Role of Credit Rating Agencies in Implementing Sanctions

Authorities, Regulations

ESMA Chair, Verena Ross, takes a look at the rating market structure today, and sees that there are 24 CRAs in the EU registered with ESMA, located in 13 different Member States. She delivered a keynote speech at the European Association of Corporate Treasurers (EACT) Summit. Verena Ross spoke, among other things, about Credit Rating Agencies (CRA) supervision – including Environmental, Social, and Governance (ESG) ratings.

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Disclosure Requirements for Initial Reviews and Preliminary Credit Ratings Discussed

Agencies, Authorities, Other, Regulations

The European Securities and Markets Authority (ESMA) published its “Final Report” with “Guidelines on Disclosure Requirements for Initial Reviews and Preliminary Ratings“. The purpose of these Guidelines is to deliver guidance that will address inconsistencies in the application of these requirements by Credit Rating Agencies (CRAs), and by extension reduce the risks that are posed by rating shopping to the extent it is possible under the existing provisions of the CRA Regulation.

ESMA has conducted a public consultation on these Guidelines in order to gather the views of CRAs and other relevant stakeholders. A number of amendments and clarifications have been introduced into the final guidelines in order to take account of the views expressed during this consultation.

In one of the answers it was noticed that ESMA’s proposal assumes good behavior on the part of the issuer, although it is precisely about the cases in which an issuer hides a poorer rating. The rating can refer to a shelf registration or any other vehicle with a different LEI or an instrument with a different ISIN, which can be legally differentiated, but represent the same economic risk. These cases are particularly difficult to grasp when the greedy rating agency also collaborates on behalf of the issuer against competing agencies.

“However,” writes ESMA, “a number of respondents raised specific concerns over the provision of an LEI or ISIN for each disclosed instance. Specifically, one respondent outlined that not all entities currently have an LEI/ISIN and that this can depend on the maturity of the entity seeking a rating, its industry, or the stage of the considered transaction.” To address this issue, it was advocated to replace a missing LEI by the “reporting company’s unique key“ or unique rating identifier, as reported to ESMA under Commission Delegated Regulation (EU) 2015/23, while other respondents advocated for the exclusion of initial assessments for which an LEI and/or ISIN had not been provided from the proposed disclosures. This was on the basis that it would be difficult to monitor other CRAs’ public disclosures to assess whether that CRAs provided an initial review or preliminary rating for that same transaction.

Concerning the LEI or ISIN, ESMA now considers that it is not a point that needs to be populated in the disclosure if that information is not available to the CRA at the time of making the disclosure. “However, the CRA should back-fill this data point on subsequent publications when this data becomes available to the CRA”, writes ESMA.

In its public consultation, ESMA asked whether respondents agree that ESMA’s proposed timing of disclosures would better enable investors and the market to identify where rating shopping may have occurred. The wise choice of the timing of publications is a differentiating factor between the rating agencies. Investors and issuers prefer agencies that know how to choose their publication times sensibly. Rating agencies compete with each other to choose the wisest possible time for publication, for example before or after the market closes, before, after or at the same time as other notifications, etc. It takes many years of experience to understand the complex constraints and interests of issuers (and their boards and shareholders), banks, law firms, auditors, rating advisors, institutional and private investors, etc.

According to ESMA’s evaluation of responses, one respondent agreed that the proposed timing of these disclosures will better enable investors and the market to identify where rating shopping might have occurred, on the basis that “since all CRAs will publish an updated list on the same day of each month, it should enable investors to check the issuers and issuances”. Another respondent questioned whether the uniformity of dates would create a risk of a race to the bottom in terms of timing.

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Assumptions of Implicit Government Support

Authorities, Criteria, Regulations

Why is it not wise to ignore an important dimension of the bank rating, not even for capital adequacy purposes?

According to the Basel Framework as it will appear in the future on January 1, 2025, banks incorporated in jurisdictions that allow the use of external ratings for regulatory purposes will assign to their rated bank exposures the corresponding “base” risk weights determined by the external ratings according to the following table:

External Credit Risk Assessment Approach

External rating of counterpartyAAA to AA–A+ to A–BBB+ to BBB–BB+ to B–Below B–
“Base” risk weight20%30%50%100%150%
Risk weight for short-term exposures20%20%20%50%150%
Risk weight table for bank exposures

“Such ratings must not incorporate assumptions of implicit government support, unless the rating refers to a public bank owned by its government. Banks incorporated in jurisdictions that allow the use of external ratings for regulatory purposes must only apply SCRA for their unrated bank exposures, in accordance with CRE20.21.”

This requirement contradicts the longstanding practice of leading rating agencies. Moody’s said in their banks’ rating methodology “our approach to incorporating our expectations related to various forms of external support, from affiliated entities, or from governments, based upon our Joint Default Analysis (JDA) framework.”

The requirement, that “such ratings must not incorporate assumptions of implicit government support, unless the rating refers to a public bank owned by its government”. The demand not only implies a disadvantage for private banks, which, due to their successful development and importance for the economy, can also count on political support. From an investor’s point of view, too, it is important to assess the default risk, including all aspects that are relevant for the classification of the probability of default. This also includes the assessment of the actions of politicians.

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Olaf Scholz Did Not Care to Visit FIU


The raid on the German Ministry of Finance was the subject of a special meeting of the Bundestag Finance Committee this week.

The background to the search are investigations into employees of the Financial Intelligence Unit (FIU), who are said to have failed to forward information on terrorist financing to the judiciary and the police in good time.

The FIU is assigned to the Ministry of Finance. The statement by Federal Finance Minister and SPD candidate for Chancellor Olaf Scholz that he had never been to the FIU in Cologne caused a surprise.

According to State Secretary for Finance Wolfgang Schmidt, the Federal Ministry of Finance has no specialist supervision over the FIU, but only legal supervision. According to a report by WirtschaftsWoche, there is also a different assessment of this. Schmidt’s statement applies to operational business, but the ministry also has specialist supervision in strategic issues.

“The myth that the BMF has no technical supervision over the FIU has been refuted,” said FDP financial expert Frank Schäffler to WirtschaftsWoche. “Olaf Scholz is responsible for the organizational deficiencies of the FIU.”

Rating Agency Violates Disclosure of Transparency Reports and More

Agencies, Authorities, Compliances, Registrations, Regulations

CRA Transparency Reports 2021

“Transparency Reports” of credit rating agencies (CRAs) are published in accordance with Article 12 and Annex I, Section E.III of the EU Regulation on Credit Rating Agencies:

  • (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies, as amended by Regulation
  • (EU) No 513/2011 of the European Parliament and of the Council of 11 May 2011 and as amended by Regulation
  • (EU) No. 462/2013 of the European Parliament and of the Council of 21 May, 2013.

