In this Newsletter:
For earlier editions of the Global Payments Newsletter, please go to our Financial Services follow web page.
Regulatory Developments
Nigeria: eNaira digital foreign money launched
On 25 October 2021, it was reported that Nigeria had launched its central bank-backed digital foreign money, known as eNaira. The official eNaira launch by Nigeria’s President Buhari is offered to look at on-line right here. Nigeria is the primary African nation to launch a digital foreign money, and one among just a few nations globally to have performed so. President Buhari mentioned that the “use of CBDCs can help move many more people and businesses from the informal into the formal sector, thereby increasing the tax base of the country”.
The new eNaira foreign money can be issued as authorized tender and operates on the Hyperledger Fabric Blockchain. According to the central financial institution, clients will have the ability to obtain the eNaira app and switch funds from their financial institution accounts to their cellular wallets. However, the central financial institution has additionally pledged to adapt the system for individuals who wouldn’t have financial institution accounts in a bid to spice up utilization in rural areas.
See the official eNaira web site for extra data.
Back to the highest
United Kingdom: PSR publishes remaining report on card-acquiring providers market assessment
On 3 November 2021, the Payment Systems Regulator (PSR) printed its remaining report on its market assessment into card-acquiring providers. The PSR highlights the significance of a accurately functioning card-acquiring market within the post-COVID-19 financial system.
The report concludes that the provision of card-acquiring providers works effectively for the most important retailers with an annual card turnover above £50 million, however does not work effectively for small, medium and huge retailers with an annual card turnover of as much as £50 million who characterize over 90% of the service provider inhabitants.
Small and medium sized retailers face pricing points (with restricted or no pass-through from the Interchange Fee Regulation caps financial savings), a loyalty penalty, and issues with switching together with lack of transparency, indefinite contracts, and POS terminal contract points.
The PSR means that outcomes might be improved for small and medium-sized retailers by encouraging them to go looking and change or negotiate a greater cope with their present supplier and likewise by lowering the obstacles to getting a greater deal.
In phrases of subsequent steps, the PSR will publish a cures session in early 2022 wherein it can search views and data from stakeholders. Following this, it can publish a provisional resolution on cures. The varieties of cures may embody:
- requiring better transparency in relation to pricing;
- lowering complexity of pricing buildings to allow simpler comparability throughout totally different suppliers;
- obligatory finish dates in card-acquiring contracts or “prompts” to encourage retailers to contemplate switching; and
- measures to make sure that POS terminal contract phrases are the identical size or shorter than these of the service provider’s card-acquiring service contract.
See this Engage article by members of Hogan Lovells’ London workplace for extra on the PSR’s remaining report.
Back to the highest
United States: Federal Reserve launches instruments and help in preparation for adoption of FedNow Service for immediate funds in 2023review
On 20 October 2021, it was reported that the Federal Reserve has launched a set of latest instruments and sources for the US funds business in an effort to promote training and innovation in instantaneous funds and assist in preparations for the adoption of the FedNow Service for immediate funds when it’s launched in 2023. The transfer comes as using instantaneous funds continues to develop in recognition.
The new instruments and sources embody the next:
- FedNow Explorer web site. This is an academic platform for monetary establishments and repair suppliers.
- Ecosystem Accelerator Group. This is a brand new person group throughout the FedNow Community which is able to present a wide range of cost service suppliers with the chance to ask technical questions, community and take part in discussions.
- Service Provider Showcase. This will permit cost service suppliers to showcase their capabilities.
Back to the highest
Bangladesh: Central financial institution authorises inward remittances
On 18 October 2021, it was reported that Bangladesh Bank, Bangladesh’s Central Bank, had authorised the receipt of inward remittances by way of on-line cost gateway service suppliers (OPGSPs).
The round issued by Bangladesh Bank states that authorised overseas change sellers are required to enter into an association with internationally-recognised OPGSPs and keep separate nostro assortment accounts for every OPGSP. A nostro account is an account held by a financial institution in a overseas foreign money at a separate financial institution.
Back to the highest
United Kingdom: HM Treasury consults on reform proposals below Financial Services Future Regulatory Framework Review
On 9 November 2021, HM Treasury (HMT) printed a session with proposals for reforms to the UK’s monetary providers regulatory framework to maintain it match for the longer term and to mirror the post-Brexit panorama. The session is a part of the federal government’s on-going Financial Services Future Regulatory Framework Review.
The session units out the federal government’s response to the suggestions acquired on its October 2020 session on Phase II of the FRF Review and makes a sequence of proposals to ship the supposed Review outcomes, ‘building on the strengths of the UK’s present framework’ established below the Financial Services and Markets Act 2000 (FSMA).
In define, the proposed modifications are:
- Introduction of a brand new secondary progress and worldwide competitiveness goal for each the PRA and the FCA and amendments to the present regulatory rules to make clear that progress ought to happen in a sustainable method that’s in step with the federal government’s dedication to realize a internet zero financial system by 2050.
- UK regulators are to have accountability for regulatory design and implementation.
- Introduction of enhanced mechanisms for accountability, scrutiny and oversight of the regulators by Parliament, HMT and stakeholders.
