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1
CURRENT DEVELOPMENTS IN THE REGULATORY FRAMEWORK
OF THE EUROPEAN BANKING SYSTEM     Prof.
Christos Vl. Gortsos Secretary General,
HBA   November 2007
2

• TABLE OF CONTENTS
•  
• A. Introductory Remarks
• B. The European financial regulatory framework
• C. Operation and supervision of credit
  institutions
• D. Operation and supervision of capital markets
• E. Consumer protection
• Payment and settlement systems
• Combating financial crime

3
A. INTRODUCTORY REMARKS   1. Levels of regulatory
intervention in the financial sector   a.
International level (Basel Committee on Banking
Supervision, IOSCO, FATF, OECD, CPSS)   b.
Community level   c. National level   Currently,
the principal source of regulatory intervention
in the financial sector are the legal acts
adopted at Community level within the context of
achieving the integration of the internal market
in the European Community.
4

• A. INTRODUCTORY REMARKS
•  
• 2. Reasons for regulatory intervention in the
  European financial sector
• a. Necessary prerequisites negative integration
• Financial services trade liberalisation  
• b. Adequate prerequisites positive integration
• Ensuring the stability of the banking system
  capital markets insurance market
• Ensuring that markets are fair, efficient and
  transparent
• Combating of financial crime
• Protection of consumers of financial services
• Efficiency of payments systems

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• B. THE EUROPEAN FINANCIAL REGULATORY FRAMEWORK
•  
• 1. What rules are applied to credit institutions
•  
• Operation and supervision of credit institutions
  (under C)
• Operation and supervision of capital markets
  (under D)
• Consumer protection (under E)
• Operation of payments and settlement systems
  (under F)
• Combating of financial crime (under G)
• Insurance mediation
• Personal data
• Tax law and accounting law
• Commercial law
• Labour law
• Environmental liability

6

• B. THE EUROPEAN FINANCIAL REGULATORY FRAMEWORK
•  
• 2. How the rules are produced
•  
• Legislative procedure
• Co-decision procedure
• Lamfalussy procedure (under 3 below)
•  
• Self-regulation
• Codes of ethics
• European Payments Council
• Ombudsman

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B. THE EUROPEAN FINANCIAL REGULATORY
FRAMEWORK   3. Lamfalussy procedure   The
Lamfalussy procedure concerns the way of
producing rules in European financial law and was
adopted by the Community institutions in 2002,
initially in the capital markets sector. Its
extension to the banking and insurance sectors
was then decided in 2004   The Lamfalussy
procedure consists in four levels Level 1 Aim
Adoption of a general regulatory framework and
determination of the issues as to which technical
implementing measures should be adopted by the
European Commission Procedure Adoption of
Community acts by the classic procedure of
co-decision of the Council and the European
Parliament on a proposal of the European
Commission
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B. THE EUROPEAN FINANCIAL REGULATORY
FRAMEWORK   3. Lamfalussy procedure
(cont.)   Level 2 Aim Concretization of the
framework principles of Level 1 Procedure
Adoption of technical implementing measures in
the form of a Directive or Regulation by the
European Commission. Provision of technical
assistance by sectoral technical committees
Level 3 Aim Joint interpretation and consistent
implementation of the measures of Levels 1 and 2
at a national level Procedure Co-ordination of
actions by the sectoral committees and issuing
relevant guidelines Level 4 Monitoring by the
European Commission of the compliance of the
Member States with the measures adopted
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B. THE EUROPEAN FINANCIAL REGULATORY FRAMEWORK  
Level 1 Level 2 Level 3
Type of legal act Basic legal act Implementing measures Recommendations / Guidelines
Legislator European Parliament / Council European Commission CEBS/CESR/ CEIOPS
Support mechanisms EBC/ESC/EIOPC (as advisory committees) EBC/ESC/EIOPC (as advisory and regulatory committees) CEBS/CESR/ CEIOPS (as advisory committees)
10

• B. THE EUROPEAN FINANCIAL REGULATORY FRAMEWORK
• White Paper on Financial Services Policy
  (2005-2010)
• Better lawmaking
• EC regulatory and supervisory structures
• Ongoing and future legislative activities
  (2005-2010)
• The external dimension