Rating agencies are therefore obliged to disclose their transparency reports in order to enable everyone to obtain certainty about the functioning of the rating agency. Unfortunately, the reports are not always easy to find. Therefore, the following lists can be found with all links to the current reports.

In one case, the report cannot be found by normal search engines, but it is stored in such a way that the supervisory authority, the European Securities and Markets Authority (ESMA) can be shown a link which, however, is normally not found by internet users. The link to the missing report can be found in the following lists.

Missing transparency report

With one of the registered credit rating agency, however, there is a clear violation of the CRA Regulation in the European Union:

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There is a page that lists transparency reports, but all the links are broken and do not allow the alleged transparency reports to be downloaded. It makes no difference whether you search in German or in English. The mandatory reports are not available in neither German nor English. The violation relates not only to the most recent report, but also to previous years and other mandatory reports of the same credit rating agency. The reports, which are so important for investors and issuers, are permanently unavailable. The lack of reports is not due to temporary maintenance.

In this case it is again evident that the European supervisory authority is apparently working too slowly to punish such violations. The deficiency could be remedied by simply uploading the reports. It has been shown that it can sometimes take ESMA several years to punish a violation of the EU regulation on rating agencies. That is too late to allow market participants an up-to-date insight.

Incorrect file name

A leading American rating agency has its transparency reports ready with confusing labels. The “Transparency Report 2020” shows what is actually a transparency report for 2019. The right Transparency Report 2020 is also available, but in a different place and with a different link. This can lead to the erroneous use of this data in statistical evaluations. We have an example of this.

The following documentation proves the incorrect and misleading designations. Here is the wrong link first:

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The following links led to the correct files – with the one exception mentioned above – on Friday, September 17th, 2021:

Sorted alphabetically

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Sorted by country

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ACRA partners with EDB and Armenia

Agencies, Authorities

Challenge of maintaining independence

The Analytical Credit Rating Agency, Eurasian Development Bank (EDB), and the Ministry of Finance of the Republic of Armenia have entered into a Memorandum of Understanding that establishes areas for cooperation between the aforementioned parties, the key goal of which is to stimulate economic growth in the Republic of Armenia and the Russian Federation. The document was signed by Minister of Finance of the Republic of Armenia Tigran Khachatryan, Chairman of the Management Board of EDB Nikolai Podguzov, and ACRA CEO Mikhail Sukhov.

The Memorandum, among other things, provides for the creation of conditions for assigning a sovereign credit rating to the Republic of Armenia, increasing the availability of rating services, and expanding the rating coverage of companies that are residents of the Armenian financial market. In addition, in accordance with the Memorandum, ACRA will assign ratings to bonds issued by Armenian issuers within the framework of projects involving the EDB. A separate area of partnership will be cooperation in the field of sustainable development in the Republic of Armenia, including through the use of green finance instruments.

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The obligation to register for rating agencies, which has now been implemented in almost all parts of the world, especially in Europe, America and Asia, has sparked an academic discussion as to whether a registration obligation already hijacks dependency relationships that could influence the independence and neutrality of the rating agency in its ratings. Through close partnership relationships, the rating agency becomes a virtual external department of ministries or banks. If the partnership is abandoned, this may have consequences for the rating agency, which could pose an existential threat to the agency.

“Using money from our Technical Assistance Fund, the EDB intends to allocate a grant on an irrevocable basis, at the expense of which ACRA will carry out actions to assign a sovereign rating to the Ministry of Finance of the Republic of Armenia. This will encourage the development of ties within the Eurasian Economic Union and with other EAEU member states and pave the way for providing rating services to companies that are residents of the Republic of Armenia and have an interest in entering the Russian financial market,” commented Chairman of the Management Board of EDB Nikolai Podguzov.

“Credit ratings are an integral part of the market economy and help ensure the formation of a stable financial market with a broad base of investors. Our cooperation with the Ministry of Finance of the Republic of Armenia and the EDB will contribute to unlocking investment potential and the expansion of trade and economic ties within the EAEU,” commented ACRA CEO Mikhail Sukhov.

Failsafe Test Case to Be Averted

Actions, Authorities

Transactions of Lang & Schwarz Aktiengesellschaft are the subject of a tax audit, reports the company in a publication of inside information in accordance with Article 17 of Regulation (EU) No. 596/2014.

The subject of the tax audit is an examination of the business of Lang & Schwarz Aktiengesellschaft in the financial years 2007 to 2011 in connection with investigations under criminal tax law. In the investigation, Lang & Schwarz Aktiengesellschaft is the addressee of a request for information and disclosure. This involves the persons responsible at Lang & Schwarz Aktiengesellschaft on suspicion of unlawful offsetting or reimbursement of unpaid capital gains taxes and solidarity surcharges in share transactions on the dividend date.

Lang & Schwarz Aktiengesellschaft plays a crucial role in trading so-called “wikifolios“. Each wikifolio can, if it meets certain criteria, serve as a fictitious reference portfolio to which a wikifolio index refers.

Lang & Schwarz Aktiengesellschaft issues endless index certificates on the wikifolio index. These endless index certificates are traded on the Stuttgart Stock Exchange and can be bought and sold at almost all banks and online brokers via the Stuttgart Stock Exchange or directly from Lang & Schwarz.

Wikifolio certificates are secured. “That means,” writes wikifolio Financial Technologies AG, “defaults from an issuer risk generally associated with investments in certificates are largely hedged.” The market capitalization of Lang & Schwarz Aktiengesellschaft is currently well below half a billion euros, which affects the susceptibility to short-seller attacks. These in turn could influence the company’s credit rating.

Therefore, investors in wikifolio certificates must take into account the unlikely but possible event that a test case of the fail-safe protection of the certificates could occur.

The Graveyard of Authorized Credit Rating Agencies in the European Union

Agencies, Authorities, Certifications, Registrations

Rating agencies have been registered in the European Union since 2010 in order to operate in accordance with the EU regulation on rating agencies of 2009 (CRAR). Dozens of agencies have therefore made use of the option, but also the obligation, to register or get certified. Rating agencies are only allowed to operate in the European Union after authorization, namely registration or certification.

A public list is kept at the European Securities and Markets Authority (ESMA) on the registered or certified agencies. This list is an important reference for all market participants in order to find out about the approved agencies.

