Basel II Certification and Compliance in the European Union

In order to comply with Basel ii in the European Union (EU), it is important to understand the unusual way in which the European Union works.

Basel II is a best practice. It is an Accord, not an Act. A general framework that gives many levels of freedom to national supervisors. The Basel Committee does not possess any formal supranational supervisory authority, and its conclusions do not have legal force.

Basel ii will be implemented in the European Union via the Capital Requirements Directive (CRD), which is legally binding for every member state of the EU.  This directive is making significant changes to two existing directives that were implementing Basel I in EU: The Banking Consolidation Directive and the Capital Adequacy Directive. Financial institutions have to persuade their regulators that not only they have allocated capital for their risks, but also they have implemented best risk management and governance practices.

Managers and professional having to implement Basel ii in the European Union have to read and understand:

1. The Basel ii papers from the Bank of International Settlements. It is impossible to avoid these papers, because it will be impossible to understand the requirements that follow.

2. The Capital Requirements Directive (in fact there are two directives: 2006/48/EC and 2006/49/EC).

Basel ii is an idea, a best practice. These directives describe what exactly we have to do in order to implement Basel ii in the European Union.

3. The guidelines from the Committee of European Banking Supervisors. An official interpretation of Basel ii as seen using the lenses of the Capital Requirements Directive.

4. The choices of the national supervisors. Basel ii gives many levels of freedom to each country, and professionals have to learn the “national discretions” and options.

5. Each bank’s approaches, choices and options. We have very different Basel ii implementations even if we compare banks in the same country using the same approach.

6. The Home/Host challenges for capital allocation and supervision on a consolidated basis.

There are also a lot of challenges. In Sarbanes-Oxley, there are only two different implementations: One for US domestic companies and one for foreign (no US) companies. In Basel II, in 100 countries we have 100 different implementations. Fortunately, we will have fewer differences among the EU countries because of the Capital Requirements Directive, this great opportunity for consistency and harmonization.

But what is a European directive?

We will start from what is the European Union.

The countries that make up the EU (the member states) remain independent sovereign nations but they pool their sovereignty in order to gain a strength and world influence none of them could have on their own. Member states delegate some of their decision-making powers to shared institutions they have created, so that decisions on specific c matters of joint interest can be made at European level.

It is not a federation like the United States, and it is not an organisation for cooperation between governments, like the United Nations. The EU is unique.

The three main decision-making institutions are the:

A. European Parliament (EP), which represents the EU’s citizens and is directly elected by them;

The Parliament has three main roles.

1. Passing European laws – jointly with the Council in many policy areas. The fact that the EP is directly elected by the citizens of the EU helps guarantee the democratic legitimacy of European law.

2. Parliament exercises democratic supervision over the other EU institutions, and in particular the Commission. It has the power to approve or reject the nomination of commissioners, and it has the right to require the Commission as a whole to step down.

3. The power of the purse. Parliament shares with the Council authority over the EU budget and can therefore influence EU spending. It adopts or rejects the budget in its entirety.

B. Council of the European Union, which represents the individual member states;

The Council is the EU’s main decision-making body. Like the European Parliament, the Council was set up by the founding Treaties in the 1950s. It represents the member states, and its meetings are attended by one minister from each of the EU’s national governments.

Which ministers attend which meeting depends on what subjects are on the agenda. If, for example, the Council is to discuss environmental issues, the meeting will be attended by the environment minister from each EU country and it will be known as the ‘Environment Council’.

The EU’s relations with the rest of the world are dealt with by the ‘General Affairs and External Relations Council’. But this Council configuration also has wider responsibility for general policy issues, so its meetings are attended by whichever minister or state secretary each government chooses.

The Council has six key responsibilities:

1. To pass EU laws – jointly with the European Parliament in many policy areas.

2. To coordinate the broad economic and social policies of the member states.

3. To conclude international agreements between the EU and other countries or international organisations.

4. To approve the EU’s budget, jointly with the European Parliament.

5. To define and implement the EU’s common foreign and security policy (CFSP) based on guidelines set by the European Council.

