EBA Updates Methodology for Assessing Third-Country Regulatory & Supervisory Equivalence Frameworks

The European Banking Authority (EBA) has published an updated methodology for assessing the regulatory and supervisory frameworks of non-EU countries, bringing it into alignment with recent amendments to the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD).

This methodology plays a critical role in determining the equivalence of third-country regimes, which in turn affects how EU-based financial institutions can interact with entities from those jurisdictions.

The assessment process continues to be structured around two key questionnaires:

1. The First Step Questionnaire: A preliminary screening that evaluates whether a jurisdiction has the core regulatory and supervisory principles in place. This step helps determine whether the country is a suitable candidate for a full equivalence assessment.

   
   

2. The Second Step Questionnaire: A detailed analysis that involves mapping the non-EU country’s framework against the EU’s CRR/CRD provisions. This in-depth comparison ensures a comprehensive understanding of the third country’s prudential framework.

To enhance usability, the EBA has streamlined the second-step questionnaire and migrated both questionnaires to a secure online platform. Non-EU jurisdictions can now complete the questionnaires directly through this digital system, improving the efficiency and transparency of the equivalence assessment process. Countries seeking access to the platform can contact the EBA via the dedicated email address: Equivalence@eba.europa.eu.

The legal foundation for this initiative lies in Article 33(2) of Regulation (EU) No 1093/2010, which mandates the EBA to assist the European Commission in preparing equivalence decisions when formally requested or when such action is necessitated by EU legislation.

Equivalence assessments have strategic significance, particularly in the context of global financial integration, cross-border banking operations, and de-risking strategies. They ensure that non-EU jurisdictions meet prudential standards comparable to those of the EU, safeguarding financial stability and maintaining a level playing field.

For compliance professionals and financial institutions engaged in international activities, staying informed about changes to the EBA’s equivalence methodology is essential. These developments may influence market access, regulatory obligations, and third-country risk assessments.

Read the press release here.