According to reports by international human rights organisations and by the media, over a hundred gay men in the Russian Republic of Chechnya have been abducted in recent days, as part of a coordinated campaign. The abducted men have reportedly been tortured and otherwise ill-treated, and forced to disclose other LGBTI individuals they know. Reports also indicate that at least three men have been killed by their captors.

If confirmed, these serious human rights violations would add to the long list of human rights abuses in Chechnya. Instead of supporting the rights of the victims, some officials of the Chechen Republic have even attempted to justify the violence against them. The Russian authorities have taken international human rights commitments that bind them at all levels to ensure the safety of all persons who may be at risk in Chechnya due to their sexual orientation.

Prompt, effective and thorough investigations into the reports of abductions and killings of gay men in Chechnya are indispensable so that anyone found guilty of or complicit in such crimes is brought to justice.

 

According to reports by international human rights organisations and by the media, over a hundred gay men in the Russian Republic of Chechnya have been abducted in recent days, as part of a coordinated campaign. The abducted men have reportedly been tortured and otherwise ill-treated, and forced to disclose other LGBTI individuals they know. Reports also indicate that at least three men have been killed by their captors.

If confirmed, these serious human rights violations would add to the long list of human rights abuses in Chechnya. Instead of supporting the rights of the victims, some officials of the Chechen Republic have even attempted to justify the violence against them. The Russian authorities have taken international human rights commitments that bind them at all levels to ensure the safety of all persons who may be at risk in Chechnya due to their sexual orientation.

Prompt, effective and thorough investigations into the reports of abductions and killings of gay men in Chechnya are indispensable so that anyone found guilty of or complicit in such crimes is brought to justice.

 

Export and import restrictions

Arms

Prohibition on the export and import of arms and related materiel of all types, including the provision of related technical and financial assistance or services or taking part in activities aimed at the circumvention of those prohibitions. Prohibition on related training including hosting of trainers, advisors, or other officials for the purpose of military, paramilitary, or police related training. Prohibition on services related to manufacture, maintenance or use and with respect to the shipment of items to or from the DPRK for repair, servicing, refurbishing, testing, reverse-engineering and marketing.

Prohibition on the supply, sale or transfer or export of any item if a Member State determines it could directly contribute to the development of the operational capabilities of the DPRK’s armed forces, or to exports that support/enhance the capabilities of armed forces of another State outside the DPRK. Certain exemptions apply.

Dual-use goods

Prohibition on the export and import of goods and technology which could contribute to the DPRK’s nuclear-related, other weapons of mass destruction-related or ballistic missile-related programmes, as determined by the UN Security Council or the UN Sanctions Committee, including a prohibition on the provision of related technical and financial assistance or services or taking part in activities aimed at the circumvention of those prohibitions. A trade ban applies for nuclear and/or missile-usable items as listed in Annex III of UN Security Council Resolution 2321 (2016) and a new conventional arms dual-use list which was adopted by the UN Sanctions Committee on 15 December 2016.

Prohibition on the export and import of certain other dual-use goods and technology, including dual-use goods as contained in Council Regulation (EC) No 428/2009 (“EU dual-use Regulation”), including any further items, materials, equipment relating to dual use goods and technology and a prohibition on the provision of related technical and financial assistance or services or taking part in activities aimed at the circumvention of those prohibitions.

Prohibition on the export and import of certain key components for the ballistic missile sector, including a prohibition on the provision of related technical and financial assistance or services, or taking part in activities aimed at the circumvention of those prohibitions.

Prohibition on the export and import of any other item that could contribute to the DPRK’s nuclear or ballistic missile programmes or to the evasion of prohibited activities, including a prohibition on the provision of related technical and financial assistance or services, or taking part in activities aimed at the circumvention of those prohibitions.

Gold, precious metals, diamonds

Prohibition on trade in gold, precious metals and diamonds with the Government of the DPRK, its public bodies and the Central Bank of the DPRK, or persons and entities acting on their behalf or at their direction, including a prohibition on the provision of related technical and financial assistance.