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C. OPERATION AND SUPERVISION OF CREDIT
INSTITUTIONS

• 1. Committee of European Banking Supervisors
  (CEBS)
• The current issues
• Liquidity risk (under a)
• Review of the large exposures regime (under b)
• Supervision in third countries (under c)
• Options and discretions in the CRD (under d)
• Definition of own funds (under e)

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C. OPERATION AND SUPERVISION OF CREDIT
INSTITUTIONS

• 1. Committee of European Banking Supervisors
  (CEBS)
• (a) Liquidity risk
• CEBS has been invited to provide the European
  Commission
• a survey of the regulatory framework adopted by
  the members states and
• an analysis of selected topics related to
  liquidity risk management.
• The objective is to identify those issues which
  may require changes in the current regulatory
  framework and promote regulatory and supervisory
  convergence at EU level

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C. OPERATION AND SUPERVISION OF CREDIT
INSTITUTIONS

• 1. Committee of European Banking Supervisors
  (CEBS)
• (b) Review of the large exposures regime
• CEBS has been invited to provide the European
  Commission with feedback in the following areas
• purpose and metrics of the large exposure regimes
• a range of specific issues (i.e indirect
  concentration risk)
• The objective is a wider ranging review of the
  current large exposures regime

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C. OPERATION AND SUPERVISION OF CREDIT
INSTITUTIONS

• 1. Committee of European Banking Supervisors
  (CEBS)
• (c) Supervision in third countries
• This issue relates to general guidance issued
  under article 143 of the Directive 2006/48/EC on
  the equivalence of arrangements for consolidated
  as well as for supplementary (conglomerates)
  supervision in third countries

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C. OPERATION AND SUPERVISION OF CREDIT
INSTITUTIONS

• 1. Committee of European Banking Supervisors
  (CEBS)
• (d) Options and discretions in the CRD
• CEBS is invited to conduct by May 2008 an indepth
• technical analysis on the exercise of options and
  discretions
• identified in its supervisory disclosure
  framework by
• indicating for each of them
• the use of the options and discretions in each
  Member State
• the extent to which further harmonisation might
  be achieved in terms of reducing the number of
  discretions and options of the CRD.

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C. OPERATION AND SUPERVISION OF CREDIT
INSTITUTIONS

• 2. Directive 2007/44/EC as regards procedural
  rules and evaluation criteria for the prudential
  assessment of acquisitions and increase of
  holdings in the financial sector
• The Directive will streamline the criteria and
  timescale of the assessment procedure applied by
  European supervisory authorities in cases where
  qualifying holdings are acquired in the financial
  sector
• The adoption of this Directive is a decisive step
  towards strengthening European competitiveness in
  particular by promoting cross-border
  consolidation

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C. OPERATION AND SUPERVISION OF CREDIT
INSTITUTIONS

• 3. Commissions Consultation on reorganisation
  and winding up of credit institutions (Directive
  2001/24/EC)
• The purpose of Directive 2001/24/EC is to ensure
  that a credit institution and its branches in
  other Member States are reorganised or wound up
  according to the principles of unity and
  universality
• Main issues of the consultation
• the problems of cross-border reorganisation and
  winding-up of banking groups, and the obstacles
  to the transferability of assets in a crisis
  situation and
• gaps and ambiguities in the current Directive
  identified so far

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• Markets in financial instruments (MiFID)
• CESR Level 3 measures
• Protocol on the supervision of branches under
  MiFID
• The protocol aims in fostering greater
  cooperation between authorities in the exercise
  of their core supervisory functions over
  investment firms and credit institutions that
  provide cross-border investment services. The
  protocol sets out a framework for co-operation
  between competent authorities under two different
  models (a) joint supervision conducted through
  common oversight programmes, and (b) requests for
  assistance based on efficient allocation of
  supervisory tasks.

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• Markets in financial instruments (MiFID) (cont.)
• CESR Level 3 measures
• Passport under MiFID Recommendations for the
  implementation of the Directive and Statement on
  practical arrangements regarding the late
  transposition of MiFID
• The purpose of the recommendations is to have a
  common approach on the notification procedures
  and on the future collaboration between the home
  and the host authorities that will be necessary
  in order to guarantee efficient and consistent
  supervision on cross-border activities. The main
  aims of these recommendations are, inter alia,
  the clarification of some aspects regarding the
  supervision of tied agents, MTFs and
  representative offices, the elaboration of
  pragmatic solutions for the transition from the
  ISD passport to the MiFID passport, and the
  prioritisation of those aspects where investment
  forms need clarity in the short term.