In order to make it easy to find it, the list of authorized credit rating agencies was linked e.g. from the website from the beginning. Since 1998, long before the word “blog” found its way into the German language, the website has been dealing with credit rating issues and the statutory or voluntary regulation and self-regulation of credit rating agencies.

It is less well known that a number of rating agencies have now returned their licenses. The return of licenses was particularly evident through brexit, when all those rating agencies that are based in Great Britain and were registered there could no longer be recognized by ESMA.

The following is a complete list of 16 de-registered or de-certified credit rating agencies as of May 7, 2021:

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Credit Rating Agency Authorisation 2021

Agencies, Authorities, Certifications, Registrations

Links to websites of the Credit Rating Agencies authorized in the European Union.

The credit rating agencies listed below have been registered or certified by the European Securities and Markets Authority (ESMA) in accordance with the Credit Rating Agencies Regulation. Domains of websites are added. According to ESMA, the list was last updated on May 7, 2021.

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Disclosure Requirements Are a First Step to SPACs Rating Criteria


No blank check for SPACs.

Special purpose acquisition companies (SPACs) are shell companies that are admitted to trading on a trading venue with the intention to acquire a business and are often referred to as “blank check companies”. The European Securities and Markets Authority (ESMA) encourages National Competent Authorities (NCAs) to focus their scrutiny of SPACs prospectuses on a number of disclosure requirements.

ESMA counts the following among these requirements:

Risk factors, strategy and objectives, escrow accounts and the reinvstement of the proceeds, relevant experience and principal activities of the administrateive, management and supversiory bodies, conflicts of interest and sponsors,shares, warrants and shareholder rights, major shareholder, related party transactions, material interests, information on the proceeds of the offer, information on the intention of certian persons to subscribe in the offer, information on the offer price, and additional disclosure likely to be required to satisfy the Prospectus Regulation.

In practice, this provides a grid to which SPAC rating criteria can be linked. In fact, however, a large number of additional criteria are necessary in order to assess the risk of investing in SPACs. Therefore, compliance with disclosure requirements under this list must not be equated with an investment recommendation.


No Vaccination Against Bad Loans


Keynote of Prof. Dr. Joachim Wuermeling, Deutsche Bundesbank, at NPL Forum in Frankfurt am Main.

“NPL dismantling” provides one of the keywords for the speech of Prof. Dr. Joachim Wuermeling, Member of the board of the Deutsche Bundesbank. In his keynote at the Frankfurt School’s NPL Forum he widens the view and takes a look to Europe. “Because: When it comes to NPL, we have to think and act European. Even if the stocks of non-performing loans in Germany are low, they can become a problem elsewhere in the euro area, initially for the respective country itself, but also for the euro area as a whole.” He sheds light on three aspects.

  • First: “In the past few years, we have made important progress in reducing the NPL in the euro area. While the NPL inventory of significant institutions in the euro area was almost € 1 trillion in mid-2016,” says Joachim Wuermeling, “it had more than halved by the end of last year, to just under € 450 billion.” However, the stocks are still very unevenly distributed across the countries of the euro area. Key milestones in this NPL decline were the ECB’s 2017 NPL Guide and the 2018 Addendum. The guide primarily targets non-performing loans that were built up during the financial crisis. “The addendum, on the other hand, formulates supervisory expectations for risk provisioning for new NPLs, so it has a preventive effect. However, following the progress made in reducing the NPL in recent years, the pandemic could now turn the trend.”
  • That is Joachim Wuermeling’s second point: a renewed spike in non-performing loans is probably only a matter of time in the euro area. As soon as the support measures expire, he expects to see an increase in the NPL level. “Basically it is of course part of the banking business that individual borrowers get into payment difficulties; that cannot be avoided at all. Banks must write-down or write-off loans as necessary, and they must collect and dispose of collateral. But here, too, the dose makes the poison”, warns Joachim Wuermeling. Through higher provisions, rising NPL stocks have a negative impact on the already weak profitability of European banks. This could also affect their solvency as a result. The higher the NPL rate in the system and the more uncertain the economic situation, the more likely investors and depositors are to question the quality of bank balance sheets and the ability of the institutions to make further value adjustments and absorb possible losses. “It is therefore important to take countermeasures now”, Joachim Wuermeling calls for action. “This will pose challenges in particular for those institutions and countries that already had a high level of non-performing loans before the pandemic began.”
  • Supervision and politics are already acting, says Joachim Wuermeling. In December 2020 the ECB sent another “Dear CEO Letter” to the significant institutes. “Among other things, it makes it clear what to expect in terms of risk provisioning. It also collects information on how banks deal with credit risks and how they determine the necessary risk provisions. There is no intention or reason to soften the ambitious NPL rules. And the EU Commission is also providing important impetus with its NPL action plan of December 2020. In this plan, the Commission proposes new measures and takes up the outstanding aspects of the 2017 Council NPL Action Plan. The Commission wants to facilitate the handling of Covid-related NPLs at an early stage and thus prevent a renewed accumulation of non-performing loans on European bank balance sheets.” The focus is on measures to promote secondary markets, set up asset management companies and improve insolvency frameworks. The Commission also comments on precautionary public support measures.

With a view to the secondary markets, the main thing is more transparency. The Commission’s proposals could make an important contribution here, says Joachim Wuermeling: a common data set and data standard for NPL transactions within the EU would make the markets more transparent. Data quality, data comparability and data infrastructure are the key words.

Joachim Wuermeling also welcomes the Commission’s proposal to set up and network national Asset Management Companies – AMCs for short. “However, this must be done on a voluntary basis, without community funding and in accordance with EU state aid rules.”

AMCs have already proven themselves in the past as a tool for NPL reduction. By means of economies of scale, better coordination of creditors and the pooling of expertise, they can help to clean up bank balance sheets. “The proposals in the action plan are correct – but they must also be taken up and followed up.” Joachim Wuermeling points to some initiatives: the EBA is currently consulting its standardized NPL data templates, which have been reduced in scope, and the Commission is putting its proposal for a European data hub up for public discussion by early September.

Ultimately, however, the banks themselves have to set up value adjustments in good time and in line with the risk in order to counter an increase in non-performing loans. “This is probably the most important lever to arm yourself for a Europe-wide increase in non-performing loans and to prevent negative repercussions on the real economy”, says Joachim Wuermeling.

