Changes in the Supervision Service of the Bank of Lithuania: fight against money laundering intensified, attention to digitalisation and consumers
Structure and name of the Supervision Service of the Bank of Lithuania changed from the beginning of November - from now on it will be called the Financial Market Supervision Service. The changes were determined by financial market development trends.
“Rapid market globalisation and digitalisation requires faster response to the risks and threats emerging in the areas of cybersecurity and money laundering prevention, whereas innovative solutions in the provision of financial services need equivalent supervisory decisions,” said Jekaterina Govina, Director of the Financial Market Supervision Service of the Bank of Lithuania.
Lithuania’s financial market went through significant changes recently: fast technological progress resulted in the transfer of financial services to the digital domain, which prompted changes in consumer expectations and habits. The Bank of Lithuania together with other institutions actively encouraged financial innovations to strengthen competition, thus increasing the number of new participants in the domestic financial market. They usually operate exclusively in the digital area not only in Lithuania, but also in the whole EU. This also altered the financial market’s risk profile, with a more important role attributed to cybersecurity and anti-money laundering. Therefore, the supervisory structure needs to be adapted focusing on relevant areas. The importance of digitalisation both to the market and the supervisory authority will be growing in the future, thus it is necessary to concentrate on advanced analytical and supervisory methods in response to new challenges.
“The changes enhance smart and insight-based financial market supervision which focuses on prevention and innovative solutions. We are seeking to ensure sustainable financial market development and its responsible functioning as well as to better satisfy consumer needs. We believe that the revised processes of the Service will contribute to more effective supervision and lower administrative burden on financial market participants, whereas innovative supervisory solutions will reduce their compliance costs,” said Jekaterina Govina.
The revised Financial Market Supervision Service will consist of three departments:
• Banking and Insurance Undertaking Supervision Department will be responsible for the supervision of activities of financial market participants that are significant to the country’s financial system - banks, central credit unions, national development institutions and insurance undertakings;
• Financial Services and Market Supervision Department will be responsible for the supervision of other financial market participants, capital market and investment services;
• Legal and Licensing Department will be responsible for the application of the law, legislative coordination and licensing of financial market participants, as well as for effective investigation of disputes between consumers and financial market participants.
Taking into consideration the priorities, the Money Laundering Prevention Division has become directly accountable to the Director of the Service (up to now, it was a part of the Prudential Supervision Department). The Service was supplemented with the newly founded Digitalisation and Advanced Analysis Division directly accountable to the Director, which shall ensure sustainable development and introduction of digital technologies and innovations in financial market supervision processes. In addition, the Bank and Insurance Undertaking Supervision Department now includes the Operational and Information Technology Risk Division, which will enhance the supervision of operational, information technology and payment security risks and their appropriate management.
The Bank of Lithuania will present the organisational changes of the Financial Market Supervision Department in detail to financial market participants in the nearest future.