1. What are the key regulatory frameworks that govern the banking and finance sector in France?

The key regulatory frameworks that govern the banking and finance sector in France are:

• European Union (EU) norms (directives transposed into French law or regulations which are directly applicable);
• French legal and regulatory framework, most of which is codified into the French Monetary and Financial Code (MFC);
• General Regulations of the Autorité des marchés financiers (AMF) (GRAMF);
• Positions and guidelines published by the competent regulators (for instance, at the EU level: the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA); at the French level: the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and the AMF); and
• Guidelines or rules of good conduct published by professional associations.

2. How does the French legal system facilitate foreign investment and transactions within the banking and finance industry?

One of the key principles of the EU is the free movement of capital, which namely aims at eliminating obstacles to cross-border investments and payments within the EU, including France. In addition, freedom to provide services on a cross-border basis within the EU and freedom of establishment are also considered by the EU as crucial for the completion of the EU internal market.

In the EU banking and finance industry, such freedoms are regulated by EU directives that enable regulated services providers located in an EU member state (credit institutions, investment service providers, investment funds managers, payment service providers, etc) to provide services in other EU member states (such as France) through the regime of freedom of establishment (by establishing a branch in the relevant EU member state) or the regime of freedom to provide services, under some conditions.
If located in a third country, regulated services providers cannot carry out their activities in France, unless they are duly authorised by the competent French regulator (ACPR and/or AMF).

Credit institutions and investment firms incorporated under foreign law may also open a representative office and have a physical presence in France. This status is limited to information, liaison and representation assignments and representative offices in France must not carry out regulated operations.

3. Could you explain the recent changes or updates in French financial regulations that impact the operations of banks and financial institutions?

Among other important changes in French regulations, sustainable finance regulation has become a key issue impacting the operations of banking and financial institutions and is being implemented progressively since 2021, in particular with the entry into force of Regulation (EU) 2019/2088 (SFDR).

The SFDR defines two new categories of products with extra financial characteristics: (i) products that promote environmental and/or social characteristics; and (ii) products that have sustainable investment as their objective and includes new obligations regarding the information to be provided by portfolio management companies and the incorporation of their extra-financial approaches in their communication.

The SFDR has also an impact on investment advisers, which must now take into account investors’ preferences in terms of sustainability of their investments.

4. What role does the Autorité des Marchés financiers (AMF) play in regulating financial markets in France?

The AMF regulates participants and products in France’s financial markets. It regulates, authorises, monitors and, where necessary, conducts investigations and issues sanctions through the Enforcement Committee to individuals or legal person whose practices violate laws and regulations and fall within the AMF’s jurisdiction. In addition, it ensures that investors receive material information, and provides a mediation service to assist them in disputes.

The AMF’s remit is to ensure that (i) savings are protected when invested in financial instruments that give rise to a public offer or admission to trading in financial instruments and in all other investments offered to the public, (ii) investors are properly informed, and (iii) the smooth operation of financial markets.

5. How do French laws address issues relate to consumer protection in financial services and products?

The French legal framework includes specific and additional requirements that apply to banking or financial service professionals in business relationship with consumers. For instance, financial and banking solicitation of consumers (démarchage bancaire et financier) is subject to strict requirements. Such requirements include notably: (i) the obligation for the service or product providers to gather information in relation to the financial situation, experience and investment goals of consumers; (ii) the obligation to communicate clear and understandable information that is relevant for decision making; (iii) the right of withdrawal; (iv) data protection; and (v) mediation services.

French laws also empower regulatory bodies, like the ACPR and the AMF, to enforce consumer safeguards.

In addition to this specific protection, consumers also benefit from the general consumer protection regime in France. This regime applies, in particular, to consumer credit, mortgage credit, and all financial services provided remotely to consumers.

6. Can you provide insights into the legal challenges and opportunities brought about by innovations like fintech and digital banking in France?

The main legal challenge for fintech companies is that regulated activities must be conducted by regulated entities. The process of obtaining authorisation from the ACPR or the AMF being generally time-consuming and costly, it prevents many fintech startups from developing certain business models as soon as part of their business model is subject to the regulator’s authorisation.

Further, since France does not have per se a specific approach regarding fintech’s regulation and that the regulatory framework to which a fintech company may be subject depends on the specific activities it carries out, fintech companies developing new types of products or services could face situations of ambiguity and legal uncertainty.

Still, both French legislators and regulators have adopted a welcoming attitude, and we are witnessing the emergence of several well-established players, especially in areas such as mobile payments, personal fundraising applications, neobanks, digital meal vouchers, crowdfunding platforms, robo-advisers, or insurtech. The future also holds a multitude of opportunities through innovative use cases such as decentralised finance (DeFi), non-fungible tokens (NFTs), tokenisation of assets or enhancements to existing functions like cross-border payments and securities settlement.

7. What are the legal requirements and procedures for obtaining banking licences or authorisations to operate in the French market?

Under French law, banking services include: (i) receiving funds from the public; (ii) granting loans; and (iii) providing banking payment services.

There are several types of licences and authorisations, depending on the type of business carried out by the relevant institution, each regime being subject to a different procedure and legal requirements. The main licences and authorisations are granted for credit institutions, investment firms, finance companies and payment/electronic money institutions.

Applications for banking licences or authorisations must be submitted to the ECB or the ACPR. When issuing licences or authorisation, regulators review whether certain conditions are met including notably minimum capital requirements, governance requirements, adequacy of the form of the legal entity and of the programme of operations, technical and financial means, robustness of shareholders and other equity providers or guarantors.

8. How does French law address anti-money laundering (AML) and combating the financing of terrorism (CFT) in the banking and finance sector?

AML/CFT rules applicable in France derive from EU legislation and in particular Directive (EU) 2015/849 (as amended) and implemented into French law by various ordinances, decrees and orders.

Such rules apply to any professional in the French banking and finance sector.

The main provisions to address AML/CFT in the banking and financial sector include the implementation by obliged entities of due diligence obligations towards their clients, internal control systems, ongoing monitoring, implementation of internal procedures to comply with AML/CFT standards and reporting obligation to the French financial intelligence unit (TRACFIN).

9. In what ways has Brexit influenced the legal landscape for international banks and financial institutions operating in France?

Banks and financial institutions which were located in the United Kingdom were operating in France under the EU passport regime which allows banking and financial institutions based in one EU member state to market their products and services throughout the European Union.

After Brexit, British banks and financial institutions cannot rely on the EU passport. They are no longer able to carry out banking and financial activities in France under the passport regime unless they decided to transfer their activities to the territory of an EU member state before Brexit.

However, the AMF and the ACPR managed to facilitate the authorisation process for British institutions that operated in France before Brexit and set up in 2016 a ‘welcome programme’ that enabled British institutions to benefit from a fast-track pre-authorisation process with the AMF and the ACPR.

10. Could you elaborate on the dispute resolution mechanisms available to parties involved in banking and finance matters in France, including arbitration and litigation?

Both the AMF and the ACPR propose mediation services through the AMF ombudsman, credit mediation service of the ACPR and mediation service of the Banque de France. Such services are free of charge.

Moreover, some financial institutions may rely on professional associations of which they are members to set up a mediation service for their clients.

Failing these procedures, the usual remedies are possible with the competent courts (commercial court or tribunal judiciaire, depending on the case).

I actually started practising law in California, way back in the dark ages. I moved over here for two years, and I’ve been here ever since. I never really intended to be a lawyer in London at all. My lifetime ambition was to be a criminal lawyer in Baltimore. My early career could be characterised as wanting to work at a big law firm in a big city before I would go back to a smaller city and a very different law practice. As you can see, all that planning never really turned out. I haven’t touched a criminal case in a very long time.

I joined Morrison Foerster over four years ago because I was aware of a number of changes in the market. One of the changes was that the whole world of tech was for 50 years an equity story. The tech industry did not really look to the debt markets, it looked to equity rounds. What changed was that people were delaying IPO-ing so all of a sudden you had these very large private tech and IP companies, which we now call unicorns. These companies had matured, and they needed debt finance.

Sometimes these companies can access traditional debt finance but there were also new areas developing such as recurring revenue financing. These are usually for companies that do not have a positive cash flow so, on a traditional metric, you would not lend to them. However, because they have sticky revenue – usually subscription revenue such as for software – which is highly likely to come in, people are willing to lend against that. I thought that was a very interesting trend, which will continue for the next 15 years or so. MoFo allowed me to do the big-ticket leveraged finance, but also to get in on these new trends and developments and to help shape those markets.

