union-wide assessments;’; (c) paragraph 3 is replaced by the following: ‘3. The Authority may develop draft regulatory and implementing technical standards in accordance with the empowerments laid down in the legislative acts referred to in Article 1(2), and in accordance with Articles 10 to 15, to ensure uniform conditions of application with respect to the provisions regarding the operational functioning of colleges of supervisors. The Authority may issue guidelines and recommendations in accordance with Article 16 to promote convergence in supervisory functioning and best practices that have been adopted by the colleges of supervisors.’;

(18) Article 22 is amended as follows: (a) the title is replaced by the following: ‘General provisions on systemic risk’; (b) in paragraph 2, the first subparagraph is replaced by the following: ‘2. The Authority shall, in collaboration with the ESRB, and in accordance with Article 23, develop a common set of quantitative and qualitative indicators (risk dashboard) to identify and measure systemic risk.’; (c) paragraph 4 is replaced by the following: ‘4. Upon request from one or more competent authorities, the European Parliament, the Council or the Commission, or on its own initiative, the Authority may conduct an inquiry into a particular type of financial institution or type of product or type of conduct in order to assess potential threats to the stability of the financial system or to the protection of customers or consumers. Following an inquiry conducted pursuant to the first subparagraph, the Board of Supervisors may make appropriate recommendations for action to the competent authorities concerned. For those purposes, the Authority may use the powers conferred on it under this Regulation, including Article 35.’;

(19) in Article 23, paragraph 1 is replaced by the following: ‘1. The Authority shall, in consultation with the ESRB, develop criteria for the identification and measurement of systemic risk and an adequate stress-testing regime which includes an evaluation of the potential for systemic risk posed by, or to, financial institutions to increase in situations of stress, including potential environmental-related systemic risk. The financial institutions that may pose a systemic risk shall be subject to strengthened supervision, and where necessary, the recovery and resolution procedures referred to in Article 25.’;

(20) in Article 27(2), the third subparagraph is deleted;

(21) Article 29 is amended as follows: (a) paragraph 1 is amended as follows: (i) the following points are inserted: ‘(aa) establishing Union strategic supervisory priorities in accordance with Article 29a; (ab) establishing coordination groups in accordance with Article 45b to promote supervisory convergence and identify best practices;’; (ii) point (b) is replaced by the following: ‘(b) promoting an effective bilateral and multilateral exchange of information between competent authorities, pertaining to all relevant issues, including cyber security and cyber-attacks, with full respect for the applicable confidentiality and data protection provisions provided for in the relevant Union legislative acts;’; (iii) point (e) is replaced by the following: ‘(e) establishing sectoral and cross-sectoral training programmes, including with respect to technological innovation, facilitating personnel exchanges and encouraging competent authorities to intensify the use of secondment schemes and other tools;’; (iv) the following point is added: ‘(f) putting in place a monitoring system to assess material environmental, social and governance-related risks, taking into account the Paris Agreement to the United Nations Framework Convention on Climate Change;’; (b) paragraph 2 is replaced by the following: ‘2. The Authority may, as appropriate, develop new practical instruments and convergence tools to promote common supervisory approaches and practices. For the purpose of establishing a common supervisory culture, the Authority shall develop and maintain an up-to-date Union supervisory handbook on the supervision of financial institutions in the Union, which duly takes into account the nature, scale and complexity of risks, business practices, business models and the size of financial institutions and of markets. The Authority shall also develop and maintain an up-to-date Union resolution handbook on the resolution of financial institutions in the Union, which duly takes into account the nature, scale and complexity of risks, business practices, business models and the size of financial institutions and of markets. Both the Union supervisory handbook and the Union resolution handbook shall set out best practices and shall specify high-quality methodologies and processes. The Authority shall, where appropriate, conduct open public consultations regarding the opinions referred to in point (a) of paragraph 1 and tools and instruments referred to in this paragraph. It shall also, where appropriate, analyse the related potential costs and benefits. Such consultations and analyses shall be proportionate in relation to the scope, nature and impact of the opinions or tools and instruments. The Authority shall, where appropriate, also request advice from the Banking Stakeholder Group referred to in Article 37.’;

(22) the following article is inserted: ‘Article 29a Union strategic supervisory priorities Following a discussion in the Board of Supervisors and taking into account contributions received from competent authorities, existing work by the Union Institutions, and analysis, warnings and recommendations published by the ESRB, the Authority shall, at least every three years, by 31 March, identify up to two priorities of Union-wide relevance which shall reflect future developments and trends. Competent authorities shall take those priorities into account when drawing up their work programmes and shall notify the Authority accordingly. The Authority shall discuss the relevant activities by the competent authorities in the following year and draw conclusions. The Authority shall discuss possible follow-up which may include guidelines, recommendations to competent authorities, and peer reviews, in the respective area. The priorities of Union-wide relevance identified by the Authority shall not prevent competent authorities from applying their best practices, acting on their additional priorities and developments, and national specificities shall be considered.’;

(23) Article 30 is replaced by the following: ‘Article 30 Peer reviews of competent authorities

(a) the adequacy of resources, the degree of independence, and governance arrangements of the competent authority, with particular regard to the effective application of the legislative acts referred to in Article 1(2) and the capacity to respond to market developments; (b) the effectiveness and the degree of convergence reached in the application of Union law and in supervisory practice, including regulatory technical standards and implementing technical standards, guidelines and recommendations adopted pursuant to Articles 10 to 16, and the extent to which the supervisory practice achieves the objectives set out in Union law; (c) the application of best practices developed by competent authorities whose adoption might be of benefit for other competent authorities; (d) the effectiveness and the degree of convergence reached with regard to the enforcement of the provisions adopted in the implementation of Union law, including the administrative sanctions and other administrative measures imposed against persons responsible where those provisions have not been complied with.