6. To coordinate cooperation between the national courts and police forces in criminal matters.

Most of these responsibilities relate to the Community domain – i.e. areas of action where the member states have decided to pool their sovereignty and delegate decision-making powers to the EU institutions. This domain is the ‘first pillar’ of the European Union.

C. European Commission, which represents the interests of the Union as a whole.

The Commission is independent of national governments. Its job is to represent and uphold the interests of the EU as a whole.

It drafts proposals for new European laws, which it presents to the European Parliament (EP) and the Council.

It is also the EU’s executive arm – in other words, it is responsible for implementing the decisions of Parliament and the Council. That means managing the day-to-day business of the European Union: implementing its policies, running its programmes and spending its funds.

Like the EP and the Council, the European Commission was set up in the 1950s under the EU’s founding Treaties.

THE CODECISION PROCEDURE

Having been established by the Maastricht Treaty, and extended and adapted by the Treaty of Amsterdam to make it more effective, the codecision procedure now covers 43 areas under the first pillar (based on the Treaty establishing the European Community) following the entry into force of the Treaty of Nice.

As defined in Article 251 of the EC Treaty, the codecision procedure is the legislative procedure which is central to the Community’s decision-making system. It is based on the principle of parity and means that neither institution (European Parliament or Council) may adopt legislation without the other’s assent.

The ‘institutional triangle’ produces the policies and laws that apply throughout the EU. In principle, it is the Commission that proposes new laws, but it is the Parliament and Council that adopts them. The Commission and the member states then implement them, and the Commission enforces them.

If we want to add a fourth body, it should be the Court of Justice of the European Communities (often referred to simply as ‘the Court’). It is based in Luxembourg. Its job is to make sure that EU legislation is interpreted and applied in the same way in all EU countries, so that the law is equal for everyone.

It ensures, for example, that national courts do not give different rulings on the same issue. The Court also makes sure that EU member states and institutions do what the law requires. The Court has the power to settle legal disputes between EU member states, EU institutions, businesses and individuals.

International Domains: Soviet Union

The Soviet Union (USSR) has, for a large portion of the 20th Century, been a major part of modern day history and has been a huge shaping point of Russian and Eastern European life and culture. The Soviet Union fully dissolved in 1991 one and they have left many traces of the former might. One of these traces can be found with the peculiar presence of the Soviet Union country-code top-level domain .su that still continues to attract people looking to register a new domain despite the former socialist beast being a remnant of the past.

Officially, the .ru domain name for Russia was issued shortly after the dismantlement of the Soviet Union, and many cases, it has succeeded to do so as.ru is the most popular domain in usage in Russia. The question is, why didn’t the .su domain die with the Soviet Union?

The answer lies with the great value the domain carries with its history. It is a relic; an artifact. The .su domain was introduced shortly before the Union’s collapse, so it saw very little official usage. That’s not to say ICANN (Internet Corporation for Assigned Names and Numbers) did not try to terminate the domain – they were simply unable, despite their successful termination of .yu and .cs, the former country-code top level domains for Yugoslavia and Czechoslovakia. The reason for .su continuing survival is mainly due to the sense of intense ownership many people have of the domain – be it for patriotic reasons, or political reasons.

Are there others who use the .su domain, you may ask?

The .su domain is also sought by individuals or companies seeking a profit due to the lucrative, unique nature of the ccTLD. The domain is also used by individuals for its historical properties. As I said, the ccTLD of the Soviet Union is an artefact of the past, making it the perfect avenue for registering domains relating to the modern history of Russia, such as the website stalin .su.

The .su domain has also proven to be popular amongst hackers and cyber criminals, due to the lack of stringent enforcement that is becoming prevalent in the official.ru domain.

Since ICANN is still determined to discontinue the .su Soviet Union domain, as a warning for those looking to register, to be prepared for the eventuality that the .su ccTLD is closed, and therefore their domain would be shut down.

East-European Views – The Society, The Devils Of Us, And Why Do We Manufacture Them?

a) The Central European region of Czecho-Slovakia recently underwent more changes than countries that are embodied in their West-European integrity. This has also affected many areas of various subjects, where we can see “transformation earthquakes”.