I’ve been lucky in my career because people have often come to me when there has been something novel to be done. I’ve been involved in coming up with structures that are now commonplace in the market. One of the things I love about what I do is I learn something every day. This is not a practice where you can learn it then sit back and go through the motions.

My father cut his teeth as a lawyer in the 50s doing civil rights work in Baltimore, back before it was fashionable. He used to get death threats, but it was interesting work because every other case had constitutional issues. That’s why I wanted to be a lawyer, and it’s why I wanted to do criminal law. I do still sometimes regret that I didn’t do criminal law in Baltimore but I’m very happy here and I have had a good career, so I’ve got no complaints.

I would have loved to be a heavy metal guitarist. Even if I had had the opportunity the talent probably wasn’t there though. I was always interested in science and if I hadn’t done law, I probably would have ended up doing immunology, working on cancer.

My management style is collaborative. I like mentoring and doing things as a team. I do not think star culture is good. I think a lot of ‘stars’ are, you might say, creaming the work and contribution from other people and getting the benefit without giving the credit.

My team would probably describe me as slightly eccentric. I collect scientific instruments and hand tools. I can’t work too effectively in a quiet room, so I almost always have music playing and the more tired I get the heavier the music gets. There are some people who have walked into my room and heard AC/DC or Guns N’ Roses playing and said: ‘You know, I think I’ll come back later.’

One of the things I’m very proud of is that throughout my career I’ve identified a lot of extremely talented lawyers, including a number of the current market leaders in London. I’ve helped them to get their own practices and stand on their own two feet. Some of them have even become competitors of mine, but that’s part of my job. It’s what I’m most proud of and frankly it’s what I enjoy most about the practice of law.

What does it take to be a great finance lawyer? In my area everybody is working towards a common goal. The best finance lawyers understand, whichever side they’re on, that there is a common goal, which is to get the deal done on effective terms. Obviously, there’s the part, which is adversarial, you have to negotiate things that the other side doesn’t want to do, the fees, the pricing and all of that. But it’s a combination of being adversarial and collaborative, and that’s something I really enjoy and it’s critical to being a finance lawyer.

Would I do anything in my career differently? Well, yes. My business plan was stupid! Coming to London, which is one of the most competitive legal markets in the world, I had the wrong legal qualification and I wanted to do acquisition finance, which at the time was dominated by the Magic Circle. Somehow over the years I managed to make it work, including by locally qualifying, and I was lucky enough to get in on a lot of market developments in leveraged finance.

Among other things, I did the first pari-passu bank/bond deal in Europe. I also did the first super senior revolving credit facility in Europe, and the first western style LBO in Russia.

Once we were doing a very large LBO acting for the banks. Part of the consortium that was seeking to buy this public company was a very prominent, very rich, and very well-known industrialist. The negotiations were getting very difficult on a commercial point, and the investment adviser for the borrower came into the room. They told us that the head of our client had conceded a point on a call with their client. I had an MD from the bank in the room with me and he said we needed to find out whether this was true as it was quite a material business point. After consulting with our client – which was not so easy to do as finance lawyers don’t normally speak with the CEO of a major international bank on deal work, it turned out he hadn’t conceded anything.

What had actually happened was our client had got a call from the guy and he said: ‘You and I are old friends.’ Our client said: ‘Absolutely’. He then said: ‘We always see the same, don’t we?’. Our client again replied: ‘Absolutely.’ That was the entire conversation, and he hadn’t given up anything on any deals. So, we went back to the investment adviser for the borrower and said we’d checked it with our client, and he didn’t concede anything. That was a unique moment.

My greatest inspiration was my father. In the early days of his career what he did was very brave. Acting for the black militant groups in Maryland in the 50s and 60s was extremely unpopular. However, it was hugely interesting, and he had a great career. It’s what got me interested in becoming a lawyer. The rest of my family also has been a great influence, I have great kids.

The biggest influence on my practice as a lawyer was Matt Kirby. He was the partner in charge of the department that I started with in California, and Matt was a very prominent acquisition finance lawyer. What I learnt from him is you have to decide what is important and what isn’t important and focus on what is important. It’s something I’ve noticed many lawyers don’t do, and they have successful careers, but the best lawyers I think get that.

In terms of doing the legal work, work from home actually works very well. Where it’s less effective is when it comes to training young lawyers and for marketing. I find the formal presentations you do over Zoom just don’t sink in the same way as on-the-job training does so young lawyers miss out on that. Learning how to negotiate, learning how to speak to the other side, a lot of the soft skills that are critical for lawyers.

I’ve been desperately trying to learn English. However, I’ve never managed to do that, so I still speak American. I guess I’m bad at foreign languages.

I’m generally regarded as having awful taste in films. To me, a film with somebody like Jean-Claude Van Damme or Jason Statham is a great film. I would say the best two films I’ve seen over the last five years are the first John Wick film and a film called Nobody made by the producer of John Wick. However, I thought the third John Wick film was terrible. It was sort of like a ballet. It was just several hours of choreographed movement, and instead of dancing it was people shooting each other.

Right now, I’m reading a biography of John Donne who was an Elizabethan poet. Before I started that book, I had just finished a Jack Reacher novel. I have catholic tastes.

I like to mountain climb. A bittersweet moment was getting within 100 meters of the top of Mont Blanc and frustratingly having to turn back because the guy I was climbing with started having breathing difficulties, so we had to make a very quick descent. We were basically there; another half an hour and we would have been at the top.

My guilty pleasure is collecting my scientific instruments and tools. That’s how I treat myself. Turning off my background on Teams is beyond my technical knowledge but if you could see behind me, you would see a bunch of telescopes. In the bookshelves around me there are lots and lots of scientific instruments: electrostatic machines, microscopes and then a whole bunch of hand tools from the 19th century.

Chris Kandel is a partner at Morrison Foerster’s London office. He advises on leveraged, special situations and acquisition finance and restructuring matters under both English and US law.

1. What types of banking and finance law cases do you typically handle in Kuwait?

Typical cases include debt recovery, fraud and financial crimes, contractual disputes, dispute resolution, and banking regulations.

2. How do banking and finance laws in Kuwait differ from those in other Gulf Cooperation Council (GCC) countries?

All banks operating within Kuwait are subject to the supervision of the Central Bank of Kuwait (CBK), while the Kuwait Capital Markets Authority exercises supervisory authority over all Kuwaiti entities (including banks and financial institutions) which are listed on Boursa Kuwait or engage in ‘Securities Activities’ in Kuwait (as defined in the Kuwait Capital Markets Law and the Bylaws thereto). Kuwait is a member of the GCC, and as such a member it shares certain similarities in banking and finance laws with other GCC countries. As always, however, there are variations and nuances which are specific to Kuwait and, among others, relate to items such as regulatory frameworks, capital requirements, anti-money laundering, investor protection, and listing and trading.

3. Can you explain the impact of Sharia law on Kuwait’s banking and finance sector?

Kuwait follows the civil law system. The Kuwaiti Constitution of 1962 provides for an independent judiciary, and Law No. 19 of 1959 (amended in Law No. 19 of 1990) regulates the organisation and functioning of the judiciary. The legal system comprises the Civil Code, the Commercial Code, the Penal Code, and the Code of Criminal Procedure, contained in Law No. 17 of 1960. However, Article 2 of the Constitution provides that Islamic Sharia forms a major source of legislation, but it does not prescribe for the strict adherence to the principles of Sharia.

4. How have recent changes or updates in Kuwaiti law affected banking and finance operations?

The CBK introduced a regulatory framework for fintech companies. Kuwait also passed the Electronic Transactions Law, which recognised the legal validity of electronic transactions and provided a framework for electronic signatures, documents, and communications. In addition, amendments have been introduced into the Kuwait companies law, which included provisions related to corporate governance, transparency, and disclosure requirements for companies operating in Kuwait.

5. How does the Central Bank of Kuwait’s regulation affect day-to-day banking operations and how do you, as a lawyer, navigate these regulations?

