12 February 2025 | Interview with Andrea Brancatelli
Regulations
General Counsel Insights – Regulations and Innovation in the European Financial Sector
Given the attention that the European regulatory system has been given recently, ECLA is conducting an interview series with (senior) corporate lawyers to better understand how Europe should move forward. We believe that corporate lawyers are in a unique position to comment on this matter, given that their work largely consists of navigating around the relevant pieces of legislation both on a national and on a European level.
This interview was conducted with Andrea Brancatelli, Legal Director at Moneygram International, an international peer-to-peer payments and money transfer company. With that in mind, the interview and comments focus more on the financial services sector, which is already one of the most tightly regulated industries in the EU.
Starting off with a broader question – as a consumer, would you agree that the EU has the best standards for its citizens globally?
Thank you for setting this up. It is very timely, as I deal with new regulations daily. The sheer volume of emerging regulations is massive and continues to grow, especially in my role within a global organisation in the financial sector.
As for the first question, I really see the contrast between the US, who, as the traditional motto says, want to innovate, whereas Europe wants to regulate. I think that, as a consumer, Europe has got standards. I don’t know if they are the best standards, but it has got standards. I think this is the main difference. While other jurisdictions potentially have competitors and the markets setting the standards instead, in Europe, the rules and regulations set the standards for its consumers and businesses.
As a lawyer, this perspective is quite clear. However, from a consumer’s standpoint, I find that my view on the EU’s rules-based standards and their impact on consumers potentially aligns with that of my peer in the US, who operates within a market-driven framework.
Nevertheless, it’s a difference in philosophy. It’s a difference, ultimately in the way that we consume things and in the way that we look at consumption, I think as well.
Taking that into consideration, do you feel that EU legislators take adequate considerations when proposing new regulatory frameworks?
Based on my experience in the financial sector, I would say that they consider the necessities and impacts of businesses in the second phase, but not in the first phase of planning. However, this could, potentially, be too late for adequate impact. I read this article recently, which concluded that 2025 will be the year of the regulatory avalanche in the EU. I found that very, very interesting. In other words, the legislators decide to create rules, having already concluded the necessity of said rules and only during the implementation phase will they ask for the view of the business. However, at that point, the rules can potentially become too convoluted or overlap with existing regimes or even contradict ongoing business practices. So, yes, the businesses are being consulted, but more effort should be made in the initial steps to include those, whom the legislation directly affects.
Additionally, it really depends on which agency will regulate said legislation. Every regulator has a different approach, but across EU, and especially in the financial sector, we have these EU supervisory colleges that I find very useful.
As a follow-up question to that, would you then agree that this process is more political than it should be?
Exactly. This is a political decision to regulate and to regulate with such ambition. However, this also entails that our position as a business or as an industry often cannot change the winds driving these political changes. This could lead to the regulatory process to be much more reactionary than it ought to be.
Does that also then mean that companies can be at the mercy of who the national regulators themselves are? For example, data privacy and the Irish authorities having a strong command over EU data privacy rules and trends.
I think we have got two concrete cases pertaining to Italy, as the Italian authorities were the only European authority who did not authorise ChatGPT. Just last week, the Italian privacy authority also stopped DeepSeek from being distributed. They have this sensibility on privacy matters, and they have also the strength to impose such actions. So yes, I think that every home regulator has a different approach and a different strength, and sometimes even a different interest, which can be contrary to other Member States or the EU overall.
On the other side, this difference has been perceived at a political level, as we are now seeing efforts to harmonise certain rules across the EU. We can no longer afford to have a Directive implemented differently across all EU Member States. Instead, we should adopt a single regulation that applies across borders—or better yet, establish a unified authority to oversee all jurisdictions.
For example, the Anti-Money Laundering (AML) package imposes one set of rules for all Member States. You have one AML authority, the so-called AMLA (Anti-Money Laundering Authority), which has about 400 new AMLA officers based in Frankfurt and is chaired by the Italian Bruna Szego. To go back to your original question, the differences between various approaches of regulators have been noticed, and there is, I think, the political intention to bring them back under a harmonised framework.
Is this more optimal for businesses? In other words, is the cross-border strategy currently too complex, or do you think that this is something that Member States still should have their own authority in?
I cannot say how it will be in the future, but in theory, especially for a global organisation, I think it’s a good approach to streamline and to harmonise. On the other side, local regulators at times have a more precise and local perspective on how things effectively work in that market. This needs to be taken into consideration. I think local authorities can do excellent work in terms of mitigating certain negative effects in that market.
I think the best solution should be a balance between the global EU approach and the tailored local perspective. The truth is always somewhere in the middle.
Do you think that local regulators have adequate staff to communicate well with businesses and whatever their needs are?
Personally, I get timely responses. And it is quite effective to work with them. How this will play in the future, I don’t know. However, this is very contingent on the industry and the country in which you are operating in.