If we are one day exposed to extreme temperature and another day to extreme frost, we differently react to our environment than other people – we unusually create and condition our social organism. We are conditioning others and being conditioned by continuous interactions. Society behaves like a physical body when, for example, a lost eye may cause a car accident and hence the subsequent death. We must keep our eyes open.

The velvet revolution in 1989 brought a lot of positive and negative facets. As a poet says – “In decay lies the highest beauty and the devil is God’s highest goodness. Wonderful is the swift work of destruction in autumn.” (Edith Södergran, Finnish poet, 1892-1923.) The “swift work of destruction” gave birth to things that we only heard of from the Western world – market economy; unemployment; drugs; uncertainty; boom of spiritualism; overhanging rock faces between the rich and the poor; terrorism. All these domains have their subdomains.

Here I will clearly and briefly describe the above-mentioned impacts on East-Europeans: MARKET ECONOMY – it makes a lot of people busy, parents have not time for their children, which may result in social pathological activities. Poorer economic situation demands to have more jobs. UNEMPLOYMENT – we have to study a lot of western literature to know how to cope with this burden. It is connected with drugs, gambling, crimes, suicides, family splits and quakes. DRUGS – we have a lot of drugs. Only recently did the legislative bodies start to fight against them. There is a little mentioned about the negatives of drugs in mass media. Some parents or children are completely uninformed about this issue. UNCERTAINTY – the psychological impact of it is more visible here than in the West due to the fact that we have not yet been accustomed to it contrary to people in the West. BOOM OF SPIRITUALISM – many youngsters are caught in the claws of sects and do not realize that it is only “ideological Coca Cola” that brings money and high standard of life to “Coca Cola gurus”. THE RICH AND THE POOR – more visible differences make the poorer people more distressful. However, the rich think that money buys anything and these people are actually invincible. This also includes political parties. TERRORISM – we do not have terrorism but with borders open there is a possible risk. However, the rise of social pathological phenomena gives birth to various conflicts of violence between some social groups (entrepreneurs, gypsies, etc.) due to the fact that some socially pathological persons explain democracy as a possibility to do everything.

Prague was the capital of Czechoslovakia and some Slovak psychologists did not like the idea of group directive thinking that had always been woven in Prague. Psychologists separated, as other social groups, in two camps – one for independent Slovakia, another for Czechoslovakia. (Now this can be seen in a progovernment and antigovernment thinking.) I did not belong to any group. I had always been against groups. Part of colleagues started to work at politics and also top politics. The major part of psychological community consists of psychologists working in counseling centers, hospitals, schools, and other state institutions. They strive for better times without having accepted the fruit of all-possibility world (i.e. they do not work as counselors for business activities or politics).

One colleague called the years of Czechoslovak psychological community as the years of asymmetrical model. In the 1990’s, psychology was accepted as an independent professional subject. Till then psychologists had only been workers assigned to various expert subjects, e.g., school and culture resorts, health resort, etc.

The most significant thing was that we were able to achieve final parliamentary proposal of the bill concerning psychological activities. We must say that the works for the preparation of innumerable versions of the law and its repeated submissions to the Slovak Parliament were often inhibited by some our colleagues rather than by people from other professions. Finally, the law No. 199/1994 from 13th July 1994 on psychological activity slithered to light.

There is a significant limitation of bilateral cooperation with Czech psychological community. Even though we could find objective reasons for this condition, I still think that we could have done more in this direction.

The positive thing brought by 1989 is the fact that psychology got out of political supervision and that there was a possibility of mutual competition in providing psychological services.
Moreover, we have the law that will start to gradually control private psychological practice so as to avoid it to be incompetently abused by wrong hands. This law is not in all East-European countries.

