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Legal Update

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As reported earlier, the Ukrainian Parliament is now scrutinzing a draft law, which will replace the current general financial services framework (Draft Law). Back in March 2021, we assessed the key features of the revised regulatory regime. For this article, we will focus on one of the key topics specifically relevant for any financial institution (FI) – whether its activity may be viewed as a provision of services in a foreign jurisdiction (in our case in Ukraine) and thus, subject to local regulatory approval.

The Securities and Futures Commission (SFC) recently released its Consultation Conclusions on Proposed Enhancements to the Competency Framework for Intermediaries and Individual Practitioners. The changes to the existing Guidelines on Competence (Competence Guidelines) and Guidelines on Continuous Professional Training (CPT Guidelines) (together the “Guidelines”) will take effect in January 2022.

In the Danske Bank ruling, the CJEU confirmed that where a branch or head office is in a VAT group, the head office should be considered as a separate taxable person from its branch such that transactions between the head office and branch should be recognized for VAT purposes. Reason being, the head office was a member of a VAT group in one member state while the branch was situated in another member state, and the effects of VAT grouping should only apply on a territorial basis.

The People’s Bank of China (PBOC) promulgated The Measures for the Supervision and Administration of Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) of Financial Institutions (Measures), which came into effect on 01 August 2021. The new Measures have widened the scope of applicable institutions by adding developmental financial institutions, consumer finance companies, loan companies, non-banking payment institutions and many other types of financial service companies.

As predicted in our Connect on Tech discussion in March, the U.S. Securities and Exchange Commission (“SEC”) is ramping up its examination and enforcement focus on cybersecurity at financial institutions, including scrutiny on actual implementation and deployment of published procedures in response to discovery of cyber breach incidents. Furthermore, the SEC appears to signal its expectation that multi-factor authentication (“MFA”) for email accounts containing sensitive client and customer information should be in place.