INTERNATIONAL: IOSCO Approves Enhanced Standard for Cross-Border Enforcement Cooperation

Monday April 3 2017

The members of the International Organisation of Securities Commissions (IOSCO) have approved the Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (EMMoU), which offers securities regulators new enforcement powers for responding to the challenges arising from recent developments in global financial markets.

Both the MMOU and the EMMoU provide a mechanism for securities regulators to share essential investigative material, such as beneficial ownership information, and securities and derivatives transaction records, including banking and brokerage records. Both documents also set out specific requirements for the exchange of information, notably ensuring that no domestic banking secrecy laws or regulations prevent the sharing of enforcement information among securities regulators.

The EMMoU, however, provides for additional enforcement powers that IOSCO believes are necessary for continuing to safeguard the integrity and stability of markets, protect investors, and deter misconduct and fraud. The ACFIT powers, as they are known, will enable members to:

• Obtain and share audit work papers, communications and other information relating to the audit or review of financial statements;
• Compel physical attendance for testimony (by being able to apply a sanction in the event of non-compliance);
• Freeze assets if possible, or, if not, advise and provide information on how to freeze assets, at the request of another signatory;
• Obtain and share existing Internet service provider records (not including the content of communications), including with the assistance of a prosecutor, court or other authority, and to obtain the content of such communications from authorised entities; and
• Obtain and share existing Telephone records (not including the content of communications), including with the assistance of a court, prosecutor, or other authority, and to obtain the content of such communications from authorised entities.

In addition, the EMMoU envisages the obtaining and sharing of existing communications records held by regulated firms.

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