Welcome to the FIG Top 5 at 5

On 19 May 2026, Governor of the Central Bank of Ireland (“Central Bank”), Gabriel Makhlouf, delivered a speech (“Speech”) at the Association for Financial Markets in Europe’s financial integration conference.

The Speech focused on the EU’s single market across goods, services and capital, noting that the single market for capital is not something that can be separated from the single market for services. The Governor makes the point that if the single market continues to be fragmented, then the savings and investment union (“SIU”) will never reach its full potential.

The Governor grounded his Speech by citing some statistics that illustrate the political and economic achievements of the single market. However, he then moved on to state that the single market has been viewed too narrowly, risking missing out on “greater growth, greater resilience and greater opportunities for the citizens of Europe.”

Barriers

Governor Makhlouf proceeded to consider what needs to be done to have Europe operating as “a genuine Single Market in goods, services and capital simultaneously”. In that regard, some of the matters highlighted are as follows:

• completing the single market could double European GDP by 6–8%, with the biggest upside being in services – which account for approximately 75% of EU GDP;
• the barriers to intra-EU trade and investment are well known and continuing, for example lack of common standards / complicated business establishment rules;
• the European Commission has pointed to a lack of single market ownership by national governments as a factor that leads to inconsistent implementation of previously agreed rules, with the Governor noting that this needs to be solved by those governments taking active ownership of the single market agenda; and
• in terms of taking ownership, the Governor highlighted the Irish Government’s recently launched national implementation framework for the EU’s single market strategy – an initiative designed to tackle fragmented rules across Europe that currently limit trade, competition and growth.

Capital market gap

The Director discussed the fact that Europe has an extensive financial system but that this does not carry through to debt or equity financing for non-financial firms, highlighting that this can be seen in EU stock market capitalisation which is around a quarter of the size of the US equivalent. Referencing the Draghi report in terms of the capital market gap and the innovation gap being two sides of the same coin, Governor Makhlouf noted that there are plenty of innovative start-ups in Europe but not a deep enough capital market to foster the growth of these start-ups.

Noting that regulatory fragmentation is often blamed, the Governor stated that this is “a symptom as much as a cause”, stating that the underlying constraint is the lack of a genuine single market, especially as regards trade in services. Without this, he emphasised, “regulatory harmonisation alone will not close the gap.”

Regulatory architecture and a single safe asset

Highlighting that the SIU addresses part of the gap, the Governor stated that there are two conditions that need to be met to deliver the SIU, while also making the point that the SIU operates in the current format of the single market.

The first condition is completion of the regulatory architecture, including:

• harmonised insolvency frameworks;
• convergent tax treatment of cross-border investment; and
• deeper and more liquid post-trade settlement infrastructure.

The second condition that the Governor mentioned is the need for a single safe asset, describing this as “the foundation for the architecture of the SIU.” The Governor discussed the NextGenerationEU (“NGEU”) programme, noting that Europe can issue common bonds at scale and that markets respond. However, he went on to explain that NGEU bonds “do not yet fully behave like safe assets”, and that creating the infrastructure for a genuine common safe asset is something that need to be further explored. In this regard, Governor Makhlouf discussed various matters, some of which are as follows:

• the option of a permanent, scaled European safe asset to finance investment in European public goods;
• the creation of a deep, large and liquid market for Eurobonds in order to deliver the financial strength needed for its strategic autonomy;
• the fact that a safe asset would support the greater internationalisation of the euro; and
• the possibility that more integration could mean less national flexibility.

With the forgoing points in mind, the Governor highlighted that the productivity gap with other countries is widening, stating that “…the longer we delay, the more expensive the adjustment becomes and the less competitive Europe will be in a world where capital, talent, and innovation remain mobile.”

Ireland

Using Ireland as an example to illustrate the demand side of the European challenge, the Governor noted the contrast between Ireland’s position as a major global financial hub and its low retail participation in capital markets – for more information, see FIG Top 5 at 5 dated 4 December 2025. He pointed to a number of factors that have created this situation, such as uneven tax treatment / financial literacy / the focus on real assets.

Coming back to the point that national action is required in such matters rather than harmonising EU regulations, he cited the following measures that Ireland is engaging in:

• the national financial literacy strategy – for more information, see FIG Top 5 at 5 dated 27 February 2025;
• Government’s commitment to legislation for a new personal investment account framework by 2027; and
• pension auto-enrolment.