HMT acknowledges that delivering the modifications – notably these relating to returning accountability for designing and implementing regulatory necessities to the UK regulators – can be a ‘significant undertaking’. Many of the mandatory modifications can be delivered by way of an in depth programme of secondary laws, which is more likely to take a number of years.
The session closes on 9 February 2022.
For extra on the session, check out this Engage article by members of Hogan Lovells’ London workplace.
Back to the highest
United Kingdom: Bank of England and HM Treasury to seek the advice of on potential UK retail CBDC
On 9 November 2021, John Glen MP, Economic Secretary to the Treasury, confirmed in a Written Ministerial Statement that the Bank of England (BoE) and HM Treasury (HMT) are to launch a proper session on a UK retail CBDC in 2022. A joint BoE/HMT assertion was additionally printed.
Key factors embody:
- The session paper will set out an evaluation from HMT and the BoE of the case for a CBDC earlier than a call on whether or not to proceed.
- The session will kind a part of a ‘research and exploration’ part and can assist to tell coverage improvement over the subsequent few years.
- The introduction of a UK CBDC could be a significant nationwide infrastructure challenge. The earliest date for launch could be within the second half of the last decade.
The authorities is dedicated to persevering with to work intently with worldwide companions on the cross-border implications of a possible CBDC.
Back to the highest
United Kingdom: HMRC publishes coverage paper on Economic Crime levy
On 27 October 2021, HM Revenue & Customs (HMRC) printed a coverage paper on the institution of an Economic Crime (Anti-Money Laundering) Levy. The new levy will apply to all individuals set out in Regulation 8 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (2017/692). The record in Regulation 8 consists of credit score establishments and monetary establishments.
The coverage paper explains that the levy will first be charged on entities which might be regulated in the course of the monetary 12 months beginning on 1 April 2022, and the quantity payable can be decided by reference to their dimension, primarily based on their UK income from intervals of account ending in that 12 months. Amounts can be payable following the tip of every monetary 12 months. Therefore, first funds can be made within the monetary 12 months from 1 April 2023 to 31 March 2024.
The levy can be charged as a hard and fast charge, decided in keeping with which of the next dimension bands an entity falls into:
- Small-sized entities (below £10.2m UK income) can be exempt from the levy.
- Medium-sized entities (£10.2m – £36m income) pays £10,000.
- Large entities (£36m – £1bn income) pays £36,000.
- Very giant entities (over £1bn income) pays £250,000.
The Finance Bill 2021-22 will set up the Economic Crime (Anti-Money Laundering) Levy in laws. The Bill had its First Reading in Parliament on 2 November 2021, was printed on 4 November 2021 and can now observe the conventional passage by way of Parliament.
Back to the highest
European Union: EBA publishes clarifications on PSD2 points
On 20 October 2021, the EBA printed clarifications to the seventh set of points raised by its business working group on Application Programming Interfaces (API WG) below PSD2.
The doc gives clarifications in areas together with the next:
- Downtime of devoted interfaces. With regard to the channel utilized by account servicing cost service suppliers (ASPSPs) to tell third occasion suppliers (TPPs) about any unavailability of the devoted interface, the Regulatory Technical Standards on sturdy buyer authentication and safe communication (SCA RTS) don’t prescribe a particular channel for use as a part of the communication plans. Therefore, it’s for every cost service supplier (PSP) to resolve on the channel used for informing TPPs about any unavailability of their devoted interface. Accordingly, ASPSPs should not prevented from utilizing e mail for this function. In relation to the suggestion that the EBA might arrange a central register/database the place ASPSPs can talk details about any upcoming upkeep of their devoted interfaces, the EBA, according to the views expressed by the vast majority of the API WG individuals, is of the view that this proposal would introduce further and pointless administrative burden for all stakeholders concerned.
- Payment standing / rejection causes. In relation to a proposal that the EBA ought to set out the minimal set of error codes and cost standing messages that ASPSPs ought to ship to TPPs, the EBA is of the view that these relate to implementation of the interfaces chosen by the ASPSPs, the precise occasions and errors that will happen, in addition to the respective enterprise fashions of TPPs. Also, the RTS don’t impose any standardised error messages that ASPSPs ought to ship to TPPs in accordance with Article 36(2) of the RTS. Accordingly, it’s for the business to set out the notification messages on the precise purpose for any surprising occasions or errors. Article 36(2) of the SCA RTS offers adequate readability on the content material of those notification messages.
- 90-day account entry renewal SCA. The EBA agrees that the appliance of the exemption below Article 10 of the SCA RTS (which says that PSPs should not required to use SCA in sure cases) has led to undesirable outcomes for account data providers, their suppliers, and their customers. To handle this challenge, the EBA has determined to make a focused modification on this explicit side. It printed a session on 28 October 2021 (see the separate merchandise beneath for extra data).
Back to the highest
European Union: EBA consults on amendments to SCA RTS below PSD2
On 28 October 2021, the EBA printed a session paper on amendments to its Regulatory Technical Standards (RTS) on sturdy buyer authentication (SCA) and safe communication below PSD2 (SCA RTS). The amendments relate to the 90-day exemption from SCA for account entry.
