Global Trustee and Fiduciary Services Bite-Sized Issue 1 2025

4 QUICK LINKS AIFMD CRYPTOASSETS EMIR FINTECH MIFID II/MIFIR MMF NBFI OPERATIONAL RESILIENCE SUSTAINABLE FINANCE/ESG ASIA IRELAND LUXEMBOURG NETHERLANDS NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 1 | 2025 EMIR EBA Publishes a No Action Letter on the Application of EMIR 3 On 17 December 2024, the Banking Authority (EBA) published a no action letter stating that competent authorities (CAs) should not prioritise any supervisory or enforcement action in relation to the processing of applications for initial margin (IM) model authorisation received as a result of the entry into force of European Market Infrastructure Regulation 3 (EMIR 3). The no action letter, developed in cooperation with the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA), applies until key deliverables mandated under EMIR 3 become applicable. The no action letter sets a registration process for counterparties in scope of IMmodel authorisation, specifying in its annex the information that counterparties should include as part of any first application submitted to CAs after the entry into force of EMIR 3, as well as for subsequent yearly updates to such application. As per the no action letter, however, CAs should not prioritise the processing of such applications, until the draft RTS on Initial Margin Model Validation (IMMV) and the guidelines on application and authorisation process mandated under EMIR 3 come into application, as those regulatory deliverables are expected to specify key requirements for the application and authorisation process, as well as for the assessment of model changes, which are missing at the moment. The EBA says that EMIR 3 requires that counterparties apply for authorisation to their CAs before using, or adopting a change to, a model for initial margin calculation. The application of validation and authorisation requirements for IMmodels may raise difficulties for CAs and counterparties immediately upon entry into force of EMIR 3. This situation will persist until the EBA has set up its central validation function and until the draft RTS on IMMV and the guidelines on application and authorisation process mandated under EMIR 3 are in place. The no action letter is addressed to all CAs and is applicable to all counterparties falling within the scope of IMmodel authorisation under EMIR 3. Link to the Letter here FINTECH US Treasury Releases Report on the Uses, Opportunities, and Risks of Artificial Intelligence in Financial Services On 19 December 2024, the U.S. Department of the Treasury (Treasury) released a report following the issuance of its 2024 Request for Information (RFI) on the Uses, Opportunities, and Risks of Artificial Intelligence (AI) in Financial Services, which summarizes key themes from respondent feedback and recommends several next steps. The report highlights increasing AI use throughout the financial sector and underscores the potential for AI – including Generative AI – to broaden opportunities while amplifying certain risks, such as risks related to data privacy, bias, and third-party providers. The report builds on Treasury’s work on AI-related cybersecurity risks in the financial sector, including its March 2024 report. The report outlines potential next steps to be considered by Treasury, government agencies, and the financial services sector. Specifically, the report recommends: • Continuing international and domestic collaboration among governments, regulators, and the financial services sector to promote consistent and robust standards for uses of AI in the financial services sector; • Further analysis and stakeholder engagement to explore solutions for any gaps in the existing regulatory frameworks, and to address the potential risk of AI causing consumer harm; • Financial regulators continue coordinating to identify potential enhancements to existing risk management frameworks and working with other government agencies to clarify supervisory expectations on the application of frameworks and standards, where appropriate;