07 December 2004

Results of ECOFIN meeting

The Council approved mandates for negotiations with the European Parliament on the directives on the capital adequacy of banks and investment firms, on strengthened provisions against money laundering. The Council also reached agreement on new tax arrangements for company mergers.

The Council agreed to forward the document to the General Affairs Council with a view to the European Council meeting on 16 and 17 December. The strategy, which comes in response to a request by the European Council in June, provides an overview of the EU's actions to date and a number of recommendations on how they might be further strengthened. A separate report on implementation of the EU's action plan against terrorism will also be submitted to the European Council.

The Council also agreed on a general approach on a proposal for a money laundering Directive.

The draft Directive will replace the current Directive whilst extending the scope to cover terrorist financing as well as persons and institutions not currently included. It is also aimed at implementing recommendations issued recently by the G7's Financial Action Task Force on Money Laundering.

The Directive is planned to be adopted in first reading. Member States would be required to implement the Directive within 18 months following its entry into force.

The Council agreed on a general approach on proposals for two Directives introducing new capital adequacy requirements for banks and investment firms. It requested the Presidency to explore the possibility of adopting the two Directives in first reading.

The two draft Directives follow the Basel agreement in requiring implementation of the new capital adequacy requirements by the end of 2006, with implementation of certain provisions by the end of 2007.

The Council also agreed on a general approach on a proposal for a Directive on the reliability of company financial statements by establishing minimum requirements for the audit of company accounts. The Directive is also planned to be adopted in first reading.

The draft Directive introduces a number of provisions to ensure independence and ethics amongst statutory auditors and audit firms. These include a requirement for external quality assurance, ensuring public oversight over the audit profession and improved co-operation between the oversight bodies of the Member States.

Finally, the Council reviewed the various recommendations of the 2002 EFC Report on financial regulation, supervision and stability. It welcomes the progress achieved in the follow-up to these particularly in three areas:

The Extension of the Lamfalussy Framework to all sectors

The establishment of the Committee of European Banking Supervisors (CEBS)

The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS).

The Council expects the extension of the Lamfalussy structure to all financial sectors be implemented rapidly after its formal adoption.

The Council invites the Financial Conglomerates Committee and the Commission to clarify how advice on financial conglomerates will be provided in the regulatory process. Financial Services Committee

For the FSC’s future work, the Council suggests that it should focus in 2005 on:

developing a proposal for a Memorandum of Understanding on crisis management and a crisis simulation exercise;

providing strategic overview on how the EU framework for financial regulation and supervision should be developed over the next few years from the finance ministries’ viewpoint; and

assessing the Commission’s forthcoming Communication outlining its future financial services strategy.

The Council reaffirms the need for a thorough evaluation of the Lamfalussy framework's application to all sectors when substantial experience with the framework has been gained. In this context, the Council recalls that all elements of the Lamfalussy framework shall be monitored regularly to ensure the new structure to be rapidly implemented. The next review of the framework shall take place in spring 2006.

Document

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