1. Compliance – The CBK regulations, instructions and directives set out specific requirements with which banks and financial institutions (under its supervision) must be in compliance with at all times.
2. Licensing and registration – The CBK regulates the licensing and registration of banks and financial institutions (under its supervision) in Kuwait.
3. Prudential regulations – The CBK establishes prudential regulations that regulate aspects such as capital adequacy, liquidity management, credit risk, concentration risk, interest rate caps, corporate governance etc.
4. Consumer protection – The CBK places importance on consumer protection in the banking sector. It issues regulations and guidelines to safeguard the rights of customers and ensure fair practices by banks.
5. Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) – The CBK enforces AML and CFT regulations to prevent illicit financial activities.
6. Enforcement actions and disputes – In case of regulatory violations or disputes involving the CBK, lawyers may represent clients in regulatory investigations, enforcement actions, and disputes resolution procedures.

6. Can you explain the process of starting a new banking institution in Kuwait? What legal obstacles might one expect to encounter?

Kuwaiti banks should all take the form of a Kuwait joint stock company (KSC). The share capital required to incorporate a bank is KD 75 million. If an entity wishes to acquire more than 5% of the share capital of a Kuwait bank, it requires the approval of the CBK prior to such acquisition. Indeed, according to Article 57(2) of the Kuwait Banking Law, the direct and indirect ownership of a single entity in a Kuwaiti Bank shall not exceed 5% of the bank’s capital. The share capital required for a branch of a foreign bank is much less (KD 15 million) and there are no shareholding restrictions. Before it can obtain a commercial licence from the Ministry of Commerce and Industry, a bank needs to obtain a banking licence from the CBK. The CBK licence is obtained after the Ministry of Finance approves the application of a bank. A bank cannot start providing services until it is registered in the Register of Banks at the CBK. Legal obstacles one may encounter when starting a banking in Kuwait include, a) a complex regulatory environment, b) capital requirements, and c) the appetite for the CBK to allow new banks to be established in Kuwait etc.

7. How are disputes typically resolved in banking and finance cases? Are they often settled out of court, or do they usually go to trial?

Banking and finance disputes in Kuwait are capable of being resolved through various methods, including both out-of-court settlements and court proceedings. The specific approach depends on the nature and complexity of the dispute, as well as the commercial preferences of the parties involved. Some of the common methods of resolving banking and finance disputes in Kuwait include the following: negotiation and settlement; mediation; arbitration; and litigation. Ultimately, the choice between settling out of court or going to trial depends on factors such as the complexity of the dispute, the desired outcome of the parties, the legal merits of the case, and the costs and time involved in each option.

8. How do you handle cases of alleged financial misconduct or fraud? What legal remedies are typically pursued?

Such matters are typically handled through the Kuwait court system. The primary legislation governing financial crimes and fraud in Kuwait is the Kuwait Penal Code (Law No. 31 of 1970). This law outlines the powers and responsibilities of the Public Prosecution in investigating and prosecuting criminal offences, including financial crimes. When a case of alleged financial conduct or fraud is reported, the Public Prosecution initiates an investigation to gather evidence and determine whether there are sufficient grounds to proceed with a criminal case. The investigation may involve collecting documents, interviewing witnesses, and conducting forensic audits, among other methods. If the Public Prosecution finds evidence to support the allegations, it may file criminal charges against the accused individuals or entities. The case is then referred to the appropriate court, generally the criminal court, where the legal proceedings take place. During the trial, both the prosecution and defence present their arguments and evidence. The court examines the evidence, hears witness testimonies, and considers legal arguments before reaching a verdict. If the court finds the accused guilty of financial misconduct or fraud, it will impose appropriate penalties, which may include fines, imprisonment, or both, depending on the severity of the offence. In addition to the criminal proceedings, victims of financial misconduct or fraud may pursue civil remedies to seek compensation for any damages they have suffered.

9. In light of the global economic situation and its impact on Kuwait’s economy, what trends or changes do you anticipate in banking and finance laws?

Some of the anticipated trends and changes in banking and finance laws include, among others, the following: increased regulatory scrutiny; further digital transformation and fintech integration; focus on cyber security and data protection; sustainable finance and ESG considerations; and international regulatory co-operation.

10. What would be your approach to a case where international banking laws conflict with Kuwaiti laws? How would you navigate such a situation?

Clearly identify the areas of conflict and understand the nature and extent of the differences. Specialist legal counsel from both Kuwait and the relevant foreign jurisdiction would need to be obtained so as to evaluate the conflict, interpret relevant laws, and provide guidance on the potential implications. The hierarchy of laws and legal frameworks also requires analysis. This process would include the determining of whether or not there are any international agreements, treaties, or conventions that may provide a basis for resolving conflicts between international and Kuwaiti law. Specific to Kuwait, it will also be important to understand the positions and requirements of relevant regulatory authorities in Kuwait (eg, those issued by the CBK), as this will aid in the determining of their stance on conflicts between international and domestic laws. It would also be helpful to develop strategies to mitigate the conflict and align with both international and Kuwaiti laws to the extent possible. This may involve engaging in dialogue with regulatory authorities and seeking their guidance or approval, structuring transactions to comply with local laws, or exploring alternative approaches that balance the competing legal requirements.

1. Could you provide an overview of the licensing and registration requirements imposed by the Monetary Authority of Singapore for foreign financial institutions seeking to establish a presence in Singapore?

Foreign financial institutions looking to establish a presence in Singapore must consider a range of licensing and registration requirements based on their intended business activities. The Monetary Authority of Singapore (MAS) is the singular regulatory authority overseeing the financial services sector in Singapore, and regulates and supervises financial institutions and their operations in Singapore.

Financial institutions seeking to establish a bank in Singapore would need to be licensed under the Banking Act 1970 (BA). Under the BA, there are two types of bank licences; full bank licences and wholesale bank licences. Full banks may engage in the full range of banking business permitted under the BA, including deposit taking, cheque services and lending. Wholesale banks may engage in the same range of banking business as full banks, but may not carry out Singapore-dollar retail banking activities.

Apart from these bank licences, the BA also provides for merchant bank licences. In 2019, the MAS announced the issuance of digital full bank licences and digital wholesale bank licences, with a limited number of such licences granted to successful applicants. Foreign applicants seeking such digital bank licences in Singapore must form a joint venture with a local company and the joint venture must meet the MAS’ headquarter and control requirements.

Non-bank foreign entities interested in conducting money lending business in Singapore would require a licence under the Finance Companies Act 1967 or a licence or exemption under the Moneylenders Act 2008.

There are licensing frameworks for other finance-related activities as well. For instance, financial institutions involved in the provision of payment services (as defined in the Payment Services Act 2019) and conduct of regulated activities (as defined in the Securities and Futures Act 2001) including the provision of capital market services will require a licence or exemption from the MAS for the conduct of such activities.

2. What legal challenges might arise for UK companies engaging in cross-border financial transactions, and how can they be addressed?

Singapore’s legal system is based on English common law, with key areas like contract law, property law and private international law being largely judge-made. Singapore is also party to the New York Convention and the 2005 Hague Convention on Choice of Courts Agreement, so arbitration awards and foreign judgments obtained from member countries to these conventions are generally enforceable in the Singapore courts. Hence, for UK companies engaging in cross-border financial transactions in Singapore, the legal challenges may be less daunting.

Nonetheless, there may still be local law issues specific to the transaction in question to be considered, which may include the following:

• restrictions, regulatory approval or registration requirements, and the feasibility and timeline for obtaining and complying with such approval and/or registration requirements;
• stamping, registration and perfection requirements in relation to the obtaining of a guarantee or security from a local security provider, or over local assets, and the timeline for the compliance with such requirements;
• financial assistance implications, if any, on the proposed financing or provision of security; and
• preferred governing law and dispute resolution mechanisms.

Hence, it would be advisable to seek local counsel advice at the earliest opportunity to flag out the legal issues and challenges that may arise in connection with such cross-border financial transactions, so that these can be properly considered and addressed before parties proceed with the transaction.

3. What mechanisms are available in Singapore for resolving banking and finance-related disputes? How can UK general counsel best represent their company’s interests in such dispute resolution proceedings, considering potential cultural and procedural differences?

The usual dispute resolution processes, litigation and arbitration, and alternative dispute resolution processes, such as mediation and neutral evaluation, are available in Singapore for resolving banking and finance-related disputes.

Most banking and finance-related disputes are litigated through the Singapore courts, which are familiar with the usual banking terms and conditions. There is a well-established body of case law for such disputes in Singapore. Arbitration is sought when there are issues which require confidentiality, or if enforcement of arbitral awards is easier in a foreign jurisdiction than a court judgment.