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• 1. Markets in financial instruments (MiFID)
  (cont.)
• CESR Level 3 measures
• Protocol on MiFID Passport Notifications
• This Protocol provides a framework for the
  co-operation of competent authorities with regard
  to the implementation of the passport
  notification provisions of the MiFID. It
  supplements the provisions of the CESR
  Multilateral Memorandum of Understanding (1999)
  which provides the general basis for mutual
  cooperation of CESR Members.
• Q A on best execution
• This process-driven approach aims to promote
  market efficiency and investor protection by
  fostering competition between trading venues and
  promoting investor confidence by ensuring that
  firms are obtaining the best possible result for
  their clients order.

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• 1. Markets in financial instruments (MiFID)
  (cont.)
• CESR Level 3 measures
• Inducements under MiFID
• Recommendations clarifying the range of
  application of the regime, specifying a common
  approach to the understanding of the different
  categories of payments within Article 26 of
  Directive 2006/73/EC.
• List of minimum records
• The recommendation sets out the content of the
  list of minimum records that competent
  authorities need to draw up in accordance with
  Article 51 (3) of Directive 2006/73/EC and that
  investment firms have to keep.

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• Markets in financial instruments (MiFID) (cont.)
• CESR Level 3 measures
• Publication and consolidation of markets data
• These guidelines and recommendations are meant
  to facilitate the understanding of certain
  requirements of the MiFID and its Implementing
  Regulation on publication and consolidation of
  market information. They also intend to
  facilitate a consistent implementation of the
  relative provisions without imposing further
  obligations on investment firms, MTFs or
  regulated markets.
• MiFID transaction reporting
• Guidance to three aspects of transaction
  reporting is provided, i.e. (a) practical
  solutions for the reporting obligations for
  branches, (b) clarification as to what
  constitutes execution of a transaction for
  transaction reporting purposes, and (c)
  operational solutions for some aspects of
  reporting channels.

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• Markets in financial instruments (MiFID) (cont.)
• CESR Level 3 measures
• Non-equities transparency
• In this paper CESR concludes that it has not
  been identified an evident market failure in
  respect of market transparency on bond markets
  and so it believes that any increase in
  transparency would need to be carefully tailored
  to ensure that liquidity provision and levels on
  competition are not damaged. In other words, a
  thorough cost-benefit analysis should be
  undertaken by the Commission before any
  regulatory action.

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• 1. Markets in financial instruments (MiFID)
  (cont.)
• CESR Level 3 measures
• Report on commodity and exotic derivatives
• This paper is part of CESRs response to the
  Commissions request for assistance on commodity
  and exotic derivatives in order to determine (a)
  which relevant entities, activities and
  instruments should be covered by the scope of EU
  financial markets regulation in these areas, and
  (b) whether current regulation needs to be
  adapted to take into account the specificities of
  the commodities and commodity derivatives
  markets.
• New arrangements for the reporting of derivatives
  trades in accordance with MiFID
• CESR developed in cooperation with the industry
  new arrangements for transaction reporting. These
  include, (a) reporting on non-securities
  derivatives (including commodity derivatives) and
  (b) an alternative way for the identification of
  securities derivatives on some derivatives
  markets (the Alternative Instrument Identifier).

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• 2. Clearing and settlement in the EU
•  
• Giovannini barrier 3
• Corporate Actions
• Monitoring of market implementation of the
  Market Standards on Mandatory Distributions
• Announcements,
• Information from (I)CSD to participants,
• Information from Custodian banks and/or (I)CSD
  participants,
• Data relating to announcements,
• Resources,
• Processing of payments.