Minerals

Prohibition on any import directly or indirectly from the DPRK, from its territory or by its nationals or using its flag vessels or aircraft, of coal, iron and iron ore, gold, silver, copper, nickel, zinc, titanium ore, vanadium ore and rare earth minerals. Certain exemptions apply for coal and iron supply, sale or transfers; in particular UN Security Council Resolution 2321 (2016) established a specific regime for coal, including a cap on the total DPRK export to all UN Member States allowed each year, the management  of which is ensured by the UN Sanctions Committee.

Statues

Prohibition on any import directly or indirectly from the DPRK, from its territory or by its nationals or using its flag vessels or aircraft, of statues, unless pre-approved by the UN Sanctions Committee on a case-by-case basis. 

Helicopters and Vessels

Ban on the direct or indirect supply, sale or transfer to the DPRK of helicopters and vessels, unless pre-approved by the UN Sanctions Committee on a case-by-case basis.

Banknotes and coinage

Prohibition on the delivery of DPRK denominated banknotes and coinage to the Central Bank of the DPRK.

Luxury goods

Prohibition on the direct or indirect supply, sale or transfer to the DPRK and import, purchase or transfer from the DPRK of luxury goods. The EU defines the latter in detail, with a list comprising 22 different categories of goods, for a total of over 300 items.

Aviation and Rocket Fuel

Prohibition of the sale or supply of aviation fuel, including aviation gasoline, naphtha-type jet fuel, kerosene-type jet fuel and kerosene-type rocket fuel, to the DPRK by nationals of Member States or from the territories of Member States, or using the flag vessels or aircraft of Member States, whether or not originating in the territories of Member States.

Petroleum

Prohibition of the import, purchase or transfer from the DPRK of petroleum products not covered by UN Security Council Resolution 2270 (2016).

 

Restrictions on the provision of certain services

In addition to the ban on providing services related to the items and technology that could contribute to the DPRK’s nuclear, other WMD and ballistic missile programmes, prohibition to provide, directly or indirectly, computer or related services, services incidental to mining and services incidental to manufacturing in the chemical, mining and refining industry, to any natural or legal person, entity or body in, or for use in the DPRK. Certain exemptions apply.  

Restrictions on financial support for trade

Prohibition on the provision of public and private financial support, including the granting of export credits, guarantees or insurance, for trade with the DPRK to their nationals or entities involved in such trade, unless pre-approved by the UN Sanctions Committee on a case-by-case basis.

Investment

Prohibition on investment by the DPRK (entities and persons) in the territories under the jurisdiction of the Member States.

Prohibition on the acquisition or extension of a participation, the creation of any joint venture or the provision of investments services in, with or to  entities in the DPRK, that are engaged in activities relating to the DPRK’s illegal programmes or in the mining, refining,  chemical industry, conventional arms-related industry, metallurgy and metalworking, and aerospace . Ban on any financing or financial assistance to entities in the DPRK that are engaged in these activities.

Financial sector

Financial assistance by Member States to the DPRK

Prohibition on new commitments for grants, financial assistance and concessional loans to the DPRK by Member States, except for humanitarian and developmental purposes addressing the need of the civilian population or the promotion of denuclearisation. Member States shall exercise vigilance with a view to reducing current commitments.

Transfer of funds

Prohibition on the transfer of funds to and from the DPRK.  Financial institutions under the jurisdiction of Member States shall not enter into, or continue to participate in, any transactions with banks domiciled in the DPRK, including branches or subsidiaries and the Central Bank of the DPRK.

Transactions falling within certain specified categories are exempted, for example transactions regarding foodstuffs, healthcare or medical equipment, or for agricultural or humanitarian purposes. Transactions above a certain threshold have to be pre-authorised.

Monitoring of financial activities of financial institutions

Enhanced monitoring by Member States of activities of financial institutions within their jurisdiction in relation to their activities with regard to DPRK banks, branches and subsidiaries of DPRK banks and financial both inside and outside EU and, entities controlled by DPRK persons and entities, to avoid such activities contributing to the DPRK’s illegal programmes.