The unique institutions in Singapore through which disputes are resolved include the Singapore International Commercial Court (SICC) and the Financial Industry Disputes Resolution Centre (FIDRec). The SICC would be of particular interest to UK companies engaging in cross-border financial transactions, and FIDReC would be of particular interest to UK companies looking to establishing digital banking services in Singapore. We elaborate briefly on each of these institutions.

The SICC is a division of the General Division of the High Court of the Republic of Singapore, created to deal with international commercial disputes. Two features of the SICC which makes it different from the other local courts are that:

1. the SICC’s panel of judges comprise specialist commercial judges from both civil law and common law traditions, including retired UK judges; and
2. foreign lawyers registered with the SICC may, in certain circumstances, represent parties before the Court.

The FIDReC was launched as part of an initiative by the Monetary Authority of Singapore, to create a one-stop centre for the resolution of retail banking disputes between consumers and licensed financial institutions. It offers a more affordable alternative dispute resolution scheme, where external counsel are not permitted to appear on behalf of the parties. There is a jurisdictional limit of S$100,000 per claim for adjudicated disputes, but there is no jurisdictional limit for mediated disputes. For an adjudicated dispute, the outcome is not binding on the consumer although binding on the financial institution.

Local counsel advice would be helpful to UK general counsel, particularly on issues concerning procedure and jurisdiction of the above-mentioned institutions to hear the dispute. Ideally, such advice should be sought before contracts are entered into, so that the available dispute resolution mechanisms are properly considered, and suitable mechanisms are adopted by the parties. When engaged in dispute resolution proceedings, local counsel advice would also be helpful to navigate potential procedural pitfalls. Their industry knowledge, including their familiarity with the relevant regulators, will be helpful to UK general counsel looking to best represent their company’s interests.

4. What legal considerations should UK companies be mindful of when collaborating with Singaporean fintech partners or establishing digital banking services in Singapore?

First, UK companies should ensure that their Singapore partners have all necessary licences from the MAS and that their collaboration would not infringe any licence conditions. Generally, the provision of payment services (as defined in the Payment Services Act 2019), regulated activities (as defined in the Securities and Futures Act 2001), and the conduct of banking business (as defined in the Banking Act 1970) will require a licence or exemption from the MAS.

Second, UK companies should be aware that Singapore takes a very strict approach to AML/CTF, and fintech companies are not exempted. Parties should clearly delineate their respective roles and responsibilities in relation to AML/CTF compliance. More generally, foreign companies should be aware that fintech regulation in Singapore is evolving rapidly and they should prioritise staying up to date.

Third, the collaboration agreement should set out clearly and comprehensively the scope of the collaboration. Careful drafting of the commercial terms (including intellectual property provisions) is strongly recommended. UK companies should also address any personal data, data privacy, and cyber security issues that may arise under the Personal Data Protection Act 2012.

Fourth, UK companies should note that the MAS considers certain types of contracts to be contracts for ‘outsourcing’ of business activities to service providers. If their Singapore partners are regulated by the MAS, the partners may require the insertion of a comprehensive set of clauses in order to comply with the MAS Guidelines on Outsourcing.

5. How does Singapore address anti-money laundering (AML) and counter-terrorism financing (CTF) requirements for financial institutions? What role should general counsel play in ensuring their organisation’s compliance with these obligations?

The Monetary Authority of Singapore (MAS) operates as the principal AML/CTF watchdog in Singapore, providing guidance and issuing AML/CTF notifications, guidelines and guidance to financial institutions outlining their responsibilities concerning AML/CTF requirements which include risk assessment and mitigation, ‘know your customer’ (KYC) (including beneficial owners) due diligence checks, record keeping and suspicious transaction monitoring and reporting.

The MAS also engages industry players on emerging risks, evolving criminal typologies and industry best practices. This is exemplified by COSMIC (Collaborative Sharing of Money Laundering/Terrorism Financing (ML/TC) Information & Cases), a digital platform that the MAS has proposed to establish and maintain to enable secure information sharing among major banks to identify potential financial crime concerns in customers displaying multiple ‘red-flags’. This is set to be rolled out in phases, starting from the second half of 2024.

Additionally, the MAS expects financial institutions to stay updated with AML/CTF information releases on high-risk jurisdictions and guidance papers by international bodies, including the global Financial Action Task Force.

The Financial Services and Markets Act 2022 (FSMA) was recently enacted in Singapore as an omnibus legislation for the sector-wide regulation of financial services and markets. Under the FSMA, the MAS can issue regulations to discharge Singapore’s international obligations binding on Singapore by virtue of a decision of the UN Security Council, as well as regulations on prevention of money laundering and terrorism financing. Non-compliance with the MAS regulations under FSMA can result in fines of up to S$1m per offence or revocation of licence issued under certain legislations such as the Banking Act 1970. Financial institutions must also adhere to anti-terrorism financing obligations outlined in the Terrorism (Suppression of Financing Act) 2002.

Given that breaches of the MAS’ AML/CTF regulations can lead to hefty fines and even licence termination, general counsel should ensure that they keep up to date on the latest AML/CTF regulations published on the MAS’s website, and work closely with the management teams of financial institutions to ensure that stringent internal controls and processes are in place to enable the financial institutions to comply such AML/CFT regulations, and ensure that there are proper AML/CTF audit and training provided to the employees. Clear criteria for escalating issues to management, along with proper documentation and tracking, will ensure effective discharge of these obligations.

6. In light of the growing importance of sustainable finance and ESG considerations, what are the unique ESG-related regulations and expectations that UK companies operating in Singapore’s financial sector should be aware of? How can general counsel support their company in integrating ESG principles into their operations?

UK companies in Singapore’s financial sector should be aware of the following ESG-related guidelines and regulations. General counsel, alongside management teams, can support integration of ESG principles through stakeholder engagement and employee training.

MAS guidelines

The MAS has issued the Environmental Risk Management Guidelines across the banking, insurance, and asset management sectors. These guidelines set out the MAS’ expectations on environmental risks management, and cover governance and strategy, risk management and disclosure of environmental risk information across all these sectors, with additional focus areas for the insurance sector (being underwriting and investment) and asset management sector (being research and portfolio construction, and stewardship).

Sustainability reporting standards

From the regulation perspective, UK companies listed on the Singapore Exchange (SGX) must disclose their ESG-related practices and performance in sustainability reports. From 2023, per the recommendations of the Task Force on Climate-related Financial Disclosures, the SGX will progressively tighten reporting practices. Sustainability reports by listed companies operating in the financial sector must now include climate reporting on a ‘comply or explain basis’. Moving forward, the ‘comply or explain basis’ will be removed and climate reporting will become strictly mandatory.

Others

ESG considerations involve engaging stakeholders (eg, shareholders, customers and the community), and UK companies should have strategies for meaningful engagement on ESG matters. Separately, ESG infrastructure can be set up within the company for capacity building and training on sustainability knowledge and market practices. General counsel should stay updated on any additional sector-specific ESG-related regulations, sustainability principles and guidelines and aligning legal documents with industry expectations.

7. What is Singapore’s position on transition finance, and is there currently any regulatory framework to develop and govern such transition finance in Singapore?

Singapore is supportive of transition financing, but there is currently no specific regulatory framework to promote or govern such transition financing which remains a nascent area of development. The MAS has, however, launched the Finance for Net Zero (FINZ) Action Plan 2023 which sets out the MAS’ strategies to mobilise financing to catalyse Asia’s net zero transition and decarbonisation activities in Singapore and the region. Through the plan, the MAS seeks to achieve the following outcomes:

• Data, definitions and disclosures: A promotion of consistent, comparable, and reliable climate data and disclosures to guide decision making by financial market participants, and safeguard against greenwashing risks.
• Climate resilient financial sector: Engagement of financial institutions by fostering sound environmental risk management practices and deepening climate scenario analysis and stress testing to identify climate-related financial risks by incorporating evolving international best practices in the supervision of financial institutions’ transition planning.
• Credible transition plans: To support financial institutions’ adoption of science-based transition plans, the MAS will engage international partners to support the development of credible regional sectoral decarbonisation pathways.
• Green and transition solutions and markets: A promotion of innovative and credible green and transition financing solutions and markets in support of decarbonisation efforts and climate risk mitigation.

Following on from the above, the MAS announced in June 2023 its intention to set supervisory expectations to steer transition planning processes of financial institutions (FIs) to facilitate credible decarbonisation efforts by their clients. The guidance on transition planning will cover FIs’ governance frameworks and client engagement processes to manage climate-related financial risks and enable transition in the real economy towards net-zero. A consultation paper is expected on this later this year.