In explicit, the session considers Article 10 of the SCA RTS, which offers an exemption from the appliance of SCA when the client accesses restricted cost account data, supplied that SCA is utilized for the primary entry and at the very least each 90 days after that. This exemption is at the moment voluntary, that means that the account servicing cost service supplier is allowed, however not obliged, to use the exemption. In sure circumstances, the EBA want to make the appliance of this exemption obligatory.
The deadline for submitting feedback is 25 November 2021.
Back to the highest
United Kingdom: Facial recognition funds in faculties paused
On 25 October 2021, it was reported that 9 faculties within the UK had paused their use of facial recognition know-how to permit youngsters to pay for meals. The transfer got here following considerations from the UK’s Information Commissioner’s Office, which mentioned that organisations ought to contemplate a “less intrusive” method the place doable. The use of facial recognition know-how had additionally been criticised by privateness campaigners.
Back to the highest
United Kingdom: PSR consults on draft course to keep up free-to-use ATMs
On 27 October 2021, the Payment Systems Regulator (PSR) printed a session paper on a draft particular course on sustaining free-to-use ATMs (CP21/9).
The new course will substitute Specific Direction 8, which is able to expire on 2 January 2022. Specific Direction 8 ensured that the operator of LINK might keep the broad geographic protection of free-to-use ATMs within the UK and meet service-user wants, and that it had the sources to take action. This was performed by requiring LINK to adjust to sure minimal necessities and requiring it to undertake sure steps to fulfil its commitments to the PSR.
The function of the draft particular course is to proceed to help the operator of LINK in making certain that it may meet the target of continuous to keep up a broad geographic protection of ATMs within the UK and meet service-user wants by having in place and sustaining applicable and efficient insurance policies, measures and reporting obligations.
The deadline for submitting feedback on the draft particular course was 16 November 2021.
Back to the highest
United Kingdom: PSR publishes response to Confirmation of Payee session
On 21 October 2021, the Payment Systems Regulator (PSR) printed a response (RP21/1) setting out its findings from the decision for proof that it issued on Phase 2 of the introduction of Confirmation of Payee (CoP).
Based on the responses acquired, the PSR is of the view that, whereas Phase 1 was a hit, it might want to take additional motion to make sure extra establishments implement CoP in an effort to present better security for shoppers once they make digital financial institution transfers. The PSR additionally famous that it had been informed that present warnings throughout CoP checks may trigger confusion to clients and that extra consistency is required. The suggestions the PSR acquired exhibits that it’s presently unclear whether or not standardised messages would supply further profit to those that use the CoP service.
In phrases of subsequent steps, the PSR will:
- Continue monitoring the progress by the Specific Direction 10 banks and the opposite Phase 1 individuals to be current within the Phase 2 surroundings by the tip of 2021. Specific Direction 10 is the course which required the UK’s six largest banking teams to implement CoP in 2020.
- Consult in This fall 2021 on whether or not it can require the tip of twin working by a specified date in 2022 and on revoking Specific Direction 10.
- Decide whether or not they should intervene to direct supply of the remaining elements of Phase 2, notably implementation of CoP by non-participants and supply of the secondary reference information (SRD) functionality.
Back to the highest
United Kingdom: The Payment and Electronic Money Institution Insolvency (England and Wales) Rules 2021 (SI 2021/1178) enter into power
On 12 November 2021, The Payment and Electronic Money Institution Insolvency (England and Wales) Rules 2021 (SI 2021/1178) entered into power. The new guidelines are ancillary to the Payment and Electronic Money Institution Insolvency Regulations (SI 2021/716) (the Regulations) that got here into power on 8 July 2021. They include detailed working provisions geared toward supporting the particular administration course of began for a cost establishment or an digital cash establishment below the Regulations.
The particular administration course of is designed for bancrupt non-bank establishments whose enterprise is worried with facilitating the switch or storage of cash by way of playing cards, mobiles, or e-wallets.
Among different issues, the principles:
- Require discover of a bar date to be given to anybody who the administrator believes has a proper to say a safety curiosity over the funds in query.
- Require insolvency practitioners to offer affordable discover earlier than a claims bar date enters into power.
- Require particular directors to interact with cost programs operators throughout a particular administration.
Back to the highest
European Union: EBA publishes opinion on remedy of shopper funds below the DGSD
On 27 October 2021, the EBA printed an opinion on the remedy of shopper funds below the Deposit Guarantee Schemes Directive (DGSD).
Article 5(1) of the DGSD offers that deposits positioned in credit score establishments by different credit score establishments, monetary establishments, funding companies and different varieties of monetary companies are excluded from deposit assure schemes’ protection. However, Article 7(3) of the DGSD offers that the exclusion won’t apply the place the credit score establishment which is making the deposit isn’t completely entitled to the sums held within the account.
The EBA makes plenty of suggestions that are supposed to make sure that:
- If a credit score establishment had been to fail, shopper funds positioned with credit score establishments by credit score establishments, cost establishments, e-money establishments, and funding companies are protected by deposit assure schemes.