This is how he sums up his remarks at the Frankfurt School:

  • First: “We must not allow ourselves to be lulled into deceptive security by the still low number of corporate insolvencies. As soon as the state aid runs out, bankruptcies are likely to rise. The rise in non-performing loans should be limited for German credit institutions. Nevertheless, caution remains the order of the day.”
  • Second: “The German banks are in good shape. They are more resilient and better equipped with capital than they were a few years ago. But they have to catch up in risk management: they have to create more transparency with regard to credit risks and improve their data skills.”
  • Third, bad loans are a European issue: “After the progress made in recent years in reducing NPLs, the pandemic could now turn the trend. It is all the more important to take countermeasures now. The EU Commission does this with its NPL Action Plan of December 2020. Now it is time to implement the proposed measures.”

There is no vaccination against bad loans. Nevertheless, banks have many options for getting themselves into a form in which post-Covid cannot harm them.

black chain

Scope’s Greensill Bank Rating Tragedy

Agencies, Authorities, Governance, Read, Regulations

The Federal Financial Supervisory Authority (BaFin) filed criminal charges Against The Bank’s Board Members.

The Federal Financial Supervisory Authority (BaFin) in Germany received monthly reports from Greensill Bank AG (Greensill Bank) about the bank’s balance sheet data from January 2019 on. This is evident from the answer given by Parliamentary State Secretary Sarah Ryglewski on March 12, 2021 to written questions from members of the German Bundestag (Drucksache 19/27704). Greensill Bank’s total assets increased rapidly in 2019 from EUR 763 million at the beginning to EUR 3.8 billion.

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On March 3, 2021, BaFin finally issued a ban on the sale and payment of the bank due to the threat of over-indebtedness. The bank had to close for business with customers. BaFin prohibited it from accepting payments that were not intended to repay debts to the bank (moratorium). In addition, the BaFin filed criminal charges against the board members of Greensill Bank.

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Clever Commission from the City of Münster in Westphalia

Agencies, Analysts, Authorities, Experts

An automated safety net for municipal investments has not existed since 2017.

If municipalities do not want to set up extensive bond research departments themselves, in which financial analysts examine thousands of qualitative data and annual financial statements from issuers of financial products, the municipalities depend on the independent judgments of reliable credit rating agencies and specialists. The scandal of the Berlin rating agency Scope around the Greensill Bank in Bremen shows the billions in consequences of an embellished credit rating (see Börsen-Zeitung).

The city of Münster in Westphalia did not rely on the judgment of a rating agency registered in the European Union – the process in itself is a disgrace not only for the local rating agency Scope Ratings in Berlin, but also for the European Securities and Markets Authority in Paris, because far away in Paris are the supervisors, who already had internal compliance reports, transparency reports and notifications about the processes in Berlin. There was no lack of information.

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Scope Ratings Game of Corporate Law

Agencies, Authorities, Whistleblowing

The “Scope Group” is a bunch of constant changes under company law.

As a result of the Scope Ratings GmbH billion Euro scandal about Greensill Bank in Bermen, which was rated as “investment grade” for the first time in 2019 and is now insolvent, the precise activities of this local rating agency in Berlin have gained public attention. Therefore, the background to the recent Berlin takeover of Euler Hermes Rating GmbH (EHRG) is being researched.

The world-famous brand name “Euler Hermes” was not acquired by Scope. Even back then, when Scope took over FERI EuroRating Services AG, a credit rating agency registered by the European Securities and Markets Authority (ESMA) and headquartered in Bad Homburg, on August 1, 2016, Scope did not care about continuing the good name of the acquired credit rating agency.

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Collection of Contributions by The Institutional Protection Scheme of EdB

Associations, Authorities, Read

A credit institution is an undertaking which conducts at least one of the banking businesses described in detail in section 1 (1) of the German Banking Act (Kreditwesengesetz) commercially or on a scale which requires commercially organised business operations. The banking businesses include the deposit business and credit business, but also specific securities-related activities such as principal broking services and the safe custody business.

The EdB compensation scheme is in place to protect depositors from the risks associated with the banking business of its members.

If a compensation event occurs, the depositor shall have a right to compensation as provided for by the law from the deposit guarantee scheme of which the CRR credit institution is a member.

The Entschädigungseinrichtung deutscher Banken GmbH (EdB, Compensation Scheme of German Private Banks) is a wholly-owned subsidiary of the Association of German Banks. It was entrusted by the German Federal Finance Ministry with the task of running the statutory deposit guarantee and investor compensation scheme for the private banks in Germany.

The EdB’s job is to compensate the creditors of a bank assigned to it where the bank is unable to repay deposits. Liabilities arising from securities transactions conducted by a credit institution (i.e. bank) as defined in the EU Capital Requirements Regulation (CRR) are also deemed to be deposits.

Pursuant to section 1 (3d) of the German Banking Act, a CRR credit institution is a credit institution that also meets the narrower definition of a credit institution in accordance with Article 4 (1) no. 1 of the EU Capital Requirements Regulation (CRR). CRR credit institutions are supervised in the context of the Single Supervisory Mechanism (SSM) either directly by the European Central Bank (ECB) as significant institutions (SIs) or by BaFin together with the Deutsche Bundesbank as less significant institutions (LSIs).

In accordance with Section 26 (1) of the German Deposit Guarantee Act (Einlagensicherungsgesetz or EinSiG), the CRR credit institutions are obliged to pay annual contributions at the end of each accounting year (Jahresbeiträge). The accounting year covers the period from October 1st of one year to September 30th of the following year. The contributions to the EdB are therefore due for payment on September 30 of each year.

The details of the contribution payment can be found in the ordinance issued by the Federal Ministry of Finance on the financing of the compensation facility of German banks and the compensation facility of the Federal Association of Public Banks in Germany (compensation facility financing ordinance or Entschädigungseinrichtungs-Finanzierungsverordnung – EntFinV), see Federal Law Gazette I of 11 January 2016 p. 9 f.

Pursuant to Section 17 (2) EinSiG, the EdB must ensure that the financial resources available to it reach a target level of at least 0.8 percent of the covered deposits of the institutions belonging to it by July 3, 2024.

The EdB has developed an internet platform for the regular collection of annual contributions to the EdB, via which a questionnaire is made available to the institutes from the end of May / beginning of June each year. A number of key figures and the external rating results must be entered in the questionnaire. The Internet access data for using the platform are sent to the banks annually by post.

The completely recorded questionnaire must be sent electronically via the aforementioned platform together with the following documents (see also Section 15 Paragraphs 2 to 4 of the EntFinV):

  • Asset encumbrance sheets, current and previous year (template F 32.01),
  • COREP sheets, current and previous year,
  • SAKI sheet, current and previous year,
  • Documentation of all ratings valid as of May 31, 2020 in accordance with Section 10 of the EntFinV (at least one rating is required)

The following documents are to be sent in paper form to the Auditing Association of German Banks e.V.: The fully recorded and legally binding questionnaire including date and institute stamp, and in accordance with Section 34 (1) EinSiG: the audit report for the financial year, insofar as this has not already been sent to the Auditing Association.