The MAS, together with the financial industry, also intends to establish the Singapore Sustainable Finance Association (SSFA) to build a vibrant ecosystem for green and transition finance. The SSFA will initially focus on initiatives to scale voluntary carbon markets, transition finance and blended finance.

The MAS is also in the process of establishing the Singapore-Asia Taxonomy to, among others, encourage the flow of capital to support the low carbon transition needed to avoid catastrophic climate change.

8. What is the role of the Singaporean courts and regulatory bodies in overseeing the banking and finance sector? How can UK general counsel effectively engage with these entities to ensure their company’s interests are protected and advocated for within the Singaporean legal system?

In Singapore, the MAS is the primary regulator for the banking and finance sector. Its role encompasses overseeing the banking, insurance and capital markets sectors, and striving for a robust financial industry through supervision and developmental initiatives. The MAS focuses on the overall financial system’s stability and the health of individual financial institutions. Through collaboration with stakeholders, including financial institutions and their boards and managers, the MAS aims to manage and mitigate risks effectively in Singapore’s finance sector.

The MAS regularly consults with, and seeks feedback from, industry players, the public, lawyers and general counsel. For instance, in 2019, the MAS sought feedback on revising risk-based capital and leverage ratio requirements to align with Basel III reforms. More recently in 2021, the MAS issued a consultation paper to financial institutions, law firms and financial companies seeking feedback on a proposed regulatory framework for financial institutions to share risk information to combat financial crimes through a secure digital platform named COSMIC. These insights shaped the proposed 2023 Financial Markets and Services (Amendment) Bill setting out the legal groundwork for the establishment of this digital platform while seeking to safeguard banking secrecy and protect the interest of legitimate bank customers.

Singapore courts work in tandem with the MAS by ensuring the laws and regulations relevant to Singapore’s banking and finance sector are enforced in accordance with Singapore’s legislature’s intent, with the overriding principle of upholding Singapore’s rule of law.

Therefore, the constant opportunities for open dialogue with regulatory authorities in Singapore through feedback sought from time to time promotes a culture of meaningful engagement and candour that UK general counsel should capitalise on to ensure that their company’s interests are well protected and advocated for within the Singaporean legal system.

The authors would like to acknowledge directors Ron Cheng, Priscilla Wang, May Ng and associate director Yap En Li for their contributions to the responses in this article.

Why did you want to become a lawyer and what drew you to the financial services regulatory side?

As much as the law itself, it was the draw of international work that led me to the City and to Herbert Smith, as it was then. I had read languages at university and was excited about the prospect of working on high-profile international matters.

I wasn’t disappointed: at the outset of my career, I worked on matters relating to the fallout from the banking failures of the 1990s – BCCI and Barings.

The insight those matters gave me into banking regulation and the operation of banks meant that, when the Financial Services Authority was established in 2001, I naturally gravitated towards regulatory matters relating to financial institutions.

You’ve worked both in-house and in private practice – what made you want to switch from one to the other? Do you have a preference?

Following a very enjoyable and fulfilling secondment, I took up a permanent in-house position at Lloyds Banking Group in 2007.

Working in a retail bank, I loved being directly involved in the application of regulation on people’s everyday lives. The other things I learned a lot about in-house were leadership and the importance of team spirit, not least through the global financial crisis in 2008.

During my time in-house, I enjoyed working with a number of law firms, but when I decided to return to private practice in 2010, I didn’t hesitate to take up the opportunity to come back to Herbert Smith Freehills.

I have always enjoyed problem solving, which I consider to be at the core of what we do as lawyers; this has been true both of what I did in-house and continue to do in private practice.

You’ve spent your entire private practice career, from trainee to global practice head, at Herbert Smith Freehills – what makes the firm special to you?

As a firm, Herbert Smith Freehills has a stated ambition to be the leading international firm for diversity and inclusion. It’s something that’s led from the top and is core to who we are.

As such, there isn’t an HSF ‘type’ and so, although I didn’t come from a traditional City law firm background, from day one, I was surrounded by people who respected each others’ differences. I am grateful to many senior partners (past and present) who believed in me and helped me believe in myself.

How has your day-to-day workload changed since becoming practice head? Was a leadership position always your goal?

I am immensely proud to lead our global financial services practice. My role involves facilitating connections and assisting our teams with supporting clients and growing practices regionally and globally. We have a simply brilliant global team, whose energy, innovative spirit and collaborative, client-focused mindset inspires me every day and makes leadership a pleasure.

I am fortunate to be able to divide my time between leadership and a busy personal practice, continuing to work with interesting clients to solve knotty problems.

What have been the top investigations of your career so far, and why?

My matters tend to be confidential. I get great satisfaction from completing an investigation – it’s a bit like a jigsaw, you start with lots of jumbled pieces. The difference between a jigsaw and an investigation though is that, with an investigation, the picture at the end is rarely the one you thought it would be at the beginning.

And which case has been the most memorable for the wrong reasons?

A big frustration in my job is the length of time it takes for the FCA to complete an investigation. While this is frustrating for financial services firms, it is particularly acute when an individual is under investigation. Their lives can be on hold while the FCA investigates. The statistics show that the vast majority of investigations into individuals close with no formal enforcement action, and it is not always clear that sufficient thought has been given to the appropriateness of those investigations taking place or to the timeliness of communicating discontinuance, where that is the conclusion reached.

What are the best and worst aspects of life as a City lawyer?

That no day is the same is both good and bad. I enjoy the variety of my job, but there is also pressure to keep up to speed with, and ideally ahead of, the next regulatory change. With regulation in a constant state of change, you are constantly learning. Luckily, I enjoy learning.

What advice would you give to those who want to get to where you have?

Find an area of the law that interests you and cultivate your knowledge and profile in that area. Being the ‘go to’ person in a particular area helps you stand out from the crowd. If you are reluctant to ‘blow your own trumpet’, join forces with others who will do it for you, in return for you doing the same for them.

Maintaining a sense of humour and a sense of perspective is also essential to thriving in professional services.

What do you think is the biggest challenge facing the financial services sector currently, and how would you address it?

Our clients are faced with a tsunami of regulatory change. Just as it looks like the wave is subsiding, it returns with a vengeance. Interpreting the changes requires experience and judgement. In many areas, we have seen clients come unstuck, not because they have made a mistake or even a bad judgement call, but because they haven’t been able to evidence contemporaneous decision making. This should be an ongoing area of focus for all financial services firms, not least in the context of the FCA’s new Consumer Duty.

If you hadn’t become a lawyer, what do you think you would be doing now?

I expect I would have pursued something related to modern languages that involved travel – maybe interpreting or teaching.

Jenny Stainsby is the global head of financial services regulatory at Herbert Smith Freehills. She has been a partner at the firm for 13 years, returning to the firm in 2010 after 2.5 years at Lloyds Banking Group during the financial crisis.

1. What are the key regulatory requirements and compliance considerations for financial institutions operating in Switzerland?

Any entity active in or from Switzerland in the financial sector, depending upon the type of activity, may become subject to regulatory approval requirements. A large range of legal, prudential and self-regulatory provisions aim at securing appropriate client protection, as well as the stability and integrity of the Swiss financial market. The main regulatory requirements in this regard would be the license or authorisation requirements for:

1. banks (under the Banking Act);
2. independent asset managers, trustees, managers of collective assets, fund managers and securities dealers (under the Financial Institutions Act); and
3. investment company with variable or fixed capital (SICAV/SICAF), limited partnerships for collective investment and representative of foreign collective investment schemes (under the Collective Investment Schemes Act).

In addition to the license or authorisation, the provision of financial services is itself subject to stringent regulations in terms of conduct, quality and offering, which are mainly governed by the Financial Services Act. The purpose of these regulations is to ensure an appropriate level of protection of the clients.

2. How does Swiss banking law address issues related to data privacy and client confidentiality in the financial sector?

Any information related to a client of a Swiss bank is protected by a strict banking secrecy in Switzerland. The violation of such secrecy may lead to serious criminal sanctions under the Banking Act (up to five years of detention). Similarly, financial institutions subject to regulatory supervision are bound to keep client-related information strictly confidential. A violation of this duty may constitute a criminal offence under the Financial Services Act (also up to five years of detention).

In addition to these specific protective provisions, the Federal Data Protection Act applies to entities operating, collecting and processing data in Switzerland. A revised Federal Data Protection Act entered into effect on 1 September 2023 which improves Swiss data protection law and adapts it to the European GDPR with a Swiss finish.