If I am to speak about the negatives, let me at least mention frequent endeavor of some specific group interests to be above the development of our endeavor and our psychological practice as a whole (group thinking). A good example of this is the last (and unfortunately valid) modification of the law about machine guns and ammunition where a compulsory psychological screening for applicants of machine guns was excluded. This happened mostly due to the fact that some groups of colleagues did not want to make mutual speech and more comprehensive analysis presumably under strong pressure of other groups.

b) Here I briefly introduce the evils and devils of us, the society: Market economy, unemployment, drugs, uncertainty, boom of spiritualism, the rich and the poor, terrorism. I do not want to make a comprehensive analysis. Let me repeat that this article is rather an essay. Now I will speak a little more about each above-mentioned facet.

Market economy. It is the only solution for our future, but it requires an understanding of all the INTERNET links of us, the devils (let me use a little humor). If someone wants to build a market economy and does not realize that we all are the part of this world with our mutual variability, co-responsibility and interactions, he may devastate other people. The consequence of this, as of any other behavior, shall breed transformations. This mostly concerns the people who have authority and decision-making power. Some economists shall probably never realize that greediness (and lack of ethos) in technological development is in interaction with social pathology, ecology, and other phenomena. If you imagine how much investment is going into the pits of darkness, you may have headaches. Let me give you just an example of American films of violence. Imagine how much money is invested in these films. Imagine children seeing them every day and trying to imitate them. I think that the priorities for us, the humankind, are peace, mutual understanding, tolerance of our variability, help, love, holistic approach, etc. We should invest money for doing and enhancing these values and I believe that this could be only done in the form of speakers for public opinion-making. The world would be then at least a little better. These speakers should be tolerant and educated men or women who should be more often seen on our TV screens. “Devils” from horror films make happy only the authors until their children are not murdered by someone who imitates their screenplays. Market economy requires a very skilled attitude of sophisticated supervision.

Unemployment. This phenomenon has a lot of to do with one’s attitudes. If you are educated and unsuccessful to find a job, you must learn to be resistant to avoid frustration and depression. Unemployment is linked with our evil society. This society stigmatized us with a feeling that when you are unemployed you do not mean anything, which is not truth. We should change our views in this sense to realize that we are maybe more fruitful for the world than people who are employed and who devastate nature and us. This view should be proposed to schools and educate children in this direction. The society stigmatized us with mechanism of “awards” – it is generally accepted that if you are not successful, you are inferior to others. This is not truth. (For example, responsible for this are lower establishments of education. They should use very subtle forms for marking pupils – colors, acceptable pictures of animals, etc, or no marking at all, but motivation must also be in consideration.) In Slovakia children are harmed by our school system but I do not believe that in the West the school system is much too better. Carl Rogers suggested that more money be given for developing our human environment (e.g., to impose a program on schools not to harm children by making one inferior and another one superior). The unemployed should be given a chance to be organized in social activities and public opinion-making.

Drugs. I believe that drugs are the problem only because there is not sufficient information, that there are not advocates who would have authority to speak against evil. I believe that it would be cheaper and more efficient than armies of armored policemen and soldiers who only try to stuff up the hole but do not realize why it is here. Currently a very bad incident happened in Australia (Tasmania) and many people were murdered by a crazy man. Let us look at this event in this light – the person was very unhappy (theoretical construction). Why? Society harmed him. How? Imagine that he was fired from his job only because he came late to work. What happened then? Then he had appendicitis and a doctor in a public hospital asked for a bribe. Did he give it to him? No. What happened then? The society made him feel inferior. He started hating all the people, took drugs and finally bought a gun and started killing. Most of us are not aware of co-responsibilities. Most of us are only stuffing up the holes.

I maintain that a lot of evil is done because of unfair treatment of our society. We must realize that there are weaker and stronger characters and that the weaker ones are more vulnerable. If there are no people who would “fly on drugs”, drugs would not be sold and used.

Uncertainty. This phenomenon is corresponding to unemployment in its nature. We need to develop positive attitudes for building a shield that would protect us against negative feelings. We should realize that human powers and weaknesses are relative. Uncertainty, in advanced countries, is mostly a result of wrong attitudes.

