On 29 October, the European Banking Authority (EBA) published a press release in which it unveiled its report on potential impediments to the cross-border provision of banking and payment services. In the report, the EBA is asking the European Commission to facilitate cross-border access to these services. This includes updating of interpretative communications on the cross-border provision of services and further harmonization of consumer protection, conduct of business and AML/CFT (anti-money laundering/countering the financing of terrorism) requirements, for the purpose of facilitating the scaling up of cross-border activity.
The EBA claims that the full potential of digital solutions has not yet been achieved in the EU. The reason for that lies, at least partially, in the divergences in regulatory requirements and supervisory practices across the Member States. According to the EBA, solving these issues is necessary in order to address barriers to market entry, support the scaling up of financial services across the EU, and improve the competitiveness of the EU Single Market.
The EBA points out to two main challenges. The first one is the identification of when a digital activity is to be regarded as a cross-border provision of services. At the moment, competent authorities and firms lack clear guidance on how to classify cross-border activity under the freedom to provide services or right of establishment.
The second challenge lies in areas of EU law that are not fully harmonized or are not yet covered by EU law. Here, the EBA points out to issues such as authorizations and licensing, consumer protection, conduct of business requirements and anti-money laundering as well as countering the financing of terrorism.
The EBA warns that if these issues are not tackled with, institutions and other FinTech firms may not be able to provide banking and payments services cross-border within the EU.
You can read the full press release and download the EBA report here.