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A new amendment to the Hungarian Anti-Money Laundering Act seeks to extend its scope to custodian wallet providers and virtual currency exchange platforms, in order to reduce the risks associated to cryptocurrencies. The proposal is currently before the Hungarian Parliament, and aims at fulfilling Hungary’s obligations deriving from the 5th Anti-Money Laundering Directive (“Directive”).

On October 10, 2019 the National Assembly of the Republic of Serbia adopted the Law on Alternative Investment Funds and Law on Open-Ended Investment Funds with a Public Offering, where both of the laws came into force on October 19, 2019 and will become applicable on April 20, 2020.

On 12 November 2019 in Belgrade, Ministry of Justice signed a cooperation agreement with EUROJUST, an EU agency dealing with judicial co-operation in criminal matters among agencies of the member states. The signing of the agreement took place in Belgrade after Serbia fulfilled the prerequisite by adopting the new Act on personal data protection, which was the final step in complete harmonization with EU regulations and directives. Eurojust has cooperation agreements with 12 countries, 3 of which are Western Balkan countries: Montenegro, North Macedonia, and Albania.

On 23 October 2019 the European Commission published a report on the third annual review on the functioning of the EU-U.S. Privacy Shield. The report states that the U.S. continues to ensure an adequate level of protection for personal data transferred under the Privacy Shield from the EU to participating companies in the U.S. Today approx. 5,000 companies are participating in this EU-U.S. data protection framework.

Welcome corporate whistleblowers

Recently we have seen a growing interest in issues relating to whistle-blower protection and its role in modern business. The main emphasis in the discussion about whistleblowers and their duties, rights and obligations was put on the individuals involved in whistle-blowing. It was also focused on creating mechanisms allowing individual whistleblowers to feel safe once they make their notification, either internally within the organization or externally with public authorities.

However, it has to be noted that not only an individual can be a whistle-blower. In the Polish legal system, a number of regulations penalize individual and corporate behaviors and the list of such regulations is constantly growing.

Ukraine is undergoing a period of structural reform throughout its financial and banking sectors that is unprecedented in its scale and complexity. The reform of the currency control regime culminated in the full cancellation of a 26-year old system and the introduction of a legislative road map for the gradual implementation of the free movement of capital. The reform gave a critical impetus to the development of the securities market and foreign investments, with Clearstream opening a direct securities account at the National Bank of Ukraine (the NBU) to provide easier access to hryvnia-denominated sovereign bonds. Ukrainian banks were authorized to grant short-term loans in local currency to foreign investors so they could invest in the bonds and hedge the FX risks of such transactions. The introduction of the IBAN standard is another example of the ongoing process of harmonizing the Ukrainian payment landscape.

Earlier this year the Estonian parliament enacted long-awaited dedicated covered bond legislation, finally allowing local banks to enter both regional and European-wide covered bond markets and to gain access to a reasonably priced and stable source of long-term funding for their key banking businesses (most importantly for funding the issuance of mortgage loans). Additionally, under the new legislation, local covered bond issuers able to meet prudential requirements under the Capital Requirements Regulation (CRR) will be able to benefit from certain forms of preferential treatment afforded to covered bonds. For the local banking sector that, at the moment, remains dominated by Scandinavian banking groups, the new legislation also creates a viable alternative to the parent funding.

Amazingly, the Lithuanian FinTech ecosystem report of 2018 revealed that there were 170 FinTech companies based in Lithuania – reflecting 45 percent growth over the previous year – with some 2,600 employees working in FinTech companies, more than 700 of which were newly-employed in 2018. The numbers are still growing this year.

Cash pooling is a staple of corporate treasurers as an efficient way to allocate liquidity and reduce financing costs within a group of companies. Despite its commercial importance, neither Austrian statutory law nor the Austrian Supreme Court has provided any guidance as to whether cash pooling is permissible under Austrian law – in particular whether it is compatible with Austria’s strict capital maintenance laws.

The organic development of the Hungarian insolvency laws was interrupted by the era of the socialist planned economy, which ended in 1990. The novel Insolvency Act of 1991 (IA) may have satisfactorily served the economy in the first years of the transition period, but due to the profound changes in the socio-economic environment in subsequent years, the statute has become obsolete. Successive governments over the past three decades have made multiple efforts to keep the IA up-to-date and to follow the numerous demands made by the various players of the market and interested legal professionals, but the more than one hundred (!) amendments have rendered the system opaque and relatively difficult to use.

