Bank of Lithuania
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Analysis and research

Analysis and research

Analysis and research series papers present the analysis and research of the data collected and systematised by the Bank of Lithuania experts.

No 4

Implementation of international sanctions in financial institutions

  • Abstract

    In carrying out, within its competence, risk-based supervision of FMPs, the Bank of Lithuania notes that FMPs do not always pay appropriate attention to the implementation of international sanctions and restrictive measures and that FMPs face difficulties in the implementation of international sanctions and restrictive measures in practice. In this Review of the Implementation of International Sanctions in Financial Institutions (hereinafter – the Review), the Bank of Lithuania provides key insights into the measures taken by FMPs to implement international sanctions and restrictive measures.

    The Review is based on the provisions of legal acts and good practices of the EU and the Republic of Lithuania, Analysis of the International Sanctions Screening Systems conducted by the Bank of Lithuania over 20 FMPs (banks, electronic money institutions, payment institutions) in December 2021–May 2022 (hereinafter – the Analysis), contains examples of good practice identified during the Analysis and cases where the measures applied to implement international sanctions need to be improved.

No 3

Capital market development action plan

  • Abstract

    With a view to promoting a stable and competitive development of the Lithuanian capital market, attracting new investors and increasing the activity of existing investors, promoting and facilitating  the use of existing financial market instruments by the country's economic entities and their access to the financing instruments used in other countries, the Bank of Lithuania has drawn up a plan of measures for the development of the capital market that took into account  not only the proposals and problems identified by market players and investors, but also those identified by the Bank of Lithuania, and  its proposals as to how such issues could be addressed.

No 2

On the application of de-risking policy and the potential impact on financial exclusion

  • Abstract

    The analysis presents the results of a desk review carried out by the Bank of Lithuania, the aim of which was to assess whether the application of stricter anti-money laundering and counter-terrorism financing (AML/CTF) measures and de-risking policy by the payment service providers supervised by the Bank of Lithuania reduce the accessibility of payment services for various legitimate groups of users. 

    The views expressed are those of the author(s) and do not necessarily represent those of the Bank of Lithuania.

No 1

Feasibility study on the use of the account information service in optimising the provision of electronic money and payment institution data for supervisory services

  • Abstract

    The main objective of this feasibility study is to analyse an opportunity of implementing the optimisation of data management for supervisory purposes by means of the AIS service in observing the compliance of EMI and PI with the requirements for safeguarding client funds.

    As part of the drawing up of the study, the existing supervisory process of safeguarding of client funds which is currently applied by FMSS PMSD was analysed, the AIS service with respect to the AIS provider was described, the survey of the credit institutions and AISPs was conducted, legal and IT feasibilities were assessed and conclusions were provided. 

    Having performed the feasibility study, it was established that:

    the use of the AIS service to receive the supervisory information on client funds held by EMIs and PIs would be one of the possibilities to optimise the supervisory work of FMSS;

    integration of AIS service could be implemented in the short and long term: (a) in the short run, AIS service would ensure the provision of balances of EMI and PI client fund accounts and it could be achieved by means of minimum time limits and financial costs; (b) in the long run, AIS service would help access all information on the account which could be consolidated, processed and applied a cross-cutting analysis to be used for the achievement of the supervisory goals. To implement one of the AIS service integrations referred to herein, the Bank of Lithuania would need to allocate additional financing sources and human resources by involving other FMSS divisions as well;

    If the AIS service, for the purpose of receiving supervisory information, were used in such a way where the EMIs and PIs preserved the option for the Bank of Lithuania to provide relevant information through AISPs and EMIs and PIs were allowed choosing AISPs on their own, the changes in the current legal regulation would not be necessary;

    Consolidated information received from EMIs and PIs through AISPs could be currently stored and held in the existing information acceptance systems of the Bank of Lithuania;

    At the moment, when AIS service is used, FMSS has only limited possibilities to receive information on client funds held with EMIs and PIs on the accounts designed to safeguard client funds as the accounts of safeguarding of client funds in almost all credit institutions are not accessed via PSD2 API interfaces only because they are not classified as the payment accounts;

    Currently, credit institutions are investing and creating premium API interfaces on the market used for the AISPs to receive relevant information for an additional fee. It is estimated that such Premium API interfaces will emerge on the market in the second half of 2021; 

    This feasibility study may be continued having updated and supplemented information and having formed a joint working group from several divisions of FMSS. For this purpose, additional actions are suggested: (a) submit a question to the EBA Q&A and request that it drafts an explanation as to whether the accounts of safeguarding of client funds should be treated as the payment accounts and be accessed via PSD2 API interfaces; (b) monitor the changes undergoing on the market; (c) develop the position of the Bank of Lithuania or interpretation for FMPs based on the response received from the EBA so that they know exactly which accounts should be accessed via PSD2 API interfaces.

    This feasibility study presents the conclusions and recommendations on further actions of the Bank of Lithuania to ensure that both the Bank of Lithuania and FMPs are properly prepared for the application of the AIS service so that data needed for supervision are received, processed and analysed.

    The views expressed are those of the author(s) and do not necessarily represent those of the Bank of Lithuania.