EU financial institutions are required in their activities with such banks and financial entities to exercise continuous monitoring of account activity, require completion of all information fields of payment instructions, maintain records of all transactions for a period of 5 years and report transactions they suspect may contribute to the DPRK’s illegal programmes to national competent authorities.

Branches, subsidiaries and corresponding banking relations

Prohibition for DPRK financial institutions, including the Central Bank of the DPRK, to open branches, subsidiaries or representative offices in EU. Obligation on Member States to close existing branches, subsidiaries and representative offices; and terminate any joint ventures, ownership interests or correspondent banking relationships with DPRK banks in their territory.

DPRK banks can no longer establish joint ventures with, take an ownership interest in EU banks or establish corresponding banking relations with EU banks. Obligation for EU entities to terminate existing joint ventures, ownership interest and correspondent banking relationships.

Financial institutions within the territories of Member States or under their jurisdiction shall be prohibited from opening representative offices, subsidiaries, branches or banking accounts in the DPRK. Existing representative offices, subsidiaries or banking accounts in the DPRK shall be closed, unless the UN Sanctions Committee determines otherwise on a case-by-case basis.

DPRK bonds

Prohibition on trade and related services for DPRK public or public-guaranteed bonds issued after 18 February 2013 with the Government of the DPRK, the Central Bank of the DPRK and other DPRK banks or financial institutions.

Transport sector

Inspections

Obligation for Member States to inspect all cargo (including personal luggage and checked baggage of individuals) to and from the DPRK, and cargo brokered or facilitated by the DPRK or DPRK nationals or persons or entities acting on their behalf, either via land, sea or air, for the purposes of ensuring that the cargo does not transfer items prohibited by UN Security Council resolutions. Inspection shall also take place when there are reasonable grounds to believe that the cargo contains items whose supply, sale, transfer or export is prohibited under Council Decision 2016/849.

Requirement to inspect vessels on the high seas where there are reasonable grounds to believe that vessels carry prohibited items.

Access, landing, taking off and overfly

Obligation for aircraft and vessels transporting cargo to and from the DPRK to supply additional pre-arrival and pre-departure information for all goods brought into or out of EU.

Obligation to deny vessels which refuse inspection entry to Member States’ ports. Obligation to prohibit the entry into Member States’ ports of any vessel that is owned, operated or crewed by the DPRK, unless there is an emergency.

Obligation to deny permission to land in, take off from or overfly  Member States’ territory to any aircraft, operated by DPRK carriers or originating from the DPRK, unless there is an emergency.

Prohibition to take part in activities aimed at the circumvention of the above transport sector measures.

Bunkering

Prohibition on the provision of bunkering or ship supply services to DPRK vessels if there are reasonable grounds to believe that the vessels carry prohibited items, unless necessary for humanitarian purposes.

Leasing, chartering, crewing services, insurance and re-insurance, and registering of vessel and aircrafts

Prohibition on nationals of Member States from leasing, chartering flagged vessels, aircraft or providing or procuring crewing services to or from the DPRK, designated persons and entities, or any persons or entities whom the Member State determines have assisted in in violation of UN Security Council resolutions.

Obligation to de-register any vessel that is owned, operated or crewed by the DPRK and not to register any such vessel that is de-registered by another Member State.

Prohibition on nationals, entities and persons within the territory of Member States from registering vessels in the DPRK or obtaining authorization for a vessel to use the DPRK’s flag. Member States are prohibited from owning, leasing, operating, or providing vessel classification, certification or associated service and insurance, to any DPRK-flagged vessel.

Prohibition on persons and entities subject to the jurisdiction of the Member States from providing insurance or re-insurance services to vessels owned, controlled or operated, including through illicit means, by the DPRK, unless exempted by the UN Sanctions Committee on a case-by-case basis.

Obligation for Member States to implement the measures decided by the UN Sanction Committee for the vessels that the latter has listed, on the basis of information that provides reasonable grounds to believe that the vessels are involved in prohibited activities.

