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CRD Equivalence Summary

Core Content

The CRD Equivalence methodology outlines the criteria for assessing whether the professional secrecy standards of third countries are equivalent to those established in the Capital Requirements Directive (CRD), specifically in Articles 53 and 54. This assessment is crucial for enabling third countries' supervisory authorities to participate in colleges of supervisors under Article 116 of the CRD. The methodology is based on prior work by the CEBS (Committee of European Banking Supervisors) up to 2010 and is designed to ensure convergence and consistency in how third countries are treated.

Main Objectives

The primary goal is to determine whether the professional secrecy provisions of a third country are equivalent to those in the CRD, in order to facilitate information exchanges between competent authorities. This is done by evaluating:

• The definition of confidential information;
• The existence of professional secrecy obligations;
• The use of confidential information;
• The restrictions on its disclosure;
• The legal consequences of breaching professional secrecy.

Key Principles and Indicators

Principle 1: Definition of Confidential Information

Objective: Establish a clear legal definition of confidential information in line with the CRD.

Standard Required:

• National law should clearly define what constitutes confidential information.
• Information must be:
  • Received in the course of work for or on behalf of the competent authority;
  • Not in the public domain;
  • Not in summary or aggregate form that could identify individual institutions.

Principle 2: Existence of Professional Secrecy Obligation

Objective: Ensure that all relevant persons (including auditors and experts) are subject to an ongoing obligation of professional secrecy.

Standard Required:

• Legal provisions must apply to:
  • All persons working or who have worked for the competent authority;
  • All auditors and experts acting on behalf of the competent authority.
• The obligation must continue after employment and during employment.

Principle 3: Use of Confidential Information

Objective: Restrict the use of confidential information to specific supervisory purposes.

Standard Required:

• Confidential information may be used for:
  • Ensuring compliance with credit institution conditions;
  • Imposing penalties;
  • Administrative appeals and court proceedings;
  • Oversight of financial institutions and markets;
  • Liquidation and bankruptcy procedures;
  • Statutory audits;
  • Deposit-guarantee schemes;
  • Monetary policy and financial system safeguarding;
  • Payment systems oversight.

Principle 4: Restrictions on the Disclosure of Confidential Information

Objective: Limit the disclosure of confidential information to clearly defined circumstances.

Standard Required:

• Disclosure is permitted only to:
  • Competent authorities within the same state;
  • Authorities overseeing other financial institutions;
  • Bodies involved in liquidation or bankruptcy;
  • Auditors and experts;
  • Deposit-guarantee administrators;
  • Central banks and monetary authorities;
  • Payment system overseers.
• Disclosure must be expressly authorized by the originating authority, and the information may only be used for the intended purpose.
• Criminal law exceptions apply.

Additional Important Information: Breach of Professional Secrecy

Objective: Ensure that breaches of professional secrecy are unlawful and sanctionable.

Standard Required:

• National law must include:
  • Offences related to breaches of professional secrecy;
  • Penalties for such breaches.
• Legal provisions must also include enforcement mechanisms and evidence of past enforcement actions.

Key Information

• Article 55 of the CRD forms the starting point for information exchange agreements with third countries.
• Annex II provides a template for assessing equivalence, which includes sections for each principle and additional relevant points.
• Equivalence is determined based on legal provisions and other factors such as enforcement and application scope.
• Consent from the originating competent authority is mandatory for disclosure to a third country's authority.
• The Network on Equivalence will conduct the initial assessment of third countries' confidentiality provisions.

Conclusion

The CRD Equivalence methodology ensures that third countries' professional secrecy frameworks meet the standards of the EU in terms of definition, obligation, use, and disclosure restrictions of confidential information. This promotes trust and cooperation in cross-border supervision and information sharing, while safeguarding the integrity and confidentiality of financial data.