- There is a harmonised technique for the reimbursement of funds in shopper accounts the place there’s a must mitigate the chance of contagion from the failed credit score establishment to the account holder.
- When calculating the contributions to deposit assure schemes of a credit score establishment, that credit score establishment’s shopper funds needs to be taken into consideration.
Back to the highest
European Union: European Commission publishes 2022 work programme
On 19 October 2021, the European Commission printed a communication outlining its work programme for 2022, together with annexes to the work programme and two factsheets (right here and right here).
Among different issues, the work programme refers to initiatives regarding:
- Instant funds within the EU.
- The Proposal for a Regulation on digital operational resilience for the EU monetary sector (DORA).
- The Proposal for a Regulation on markets in cryptoassets (MICA).
- Proposals designed to strengthen and modernise the EU anti-money laundering (AML) and counter-terrorist financing (CTF) framework.
Back to the highest
European Union: EBA publishes response to European Commission name for recommendation on CMDI assessment
On 22 October 2021, the EBA printed its response to the European Commission’s April 2021 name for recommendation relating to funding in decision and insolvency as a part of the financial institution disaster administration and deposit insurance coverage (CMDI) framework assessment, along with a protecting letter. In the response, the EBA concludes that:
- Preferring deposits to different atypical unsecured claims might improve the variety of banks which might be in a position to meet the necessities to entry decision financing preparations (RFA) with out the bail-in of any kind of depositors.
- A single-tier depositor choice (that’s, the place all varieties of depositors rank pari-passu) comes with the best impression on coated deposits and the best contributions from deposit assure schemes (DGS) in comparison with the opposite coverage choices and the present place.
The EBA additionally units out an evaluation of the reported issue of small and mid-sized banks to challenge devices which might be eligible for the minimal requirement for personal funds and eligible liabilities (MREL). It discovered that 12 establishments at the moment dealing with an MREL shortfall haven’t issued any MREL-eligible devices. It intends to conduct additional work on this matter and, specifically, on the price of MREL as a part of its MREL monitoring exercise.
Back to the highest
Kuwait: MP presents regulation to tax abroad remittances
On 6 November 2021, it was reported {that a} Kuwaiti MP has proposed a regulation to impose a tax on abroad remittances.
The invoice was first launched final 12 months, however was rejected by the federal government, the Central Bank and a legislative committee, who argued that it might have a destructive impression on the financial system and create a black marketplace for remittance funds. The invoice is reportedly widespread with some lawmakers, nonetheless, particularly as Kuwait’s overseas inhabitants makes up 70% of the nation’s whole inhabitants.
Under the proposals, transfers of as much as KD99 could be taxed at 1%, transfers of KD100-299 at 2% and transfers of KD300-499 at 3%. Those of KD500 and above could be taxed at 5%.
Back to the highest
France: Banque de France commissions CBDC exams
On 19 October 2021, it was reported {that a} consortium of establishments had accomplished a take a look at run of utilizing central financial institution digital foreign money (CBDC) for settling French treasury bonds on a blockchain.
Overall, 500 directions had been executed in the course of the trial, in each major and secondary markets. The operations coated areas together with securities issuance, major market and secondary market trades, and liquidity optimisation mechanisms.
The trial kinds a part of a wider Banque de France initiative to make use of CBDC within the change and settlement of tokenised monetary property between monetary intermediaries.
Back to the highest
Indonesia: President orders moratorium on fintech lending licences
On 16 October 2021, it was reported that the Indonesian president, Joko Widodo, had ordered a moratorium on licence issuance for fintech lending. The function of the restriction is to deal with the rise in unlawful enterprise which has trapped individuals and small companies in high-interest loans.
Widodo has additionally requested regulators to enhance the governance of present fintech lending companies. While Indonesia solely has 107 registered fintech corporations, greater than 1,800 unauthorised fintech lenders have been shut down this 12 months alone.
Back to the highest
European Union: EDPB launches first coordinated motion below its Coordinated Enforcement Framework
On 18 October 2021, the European Data Protection Board (EDPB) launched its first co-ordinated motion following the choice in October 2020 to launch its Coordinated Enforcement Framework. The Framework permits the EDPB to prioritise a subject for supervisory authorities to work on on the nationwide degree. The outcomes are then analysed to offer perception into the subject and permit for focused follow-up nationally and on the EU degree. The matter of this primary motion is using Cloud-based providers within the public sector.
Back to the highest
Australia: Government publishes draft laws on new privateness guidelines for world corporations
On 25 October 2021, the Australian Attorney General’s Department printed a session on the publicity draft of the Privacy Legislation Amendment (Enhancing Online Privacy and Other Measures) Bill 2021 (Bill).
The draft Bill is geared toward enhancing the safety of private data by way of the introduction of an Online Privacy Code (OP Code), enlargement of the extra-territorial scope of the Privacy Act 1988 (Cth) (Privacy Act) and strengthened penalties for non-compliance.