The concept of financial restructuring was introduced in Turkey following the currency crisis of August 2018. Financial restructuring became the major item on the agenda of Turkish financial institutions, and regulators intervened immediately, working to create a useful legal framework for the process. The joint efforts of the Banking Regulatory and Supervisory Authority (the BRSA) and the Banks Association of Turkey (the BAT) resulted in the Framework Agreement. Nevertheless, restructurings commenced pursuant to the Framework Agreement are progressing very slowly, and in most cases have reached an impasse.

Bond financing has recently become quite popular in the Czech Republic and companies often finance their business needs by issuing corporate bonds instead of the more usual credit financing. Obviously, the popularity of corporate bonds is also associated with the greater willingness of investors to buy them. Bonds are perceived by the general public as a safe and conservative investment instrument. Nevertheless, recent market developments show that corporate bonds issued by private companies may not always be a safe investment, as evidenced, for example, by the insolvency of online fashion store Zoot, which funded its expansion by issuing bonds.

The main characteristics of the Macedonian banking market are its small size and the relatively large number of players. According to the latest reports of the National Bank of North Macedonia, out of fifteen active banks, five have significantly higher market shares than the rest. The combined market share of these five biggest banks is 74.4%, with a significant discrepancy between the bank that owns the largest amount of assets (a market share of 22.7%) and the one with the lowest (a market share of 0.5%).

Some might say that Serbia’s banking sector is blooming and steadily consolidating. Others may argue that actual consolidation is still far away. Either way, players on the local market are changing. This is clear now following the exit of Societe Genarale, BNP’s Findomestic, and two Greek banks, followed by the bold revamp of Hungary’s OTP and the strengthening of domestic investors such as AIK and Direktna Bank.

The wide usage of benchmark rates and their key role in the financial system requires that they be reliable and defiant to any manipulation. To ensure this, the EU undertook to reform the benchmark rate determination process and improve market confidence in them, resulting in the adoption of the EU Benchmarks Regulation (the BMR).

When investors think of attractive and developed capital markets, Croatia’s is probably not the first to come to mind. Can that be changed? 

In 2013, a wide range of changes were introduced in relation to the London Inter-Bank Offered Rate. A staple for a wide range of financial products, LIBOR has been the dominant rate for syndicated loans, bonds, and derivatives entered into on the Bulgarian, CEE, and wider European markets. However, following a series of problems over the past decade, the need to move away from LIBOR has become apparent. As panel banks would not be required to submit their references by the end of 2021, the question has become what the alternatives to LIBOR are and how they can be implemented.

One of the challenges of introducing class actions to the Czech legal system is the finding of a proper balance between the interests of clients and those of attorneys. While the default position is that attorneys are to protect the justified interests of their clients and place them before their own (within statutory limits, of course), a careful balancing exercise will need to be carried out if class actions are to be allowed. While class action law is still at the stage of an initial proposal in the Czech Republic, this proposal is demonstrative of the direction the Czech Ministry of Justice intends to take.

If you decide to apply for bank financing, you will need to consider not only the financial terms of the loan but also whether you are ready to allow the bank to access your assets as collateral. It will probably ask for the following guarantees.

The new Serbian Act on State Aid Control ("SAA")1 has entered into force. Its implementation, apart from the provisions on organisation of the Commission on State Aid Control ("Commission"), will begin on 1 January 2020.

In the light of the favourable economic climate and affordable financing sources, Slovenia has been facing a lively M&A market in the recent few years, especially in the area of commercial real estate. Further, companies are eager to refinance their existing debt or borrow new funds under the more favourable conditions currently available on the market.  Since the majority of financing is done via standard bank financing, every deal poses the same old question: “How will be the loan secured”?

On 11 November 2019, the European Union adopted a legal framework for restrictive measures against Turkey. The EU is thus responding to Turkish exploratory drilling for natural gas deposits off the Cypriot coast, which Cyprus and the European Union consider illegal. The legal framework will make it possible to sanction individuals or companies responsible for or involved in drilling activities in the Eastern Mediterranean. However, no specific measures have been imposed yet.

When it comes to instances of compensation, this is not always the case. The European Court of Justice (ECJ) has recently reiterated that compensation for damages or contractual penalties may also qualify as consideration for a service for the purposes of VAT. This is important because consideration (i.e. the price of a service) is subject to VAT, whereas compensation is not. This could affect so-called loyalty periods or other fixed-term services in particular.

The Court of Justice of the EU (CJEU) recently dealt with "appropriate compensation" due in cases where a preliminary injunction based on IP rights was lifted or not rectified in subsequent main proceedings.