Laws and Regulations

The European Council and the European Parliament on Thursday reached a preliminary agreement on a new European directive mandating corporate social responsibility for large companies, but that will, following lobby pressure, exclude the financial sector.

Luxembourg’s Financial Intelligence Unit is key to fulfilling Luxembourg’s international anti-money laundering/terrorist financing prevention obligations, reducing the perception that this country’s financial sector is somehow “above the rules”. Investment Officer recently had an opportunity to speak with FIU director Max Braun.

Investment firms are struggling with AML/KYC requirements, with one fund manager saying his AML/KYC team can’t grow fast enough. The push towards ‘retailisation’ of private markets is only going to increase the stress.

European pension savers are facing significant hurdles due to high fee levels and a lack of transparency in pension savings markets.

Despite a call by the ECB, European financial institutions do not seem to be immediately covered by the new corporate responsibility directive. A majority of member states reportedly do not want to decide on this until after the directive comes into force for non-financial companies. 

The current approach to the EU’s retail investment strategy may not adequately address broader issues such as the retirement savings gap, reflecting a need for a more holistic approach to financial education and pension policies, a leading European industry representative argues.

European regulators, especially those in Paris and Luxembourg, are at odds over the regulatory and technical standards for the updated European Long Term Investment Funds scheme, known as Eltif 2.0, according to people familiar with the discussions.

Proposed amendments to EU rules for alternative investment funds have passed through technical discussions in Brussels without much damage. The outcome of these ‘level 1’ talks means that the AIFMD and Ucits review now is back on course to be completed shortly. The EU’s presidency is expected to issue a statement next week.

European authorities are speeding up negotiations on the final text of the so-called Corporate Sustainability Due Diligence Directive (CSDDD, also known as the CS3D). Before the end of this year, the European Commission, the European Parliament and the European Council want to reach an agreement on it.

Representatives of the European asset management industry believe that lawmakers in Brussels need to step up their efforts to make sure that new voting rules for SMEs and scale-up companies strike a balance between the needs of investors and issuers. The proposal is also of importance to private equity firms investing in these companies.