The EdB can allow the CRR credit institutions assigned to it to pay up to 30% of their annual contribution in one accounting year by assuming contractual payment obligations. The prerequisites are that the EdB and the CRR credit institute have signed a framework agreement on payment obligations pursuant to Section 21 of the EntFinV and a framework contract on financial collateral pursuant to Section 27 of the Funding Regulation by June 30 of the respective accounting year. In addition, there has to be an agreement on the assumption of payment obligations by September 1st of the accounting year according to § 22 EntFinV for the accounting year and the provision of financial collateral according to § 26 EntFinV.

A contribution notification will be created on the basis of the transmitted data. The contribution notification is an administrative act against which an objection can be raised at the EdB. However, according to Section 32 (1) EinSiG, objections and actions for rescission have no suspensive effect. Pursuant to Section 32 (2) EinSiG, the law provides for the possibility of enforcement from the contribution notice in accordance with the provisions of the Administrative Enforcement Act.

The EdB also has to levy special contributions if it finds that its funds are insufficient to carry out compensation proceedings. Section 29 EinSiG regulates the details.

The contributions to the compensation scheme depend on the creditworthiness of the assigned institute. You will find an explanation in “Creditworthiness functions according to the EntFinV”. The external rating results, which are included in the calculation of the creditworthiness with 25%, are part of these explanations.

With regard to the creditworthiness function, a left-skewed distribution in favor of the discount classes was determined as part of the annual backtesting process, which is also expressed in an increased “µ” in the EBA formula. On the basis of a now broader and qualitatively better database, both individual risk indicators and the transformation functions were validated with the aim of a broader spread. On the basis of transformation functions, the calculated risk indicators are assigned individual risk values ​​(IRSi), which are combined to form a weighted individual risk value. Using the sum value (ARSi) of the weighted individual risk values, the aggregated risk weight (ARWi) is determined based on ten credit rating cagegories using a further transformation function.

The annual contribution is the result of the following formula:

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Lack of Financial Education

Advisors, Authorities, Read

“You do not talk about money.” This is a common saying in German. “You do not talk about money? But we should! ”- under this motto, Austria’s Financial Market Authority (FMA) is launching a new information format for consumers with immediate effect: “Let’s talk about money”. Exciting aspects from various basic finance topics shall be prepared on a monthly basis and answers to everyday financial questions are given.

In the USA, companies like Morningstar ensure that private investors are informed about financial issues. The rating agency’s offers range from platforms on the Internet to large events with thousands of visitors.

Great investing advice means understanding investors’ hopes, dreams, and ideals to find out what really matters. Morningstar doesn’t just focus on the finish line, but focuses on the entire journey. This way, Morningstar has been empowering investor success since 1984, and they have seen firsthand and learned how great advice can help people reach their goals, how to avoid traps and evade scammers.

In German-speaking countries, consumers are not sufficiently aware of the activities of rating agencies. Therefore, regulators are trying to fill the loophole. In the corset of state regulation, however, the authorities’ options to help consumers are ultimately limited. Morningstar also has a German-language website with information for private investors.

The first issue starts with the topic “Beware of investment fraud!” and explains how, with the help of a few simple steps, consumers can ensure that they do not fall victim to financial fraud before making an investment decision. In February, the FMA will provide information on what to consider when taking out an online consumer loan; in March there will be tips on using insurance comparison portals.

“With this new format, we would like to offer an objective source of information to all those who feel insecure about the breadth and complexity of the various financial topics and are looking for understandable answers to everyday questions about money,” said FMA board members Helmut Ettl and Eduard Müller. The FMA derives the topics of the new format from the most frequent inquiries in its consumer information and then prepares them briefly and in simple language, according to Ettl and Müller.

Collective consumer protection has been an operational supervisory and audit focus of the FMA for many years. After the Finance ABC on the FMA website, “Let’s talk about money” is the second proactive financial education initiative. All issues are available both in print and online at the website

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BaFin Corrects False Warning Against a Real Company and Warns Against Fake Business of a Doppelganger

Authorities, Read

Following its consumer report of December 3, 2020, the Federal Financial Supervisory Authority (BaFin) now makes it clear on January 18, 2021 that the activity as “asset manager” is not used by HTG Consulting GmbH, but by unknown third parties. HTG Consulting GmbH became victim of identity theft.

On December 3, 2020, BaFin reported, among other things, that HTG Consulting GmbH was promoting to work as a “trust manager” or “end customer manager” or “support employee in asset management” or “asset manager”, make their private account available in order to accept and forward payments on instructions.

With such “business models”, the fiduciary managers risk that the funds transferred to their accounts come from criminal, in particular fraudulent, activities. If you accept the job offer as a financial agent, there are serious consequences under civil and criminal law. The activity as a financial agent can also be prosecuted by the BaFin. Insofar as the companies claim that they have reported the accounts to BaFin as “trust accounts” or “asset accounts”, BaFin makes it clear that there is no such procedure for reporting trust accounts.

The clarification by BaFin shows that the Federal Agency cannot effectively act as a rating agency that continuously provides consumers with an overview of serious, less serious or dubious offers. Professional fraudsters make use of various possibilities of deception. As a result – as happened here – BaFin must publish “warnings” against reputable companies, although in reality only the false doppelganger is meant.

In China such fraud is supposed to be put to an end by the social credit system. Social credit ratings are intended to make the reputation of market participants transparent and to differentiate between trustworthy and less trustworthy addresses. The implications for data protection and citizen control are far-reaching. Although the problems of dubious offers and identity theft to be solved are similar in Western countries, convincing responses from the West regarding the Chinese system are still pending.

How to Run a Credit Reporting Agency in China

Agencies, Authorities, Bureaus, Compliances, Governance, Read, Registrations, Regulations

The People’s Bank of China issued a Draft for comments on “Measures for the Administration of Credit Investigation Services“. It is intended to regulate the credit investigation business and related activities, and promote the healthy development of the credit investigation industry. This is formulated in accordance with the “Civil Code of the People’s Republic of China”, “The People’s Bank of China Law of the People’s Republic of China”, “Regulations on the Administration of Credit Investigation Industry” and other laws and regulations.

Who is affected?

These Measures shall apply to individuals, enterprises, institutions and other organizations that carry out credit investigation services and related activities within the territory of the People’s Republic of China, but these Measures are also applicable to the credit investigation business and related activities of residents of the People’s Republic of China (natural and legal persons) outside the People’s Republic of China.