3. Can you explain the process and requirements for obtaining a banking license in Switzerland, and how long does it typically take?

Under Swiss law, any entity (i) accepting deposits from the public above CHF100m on a professional basis or soliciting such deposits publicly, or (ii) offering financing to a larger public is, inter alia, considered as a bank and must apply for a banking license.

Obtaining a banking license is a complex undertaking. The application process may last more than 12 months and is led by the Swiss Financial Market Supervisory Authority (FINMA).

To obtain the banking license, the applicant must among others, meet strict prerequisites which include:

1. a minimum capital minimum CHF10m;
2. an appropriate business plan;
3. a guarantee of irreproachable business conduct for any qualified participation holders and management members;
4. a management operating from Switzerland;
5. appropriate risk management and internal control systems; and
6. the appointment of recognised auditors (for the application process and the subsequent supervision). When the applicant is controlled by foreign persons, it must in addition show that the relevant jurisdictions of the foreign persons provide reciprocity for Swiss financial institutions.

4. What are the main legal challenges and considerations for foreign financial institutions looking to establish a presence or conduct business in Switzerland?

In short, foreign financial institutions may establish a presence in Switzerland through a subsidiary, a branch or a representative office. Such establishment shall trigger authorisation requirements which are obviously much more stringent for a subsidiary than for a branch or a representative office. The need for an authorisation is usually triggered either by the fact that the entity is a financial entity regulated abroad and/or by the fact that the foreign entity establishes a permanent presence in Switzerland with a regulated professional activity.

For instance, a foreign bank having employees in Switzerland who only represent the foreign bank for advertising or other purposes may have to apply for an authorisation to act as a representative office, which will trigger a relatively light regulatory supervision. On the other hand, when the employees in Switzerland manage customer accounts or have the power to bind the foreign entity toward clients, a license to operate as branch of a foreign bank will be required.

5. How does Swiss law handle issues related to anti-money laundering (AML) and know your customer (KYC) requirements for banks and financial institutions?

Switzerland has adopted a tight set of rules over the past decades with respect to anti-money laundering and counter-terrorist financing. The Federal Act on Combating Money Laundering and Terrorist Financing is at the core of these regulations and applies to all so called ‘financial intermediaries’. This legal framework includes duties to identify the contracting party and the ultimate beneficial owners of the contracting party, the clarification of the purpose of a business relationship and the economic background of certain transactions, as well as to report suspicious transactions.

In recent years, the AML regulation has continuously been strengthened and adapted to international standards, such as those set forth by the Financial Action Task Force. A revision of the anti-money laundering act entered into force on 1 January 2023. New changes have already been proposed by the Swiss government, such as the introduction of increased transparency rules for legal entities, a national register of beneficial owners of legal entities and due diligence requirements for legal advisors (including lawyers).

6. What are the current trends and developments in Swiss financial regulations that businesses in the sector should be aware of?

In addition to recent changes made to the regulation to take into account the blockchain, such as the so-called ‘fintech license’, new developments are being discussed and elaborated by the Swiss government and regulator. Self-regulatory and industry associations are also preparing changes to their regulations.

Notable changes will be the introduction of rules related to ESG principles and their application within Swiss financial companies.

7. How does Swiss law address disputes and litigation involving financial transactions and banking matters, and what dispute resolution mechanisms are commonly used?

Disputes with banking clients are mainly tried before civil state courts in Switzerland. These proceedings are both very time consuming and expensive. Depending on the relevant contractual provisions, arbitration may also be used to settle such disputes.

A specific mediation procedure is set forth in the Federal Financial Services Act, but it is not often used. Since February 2021 all financial service providers that do not provide financial services exclusively to institutional or professional clients must be affiliated with a mediation organisation. Likewise, a banking client may submit (or may even be obligated to submit if the general conditions of the bank provide so) his claims to the banking ombudsman before filing his/her claim before state court. The ombudsman will try to settle the dispute without any decisional authority.

8. What are the recent changes or updates in Swiss financial laws or regulations that have had a significant impact on the industry?

The introduction of the Financial Services Act and the Financial Institutions Act on 1 January 2020, is the recent change which had the most significant impact on the financial industry.

The new rules regarding the provision of financial services and the new licensing requirements by FINMA for services providers, in particular for external asset managers, which were not subject to any state authorisation triggered a major challenge to the sector, and pushed smaller players to regroup in order to benefit from economy of scale to absorb new administrative costs and ensure a certain degree of sustainability.

9. How do Swiss laws and regulations concerning fintech and digital banking services differ from traditional banking, and what opportunities and challenges do these present for businesses in the financial sector?

The Swiss regulators and authorities have adopted a so-called ‘technology-neutral’ approach to encourage innovation in the financial services industry during the last decade. The most notable changes of the past years were the introduction:

1. of a so-called ‘fintech license’ (as per article 1b of the Banking Act) to avoid the application of the stringent banking licensing requirements for start-ups in the financial sector; and
2. of a license as a Distributed Ledger Technology trading facility (within the meaning of the Financial Market Infrastructure Act). Both institutions are subject to a supervision by the FINMA.

1. What are the key regulatory bodies overseeing the banking and finance industry in Nigeria, and what is their role in ensuring legal compliance?

In Nigeria, the primary regulatory and supervisory body for the banking and finance industry is the Central Bank of Nigeria (CBN). The CBN authorises, regulates, and supervises banks and other financial institutions (finance houses, merchant banks, financial technology companies, etc).

Another regulator, the Nigerian Deposit Insurance Corporation (NDIC), guarantees the deposit liabilities of banks and together with the CBN, supervises these institutions to mitigate the risk of failure. It also oversees the liquidation of failed insured banks and other financial institutions.

Other notable regulators include the Securities and Exchange Commission (SEC) (where securities of the bank or other financial institution are quoted on a securities exchange) and the Corporate Affairs Commission (CAC) (for incorporation and registration matters) respectively.

2. How has recent legislation and regulation, such as the Nigerian Financial Act, impacted the legal landscape of banking and finance in Nigeria?

Some notable recent legislations in the sector include the Nigerian Deposit Insurance Corporation Act 2023 which contains, amongst others, amendments to the powers of the NDIC. For example, the NDIC is now required to act in concurrence with the CBN when making payments of insured deposits to depositors of failed banks.

Further, the Finance Act 2023 expands the scope of assets chargeable to capital gains tax to include digital assets. The CBN’s current attempts to float Nigeria’s currency, the Naira, and to achieve a unification of differing exchange rates of the Naira relative to other international major currencies are also impacting the sector.

3. What are the legal requirements and procedures for foreign banks and financial institutions to operate in Nigeria?

A foreign bank or other financial institutions seeking to operate in Nigeria must register a local company with the CAC for that purpose and obtain a licence from the CBN. A foreign bank may, with the CBN’s approval, also establish a representative office.

4. Can you explain the legal framework for consumer protection in the Nigerian banking sector, including regulations governing banking fees and charges?

The CBN has bespoke regulations for the protection of bank consumers, including the CBN Consumer Protection Framework 2016, and the CBN Consumer Protection Regulations 2019. Among others, financial institutions are required to treat consumers equitably and in a transparent manner in relation to the cost of a product or service. Financial institutions are also required to give consumers of their services equal access, and are prohibited from varying or making changes to their interest rates, fees, or charges except when expressly provided in contract. The Federal Competition and Consumer Protection Commission (FCCPC) also has similar rules. It established a Consumer Protection Tribunal to adjudicate disputes between consumers and providers of services (banks inclusive).

5. How does Nigerian law address issues related to money laundering and terrorist financing in the banking and finance sector?

Nigeria’s banking and finance sector has a robust Anti-Money Laundering and Combating Financing of Terrorism and Countering Proliferation Financing (AML/CFT/CPF) framework. Amongst other obligations, financial institutions are required to conduct rigorous customer due diligence, monitor and report suspicious transactions to Nigeria’s financial intelligence unit, keep records, set up a dedicated compliance unit, and train their employees on AML/CFT/CPF measures. They are also required to adopt policies stating their commitment to comply with their AML/CFT/CPF obligations.

6. What are the legal implications and obligations for Nigerian banks regarding data protection and customer privacy, especially in light of the General Data Protection Regulation (GDPR) principles?