Boom of spiritualism. I believe that spiritual people have invisible horns. They spend hundreds of hours talking about Jesus but they do not realize that Jesus and Lord want this world to be a better place. Instead of speaking about Jesus or Vishnu they should rather speak to world economists and political leaders, speak against drugs, against intolerance. We all have mutual responsibility for one another. Imagine those people who do not go to church only because they do not like the priest and the priest is, hence, offended. If the priest showed real love and compassion, as Jesus showed to a prostitute whom the crowd wanted to stone, these people would go to church and would listen to the priest. I give you another example. Imagine I believe that the Lord created the devil as the opposition in the Congress (I am not a Republican). I think that devil is a friend of Lord who is vindicating the evil only to give Him criticism. If you are criticized, you are provoked and more creative. Yes people (almost all politicians have them) would hardly help the Lords and Gods and the devils. But if I go in any church and I tell this, all the “group-spirit” people will condemn me. They will tell me (this already happened to me) – “Devil is a big enemy. How can you say he is Lord’s friend? You must be a demon-possessed person.” Now, imagine other people than me, who, after being condemned, shall never contact believers because of possible rejection and feeling of inferiority in this group, and they start to look for other groups who, for example, will receive them but with ideas favoring terror and drugs; or imagine a theoretical person who, because of being condemned, refuses Catholics or Baptists and becomes a Witness of Jehovah. However, after a car accident his step child dies only because he refused the child to be given a blood transfusion. The real father of this child, who is a drunkard because his parents did not listen to priests in the same way as many other people do not listen to them because of the intuition of being rejected, will then possibly kill this step father and, as you can see it everywhere, the infinite chains of evil have continued in this form from the time the Lord created the first beast. Boom of spiritualism is more evil than it is good. We could avoid its negative effects by early psychological intervention that would develop understanding for harmony and our mutual variability. Only spiritual tolerance can be beneficial.

The rich and the poor. This is a very difficult issue but I think that we should see it, too, in the light of actions of chaining. The Australian gunman is now in prison and many people are dead. Yet, there may be many more people dead as we are still manufacturing the devils. We cannot tolerate. Why? Why it is difficult for Christians, who advocate love, to tolerate a man who thinks that Lucifer is God’s friend, or who speaks loud in church? These people will never like me and we can find the answer in history – we were taught to see everything as black and white, we were conditioned by wrong attitudes and wrong ideas that have been passed on from generation to generation (if you are not successful, you mean nothing; if you criticize me, you are my enemy; if you do not wear a tie, you must be a silly man; if you do not drive a car, you must be inferior, etc.) The poor and the rich. We cannot solve this problem entirely, but we can do a lot to contribute. If we invested less in films and less in not necessary technology and more in poor countries, we will also indirectly invest in the healthy existence that surrounds us. Helmut Kohl, the German Chancellor, had an exhaustive debate in German Parliament. He advocated Yeltsin, he said that Russia needed help, because he realizes that Russia and other countries are OUR responsibility, too. It is a pity that Helmut Kohl had to do this speech. The people around him should have known that investment in poorer countries shall bring a feed-back.

Terrorism. I will introduce a typical mistake of governments. British government refused to negotiate with IRA. Why? They said they had nothing to discuss with terrorists. But terrorists are here. They are reality. You must accept it as the sun. Then the British government changed their view and things got better. A similar mistake of US government in the past was done by rejecting Mr. Arafat a visa. There are people who have extreme demands, but if you are a politician, a leader, you must speak at least for the lives of those who live and who may be dead tomorrow. This is how it goes everywhere in the world. If politicians refuse, it may have a considerable impact. I do not want to favor IRA or Mr. Arafat or Hamas, but they are a reality. And the reality must be faced as it is whether we like it or not.

Conclusion

In this article I gave my opinions regarding social pathology in view that it is interconnected – both with history, presence and future – with all of us, and that the society is a factory that has a considerable participation in the manufacture of social pathology. I do not want to say that all the evil comes from society, it also comes from us – the individuals – but I believe that there is a lot that can be done for the sake of those who live and who may uselessly die tomorrow. We should develop social “Greenpeace” advocates for the benefit of our world, for those who live and who may yet be harmed. This would save our children, it would contribute to our benefit and to the benefit of state budgets of arms race.