In accordance with Article 16(3), the competent authorities shall make every effort to comply with any guidelines and recommendations issued. When developing draft regulatory technical standards or draft implementing technical standards in accordance with Articles 10 to 15, or guidelines or recommendations in accordance with Article 16, the Authority shall take into account the outcome of the peer review, along with any other information acquired by the Authority in carrying out its tasks, in order to ensure convergence of the highest quality supervisory practices.

(24) Article 31 is amended as follows: (a) the first paragraph is replaced by the following: ‘1. The Authority shall fulfil a general coordination role between competent authorities, in particular in situations where adverse developments could potentially jeopardise the orderly functioning and integrity of financial markets or the stability of the financial system in the Union.’; (b) the second paragraph is amended as follows: (i) the introductory part is replaced by the following: ‘2. The Authority shall promote a coordinated Union response, inter alia, by:’; (ii) point (e) is replaced by the following: ‘(e) taking appropriate measures in the event of developments which may jeopardise the functioning of the financial markets with a view to the coordination of actions undertaken by relevant competent authorities;’; (iii) the following point is inserted: ‘(ea) taking appropriate measures to coordinate actions undertaken by relevant competent authorities with a view to facilitating the entry into the market of actors or products relying on technological innovation;’; (c) the following paragraph is added: ‘3. In order to contribute to the establishment of a common European approach towards technological innovation, the Authority shall promote supervisory convergence, with the support, where relevant, of the Committee on consumer protection and financial innovation, facilitating entry into the market of actors or products relying on technological innovation, in particular through the exchange of information and best practices. Where appropriate, the Authority may adopt guidelines or recommendations in accordance with Article 16.’;

(25) the following Article is inserted: ‘Article 31a Information exchange on fitness and propriety The Authority shall, together with the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and with the European Supervisory Authority (European Securities and Markets Authority), establish a system for the exchange of information relevant to the assessment of the fitness and propriety of holders of qualifying holdings, directors and key function holders of financial institutions by competent authorities in accordance with the legislative acts referred to in Article 1(2).’;

(26) Article 32 is amended as follows: (a) the title is replaced by the following: ‘Assessment of market developments, including stress tests’; (b) paragraph 1 is replaced by the following: ‘1. The Authority shall monitor and assess market developments in the area of its competence and, where necessary, inform the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority (European Securities and Markets Authority), the ESRB, and the European Parliament, the Council and the Commission about the relevant micro-prudential trends, potential risks and vulnerabilities. The Authority shall include in its assessments an analysis of the markets in which financial institutions operate and an assessment of the impact of potential market developments on such institutions.’; (c) paragraph 2 is amended as follows: (i) the introductory part is replaced by the following: ‘2. The Authority shall initiate and coordinate Union-wide assessments of the resilience of financial institutions to adverse market developments. To that end, it shall develop:’; (ii) point (a) is replaced by the following: ‘(a) common methodologies for assessing the effect of economic scenarios on a financial institution’s financial position taking into account inter alia risks stemming from adverse environmental developments;’; (iii) the following point is inserted: ‘(aa) common methodologies for identifying financial institutions to be included in Union-wide assessments;’; (iv) points (c) and (d) are replaced by the following: ‘(c) common methodologies for assessing the effect of particular products or distribution processes on a financial institution; (d) common methodologies for asset evaluation, as necessary, for the purpose of the stress testing; and’; (v) the following point is added: ‘(e) common methodologies for assessing the effect of environmental risks on the financial stability of financial institutions.’; (vi) the following subparagraph is added: ‘For the purposes of this paragraph, the Authority shall cooperate with the ESRB.’; (d) in paragraph 3, the first subparagraph is replaced by the following: ‘3. Without prejudice to the tasks of the ESRB set out in Regulation (EU) No 1092/2010, the Authority shall, once a year, and more frequently where necessary, provide assessments to the European Parliament, to the Council, to the Commission and to the ESRB of trends, potential risks and vulnerabilities in its area of competence, in combination with the risk dashboard referred to in Article 22(2) of this Regulation.’; (e) paragraph 3b is replaced by the following: ‘3b. The Authority may request that the competent authorities require that financial institutions make information that they must provide under paragraph 3a subject to an independent audit.’;

(27) Article 33 is replaced by the following: ‘Article 33 International relations including equivalence

Where a third country, in accordance with a delegated act, which is in force, adopted by the Commission pursuant to Article 9 of Directive (EU) 2015/849, is on the list of jurisdictions which have strategic deficiencies in their national anti-money laundering and countering the financing of terrorism regimes that pose significant threats to the financial system of the Union, the Authority shall not conclude administrative arrangements with the regulatory, supervisory and, where applicable, resolution authorities of that third country. This shall not preclude other forms of cooperation between the Authority and the respective third-country authorities with a view to reduce threats to the financial system of the Union.

Furthermore, it shall verify whether the criteria, on the basis of which those equivalence decisions have been taken, and any conditions set out therein, are still fulfilled. The Authority may liaise with relevant authorities in third countries. The Authority shall submit a confidential report to the European Parliament, to the Council, to the Commission and to the European Supervisory Authority (European Insurance and Occupational Pensions Authority) and the European Supervisory Authority (European Securities and Markets Authority) summarising the findings of its monitoring of all equivalent third countries. The report shall focus in particular on implications for financial stability, market integrity, investor protection or the functioning of the internal market. Where the Authority identifies relevant developments in relation to the regulation, supervision or, where applicable, resolution, or the enforcement practices in the third countries referred to in this paragraph that may affect the financial stability of the Union or of one or more of its Member States, market integrity, investor protection or the functioning of the internal market, it shall inform the European Parliament, the Council and the Commission on a confidential basis and without undue delay.