The term “credit information” refers to various types of information used to determine the credit status of individuals and enterprises by providing services for financial and economic activities. Personal and corporate identity, address, transportation, communication, debt, property, payment, consumption, production and operation, fulfillment of legal obligations and other information, as well as analysis and evaluation of the credit status of individuals and companies based on the foregoing information information are all considered to be “credit information”.

When engaging in credit investigation business and related activities, the lawful rights and interests of information subjects shall be protected in accordance with the law, information security shall be protected, and the leakage and abuse of credit information shall be prevented. Engaging in credit investigation business and related activities shall follow the principles of independence, objectivity, and impartiality, and shall not make discriminatory arrangements that violate social public order and good customs, and shall not provide exclusive services with the help of an advantageous position.

The collection of credit information by credit reporting agencies in China shall follow the principle of “minimum and necessary” and shall not collect excessively.

Credit reporting agencies shall not collect credit information in the following ways:

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When collecting credit information, credit reporting agencies shall review the business legitimacy, information sources, information quality, information security, and authorization of information subjects of the information providers to ensure the legality, accuracy and sustainability of the collection of credit information.

Credit reporting agencies in China shall clarify their respective rights and obligations with information providers in terms of data correction, objection handling, and information security. The People’s Bank of China expects credit reporting agencies operating personal credit reporting services to formulate plans for collecting personal credit information, and report to the People’s Bank of China on matters such as the collected data items, the correlation with credit, and the protection of information subjects’ rights and interests.

The collection of personal credit information by a credit reporting agency shall obtain the consent of the information subject, and clearly inform the information subject of the purpose, source and scope of the collection of credit information, as well as the possible adverse consequences of not agreeing to the collection of information. Where a credit reporting agency obtains personal consent through an information provider, the information provider shall clearly inform the information subject of the name of the credit reporting agency. When collecting non-public corporate credit information, credit reporting agencies shall adopt appropriate methods to obtain the consent of the enterprise. The collection of credit information related to the performance of duties by corporate directors, supervisors, and senior executives by credit reporting agencies shall not be regarded as personal credit information.

Credit reporting agencies shall follow the principle of objectivity in sorting, storing, and processing credit information and shall not tamper with the original data. If a credit reporting agency finds information errors in the process of sorting, storing, and processing credit information, if the information provider reports an error, it shall promptly notify the information provider to correct it; if it is an internal processing error, it shall promptly correct it, and improve the internal processing flow.

5 Years Retention Period

The retention period of bad personal information collected by credit reporting agencies in China shall be 5 years from the date of termination of bad behavior or incident. When bad credit information expires, the credit reporting agency should delete it. If it is used as sample data, it should be de-identified and moved to a non-production database for storage to ensure that personal credit information is not directly or indirectly identified. The People’s Bank of China encourages redit reporting agencies to separate personal identification information from other credit information, and implement physical isolation.

Credit reporting agencies shall take appropriate measures to conduct necessary review of the identity, business qualifications, and purpose of use of information users. They shall conduct necessary review of the network and system security and compliance management measures of information users who access the credit reporting system through the Internet, monitor the inquiries, discover violations, and stop services in a timely manner. Credit reporting agencies shall conduct necessary review of information users to ensure that information users obtain the consent of the information subject when inquiring about personal information and use it for the agreed purpose. The use of credit information provided by credit reporting agencies by information users shall be used for lawful and legitimate purposes and shall not be abused.

Information users shall use personal credit information for clear and specific purposes, and use them in accordance with the purposes agreed upon with the information subject. If they exceed the agreed purposes, they shall obtain separate consent. Information subjects can inquire about their own credit information from credit reporting agencies. If the credit reporting agencies have not collected the information subject’s information, they should clearly inform them that if they have collected the information subject’s information, they should provide the information subject with the collected information content.

Credit reporting agencies in China shall provide personal information subjects with free credit report inquiry services twice a year through various methods such as the Internet, business premises, and entrusting other institutions. If a credit reporting agency entrusts other agencies to provide free credit report query services to information subjects, it shall review the qualifications, service capabilities, safety protection facilities, and compliance requirements of the entrusted agency, and be responsible for the entrusted agency’s inquiries and leaks by joint and several liability.

The subject of personal information in China has the right to request a complete credit report from the credit bureau. The content of credit reports provided by credit reporting agencies to individuals shall not be less than the content of credit reports provided to information users. Credit reporting agencies in China shall not charge information subjects for the reason of deleting bad information or not collecting bad information.

Where credit reporting agencies provide credit information inquiry products and services such as credit reports, they shall objectively display the content of the inquired credit information, and explain the content of the inquired credit information and professional terms. If a credit reporting agency provides a credit report product, the content of the report shall include the information user’s inquiry records, objection marks, and information subject statement. Credit reporting agencies that provide evaluation products and services such as portraits, scoring, rating, etc., shall establish evaluation standards, and must not use elements that are not related to the credit of the information subject as evaluation standards. Where a credit reporting agency provides personal credit evaluation services, all data used for evaluation shall be displayed in the credit report provided to the information subject. Credit reporting agencies shall disclose the scoring methods and models used in personal credit evaluation products, and the degree of disclosure shall be limited to reflecting the credibility of the evaluation.

If credit reporting agencies provide corporate entities or debt credit rating services, they shall comply with relevant management regulations on credit rating businesses. Where credit reporting agencies provide anti-fraud products and services, they shall establish standards for identifying fraudulent credit information.

Credit reporting agencies providing credit information inquiry, credit evaluation, and anti-fraud services shall report the following matters to the People’s Bank of China or its branches above the provincial capital (capital) city center branch (hereinafter collectively referred to as the branch):

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Credit reporting agencies shall not provide the following credit reporting services and products:

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Credit reporting agencies shall formulate safety management systems involving all business activities and equipment and facilities, and adopt effective protective measures to ensure the security of credit information.

Individual credit reporting agencies and corporate credit reporting agencies that store or process the credit information of enterprises of more than 500,000 enterprises shall meet the following requirements:

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Credit reporting agencies shall ensure the safety of the operating facilities and equipment of the credit reporting system, security control facilities and APPs and other mobile internet terminals, do a good job in daily operation and maintenance management of the credit reporting system, and ensure the physical security of the system, network security, and host security, application security, data security and client security, prevent data loss and destruction, and prevent illegal intrusion into the credit investigation system.