The Australian Government has invited related stakeholders to make submissions on the draft Bill by 6 December 2021. This suggestions can be thought of earlier than the draft Bill is launched to Parliament. For extra on the draft Bill, check out this Engage article by members of Hogan Lovells’ Sydney workplace.
The draft Bill follows a raft of current reforms focused at strengthening privateness and cyber safety safety for all Australians. More lately, the Online Safety Bill 2021 (Cth) was handed and is because of come into impact in January 2022.
The Attorney-General’s Department can be enterprise a assessment of the Privacy Act. The Department has launched a dialogue paper which seeks suggestions on the proposals for privateness reform. These proposed modifications embody, amongst others, the introduction of mechanisms to prescribe and certify nations with considerably comparable privateness legal guidelines when sharing data exterior of Australia and using standardised notices and consents. Submissions are open till 10 January 2022.
Back to the highest
Global: IOSCO publishes up to date outsourcing rules
On 27 October 2021, the International Organisation of Securities Commissions (IOSCO) printed the ultimate report on its rules on outsourcing, setting out up to date outsourcing rules for regulated entities that outsource duties to service suppliers. This follows its May 2020 session on revising the rules.
The remaining report units out the seven rules beneath, and likewise offers particulars of how these rules needs to be carried out:
- Principle 1: A regulated entity ought to conduct appropriate due diligence processes in deciding on an applicable service supplier and in monitoring its ongoing efficiency.
- Principle 2: A regulated entity ought to enter right into a legally binding written contract with every service supplier, the character and element of which needs to be applicable to the materiality or criticality of the outsourced process to the enterprise of the regulated
entity. - Principle 3: A regulated entity ought to take applicable steps to make sure each the regulated entity and any service supplier set up procedures and controls to guard the regulated entity’s proprietary and client-related data and software program and to make sure a continuity of service to the regulated entity, together with a plan for catastrophe restoration with periodic testing of backup services.
- Principle 4: A regulated entity ought to take applicable steps to make sure that service suppliers shield confidential data and information associated to the regulated entity and its purchasers, from intentional or inadvertent unauthorised disclosure to 3rd events.
- Principle 5: A regulated entity ought to pay attention to the dangers posed, and will handle them successfully, the place it’s depending on a single service supplier for materials or essential outsourced duties or the place it’s conscious that one service supplier offers materials or essential outsourcing providers to a number of regulated entities together with itself.
- Principle 6: A regulated entity ought to take applicable steps to make sure that its regulator, its auditors, and the entity itself are in a position to receive promptly, upon request, data regarding outsourced duties that’s related to contractual compliance and/or regulatory oversight. This will embody, as needed, entry to the information, IT programs, premises and personnel of service suppliers regarding the outsourced duties.
- Principle 7: A regulated entity ought to embody written provisions regarding the termination of outsourced duties in its contract with service suppliers and make sure that it maintains applicable exit methods.
The remaining report additionally briefly addresses the impression of the COVID-19 pandemic on outsourcing and operational resilience, and consists of an annex that describes how outsourcing integrates with cloud computing and the way CRAs use and incorporate outsourcing and cloud computing of their organisational methods and buildings.
IOSCO advises that monetary market infrastructures (FMIs) are exterior the scope of the up to date rules, however they might contemplate making use of them anyway. It can be participating with the Committee on Payments and Market Infrastructures (CPMI) on FMI outsourcing points as a part of the longer term joint IOSCO-CPMI work programme. IOSCO can be holding a watching transient on the appliance of outsourcing rules to the asset administration sector.
Back to the highest
United States: FinCEN offers AML regulatory aid to casinos
On 19 October 2021, FinCEN, the US Government’s lead AML regulator, printed an Exceptive Relief wherein it exercised its regulatory aid authority to permit casinos and card golf equipment to make use of “non-documentary means” to confirm patrons’ id.
The unique guidelines required casinos to examine id paperwork (like drivers’ licenses and passports) to ascertain a buyer’s id earlier than opening an account. FinCEN invoked its “exceptive relief” authority to chill out the regulatory necessities, permitting casinos and card golf equipment to make use of different strategies similar to information proof programs and database verifications to make sure that the client is who they are saying they’re.
For extra data on this improvement, check out this Engage article by members of Hogan Lovells’ Washington D.C. workplace.
Back to the highest
United Kingdom: Money Laundering and Terrorist Financing (Amendment) (No 3) (High-Risk Countries) Regulations 2021 enter into power
On 2 November 2021, the Money Laundering and Terrorist Financing (Amendment) (No 3) (High-Risk Countries) Regulations 2021 (SI 2021/1218) got here into power.
These Regulations amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692) (the MLRs) by substituting the record of high-risk third nations in Schedule 3ZA for a brand new record.
Back to the highest
United Kingdom: HM Treasury updates advisory discover on AML/CTF controls in greater threat jurisdictions
On 28 October 2021, HM Treasury up to date its Advisory Notice: Money Laundering and Terrorist Financing controls in greater threat jurisdictions. This advisory discover replaces all earlier notices issued by HM Treasury on the topic. The advisory discover follows two statements printed by the Financial Action Task Force (FATF) on 21 October 2021, figuring out jurisdictions with strategic deficiencies of their AML/CTF regimes.