Having discussed these initiatives, the Governor made the point that “the SIU will still fall short of its potential if national barriers like these are not addressed alongside it.”

The Central Bank’s actions

The Governor discussed what the Central Bank is doing in order to advance deeper European integration, citing:

• the prioritisation of, and active contribution to, supervisory convergence at the European Supervisory Agencies, highlighting that convergence can sometimes be best achieved “through even greater collaboration between national and European authorities, through stronger common standards applied consistently at a national level, and through the kind of mutual trust and shared supervisory culture that takes time to build”; and
• regulatory simplification – highlighting the December 2025 publication of “Regulating and Supervising Well” – for more information, see FIG Top 5 at 5 dated 11 December 2025.

On 18 May 2026, the Central Bank of Ireland (“Central Bank”) published the results (“Results”) of its recently conducted thematic assessment (“Assessment”) of the compliance function across a cohort of MiFID investment firms. This Assessment took place on foot of weaknesses regarding culture, governance and risk management that were previously identified by the Central Bank as key risks for the MiFID sector – for more information, see FIG Top 5 at 5 dated 5 March 2026.

The Assessment was aimed at assessing firms’ adherence to the compliance function requirements in article 22 of the MiFID delegated regulation (“Delegated Regulation”) and the European Securities and Markets Authority’s (“ESMA”) guidelines on certain aspects of the MiFID II compliance function requirements (“Guidelines”).

Two phased

The Assessment was carried out over two phases, with the first phase being a request for information questionnaire and a desk based review and the second phase consisting of a targeted, in depth assessment for certain firms – including in person meetings with heads of compliance.

Key areas of focus

 

The Assessment focused on three key areas, with the Results setting out a summary of the good practices that were observed and areas for improvement that were identified, across the three areas. The following is an overview of the good practices and areas for improvement, as per the focus areas:

Focus area 1: Determine the adequacy of the compliance function and related compliance framework

In this area, some of the good practices highlighted by the Results are as follows:

• firms recognise the importance of involving the compliance function in relation to strategic initiatives that could affect their risk profile as outlined in the Guidelines;
• the compliance function was actively engaged in decision-making processes concerning new business lines or new financial products evidencing acknowledgment of the compliance function’s input as an important component in setting business strategy;
• in many cases, the compliance function was a voting member of firms’ product approval committees and had appropriate committee representation across the organisation; and
• firms’ compliance functions appear to be adequately resourced proportionate to the nature, scale and complexity of their investment services and activities.

Some of the weaknesses identified are as follows:

• several firms could not demonstrate robust succession plans or contingency arrangements for compliance roles, nor provide evidence of skills assessments and development plans for their compliance teams — creating a vulnerability to the permanence of the compliance function; and
• direct compliance-led training delivered by the compliance function itself was limited in some firms, which risks undermining a strong compliance culture and “tone from the top”. The Central Bank expects firms to ensure their compliance function is actively engaged in the design and delivery of compliance training to embed an appropriate compliance culture at all organisational levels.

Focus area 2: Assess the effectiveness of the compliance planning, monitoring and testing process

Here, some of the good practices highlighted by the Results included:

• most firms have established risk-based compliance monitoring programmes, with some extending monitoring beyond desk-based reviews to include on-site inspections of business areas;
• the linking of compliance monitoring findings to identifying training needs in specific business areas, including follow up monitoring activities after targeted training took place; and
• horizon scanning is in place in most firms, enabling the compliance function to maintain robust compliance frameworks and fulfil regulatory obligations effectively.

Some of the weaknesses identified included that, in some firms, not all identified risks were subject to regular review in accordance with the Guidelines. Additionally, compliance plans and the documented compliance universe lacked sufficient detail, and in one instance no annual compliance plan was prepared at all.

Focus area 3: Ascertain the quality of compliance reporting to the board / sub-committee(s)

In terms of good practices identified in this area, the Results note that all firms within scope of the thematic assessment regularly provide mandatory compliance reports to the board and sub-committees, with such reports being generally well documented.

However, weaknesses were found regarding board minutes, with insufficient evidence of substantive discussion / challenge around compliance related issues. The Results specifically highlighted that minutes did not consistently demonstrate challenge or scrutiny of the compliance reports and recommendations presented to governance forums, indicating insufficient board oversight and accountability.

