Question
Under Article 103(2), point (b)(vi), CRR, there is a requirement that institutions shall have active anti-fraud procedures and controls. Could you please provide clarification on the specific types of fraud that should be considered with respect to the trading book? Can this be considered to effectively cross-refer to the requirements of Regulation (EU) No 596/2014 on market abuse or are there other areas which need to also be considered?
Background on the question
There is no clarity on the types of fraud which should be considered and therefore the scope of procedures and control requirements which firms should have in place is ambiguous
Answer
If a term is not defined in the legislative acts referred to in Article 1(2) of the EBA’s founding Regulation, as well as associated delegated and implementing acts, and guidelines and recommendations, adopted under these legislative acts the Q&A process cannot be used to provide a formal, legal definition. Non-defined terms must be interpreted - by institutions and subject to overall supervision carried out by competent authorities - according to the general meaning of the terms used, together with other recognised interpretative methods, such as contextual interpretation and by identifying the objective of the concerned provisions. For further information on the purpose of this tool and on how to submit questions, please see 'Additional background and guidance for asking questions'.