Back to the highest
Europe: AFME publishes report on AML monitoring
On 20 October 2021, the Association for Financial Markets in Europe (AFME) printed a paper on companies’ monitoring of economic transactions for potential cash laundering actions.
The AFME word that there are 5 key themes:
- Current AML transaction monitoring (TM) programs are ineffective within the markets sector, and there’s a broadly held view within the non-public sector that cash laundering is more likely to be occurring undetected.
- A small variety of companies have demonstrated that it’s doable to watch successfully by way of using a hybrid method mixing know-how tooling and automatic strategies with extremely expert guide processes.
- The key to deploying analytical transaction monitoring options efficiently within the markets sector is utilizing extremely expert crew members that perceive the advanced area in addition to the technical strategies.
- More collaboration between non-public and public sector could be useful, even when it’s not possible for regulation enforcement businesses to provide suggestions on particular person Suspicious Activity Reports.
- Greater effectiveness and price efficiencies can be achieved by way of partial convergence of market abuse surveillance with AML TM.
Back to the highest
Global: FATF publishes up to date steering on digital property and digital asset service suppliers
On 28 October 2021, the Financial Action Task Force (FATF) printed the up to date model of its steering on the risk-based method to digital property (VAs) (often known as cryptoassets) and digital asset service suppliers (VASPs).
The steering explains how the FATF’s AML and CTF requirements apply to VAs and VASPs, offers related examples, identifies obstacles to making use of mitigating measures and gives potential options.
The up to date steering addresses points recognized from the FATF’s second 12-month assessment of implementation of its requirements on VAs and VASPs, which it reported on in July 2021. It additionally displays enter from responses to FATF’s March 2021 session on updating the steering. A fast information printed alongside the up to date steering offers a abstract of the important thing modifications made to the earlier model of the steering.
FATF will proceed to intently monitor the VAs and VASPs sector for any materials modifications that necessitate additional revision or clarification of its requirements.
Back to the highest
Global: FSB requires world convergence in cyber incident reporting
On 19 October 2021, the Financial Stability Board (FSB) printed a report titled “Cyber Incident Reporting: Existing Approaches and Next Steps for Broader Convergence”.
The report explores whether or not better convergence within the reporting of cyber incidents might be achieved, in gentle of accelerating monetary stability considerations, particularly given the digitalisation of economic providers and elevated use of third-party service suppliers.
The report goes on to determine three ways in which the FSB will search to advertise better convergence in cyber incident reporting:
- Develop greatest practices by figuring out a minimal set of varieties of data authorities might require associated to cyber incidents to fulfil a typical goal (for instance, monetary stability, threat evaluation and threat monitoring) that authorities might contemplate when creating their cyber incident reporting regime.
- Identify widespread varieties of data to be shared, perceive any authorized and operational impediments to sharing such data, and proceed efforts to scale back such limitations.
- Create widespread terminologies for cyber incident reporting, specifically a typical definition for ‘cyber incident’.
Back to the highest
United Kingdom: CMA publishes replace on governance of Open Banking
On 5 November 2021, the Competition and Markets Authority (CMA) printed an replace on the governance of Open Banking.
Open Banking is delivered by way of the Open Banking Implementation Entity (OBIE), an organisation established by the Retail Banking Market Investigation Order 2017 and funded by the 9 largest present account suppliers within the UK (the CMA9). An Implementation Trustee, accredited by the CMA, was appointed to supervise the method.
As the implementation part of Open Banking is nearing completion, in March 2021 the CMA consulted on what preparations needs to be put in place for its governance within the subsequent part of its improvement.
The CMA’s replace units out progress in strengthening company governance on the OBIE. It additionally highlights ongoing work to make clear the roles and tasks of every of the CMA, OBIE, Trustee and CMA9, assessment the position of the OBIE Board, and enhance transparency.
The CMA has additionally recognized plenty of high-level rules to tell work on the longer term governance of Open Banking, regarding function, regulatory collaboration and oversight, stakeholder pursuits, management, governance, reporting, monitoring and compliance, funding and transition. Working with different regulators, specifically the FCA and the Payment Systems Regulator (PSR), alongside related authorities departments, the CMA is creating a press release which is able to set out a transparent joint imaginative and prescient for the way forward for Open Banking and its governance. The CMA intends to publish the assertion and supply an extra replace in late 2021 or early 2022.
Back to the highest
United Kingdom: Bank of England publishes coverage assertion on charges regime for FMI supervision 2021/22
On 18 October 2021, the Bank of England (BoE) printed a coverage assertion following its June 2021 session paper on the 2021/22 charges regime for the supervision of economic market infrastructure (FMI). It has not made any modifications to the proposals that had been set out within the session paper.
The FMIs which might be at the moment inside scope of the annual FMI supervisory charge are recognised cost programs, specified service suppliers to recognised cost programs, UK central counterparties (CCPs) and UK central securities depositories (CSDs).
As effectively as proving suggestions to the three responses the BoE acquired to its session paper, the coverage assertion units out:
- The remaining charge charges in relation to the BoE’s 2021/22 funding requirement for its FMI supervisory exercise and the coverage exercise that helps this.