Central Bank’s expectations / action to be taken by firms

 

The Results highlight that the Central Bank expects all firms:

• to ensure their compliance function is actively engaged in the design and delivery of compliance training to embed an appropriate compliance culture at all organisational levels;
• to prioritise horizon scanning, as it enables the compliance function to prepare proactively for regulatory changes; and
• to consider the Results and carry out a self assessment of their compliance function as against the Results, together with the requirements of article 22 of the Delegated Regulation and the Guidelines.

The Results also emphasise that firms should consider how their compliance function can support embedding the revised Consumer Protection Code, including the Guidance on Securing Customers’ Interests and Protecting Customers in Vulnerable Circumstances.

The Results also highlight the following action that should be taken by all firms:

• where gaps or weaknesses are identified, actions should be developed and implemented to deal with these is a proactive and timely way; and
• the Results are to be discussed at the next board meeting and the discussion is to be recorded in the minutes of the meeting.

Finally, the Results state that the Central Bank may engage directly with firms, on the matters set out on the Results, during the course of its supervisory activities.

On 13 May 2026, subsection (4) (as amended by section 9 of the Insurance (Miscellaneous Provisions) Act 2022) of section 18 of the Consumer Insurance Contracts Act 2019 (“Act”) came into operation.

The Consumer Insurance Contracts Act 2019 (Commencement) Order 2026 (SI No 203 of 2026) (“Commencement Order”), which was signed by Simon Harris, Minister for Finance on 12 May 2026, commences section 18(4) of the Act.

It was the only provision of the Act that remained to be commenced and relates to proportionate remedies and claims handling, specifically, the situation where a contract of insurance contains a term or condition excluding coverage for loss or damage to property caused by a criminal or intentional act or omission of a consumer or any other person.

Section 18(4) provides that such exclusion applies only to the claim of a person:

• whose act or omission caused the loss / damage;
• who abetted or colluded in the act / omission; or
• who consented to the act or omission and knew, or ought to have known, that the act or omission would cause the loss or damage.

The innocent party will only be entitled to recover his / her proportionate interest in the lost or damaged property. Additionally, an innocent co-insured must cooperate fully with the relevant insurer during the course of the investigation in order to be entitled to their portion of the claim.

Next Steps

The Act, which was signed into law by former President Michael D. Higgins on 26 December 2019, is now fully commenced.

1. AMLA publishes reporting package for identification of entities for direct supervision

 

On 12 May 2026, the Anti-Money Laundering Authority (“AMLA”) published a reporting package (“Package”) that aims to identify provisionally eligible obliged entitles that will come under the direct supervision of the AMLA from 2028.

This publication follows the AMLA’s March 2026 data collection exercise to test risk assessment models  – for more information, see FIG Top 5 at 5 dated 19 March 2026.

Eligible obliged entities are credit institutions, financial institutions, and groups thereof, who are operating in at least six member states, including their home member state, either by way of freedom of establishment or freedom of services.

The Package consists of:

• a standardised reporting template (“Template”); and
• an interpretative note (“Note”) that is addressed to obliged entities and contains clarifications as to their reporting obligations regarding the collection of eligibility information under the draft implementing technical standards under article 15(3) of the AMLA regulation.

NCAs will collect eligibility information from relevant obliged entities in their supervisory remit as per the specifications set out in the Package. They will use the data collected to identify which entities meet the eligibility criteria to be included in their selection for direct supervision by AMLA.

Next Steps

The AMLA will hold a public webinar on 10 June 2026 where the template will be explained, with the AMLA stating that more information on this will follow in due course.

NCAs are required to have the data collected by 15 August 2026. The AMLA has stated that an error collection and alignment phase will take place in coordination with NCAs.

Finally, it is expected that the provisional list of eligible obliged entities will be finalised by the end of September 2026.

 

2. AMLA consults on draft ITS for FIU cooperation

 

On 13 May 2026, the Anti-Money Laundering Authority (“AMLA”) published a press release (“Press Release”) announcing that it is consulting on three draft implementing technical standards (“ITS”) regarding common formats for cooperation between financial intelligence units (“FIUs”) and between the AMLA, FIUs and the European Public Prosecutor’s Office (“EPPO”).