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• 3. TARGET2-Securities
• On 6 July 2006, the Governing Council of the
  European Central Bank decided to further explore
  in cooperation with central securities
  depositories and other market participants, the
  setting up of a new service called
  TARGET2-Securities for securities settlement in
  the euro area
• The objective of the project is to allow the
  harmonised settlement of securities transactions
  in euro which are settled in central bank money.
  Synergies for the market with other facilities
  operated by the Eurosystem will be sought, in
  particular in connection with the future TARGET2
  payment system
• The Governing Council of the ECB intends to hold
  another public consultation by the end of 2007,
  requesting comments on fully articulated user
  requirements. Only after this public consultation
  the Governing Council will decide on the
  development phase

27
D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• 3. TARGET2-Securities (cont.)
• Objectives
• Provide a single venue where all EU assets can be
  exchanged for euro
• Reduce cost of cross-CSD settlement via a single
  settlement platform and standardized
  communication protocols
• Reduce complexity and associated operational
  costs and risks by harmonizing market rules and
  practices for clearing and settlement related
  corporate events
• Benefits of T2S on post-trading
• Increased market liquidity and access to wider
  investor base lead to lower cost of capital for
  issuers
• Increased market liquidity and lower cost of
  portfolio diversification lead to better return
  for investors

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• 4. Investment Management
• White Paper on enhancing the Single Market
  framework for investment funds
• European Parliament Draft report on Asset
  Management II
• CESRs Consultation paper Content and form of
  Key Investor Information (KII) disclosures for
  UCITS
• CESR makes specific recommendations on a number
  of key points, including objectives and scope of
  KII, format and general content, risk-reward,
  past performance, charges.
• Purpose Review of the Directive 85/611/EC by
  the end of 2008

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• 4. Investment Management (cont.)
• Private Placements
• European Commissions feedback statement on its
  consultation on the functioning of private
  placement regimes in Europe, and on the case for
  a common EU regime
• The Commission concludes that the possibilities
  for private placements differ widely across EU
  Member States and that there is a good level of
  support for a European regime, in particular for
  non-harmonised open-ended investment funds, to
  which the Prospectus Directive does not apply.

30
D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• 4. Investment Management
• Hedge Funds
• Hedge Fund Working Group Consultation Paper -
  Draft Code of Conduct of the London-based hedge
  fund industry
• The proposed standards are rooted in the UK/FSA
  background but aspire to become globally
  applicable. They are presented in a consultation
  document in order to allow hedge fund managers
  and other stakeholders to be involved in the
  development of the standards.

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• 5. Other issues
• Investor protection and transparency
• Level 3 - Commission Recommendation on the
  electronic network of officially appointed
  mechanisms for the central storage of regulated
  information referred to in Directive 2004/109/EC
  of the European Parliament and of the Council
• Other Level 3 issues under consideration
• The implementation of the options given by the
  Transparency Directive to Member States
• Further consideration of the mechanisms for the
  storage and filing of regulated information
• QA document on the inconsistencies in the
  practical application of the Transparency
  Directive
• Prospectus
• Assessment of the application of the Prospectus
  Directive and the level 2 Regulation
• Level 3 measures under preparation

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• 5. Other issues (cont.)
• Market abuse
• Level 3 measures under preparation. Issues
  identified for further work (October 2007 June
  2009) include
• List of sanctions and measures applicable under
  the MAD, in order to accommodate concerns about
  the diversity of measures and sanctions applied
  in Member States.
• Harmonisation of requirements for insiders
  lists.
• Suspicious Transactions Reporting
• Stabilisation Regime
• Twofold notion of inside information
• Mapping of the existing thresholds in Member
  States and other practices of CESR Members as
  regards notifications of transactions by persons
  discharging managerial responsibilities and
  consideration of whether there is a case for
  recommending adjustment of the threshold.
• Develop guidance on the definition of inside
  information with regard to commodity derivatives
  to the extent possible.