Psychology, in former Czechoslovakia, is walking hand in hand with new trends, and even though there is a lot of to achieve, we have not to be ashamed of being in a position of telling that we know everything. Those who think they know everything hardly know a little, those who know they do know a little are more knowledgeable.

Security in Domain Registration – What’s all the Hype About?

Whether you are a small or large company, or simply interested in setting up your own personal website, what you need are effective solutions and the correct business tools at a respectable price to offer you peace of mind. I would strongly recommend not looking for cheap imitations of registrars offering you the best quality at ridiculously cheap prices as they don’t tend to go hand in hand. You should be looking for a registrar that will provide you a service that offers guaranteed performance, support, reliability, user-friendliness and, above all, SECURITY.

“But surely security is offered by all, right?”, I hear you ask. Although this statement is generally correct, this security aspect is often neglected by some registrars, even the top dogs in the business. Below are some key areas that you should consider regarding registration security, and will hopefully explain – without all the technical jargon – and assist you in deciding which registrar company suits your needs and expectations.

Why is security so important?

Security issues adopted by the principal registration companies guarantee that your domain is safeguarded against domain highjackers or others who want to transfer your domain(s) to another registrar without your specific authorization. The knock-on effects will not only imply losing your domain name but will also result in a costly downtime of yours and your customers´ websites. Furthermore, you could even look at it as a direct attack on your online identity, the traffic base you have worked so hard to attract on the reputation of your service and products.

Password based security

Let us take the example of Anakena.com, a leading European registrar whose company policy places an important emphasis on security, real-time customer support and a multilingual service. They use a system whereby all your communications are encrypted, which means that when you access your Anakena personal account page you are automatically transferred to a secured connection using the secured protocol https. This measure has been put in place to prevent possible uses of ‘sniffers’ in your online connection. Furthermore, their security procedure also prevents anyone using your email to reset your password. The procedure is simple, and requests that all those clients who have forgotten their password need to answer 2 questions before receiving an email to reset their new one. If that security hurdle isn’t enough to keep the most demanding client satisfied, then knowing that his/her password is then encrypted on the Anakena servers, where nobody is able to see it, is just another reassuring and preventive measure. As the saying goes, it is always better to prevent than to cure (especially if the curing period comes too late!).

Payment

Payment has always been a soft spot, due to the fear of your bank details, access codes and personal information falling into unknown hands. Not only this, but the majority of people who purchase a product or service over the web also want to know exactly how much it will cost (be sure to read the small print), what alternative payment methods exist and when you will get invoiced. This equation might simplify this:

Consolidated Payment Options*

+

Secure & Automated Invoicing

=

RELIABLE PAYMENT PROCESS YOU CAN TRUST

* Direct Debit, Wire Transfer and PayPal

On another note, you probably ask yourself, “Who keeps records of my credit card details?”. Well, Anakena, for example, doesn’t. Every payment is made with your bank directly and they do not have access to your card details. For them, there is nothing safer that your own bank processing your personal banking needs.

Account Lock

Another important factor you should consider when choosing the right registrar for you is the option of locking your account. The top players in the registration business may not even offer this feature in their service, resulting in greater exposure of your site to “domain predators” and infringing on the safety elements that a registrar might promise. A lock on the account allows only the website owner to modify features, personal information, and even transfer domains to another registrar/customer. This locked status will remain until the owner wishes to remove it. The only downside to this is that a registrar cannot modify illicit signups where a customer doesn’t include valid information. In the case of Anakena, for example, this information is screened upon registration and the company will contact the customer to request further information in order to complete the signup process. Not only is the company looking out for the interest of the customer but also the partnership it hopes to consolidate in the future.

Email notification

The leading registrar companies, and the vast majority of service providers online, have automated email notification systems set up that send you relevant news or updates to the website, your account interface, etc. However, there have been examples in the past where companies or individuals have not been informed instantly of technical aspects or modifications to the service they receive from the particular registrar. It may even be a question of days before they actually realise that something has been modified, caused by a failure to communicate effectively with their customers. But those companies who do, and devote paramount importance to keeping their clients informed are consolidating themselves in the market thanks to growing customer loyalty and a healthy increase in their customer base.