Consistent with the entrenched right to privacy under Nigeria’s Constitution, the Nigerian Data Protection Act 2023 (DPA) mandates that data processing must adhere to principles of fairness, legality, and transparency. Personal data should only be collected for well-defined, explicit, and lawful purposes, and must not undergo further processing that is incompatible with these intended purposes. There must be a lawful basis for the processing of personal data by financial institutions based either on the consent of the data subject, necessity, or public interest or the legitimate interest of the financial institution.

7. Can you outline the legal processes and mechanisms for dispute resolution in banking and finance cases in Nigeria, including arbitration and litigation?

Resolution of disputes in the banking and finance sector involves negotiations, mediation, arbitration, and litigation. Where either negotiation or mediation fails, litigation is an option. Litigations involving banks and other financial institutions are typically heard in either the Federal or State High Courts.

Arbitration is also a common choice for the resolution of banking disputes. Arbitration awards are binding and enforceable in Nigerian courts.

8. What are the recent developments and challenges related to digital banking and fintech regulation in Nigeria, and how are they impacting the legal framework?

The Nigerian Startup Act 2022, a recent enactment, provides the framework for the regulation and development of fintech startups. The DPA regulates how digital banks and fintech companies should process personal data.

In June 2023, the CBN released the Guidelines for Contactless Payments in Nigeria to standardise operations in the payment system. The recently published Operational Guidelines for Open Banking 2023 aim to simplify and standardise open banking practices and information sharing among participants. The CBN also published the Nigeria Payments System Vision 2025, which focuses on advancing digital innovation and payments, particularly in contactless payments.

A challenge in the regulation of fintech is the rapid increase of unlicensed digital lending companies. To address this, the FCCPC, backed by a regulatory taskforce, released in 2022 guidelines requiring the registration of digital lenders. In 2023, the FCCPC ordered the removal of unlicensed digital loan apps from Google (PlayStore).

9. How does Nigerian law address issues of corporate governance and compliance within banks and financial institutions, especially in regard to board responsibilities and risk management?

The Corporate Governance Guidelines for Commercial, Merchant, Non-Interest and Payment Service Banks, and Financial Holding Companies 2023 (Guidelines) is the primary corporate governance framework applicable to banks and other financial institutions.

Some of the responsibilities of the board of a bank as stipulated in the Guidelines include approving the bank’s strategic goals, ensuring a business continuity plan for the bank, and establishing a structure to independently verify and safeguard the integrity of financial reporting.

On risk management, the Guidelines provide that the board is to approve an enterprise risk management framework specifying the bank’s risk appetite, risk culture, governance architecture, policies, procedures and processes for the identification, measurement, monitoring and control of the risks inherent in its operations.

10. What are the legal requirements and best practices for securities offerings, mergers and acquisitions, and other major transactions involving banks and financial institutions in Nigeria?

The CBN regulates mergers and acquisitions involving banks and other financial institutions. Merging entities are required to obtain the approval of the CBN to proceed with a merger or acquisition. The approval of the SEC will also be required where any of the merging entities or the target and/or acquiring entity is a public company or is quoted on a securities exchange. Where one of the parties is not a financial institution, the approval of the FCCPC may be required if a certain monetary or other regulatory threshold is met.

The procedures for most corporate arrangements such as schemes of arrangements are set out in the Companies and Allied Matters Act 2020 (CAMA). Schemes under CAMA require a court-ordered meeting and a court order sanctioning the scheme.

1. Could you explain the key differences between secured and unsecured loans in the context of Dutch banking and finance transactions?

In a secured loan the payment obligations of the borrower are secured by security rights over assets of the borrower or a third party. In a bankruptcy scenario, a secured creditor can enforce these security rights as if there were no bankruptcy and in principle ranks ahead of all unsecured creditors subject to exceptions. Unsecured creditors rank pari passu in terms of payment with the claims of the borrower’s other unsecured creditors, have to submit their claims for verification with the bankruptcy trustee and cannot unilaterally enforce their claims as if there were no bankruptcy.

2. How do the security structure and parallel debt concepts work within Dutch financing transactions, and what advantages do they offer to lenders and borrowers?

A parallel debt structure is generally used in secured finance transactions where there is more than one lender. A parallel debt clause provides that any amount owed to a lender is also owed to the security agent, thereby creating a parallel debt vis-à-vis the security agent to ensure that Dutch law governed security rights can be held by the security agent for the benefit of all lenders. A parallel debt structure is used because it facilitates the accession and resignation of lenders and the transfer of loans, because it is uncertain if a security agent can hold security for the benefit of the lenders without being a creditor itself and because joint security of the lenders is not practical.

3. Can you outline the steps and legal requirements for creating valid security rights over assets in the Netherlands, including real estate and movable property?

Security over receivables is created by way of a deed of pledge. The pledge can be disclosed or undisclosed. If undisclosed, the deed needs to be date-stamped by the tax authorities or signed as a notarial deed. Security over shares is created by way of a notarial deed of pledge. Security over movable assets is created by way of a deed of pledge. The pledge can be possessory or non-possessory. If non-possessory, the deed needs to be date-stamped by the tax authorities or signed as a notarial deed. Security over real property is created by way of a notarial deed of mortgage and registration thereof in the land registry.

4. In the event of insolvency, what protections do secured creditors have under Dutch law, and how does the ranking of claims play out in practice?

A secured creditor may enforce its security rights as if there were no bankruptcy, provided that it could be subjected to:

1. a cooling off period (afkoelingsperiode) for a maximum of four months during which the right to enforce a security right is temporarily suspended;
2. a request from the bankruptcy trustee to enforce the security right within a reasonable term; and
3. although there is debate in the legal literature in this regard, having to notify the tax authority in respect of the execution of certain movable assets which qualify as bodemzaken.

In case the secured creditor fails to exercise its rights as a so-called ‘separatist’ within a reasonable term, including its right of summary foreclosure (parate executie) or in respect of receivables, to collect such receivables, the bankruptcy trustee may sell the assets, in which event the secured creditor retains its right of priority to the proceeds, but has to share in the bankruptcy costs.

5. Could you provide insights into the Dutch schemes of arrangement and how they are utilised for financial restructuring or debt reorganisation?

With the entry into force of the Act on Court Approved Pre-Insolvency Schemes (WHOA) on 1 January 2021 the Netherlands adopted a powerful restructuring tool for debtors in financial difficulties which is inspired by the UK Scheme of Arrangement and the Chapter 11 bankruptcy proceeding in the United States. It is increasingly used in the Netherlands also against the backdrop of the current economic downturn and increased interest rates. Under the WHOA, a debtor or a court-appointed restructuring specialist may offer an extrajudicial restructuring plan to the debtor’s creditors and shareholders. Once the restructuring plan is approved by at least one class of creditors and subsequently approved by the court it becomes binding on all affected parties (creditors and shareholders who have voted against the restructuring plan can be (cross-class) crammed down, subject to certain conditions and limitations).

6. What are the key components of bankruptcy remote special purpose vehicle (SPV) structures, and how do they contribute to minimising bankruptcy risks?

A Dutch SPV is usually incorporated as a private company with limited liability with its sole shareholder being a newly incorporated Dutch foundation. The board of directors of each of the SPV and its shareholder is formed by a trust company. The creditors of the SPV are limited to the parties which form part of the structured finance structure and the transaction documents normally include non-petition and limited recourse clauses. Any insolvency proceedings against the originator should not affect the SPV.

7. How do non-petition clauses function in the context of bankruptcy remote SPV structures, and what legal enforceability do they have under Dutch law?

Pursuant to a non-petition clause counterparties of the SPV agree that they will not initiate insolvency proceedings against the SPV or take any other steps which may lead to the dissolution or liquidation of the SPV until all the payment obligations of the SPV are fully satisfied. Non-petition clauses, especially in combination with no action clauses, are considered in the legal literature to be effective. However, absent case law in this regard, it cannot be ruled out that a Dutch court would consider a petition for bankruptcy even if such petition was presented in breach of a non-petition clause.

8. Can you explain limited recourse clauses and their significance in structured finance transactions?

Pursuant to a non-petition clause counterparties of the SPV agree that they will not initiate insolvency proceedings against the SPV or take any other steps which may lead to the dissolution or liquidation of the SPV until all the payment obligations of the SPV are fully satisfied. Non-petition clauses, especially in combination with no action clauses, are considered in the legal literature to be effective. However, absent case law in this regard, it cannot be ruled out that a Dutch court would consider a petition for bankruptcy even if such petition was presented in breach of a non-petition clause.

9. What legal mechanisms are in place to ensure the true sale of securitised assets to SPVs, and how do these mechanisms help in mitigating potential risks?