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D. OPERATION AND SUPERVISION OF CAPITAL MARKETS

• 5. Other issues (cont.)
• Credit Rating Agencies
• IOSCO Code of Conduct Fundamentals for Credit
  Rating Agencies
• (CESR intends to monitor the compliance by CRAs
  with the Code and submit its report probably by
  mid 2008)
• European Commission Issues an Additional Request
  for CESR to review the role of Credit Rating
  Agencies. Main issues for consideration
• - Transparency of Credit Rating Agencies (CRAs)
  rating methodologies,
• - Human resources allocated to rating and
  monitoring,
• - Periodic monitoring of the ratings and
  timeliness of rating actions,
• - Potential conflicts of interest (i.e.
  remuneration structures of CRAs)

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E. CONSUMER PROTECTION 

• 1. Proposal for a Directive on credit agreements
  for consumers
• Main issues
• The principle of responsible lending a. duty to
  provide explanations and b. obligation to assess
  the consumers creditworthiness
• Provision of exhaustive pre-contractual
  information
• Introduction of new provisions on the way of
  calculating the Annual Percentage Rate of Charge
• Right of withdrawal period to exercise the right
  of withdrawal is 14 days
• The Plenary of the European Parliament is
  expected to adopt the Directive in December 2007
  or January 2008

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E. CONSUMER PROTECTION

• 2. Future expected developments in the field of
  consumer protection
• Green Paper on Bank Accounts and Customers
  Mobility the aim is
• a. to improve customer mobility in relation to
  bank accounts,
• b. to boost competition in financial services
  and
• c. to allow customers to make full use of the
  internal market.
• Green Paper on the Retail Financial Services
• a. Report on the Green Paper on retail financial
  services to be delivered by the European
  Parliament
• b. Single Market Review to be published by the
  Commission it will include the findings of the
  consultation on retail financial services

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E. CONSUMER PROTECTION

• 2. Future expected developments in the field of
  consumer protection (cont.)
• White Paper on Mortgage Credit the objectives of
  the White Paper will be
• a. to facilitate lenders cross-border activity,
  
• b. to facilitate customer mobility,
• c. to enhance product diversity and
• d. to improve and modernize consumer protection.
  
• Concrete measures will be proposed as regards
  early repayment, information requirements, annual
  percentage rate of charge, advice, property
  valuation, assessment of consumers
  creditworthiness, foreclosure procedures and land
  registers registration.

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E. CONSUMER PROTECTION

• 2. Future expected developments in the field of
  consumer protection (cont.)
• Review of the Directive 2002/65/EC concerning the
  Distance Marketing of Consumer Financial Services
  on the conclusion of cross-border contracts
  Conduct a study from an economic perspective in
  cooperation with stakeholders affected by the
  Directive, examining whether or not the Directive
  has achieved its objectives.

38
F. OPERATION OF PAYMENT and SETTLEMENT SYSTEMS

• 1. SEPA
•  
• SEPA is the area in which
• Citizens, firms and other economic agencies will
  be able to make electronic
• payments in euro in the European Economic Area
  with the same conditions,
• rights and obligations, regardless of their
  country of establishment
•  
• The political dimension of SEPA
•  
• Focus on the Eurozone SEPA will be delivered to
  the countries of the Eurozone as a priority
•  
• Countries which do not belong to the Eurozone
  will be able to participate in the
• pan-European systems of payments and will be able
  to adopt the relevant
• standards and practices to contribute to the
  single euro payments market

39
F. OPERATION OF PAYMENT and SETTLEMENT SYSTEMS

• 1. SEPA (cont.)
• The EPC is a self-regulatory decision-making
  organisation of the European Payment Industry
• The development and delivery of competitive 'SEPA
  Payment Schemes' are a competence of the EPC
• The adoption of the 'SEPA Payment Schemes' will
  be
• a decision of the EPC and the national banking
  systems, so that they can develop the basic
  prerequisites (e.g., capability of delivery) in
  due time
• a decision of each bank so that it can provide
  its clientele with SEPA payment services
• The adoption of 'SEPA Schemes' at a national
  level to supplement or replace existing
  'infrastructures' at national level is a decision
  for the national banking communities
• Within the framework of PE-ACH, the possibility
  of merging the national ACHs is a decision for
  the users and/or shareholders

40
F. OPERATION OF PAYMENT and SETTLEMENT SYSTEMS

• 1. SEPA (cont.)
• Launching of SEPA payment instruments
•  
• 1.1.2008, SEPA for Cards (at least one card
  payment product with EMV chip)
• 28.1.2008, SEPA credit transfers for citizens and
  business
• 1.11.2008, SEPA direct debits for citizens and
  business
•   