Scientific and Technical Cooperation

Obligation on Member States to suspend scientific and technical cooperation involving persons or groups officially sponsored by or representing the DPRK except for medical exchanges unless:  (a) in the case of scientific or technical cooperation in the fields of nuclear

science and technology, aerospace and aeronautical engineering and technology, or advanced manufacturing production techniques and methods, the UN Sanctions Committee determines on a case-by-case basis that a particular activity will not contribute to the DPRK’s proliferation, sensitive nuclear activities or ballistic missile-related programmes;  or (b) In the case of all other scientific or technical cooperation, the Member State determines that the particular activity will not contribute to the DPRK’s proliferation sensitive nuclear activities or ballistic missile-related programmes and notifies the UN Sanctions Committee in advance of such determination.

Restrictions on admission and residence

Restrictions on admission

Prohibition to admit, even if only for transit, to the territory of the Member States persons responsible, including through supporting or promoting, for the DPRK’s nuclear-related, ballistic missile-related or other weapons of mass destruction-related programmes, and persons acting on their behalf or at their direction.  This includes members and officials of the Government of the DPRK and the DPRK’s Armed Forces that a Member State determines are associated with the DPRK’s prohibited activities. 

Prohibition to admit, even if only for transit, to the territory of the Member States persons who provide financial services or the transfer to through or from Member States’ territory of any financial or other assets or resources that could contribute to the DPRK’s nuclear-related, ballistic missile-related or other weapons of mass destruction-related programmes, or persons who are involved in the supply to or from the DPRK of arms and related materiel of all types, or dual-use goods.

Prohibition to admit, even for transit, to the territory of the Member States persons working on behalf of or at the direction of listed persons and entities, or persons assisting in the evasion of sanctions or violation of relevant UN Security Council Resolutions and EU norms.

Humanitarian and certain other exemptions apply.

Restrictions on residence

Obligation to expel from the territory of Member States DPRK diplomats, government representatives, other DPRK nationals acting in a governmental or representative office capacity, and DPRK or foreign nationals if a Member State determines are working on behalf or at the direction of a designated person and/or entity or of a person and/or entity assisting in evasion or violation of restrictive measures.

Obligation to expel persons who are working on behalf or at the direction of a DPRK bank or financial institution, unless  the presence of the person is required for fulfilment of a judicial process or exclusively for medical, safety or humanitarian purposes.

Freezing of funds and economic resources

Obligations to freeze all funds and economic resources belonging to the same persons as referred to under “restrictions on admission” and on entities involved in the activities mentioned above for “restrictions on admission”. It is also prohibited to make funds or economic resources available to these persons and entities. Likewise, it is prohibited to take part in activities aimed at the circumvention of those measures. A number of standard exemptions apply, inter alia in relation to funds and economic resources necessary to satisfy basic needs and for the payment of legal services.

Obligations to freeze all funds, financial assets, and economic resources that are owned or controlled, directly or indirectly, by entities of the Government of the DPRK or the Workers’ Party of Korea, or by persons or entities acting on behalf of or at their direction, that are associated with prohibited activities.

Obligation to close the representative offices of designated persons and entities, as well as of any persons or entities acting on behalf of such designated persons or entities, as well as to prohibit them from participating in joint ventures and any other business arrangements.

Other restrictive measures

Specialised teaching or training

Obligation for Member States to prevent specialised teaching or training of DPRK nationals in disciplines that could contribute to the DPRK’s proliferation-sensitive nuclear activities and the development of nuclear weapon delivery systems, including teaching of advanced physics, advanced materials science, advanced computer simulation and related computer sciences, geospatial navigation, nuclear engineering, aerospace and aeronautical engineering and related disciplines, advanced chemical, mechanical, electrical and industrial engineering.

DPRK diplomatic missions and diplomats

Obligation for Member States to exercise enhanced vigilance over DPRK diplomats in their territory so as to prevent them from contributing to the DPRK’s illegal programmes or other prohibited activities.

Obligation on Member States to prohibit the DPRK from using real property that it owns or leases in their territory for any purpose other than diplomatic or consular activities.

Obligation on Member States to limit the number of bank accounts to one per DPRK diplomatic mission and consular post, and one per accredited DPRK diplomat and consular officer at banks in their territory.