- The final result of the 2020/21 precise prices incurred and the impression on FMI charges charged for 2021/22, together with the BoE’s affirmation of the shortfall/surplus in charges for 2020/21. As there was no surplus or shortfall within the charge 12 months 2020/21, no FMI will obtain a rebate within the 2021/22 bill.
Regarding implementation, the BoE supposed to challenge invoices in September for the 2021/22 charge 12 months.
Back to the highest
United Kingdom: Latest model of Financial Services Regulatory Initiatives Grid printed
On 1 November 2021, the fourth version of the Financial Services Regulatory Initiatives Grid was printed by the Financial Services Regulatory Initiatives Forum.
Members of the Forum are the Bank of England (together with the PRA), the FCA, the Payment Systems Regulator, the Competition and Markets Authority, the Financial Reporting Council, The Pensions Regulator and the Information Commissioner’s Office. HM Treasury attends as an observer member. The Forum was launched to strengthen coordination between members, and the Grid (first printed in April 2020) units out the regulatory pipeline in order that the monetary providers business and different stakeholders can perceive – and plan for – the timing of the initiatives that will have a big operational impression on them.
The Forum publishes the Grid twice a 12 months, offering element on the timing of initiatives over a 24-month horizon.
For extra on this improvement, check out this Engage article by members of Hogan Lovells’ London workplace.
Back to the highest
United Kingdom: Latest model of Financial Services Regulatory Initiatives Grid printed
On 21 October 2021, the FCA printed its Perimeter Report 2020/21. In a associated press launch, the FCA highlights areas the place it’s calling for legislative change to guard shoppers. Points of curiosity within the Report embody:
- Payments: The FCA can be working intently with HM Treasury (HMT) within the coming months to put the foundations to delivering on the priorities outlined within the Government’s response to the Payments Landscape Review.
- Cryptoassets: The FCA will proceed to watch the market and contemplate whether or not actions fall inside its perimeter. It can even proceed to work with HMT and different regulators to tell considering on the place additional regulatory or legislative change is required. The FCA is working with HMT, the Bank of England and the Payment Systems Regulator as a part of the UK Cryptoasset Taskforce to contemplate the suitable regime for cryptoassets used for funds.
- SMCR: Extending the SMCR to the funds and e-money sector (amongst others) would improve particular person accountability and governance inside companies, and strengthen the FCA’s means to oversee such companies by giving it a wider vary of instruments to drive greater requirements and mitigate dangers of shopper hurt. The FCA will proceed to work with HMT on this challenge.
- The Money Laundering Regulations 2017 (MLRs): The FCA is worried, primarily based on its expertise below the MLRs and as has beforehand been made public in its correspondence with the Treasury Select Committee, that the registration requirements it’s permitted to use below the MLRs are far much less demanding than these relevant below FSMA. It subsequently welcomes the July 2021 name for proof printed by HMT, which expressly consists of the query of whether or not supervisory authorities below the MLRs have the powers they should help an efficient gateway into the MLR perimeter.
The Perimeter Report will kind the premise of a proper dialogue between the FCA Chief Executive, Nikhil Rathi, and the Economic Secretary to the Treasury, John Glen MP, earlier than the tip of the 12 months, the minutes of which can be printed.
Back to the highest
United Kingdom: Chief Executive of Digital Regulation Cooperation Forum appointed
On 1 November 2021, the Digital Regulation Cooperation Forum (DRCF) introduced the appointment of Gill Whitehead as its Chief Executive. The DRCF was established in July 2020 by the Competition and Markets Authority (CMA), Ofcom and the Information Commissioner’s Office (ICO) to make sure a better degree of coordination between the totally different regulators of on-line providers in an effort to drive a coherent method to digital regulation. The FCA turned a member of the DRCF in April 2021.
Back to the highest
United Kingdom: FCA speech on work and position as a data-led regulator
On 2 November 2021, the FCA printed a speech given by Jessica Rusu, FCA Chief Data, Information and Intelligence Officer. The speech focuses on the FCA’s response to new applied sciences and the way it’s making the most effective use of its sources to sort out the challenges confronted by shoppers and business as an efficient data-led regulator. Points of curiosity from the speech embody a point out of the truth that the FCA will quickly publish a refreshed Data Strategy (final up to date in January 2020).
Back to the highest
Global: FSB Chair makes speech on focus for 2022
On 18 October 2021, Randal Okay. Quarles, Chair of the Financial Stability Board (FSB), made a speech on the FSB’s focus for 2022.
Among different areas, Quarles talked about that the FSB is intently watching cryptoassets and stablecoins, noting that within the final 18 months, the market capitalisation of cryptoassets has grown from lower than $200 billion to as a lot as $2.4 trillion. He additionally warned of the necessity to contemplate whether or not the FSB’s regulatory and supervisory approaches appropriately handle dangers, whereas preserving the advantages that innovation can convey. Digital property don’t match neatly into present regulatory buckets, and so they function within the digital ether the place they’ll simply cross nationwide borders.