41
F. OPERATION OF PAYMENT and SETTLEMENT SYSTEMS

• 2. TARGET2
• The Trans-European Automated Real-time Gross
  settlement Express Transfer (TARGET) system went
  live in January 1999, at the same time as the
  introduction of the euro
• In October 2002, the Governing Council of the ECB
  decided to develop the next generation of TARGET
  (TARGET2)
• In 2003, three national central banks of the euro
  area - the Deutsche Bundesbank, the Banque de
  France and the Banca dItalia - offered to
  jointly build and operate the SSP on behalf of
  the Eurosystem

42
F. OPERATION OF PAYMENT and SETTLEMENT SYSTEMS

• 2. TARGET2 (cont.)
• Under TARGET2 the decentralised structure of the
  current TARGET system will be replaced by a
  single technical platform, the so-called Single
  Shared Platform (SSP)
• TARGET2 is envisaged to start operations on 19
  November 2007

43
G. COMBATING FINANCIAL CRIME

• 1. Anti Money Laundering
• (a) Directive 2005/60/EC (3d AML Directive)
• The Third Anti-Money Laundering Directive
  incorporates into EU law the June 2003 revision
  of the Forty Recommendations of the Financial
  Action Task Force (FATF)
• The Directive is applicable to the financial
  sector as well as lawyers, notaries, accountants,
  real estate agents, casinos, trust and company
  service providers. Its scope also encompasses all
  providers of goods, when payments are made in
  cash in excess of 15.000.
• Those subject to the Directive need to
• identify and verify the identity of their
  customer and of its beneficial owner and monitor
  their business relationship with the customer
• report suspicions of money laundering or
  terrorist financing to the public authorities
  -usually, the national financial intelligence
  unit and
• take supporting measures, such as ensuring a
  proper training of the personnel and the
  establishment of appropriate internal preventive
  policies and procedures.
• introduce additional requirements and safeguards
  for situations of higher risk (e.g. trading with
  correspondent banks situated outside the EU).
• Member States should implement the Directive
  until December 2007

44
G. COMBATING FINANCIAL CRIME

• 1. Anti Money Laundering
• (b) Commission Directive 2006/70/EC
• Commission Directive lays down implementing
  measures for Directive 2005/60/EC
• of the European Parliament and of the Council as
  regards
• the definition of politically exposed person
• the technical criteria for simplified customer
  due diligence procedures and
• for exemption on grounds of a financial activity
  conducted on an occasional or very limited basis
• Member States should implement the Directive
  until 15 December 2007

45
G. COMBATING FINANCIAL CRIME

• 2. Combating Terrorist Financing
• Regulation (EC) 1781/2006
• Regulation (EC) No 1781/2006 on information on
  the payer accompanying transfers of funds lays
  down rules for payment service providers to send
  information on the payer throughout the payment
  chain. This is done for the purposes of
  prevention, investigation and detection of money
  laundering and terrorist financing.
• The Regulation transposes Special Recommendation
  VII (SRVII) of the Financial Action Task Force
  (FATF) into EU law and is part of the EU Plan of
  Action to Combat Terrorism.
• Member States shall lay down the rules on
  penalties applicable to infringements of the
  provisions of this Regulation and shall take all
  measures necessary to ensure that they are
  implemented. Such penalties shall be effective,
  proportionate and dissuasive.They shall apply
  from 15 December 2007.

46
G. COMBATING FINANCIAL CRIME

• 3. Weapons of Mass Destruction (WMD)
  proliferation financing
• In June 2007, the FATF adopted guidance regarding
  the implementation of financial provisions of the
  United Nations Security Council Resolutions
  (UNSCRs) to counter the proliferation of weapons
  of mass destruction (WMD).
• In October 2007, the FATF adopted guidance
  regarding the implementation of activity-based
  financial prohibitions of United Nations Security
  Council Resolution 1737. This guidance is not
  binding and is not directly related to any of the
  Financial Action Task Force (FATF) 40 9
  Recommendations, and therefore it is not
  considered in the FATF mutual evaluation or
  assessment process. It is intended solely to
  assist jurisdictions in developing guidance for
  financial institutions to facilitate
  implementation of the activity-based financial
  prohibitions contained in S/RES/1737(2006).