How many authorisations are necessary to make emissions allowances transfer request fraud-resistant and, concurrently, non-bureaucratic?
§ 95921. Conduct of Trade (draft)(a) Transfers of Compliance Instruments Between Accounts.
(1) The accounts administrator will not register a transfer of compliance instruments between two registered entities into the tracking system unless:
(A) One individual who is the authorized account representative or an alternate authorized account representative of the source account for the transfer submits a transfer request, confirmed by another alternate authorized account representative for the same entity, to the accounts administrator within 48 hours of settlement of the transaction agreement for which the transfer request was submitted;
(B) The authorized account representative or an alternate authorized account representative for the destination account submits a confirmation to the transfer request to the accounts administrator within 24 hours of receiving the transfer request;
(C)The transfer is between holding accounts and/or an exchange clearing holding account.
(D) The Executive Officer has determined the transfer request and the transaction for which the transfer request was submitted meet the requirements of this article based on the information available at the time of approval.
(2) Transfers initiated by the Executive Officer do not require confirmation pursuant to section 95921(a)(1)(B).
(3) Transfers between a single entity’s holding and compliance accounts do not require confirmation pursuant to section 95921(a)(1)(B).
The recent Registry Regulation amendments (Article 21 of the Commission Regulation No 1193/2011 of 18 November 2011) adopted the principle that generally, the approval of an additional authorised representative is required, in addition to the approval of an authorised representative, in order to initiate a transaction, except for transfers to an account on the trusted account list in the Union Registry of the account holder (insignificant exceptions omitted). This was introduced as a reaction to the wave of registry safety violations which ended in allowances being stolen from accounts which in consequence led to multiple judicial disputes (see for instance: Transfer of EUAs as proof of ownership).
This indicates, currently under EU ETS rules the authorisation of two persons makes the transfer viable. The new draft amendments to the California cap-and-trade regulation (see: Major overhaul of the California cap-and-trade - linkage with the Quebec scheme and the KYC-checks substitution for the beneficial holding disclosure provisions) go beyond that.
Draft Changes to Transfer Process (§ 95921 - see: box) propose to replace current “Two key” process by so-called “Push-Push-Pull” method where:
- two authorized or alternate authorized account representatives for the source account file transfer request,
- one authorized or alternate authorized account representative for destination account confirms transfer,
- there are time-limits 48 hours for the filing of the request, 24 hours to confirm.
The collaboration of three persons is in effect necessary to make the transfer.