The credit reporting agency shall do a good job in personnel safety management in terms of personnel recruitment, personnel leaving, personnel assessment, safety awareness education and training, and external personnel visit management. Credit reporting agencies shall strictly limit the authority and scope of staff who inquire about and obtain credit information, and they shall establish operating records for staff inquiring and obtaining credit information, and clearly record the time, method, content and purpose of staff inquiring and obtaining credit information.

Credit reporting agencies shall establish an emergency response system. When major credit information leaks occur or are likely to occur, they shall immediately take necessary measures to reduce the harm and report to the People’s Bank of China and its local branches.

For credit reporting agencies to carry out credit reporting services and related activities in China, the production database and backup database shall be located in China. Credit reporting agencies that provide personal credit information abroad shall comply with the provisions of national laws and regulations. Credit reporting agencies providing corporate credit information inquiry services overseas should review the identity and purpose of information users, ensure that credit information is used for reasonable purposes such as cross-border trade and financing, and provide it in a single inquiry. Credit reporting agencies shall not transmit the credit information of batch enterprises in a certain region or industry to the same information user overseas. Credit reporting agencies that provide corporate credit information overseas should file with the People’s Bank of China. If a credit investigation agency cooperates with an overseas credit investigation agency, it shall file with the People’s Bank of China after the cooperation agreement is signed.

Credit reporting agencies shall disclose the following matters to the public and accept social supervision:

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China’s Administrative Measures for Credit Investigation and Regulations on the Administration of Credit Investigation Industry

Authorities, Read, Regulations

On January 11, 2021 the People’s Bank of China announced the “Administrative Measures for Credit Investigation (Draft for Comment)”. This is another heavy new regulation that the credit reporting industry will usher in after the 2013 “Regulations on the Administration of Credit Investigation Industry” and the “Administrative Measures for Credit Investigation Institutions”.

The “Measures” have seven chapters and 46 articles, which stipulate the scope, collection, sorting, storage, processing, provision, use, safety, cross-border flow and business supervision and management of credit information, clearly define credit information, and emphasize the need to strengthen personal rights and protect the rights and interests of corporate information subjects to ensure information security.

“The “Measures” can be said to have come out after a lot of calls, and the market is paying great attention to it.” Su Xiaorui, a senior researcher at the Ma Dai Research Institute, said that in recent years, the Internet ecology has been enriched, and the dimensions of personal credit data have been extended, such as online shopping, social relations, travel status, financial holdings, etc., but these data are mostly controlled by internet giants, and it is urgent to regulate the collection and use of data.

The development of credit investigation industry in the era of digital economy calls for new regulations. The “Measures” are intended to better adapt to the development trend of the credit investigation industry in the digital economy era. In fact, every time the relevant laws and regulations of the credit investigation industry are released, they are closely related to the actual situation of market development.

Since the establishment of the Credit Information Center of the People’s Bank of China in 2006, the construction of the country’s credit information system has entered a stage of steady progress. After years of deliberation and research, on March 15, 2013, the country’s first credit reporting industry regulation, the “Regulations on the Management of Credit Reporting Industry,” was officially implemented. The “Regulations” apply to the collection, sorting, preservation, and processing of personal or corporate credit information within China, and credit investigation services and related activities provided to information users. The target of the regulation is mainly the business activities of credit reporting agencies and the supervision and management of credit reporting agencies.

In the same year, in accordance with the “Regulations”, the People’s Bank of China issued the “Administrative Measures for Credit Investigation Institutions”, which refined and clarified the market access of individual credit investigation institutions and their filing conditions. Since then, the People’s Bank of China has been continuously researching and looking for the right time to issue the “Credit Investigation Management Measures.”

In the era of digital economy, credit investigation is facing new challenges. The introduction of the “Measures” can better meet the needs of digital economy development under new technological conditions and increase the effective supply of credit investigation. Technologies such as blockchain, cloud computing, and big data have made it easier to collect and process a large amount of data involving credit information. Credit investigation services are gradually expanding from bank credit to commercial credit and credit-related alternative data fields in China.

It is in the above context that the promulgation of the “Measures” has begun to accelerate. On the one hand, the introduction of the “Measures” can better meet the needs of financial innovation and inclusive finance. Households without credit records, “white households” or “quasi-white households” (mainly small and micro enterprises, individuals who just worked) lacking credit records were mostly due to information asymmetry. It is difficult to enjoy normal financial services for these groups, Therefore, non-credit alternative credit data will play a greater role.

On the other hand, the “Measures” also strengthened the protection of personal information, taking into account information security and information compliance. In the development process of the credit investigation industry, some new phenomena have also attracted great attention from all walks of life. Due to the lack of clear business rules for credit investigation in new business models, problems such as unauthorized collection and inadequate protection of information subjects’ rights and interests have emerged. To fundamentally solve the above-mentioned problems, it is necessary to “correct the roots” from the legal level.

In addition, the promulgation of the “Measures” is also to meet the needs of opening up. The “Measures” clearly stipulate the overseas credit investigation business and related activities for residents of the People’s Republic of China, and the cross-border flow of credit information, which is an effective supplement to the previous regulations.

One of the highlights of the “Measures” is that it clarifies what is credit information. The understanding regarding identity, data on payment transactions, property, and whether social information and other data belong to credit information is not uniform. In addition, with the rapid development of science and technology, information has broken through traditional cognitions in terms of definition, circulation, and transactions. In practice, credit information has already broken through the scope of lending information.

In accordance with the principle that substance is more important than form, the “Measures” include all types of information that provide services for financial and economic activities. Information used to determine the credit status of individuals and enterprises, including but not limited to: personal and enterprise identities, addresses, transportation, and communications., debt, property, payment, consumption, production and operation, fulfillment of statutory obligations and other information, as well as analysis and evaluation of information based on the aforementioned information on the credit status of individuals and enterprises, are all regarded as credit information. All activities that collect, organize, store, and process credit information and provide it to information users are all credit investigation services and must be included in the Chinese credit investigation supervision.

It is worth noting that some information belongs to the category of personal privacy, and even licensed credit reporting agencies cannot obtain and call relevant information at will. The information can only be collected when the information subject is fully informed of the possible adverse consequences of the collection and use, and sufficient authorization has been obtained, such as property information; including religious beliefs, genes, fingerprints, blood types, and diseases. Such personal privacy information as well as information prohibited by laws and regulations from being collected fall into the category of strictly prohibited collection, and credit reporting agencies shall not collect it.

Clarifying what is credit information will help prevent personal information from being excessively collected, improperly processed and illegally used, and will help improve the transparency of credit investigation business activities: Follow the “minimum, necessary” principle and strengthen the protection of information subjects’ rights and interests.