Besides timely communications, language is still, unfortunately, a key barrier in many Member States. Certain regulators will not work in English, for example. And that’s a practical element to keep into consideration. You can be highly business oriented as a country, but if you hinder the ability of businesses to operate in English, you limit their ability to succeed in your country. This is a crucial element.
Do you think that the EU regulatory system is unfairly being scapegoated in the media? Or do you think that the criticisms are certainly valid enough to have this sort of a broader discussion?
Media is run by stereotypes. US innovates, China replicates, EU regulates. Repeat this for a couple of decades and it becomes ‘common knowledge’, which can be hard to shed, or, worse, ends up as a self-fulfilling prophecy.
Have you had first-hand experience of hampering innovation in the EU market? Meaning that there are approaches, services, or products that can be offered in other markets that, due to regulatory pressure, the European market is unable to offer.
Crypto and the MiCA Regulation I think is a perfect example. Before MiCA, if you did not cover financial services, you could enter the market with little friction. After MiCA, you need a certain level of presence and a certain level of control. I think there are draft legislations in California that are looking to regulate crypto all over the world. However, it’s still at a draft stage. Instead, here we have all of Europe under MiCA with specific rules and especially AML rules to comply with, are quite heavy compared to other parts of the world.
Let’s talk a bit more about innovation from the company’s own perspective and, more specifically, the fact that we have 24 official languages. I find it fascinating that Amazon was the company that unified the European online consumer market. I can buy cross-border things from Amazon, often shipped from a German warehouse, whereas most German stores do not have any cross-border elements and are content with their local market. Do you feel that this is an area where the EU should push even further to unify the internal market?
Language remains an issue. For example, the AI Act, before it was enforced, had to be translated in all the official languages. This delayed the whole process, while companies were running to get the AI Act live before the specified deadlines. Even if it is translated, there have been instances where the translation can lose its meaning in some very key elements, which again leads to court proceedings and delays. The only way to solve this is, again, a cultural and a political change. Additionally, there are certain countries currently that will not interact with you in English. This, of course, makes it truly challenging when it comes to applying rules or to enlarging the business in that country. This, I think, is a cultural phenomenon which, for EU to be a global competitor, needs a political shift.
Additionally, the terminology and legalese that comes with each passing legislation needs to be simplified. If you are not clear on your intent, the translation will be poor in any event.
Are there any specific approaches that you must take when conversing with the regulators? Is there a common language when approaching them?
The winning card is transparency. Giving a transparent and open description of the business and making ourselves available to discuss any future regulation that is coming out is both effective and essential. I think this also always helps me in my daily job, because at the end of the day, regulators are often facing the same challenges. If they understand our business in a proper way, they can regulate our business in a better way. This is what I’ve noticed. Understanding that we are fighting the same battle in terms of having good rules that make the system function.
Let’s say you have a magic wand. What would you change in the EU structure to essentially better meet the business needs?
Very simply, reduce the volume of laws that are coming out, to avoid instances where new legislation conflicts with existing ones or, that sometimes are missing the secondary legislation essential for proper functioning. Currently, you cannot keep up with the pace of the upcoming legislations.
Returning to your initial point—that Europe is governed by rules, while the US market is shaped by competition—would you agree that this also applies to new businesses? In other words, the main barrier to entry in the EU is the high cost of regulatory compliance, whereas in the US, the challenge is more about competitors preventing market entry?
On the one hand I would agree with you – you have more freedom outside of Europe to innovate in your own direction. However, rules, and especially the sandboxes that the regulators create, can and should be seen as an innovation hub. Sets of rules can set the track for other businesses to innovate along that same path. This is why I do not want to see it only from a restrictive perspective, because restrictions really can accelerate the growth in a harmonized way, which is what the EU is seeking. This gives clarity and expectations for both established and new businesses. Contrary, in the US you can see rules or market habits formed from established businesses that both hinder innovation for new businesses and have negative effects on consumers. There are several examples of industries in the US which have lacked any sort of real innovation due to regulatory capture.
Are there any sort of regulations or other types of legislations that you feel the EU has implemented really well, both as a consumer and as a corporate lawyer?
That’s a great question. I think the instant payments rules were well-needed, especially as a consumer. Back in January 2024, the EU set out these rules, establishing that banks must allow instant payments. We knew that we had the concept and that our financial sector should reach this functionality, but many banks at the time did not have the capability or the technicalities to do this. With these new set of rules, they were forced to implement this.
However, the EU understood that they could not just simply impose everything to take effect simultaneously. They understood the technical challenges that arose with this sort of obligation, which led the EU to establish a sensible rollout timeline that businesses can adhere to. As a customer today, through my bank, I can do instant payments and most banks accept this. This effectively gave banks a new much-needed functionality and gave consumers added convenience.