Seizure and disposal of prohibited items

Member States are obliged to, seize and dispose (such as through destruction, rendering inoperable or unusable, storage, or transferring to a State other than the originating or destination States for disposal) of items the supply, sale, transfer, or export of which is prohibited by  UN Security Council Resolutions 1718 (2006), 1874 (2009), 2087 (2013), 2094 (2013), 2270 (2016) or 2321 (2016) that are identified in inspections, in a manner that is not inconsistent with their obligations under applicable UN Security Council Resolutions, including Resolution 1540 (2004).

I am happy to be back at Eurofi at a time when the economic situation in Europe is improving. For the first time in almost a decade, the economies of all EU Member States are expected to grow this year and next.

Real GDP in the euro area has grown for 15 consecutive quarters. Employment is growing at a robust pace. Unemployment continues to fall, although it remains above pre-crisis levels. Private consumption is still the engine of the recovery. Investment growth continues even if it remains subdued.

In its latest forecast, the Commission expects GDP in the EU to grow by 1.8% both in 2017 and 2018. This tends to prove that our economic policy mix – investment, structural reforms and responsible fiscal policies – is working. It is important to stay the course.

However, this positive outlook remains surrounded by uncertainty. Progress is uneven across EU countries. We still see high levels of public and private debt. Many Europeans do not yet feel the economic recovery in their pockets, and perceive increased inequalities in our societies. And Europe is facing new geopolitical challenges, from migration to conflicts and instability in our neighbourhood. For the first-time a Member State is leaving the EU.

These challenges invite a broader reflection, and President Juncker has launched this with the White Paper on the Future of the EU.

But there are a number of areas in the financial sector where we can act to reduce uncertainty and strengthen the recovery:

–     first, we need to tackle remaining vulnerabilities in our financial sector, and non-performing loans are a case in point;

–     second, looking at the future, accelerating Capital Markets Union will unlock additional financing for growth;

–     and third, we need to develop our regulatory and supervisory framework to address new challenges.

Let me develop these three points.

First: non-performing loans.

A broad consensus has emerged that high ratios of NPLs in several member States are weighing on the performance and viability of the EU banking sector. This has negative implications for economic growth and financial stability.

Based on historical experience and current trends, if we do not accelerate the NPL clean-up, it would take another 10 years to clear the total current NPL stock. If however we were to tackle NPLs, the capital relief could support lending by up to EUR 500 bn over the next years, in particular in the Member States which need it most.

Within the EU, the level and structure of NPLs differ significantly across national banking sectors. Furthermore, most of the policy instruments to address NPL problems are within the competence of Member States. This suggests that Member States remain primarily responsible for addressing NPL problems.

However, there is a clear EU dimension: weak growth in some Member States due to high NPLs affects economic growth elsewhere, and investors often perceive the value and soundness of EU banks more generally and as a function of weak balance sheets of just some banks.

These spill-over effects suggest that national authorities and European institutions should join forces by designing an EU strategy which would support Member States in tackling NPLs. There is no silver bullet against this problem. We need a combination of measures. Solutions include reformed insolvency frameworks, stronger judicial capacity, and measures to foster larger and more efficient secondary markets for NPLs, including the possibility to set up national asset management companies based on a common blueprint.

We are not starting from scratch, but we need to accelerate and join up efforts.

I hope that at tomorrow’s ECOFIN we will see broad recognition that there is an EU dimension to NPLs, and broad support to agree on a common EU strategy with concrete deliverables.

The Commission is already actively contributing to a number of these efforts. We support reforms through the European Semester and the Structural Reform Support Service. We are helping Member States to design NPL measures within the EU state aid and resolution framework. And we are considering further EU initiatives to support legal reforms and secondary NPL markets.

This brings me to my second point: accelerating Capital Markets Union.

According to some estimates, the development of EU capital markets could unlock € 2 trillion of assets to invest in the EU economy and could lead to more than € 50 billion a year in additional financing for companies.