Profiling and evaluations of individuals using personal credit information” are all credit investigation services, which means that personal information services provided by some large internet platform companies will also be included in credit investigation.

At present, there are some big data risk control companies and data service providers under the banner of credit investigation in the market, and there are many large internet platform companies. These companies take advantage of the market and do not have sufficient authorization. These institutions wander the legal boundaries, but in fact they are not subject to corresponding supervision. With one-time authorization, infinite collection, and unlimited use, opaque processing, and the lack of objective and fairness in automated decision-making, the right to know, consent, and dissent cannot be guaranteed.

In response to the above problems, the “Measures” put forward the principle of “minimum and necessary” information collection around the links of credit information collection, sorting, storage, processing, provision and use, and clearly inform the information subject and obtain consent, and use it for legal purposes. It helps protect the legitimate rights and interests of information subjects and realize the safe, compliant and reasonable flow of credit information.

For the restricted area of information collection, the “Measures” also clearly stipulate that agencies are not allowed to deceive, coerce, induce, collect fees from individuals or companies, collect from illegal channels, or otherwise infringe the legal rights and interests of the information subject to collect credit information.

In addition to regulating the domestic credit investigation business, the “Measures” also make clear provisions on the cross-border flow of credit information. This is seen as an inevitable requirement for building an open economy. As an integral part of the modern financial system, expanding the opening up of the Chinese credit investigation industry is an important part of implementing the financial opening up strategy. Moreover, with the introduction and implementation of the “Belt and Road” initiative, the economic and trade between China and the countries along the “Belt and Road” are getting closer and closer. Chinese enterprises investing cross-border all require cross-border exchanges and cooperation of credit information.

In previous laws and regulations, there was no clear provision for this part. With the “Measures” released, cross-border credit information flow and cooperation are expected to break. According to Article 24 of the “Regulations”, the sorting, storage and processing of information collected by credit reporting agencies in China shall be carried out in China. Credit reporting agencies that provide information to overseas organizations or individuals shall abide by laws, administrative regulations, and relevant regulations of the credit reporting agency under the State Council of the People’s Republic of China.

In this regard, the “Measures” emphasize that these measures are also applicable to the credit investigation business and related activities of residents (natural and legal persons) of the People’s Republic of China outside the People’s Republic of China.

At the same time, the “Measures” have made clearer regulations on cross-border flows of credit information. For example, if a credit investigation agency provides corporate credit information inquiry services overseas, it shall ensure that the credit information is used for reasonable purposes such as cross-border trade and financing, and provide it in a single inquiry manner. It is not allowed to transmit bulk credit information to an individual user overseas. Credit reporting agencies that provide overseas corporate credit information inquiries or which are cooperating with overseas credit reporting agencies shall file with branches above the central branch of the provincial capital of the People’s Bank of China.

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Western Countries Still Lack Systems to Fight Identity Theft

Authorities, Crime, Read, Systems

The German Federal Financial Supervisory Authority (BaFin) published an urgent announcement “21.12.2020 | Topic Consumer protection: Warning regarding the website ‘'”. Regardless of the warning, the website is still active:

BaFin advises that the website “” does not belong to the US company OTC Markets Group Inc. “This is a case of identity theft committed by unknown perpetrators”, writes BaFin.

Identity theft is the crime of obtaining the personal or financial information of another person to use their identity to commit fraud, such as making unauthorized transactions or purchases. Banks and financial service providers and their clients are popular victims. Identity theft is committed in many different ways and its victims are typically left with damage to their credit, finances, and reputation.

It is not only difficult to catch the perpetrators. Shutting down the website also requires complicated legal steps, if at all possible. For many months in 2017 and 2018, for example, there was also a doppelganger from Frankfurt-based ICF Bank AG. The original website of ICF BANK AG is Using popular search engines such as Google or Baidu, Chinese-speaking prospects and customers were taken to a website at this address that had nothing to do with the Frankfurt-based bank, but contained the same information on the regulatory authority aside from incorrect telephone numbers.

If a prospect or customer contacts a fake website and reveals his personal data, trusting the seriousness of the website, the victim enables a multitude of criminal offenses. Once identity thieves have the information they are looking for, they can ruin a person’s credit rating and the standing of other personal information.

The cases show that the new information and communication technologies also demand new answers to the question of evidence and credibility. One of the so far in Western countries unpopular responses of the People’s Republic of China to the challenges mentioned is the introduction of a social credit system.

Another less serious case is blog identity theft. For example, the blog was completely copied and advertised on another website. In this case, the perpetrators benefited from the advertising revenue. All texts, images, even the entire structure of the website were completely copied. The perpetrators benefited from generating advertising income without having to write texts themselves.

The internet presence operated by OTC Markets Group Inc. is “”, according to BaFin’s consumer news.

black chain

FATF and BaFin Ratings

Authorities, Compliances, Governance, Regulations

The European Union (EU) and Financial Action Task Force (FATF) lists countries with deficits in the fight against money laundering, terrorist financing and the financing of proliferation. The lists have far-reaching implications for country ratings and especially for ratings of financial service providers. FATF publishes a consolidated table of assessment ratings.

On the basis of Article 9 of the Fourth Money Laundering Directive (EU) 2015/849, the European Commission has defined third countries with high risk in the Delegated Regulation (EU). It includes the following countries: North Korea, Iran, Afghanistan, Bahamas, Barbados, Botswana, Ghana, Iraq, Jamaica, Yemen, Cambodia, Mauritius, Mongolia, Myanmar / Burma, Nicaragua, Pakistan, Panama, Zimbabwe, Syria, Trinidad and Tobago, Uganda and Vanuatu.

Legal consequences and measures of the German Federal Financial Supervisory Authority (BaFin) with regard to the listed countries with increased risk differ and follow this rating:

  1. North Korea,
  2. Iran,
  3. Afghanistan, Bahamas, Barbados, Botswana, Ghana, Iraq, Jamaica , Yemen, Cambodia, Mauritius, Mongolia, Myanmar / Burma, Nicaragua, Pakistan, Panama, Zimbabwe, Syria, Trinidad and Tobago, Uganda and Vanuatu and
  4. Albania.

As before, Albania, which is only listed in the FATF statement on “Jurisdictions under Increased Monitoring” and not in the Delegated Regulation, Albania has no immediate obligations to act and no additional due diligence or organizational obligations need to be fulfilled. Nonetheless, when assessing the country risk in the context of the prevention of money laundering and terrorist financing, the situation in Albania and / or people from Albania should be given due consideration, explains BaFin; otherwise, BaFin refers to the Deutsche Bundesbank and the national risk analysis.