The three draft sets of ITS are as follows:

Draft ITS on FIU-to-FIU exchanges

The draft ITS contain six standard templates for the exchange of information between FIUs on a secure channel for FIU cooperation in the EU. The draft ITS aim to ensure a consistent, clear and interoperable framework for FIU cooperation in the EU, seeking to enhance:

• standardisation of FIU-to-FIU communications, both in form and substance;
• simplified and streamlined procedures, particularly regarding prior consent mechanisms for the use and dissemination of information;
• seamless integration into FIU.net, which is the sole channel for cooperation under article 30(2) of the anti-money laundering directive (“AMLD”); and
• analytical value of exchanges, by way of minimum data requirements and harmonised fields.

The AMLA has stated that this harmonisation not only strengthens consistency but also allows for faster and more efficient exchanges of information, which is crucial where timeliness is a decisive factor in detecting and preventing money laundering and terrorist financing.

Draft ITS on FIUs to EPPO exchanges

The draft ITS sets out the format that FIUs must use when reporting findings to the EPPO where analysis reveals reasonable grounds to suspect offences against the EU’s financial interests. They contain a harmonised EU wide reporting format to reduce existing divergences and improve national reporting practices. An annex to the ITS contain an example of a reporting template that sets out the structure and content for reporting FIU analyses.

Draft ITS on AMLA to EPPO exchanges

The draft ITS sets out the format that the AMLA must use when reporting results of joint analyses where there are reasonable grounds to suspect that offences within the competence of the EPPO have been committed. The draft ITS contain a sample reporting template, setting out the structure and content for reporting.

Next Steps

The AMLA will hold two public hearings on 27 May 2026, with a morning hearing addressing the two EPPO draft ITS and an afternoon session covering the FIU to FIU draft ITS. Interested parties can register here.

On 20 May 2026, the European Commission (“Commission”) launched a consultation on the functioning of the regulation on markets in crypto assets (“MiCA”), consisting of a public consultation (“Pubic Consultation”) for individuals and a targeted consultation (“Targeted Consultation”) which covers more technical and legal matters, and is aimed at stakeholders such as digital asset issuers and service providers, financial institutions, technology providers and industry bodies.

Fit for purpose?

The Targeted Consultation aims to enable the Commission to assess whether MiCA is still fit for purpose, taking into account that there have been many policy and regulatory developments globally since MiCA was adopted. Additionally, the Commission highlights that crypto‑asset markets themselves have developed significantly, and continue to evolve, since MiCA was designed and adopted.

The Commission proposes to compare and contrast MiCA with more recent frameworks in other jurisdictions and with market developments.

Areas addressed

The Targeted Consultation cover the following areas:

• part 1 looks at scope and definitions and includes questions on the current conditions for offering or seeking admission to trading of crypto‑assets other than asset referenced tokens (“ARTs”) or e‑money tokens (“EMTs”);
• part 2 addresses the requirements applicable to ARTs and EMTs and their issuers and includes questions on the current conditions for offering or seeking admission to trading of ARTs and EMTs / their prudential regime / the multi‑issuance model of global tokens / the interaction with third country regulatory frameworks / the reserve requirements of ARTs and EMTs / the redemption rights of their holders / crisis management measures;
• part 3 considers the appropriateness of the current legal framework for crypto‑asset service providers (“CASPs”) with questions covering the adequacy of the current scope of crypto‑asset services regulated under MiCA; and
• part 4 looks at topics beyond the initial scope of MiCA, dealing with decentralised finance, crypto‑assets staking, lending and borrowing activities and non‑fungible tokens. In addition, this part seeks views on whether MiCA should aim to increase legal certainty of crypto‑assets and other on‑chain assets, particularly in relation to natively issued assets.

As per the Commission’s simplification agenda, the Targeted Consultation is also seeking feedback on whether there is any scope for simplification, reduction or elimination of administrative or other burdens.

Public Consultation

As mentioned above, the Public Consultation is aimed at EU citizens and seeks to gather high level information on respondents’ general levels of awareness, experience, and views regarding the different types of digital assets and associated services they may be using.

Next Steps

Both the Targeted Consultation and the Public Consultation are open for feedback until 31 August 2026 with the Commission stating that feedback will inform its future policy work on digital assets.