Building capital markets is a long-term project. We have to confront new challenges. Since last week, we have it confirmed black on white that Europe’s largest financial centre will leave the single market. This challenge should focus our minds. I see that there is a growing sense of urgency for developing a Capital Markets Union amongst the 27 remaining Member States.

We have made a good start: the Commission has delivered on 16 out of the 37 measures of the CMU Action Plan. And we have high hopes that the European Parliament and the Council will soon deliver on their side, in particular on securitisation and venture capital.

It is now time to build on this and accelerate CMU. Our consultation which has just closed is showing strong support for the objective of a stronger capital markets system. This will help us launch a CMU mid-term review in the summer.

We will stay firmly focussed on the core policy themes of the CMU action plan: improving access to risk finance for SMEs; enabling institutional investors to invest in longer-term assets such as infrastructure and energy transition; more effective and rewarding retail investor engagement with capital markets; sustainable and green finance; removing remaining barriers to cross-border investment.

However, in the second phase of the project, we will refresh our strategy to make sure we deliver on our objectives, and establish Capital Markets Union by 2019.

And we need to ensure that we have the right supervisory framework for our integrated financial markets, which is my third point.

Since their establishment, the European Supervisory Authorities have contributed significantly to a robust financial framework for the Single Market, also underpinning Banking Union. However further progress in supervisory convergence is needed to promote the CMU for all EU Member States, improve integration within the single market and safeguard financial stability.

While the ESAs have started to shift attention and resources to analyse risks to consumers and investors and undertake more work to increase supervisory convergence, work in this area must be accelerated. The ESAs also have a major role to play to capture the growing benefits of technological developments such as FinTech, whilst addressing any possible risks arising in this context.

We need to reflect on what possible changes to the current legal framework are needed to enable the ESAs to fully deliver on their mandates. In order to gather evidence, the Commission has recently launched a public consultation focusing on a number of issues related to the ESAs’ tasks and powers; governance; supervisory architecture; and funding.

Our aim is to identify areas where the effectiveness and efficiency of the ESAs can be strengthened and improved.

An area in which Brexit will profoundly change the EU’s financial landscape is central clearing of derivatives. Today the United Kingdom accounts for a significant amount of Europe’s clearing activities.

So it is all the more important to consider how Europe’s framework for the clearing market will develop. Let me mention four points on this.

First of all, our recent consultations showed that with EMIR we have a framework which is considered to have brought transparency and mitigated systemic risks in derivative markets, and which is here to stay.

Second, we will continue our efforts to make the system more efficient and reduce disproportionate costs and burden. We have received many sensible suggestions from stakeholders on: how to better calibrate the application of some requirements to specific actors, notably to non-financial counterparties, pension funds and small financial counterparties. We will come out with legislative proposals on our review very soon.

Third, Europe’s clearing markets should continue to be part of integrated international markets. In this and in other areas we are committed to maintaining and developing strong international standards, and we expect the same from our international partners. Based on these standards, the principle of equivalence is key to EMIR. We have only recently extended equivalence to a number of jurisdictions. We have recalled the key features of our equivalence system in a Staff Working Document. And we are open to further develop equivalence where necessary.

Fourth, and finally, – not least due to the success of EMIR – ever larger volumes of derivatives are cleared centrally in a small number of CCPs which are of systemic relevance across the EU. As also set out in our consultation in the ESAs review, we will therefore need to consider how to continue developing the EU’s supervisory and resolution system.

A specific issue in this context is how to deal with the fact that a very significant proportion of clearing activities in certain market segments currently occurs in the UK. That activity would in future therefore be outside the EMIR framework. This will surely be a matter of important reflection in the coming months and years. 

Ladies and gentlemen,

There is a lot of work ahead of us. But let us not detract from one fundamental truth: For financial markets in Europe, and even more so in the future Europe of 27 Member States, integration is an existential question. Only together we have the depth and liquidity for markets to function efficiently, the scope for innovative finance to develop and scale up, and the strength to finance our economies.

I am looking forward to continue working with you to capitalise on the strength of the EU’s internal market for financial services, in support of Europe’s economy and its citizens.

Thanks for your attention