Depending on the commercial preference of the originator, receivables are transferred by way of a disclosed assignment, an undisclosed assignment or a contract takeover. If receivables qualify as future receivables certain limitations apply to transferring such receivables on an undisclosed basis. Also, any assignment in advance of future receivables will not have effect in case such future receivables are obtained after the originator is declared bankrupt. Risk mitigation in relation to future receivables depends on the nature of the securitised asset. For example, in Dutch car lease securitisations the cars are transferred by way of hire purchase to the SPV and the associated future lease receivables qualify as proceeds of the hire purchased car and transfer to the SPV by operation of law as a result (and are transferred by way of assignment and contract takeover as a backup procedure to the extent necessary).

10. In the context of covered bond structures, what safeguards and regulations does Dutch law provide to ensure the security and stability of these financial instruments?

Covered bond structures differentiate from securitisation structures by employing a dual recourse structure. Covered bond holders have recourse against not only the underlying cover assets which are transferred on the basis of a guarantee support agreement through undisclosed assignment, but also against the relevant licensed bank active in the Netherlands which issues the covered bonds. Although there is legal debate in this regard, covered bonds in principle cannot be written down following a bail-in intervention of the national authorities in relation to the covered bond issuer.

1. What is your experience in banking and finance law in Portugal, and can you provide examples of cases or transactions you’ve handled?

The banking and finance team of CTSU, a Deloitte Legal Practice in Portugal, has extensive experience in supporting clients with transactions and to advise on governance and regulatory changes to their activity and internal organisation.

Recently, we have been particularly focused in structuring investment funds, namely through the conversion of real estate commercial companies into regulated AIFs for real estate investment, in the sale and purchase of PL and NPL portfolios, in financings and associated collaterals, as well as in the support to the acquisition, setting up, winding up and registering of credit institutions, financial companies and insurance companies.

We are very active in digital transformation projects, cross-border and passporting of financial services and products into the Portuguese market and on the development of digital products in the banking, insurance and financial sectors.

Moreover, we have a proven track-record in the implementation of compliance programmes and on cross-border restructuring projects for financial entities, working in close coordination with clients and their advisors.

2. Can you explain the regulatory framework for banking and financial institutions in Portugal, including recent changes that may impact my situation?

In short, the main pieces of local legislation for financial institutions in Portugal can be divided into:

1. The credit institutions and financial companies general regime, approved by Decree-Law no. 298/92, that regulates the banking sector and some financial services such as factoring companies or foreign currencies exchange companies.
2. The Portuguese Securities Code, approved by Decree-Law no. 486/99, that regulates the securities market and financial instruments and transposes MiFID II into national law.
3. The asset management regime, which was recently approved by Decree-Law no. 27/2023, regulates investment funds and venture capital and transposed UCITS and AIFMD Directives to Portuguese law.

Moreover, there are specific pieces of legislation governing some products and services such as consumer credit, payment services and electronic money, distance financial services contracts, financial leasing, insurance and pension funds.

These regimes are complemented by European regulation, technical standards and guidelines and by local regulation from the national supervisory authorities, namely the Bank of Portugal, for the banking sector, the CMVM, for capital markets, investment services and investment funds, and ASF, for insurance and pension funds.

3. What types of financial services and products are commonly regulated in Portugal?

The financial services sector is highly regulated and the majority of banking and financial products in Portugal have to comply with a wide range of European and local legislation and regulation enacted by local supervision authorities.

For example, investment and venture capital funds are supervised by the CMVM. The legal framework was recently updated in Portugal with the entering into force of the new asset management regime, which transposes to national law the UCITS and AIFMD Directives and set forth several simplification measures in comparation with the previous asset management legal framework, including the introduction of an ex post supervision approach to the majority of authorisation and registry procedures.

4. How can you assist me in structuring financial transactions or investments to ensure compliance with Portuguese laws and regulations?

We can assist clients in licensing with local regulators, financing and in the setting up of investment structures through investment funds. Our support includes covering all regulatory matters in relation to your financial transactions.

Our advice is integrated with the other areas of practice of the firm, in particular tax, corporate, mergers and acquisitions, real estate, litigation, and digital and TMT, to act on strategic deals where banking and finance law is a key element.

Our team has also been active in supporting transactions and investments relating to the technological revolution of the financial sector: fintech companies, crypto assets, neo banks and the use of the EU financial passport mechanism for online cross-border banking and investment services, among others.

We work together with other Deloitte Legal practices both to address specific legal needs of clients which operate or intend to start their activity in Portugal and in the assistance of multidisciplinary projects which involve several jurisdictions.

5. Can you provide guidance on the tax implications of banking and finance transactions in Portugal, and help me optimise my tax position?

Yes, we count with tax experts that have are specialised in tax implication analysis of banking and finance transactions in Portugal and also with an experienced tax litigation team.

6. In the event of a dispute or litigation related to banking or finance matters, how experienced are you in representing clients in Portuguese courts or alternative dispute resolution mechanisms?

We have an experienced litigation team that covers tax controversy issues, insolvency and credit recoveries on a regular basis to clients in the banking and financial sector.

Our tax team, which has relevant experience in banking and finance (CIT, VAT, etc.), has been assisting several clients regarding tax litigation, in the context of arbitral claims, which ended with a favourable decision.

As an example, we highlight the additional contribution on the banking sector, which was created in order to face the Covid-19 pandemic situation and to finance the social security fund. However, the recent arbitral court’s rulings declared that this contribution violates the Portuguese Constitution, namely the equality and the contributive capacity principles.

Our tax litigation team has also been assisting several clients regarding the standard contribution on the banking sector, with some favourable decisions as well.

7. What are the key considerations and legal requirements for international businesses or individuals looking to establish banking or financial operations in Portugal?

The structuring of operations in Portugal can take different paths. There are several players in the Portuguese market that have established branches in Portugal. In the case of institutions authorised in other EU member states, it is also viable to operate on a cross-border basis on a non-continuous basis and without a physical presence in Portugal through the freedom to provide services regime (‘FPS’).

Both options have its pros and cons but can be considered a more flexible solution for the establishment of operations in Portugal. In the case of FPS, as a general rule the legislation from the Home Country applies, although Portuguese public interest rules must be followed.

On the other hand, depending on the activity, a bank or financial company can also be established in Portugal through a prior authorisation and/or register procedure with the supervisor. These are granted on a case by case basis by the relevant regulator, which in the case of credit institutions, financial companies, payment and e-money institutions is the Bank of Portugal (when applicable, in cooperation with the European Central Bank, within the framework of the single supervision mechanism).

For example, the legal requirements and the key elements that should be taken into consideration in the filing of an authorisation request for a credit institution before the Bank of Portugal are listed in the credit institutions and financial companies general regime. These include the type of entity, a programme of operations, identity of shareholders and of the members of the management and supervisory bodies, explanation on the adequacy of the shareholder structure, governance arrangements, risk management and internal control system, remuneration policy, among others.

The acquisition or increase of qualified holdings in existing financial institutions is also an option to establish banking or financial operations in Portugal.

8. What is the process for obtaining necessary licenses and approvals for financial activities in Portugal, and how long does it typically take?

Timings and process can vary depending on the type of entity and financial activities being carried out. Please refer to the previous questions regarding the process for obtaining the necessary licenses and approvals for institutions subject to the Bank of Portugal. In the case of a prior authorisation for a banking license, the applicants must be notified of the decision within six months of the application being deemed complete, but in any case no longer than 12 months after the initial receipt of the application by the regulator.

9. How do you stay updated on changes in Portuguese banking and finance law, and how will you keep me informed of relevant developments affecting my interests?

We provide daily information to clients on new legislation and regulation that could affect the banking and financial sector through legal alerts, newsletters and as a service through an online tool.

Additionally, in some cases we can provide benchmarks on regulatory topics and of market trends (eg buy now pay later) prepared together with the Deloitte Legal network. Moreover, within the Deloitte Legal network we participate in group discussions to keep track of new legislation being prepared at the European level (eg MiFID III, PSD III, AIFMD II) and to assess potential impacts of new European legislation to our clients.

10. How can you provide legal support to multinational financial institutions with a presence in Portugal?

CTSU’s banking and finance team has an extensive track record in cross-border operations and in the restructuring of financial groups with a presence in Portugal.

Moreover, within the Deloitte Legal network, we have been working alongside with colleagues of different countries whenever the needs of the client entail several jurisdictions.