On this level, Quarles famous that whereas digital property might not be present threats to world monetary stability, merchandise which fall between the regulatory cracks at some point can develop into systemic issues the subsequent, and that the purpose of the FSB’s work is to protect in opposition to new dangers that emerge from innovation with out stifling this identical innovation.
Back to the highest
Global: FSB letter to G20 leaders
On 25 October 2021, the Financial Stability Board (FSB) despatched a letter to the G20 leaders forward of the October 2021 G20 summit. Points raised embody:
- The COVID-19 pandemic has boosted using digital monetary providers, specifically numerous types of digital funds: Growth on this space strengthened the necessity to assess the monetary stability implications of economic innovation, notably innovation with a technological element. The letter additionally highlighted the necessity to make sure that supervisory and regulatory frameworks and approaches present a stable basis for harnessing the advantages of such innovation whereas containing their dangers, as additionally highlighted in Randal Quarles’ speech (see the earlier merchandise).
- Cryptoassets of their numerous kinds elevate explicit challenges: The markets for such property have advanced quickly over the previous 12 months. With market capitalisation for cryptoassets rising and hyperlinks to the remainder of the monetary system rising, the FSB will proceed to intently monitor these markets and their implications for monetary stability. The FSB’s assessment this 12 months demonstrated that a number of jurisdictions have been analysing and updating their authorized and regulatory regimes to make sure that they’ve the power to determine and handle the precise dangers arising from ‘stablecoins’. Further, authorities recognized a number of points that warrant additional consideration on the worldwide degree, and the FSB is working to deal with these.
- The FSB is working to make cross-border funds cheaper, sooner, extra clear, and extra accessible: Work in 2021 centered on laying the foundational parts that help the FSB’s G20 roadmap for enhancing cross-border funds. A key a part of the inspiration has been the publication of particular quantitative world targets that handle the challenges of value, velocity, transparency, and entry that cross-border funds face. These targets play an vital position in defining the ambition of the work and creating accountability. But the FSB warned that the roadmap won’t be achieved merely by way of analyses and proposals. The subsequent stage of labor in 2022 consists of the event of particular proposals for materials enhancements of underlying programs and preparations, in addition to the potential improvement of latest programs.
Back to the highest
Global: G20 leaders’ declaration from October 2021 summit printed
On 31 October 2021, the G20 printed the leaders’ declaration which was adopted following the summit held in Rome on 30 and 31 October 2021.
Among different issues, within the declaration the G20:
- Welcomes the progress reported in opposition to the 2021 milestones set below its roadmap to reinforce cross-border funds and endorses the quantitative world targets for addressing the challenges of value, velocity, transparency and entry by 2027 set out within the FSB’s associated report.
- Reiterates that no world stablecoins ought to begin operation till all related authorized, regulatory and oversight necessities are adequately addressed by way of applicable design and by adhering to relevant requirements. It urges jurisdictions to progress their implementation of the FSB’s high-level suggestions on this space, and normal setting our bodies to finish their evaluation of whether or not to make any changes to requirements or steering in view of those suggestions.
- Encourages the Committee on Payments and Market Infrastructures (CPMI), Bank for International Settlements (BIS) Innovation Hub, International Monetary Fund (IMF) and World Bank to proceed deepening the evaluation on the potential position of central financial institution digital currencies in enhancing cross-border funds and their wider implications for the worldwide financial system.
Back to the highest
Global: G7 agree Digital Trade Principles
On 22 October 2021, commerce ministers from the G7 nations met and agreed to 5 Digital Trade Principles:
- Open digital markets. In explicit, the ministers acknowledged that they’re united of their help for open digital markets and in opposition to digital protectionism and digital authoritarianism.
- Data free move with belief. The ministers wish to harness the alternatives of the digital financial system and help the commerce of products and providers. They are notably involved about conditions the place information localisation necessities are getting used for protectionist and discriminatory functions.
- Safeguards for staff, shoppers, and companies. Effective measures should be in place to make sure a excessive degree of shopper safety when buying items and providers on-line. Businesses should have a safe digital buying and selling surroundings, with the best requirements of cybersecurity and resilience in opposition to illicit or malign exercise.
- Digital buying and selling programs. Governments and business ought to drive ahead the digitisation of trade-related paperwork. This consists of addressing authorized, technical, and industrial limitations to the digitisation of paper processes.
- Fair and inclusive world governance. Common guidelines for digital commerce needs to be agreed and upheld on the World Trade Organisation.
Back to the highest
Global: FATF report on penalties of incorrect implementation of Standards
On 27 October 2021, the Financial Action Task Force (FATF) printed a report setting out its views on the unintended penalties of the inaccurate implementation of the FATF Standards. The report seems to be at 4 key themes:
- De-risking: It is tough to determine a direct correlation between the FATF Standards and de-risking within the monetary sector, despite the fact that failure to implement the risk-based method of the FATF Standards on the nationwide degree might be one of many many drivers of de-risking, specifically for cash or worth switch providers (MVTS) operators and a few non-profit organisations (NPOs).
- Financial exclusion: The misapplication of the FATF Standards, and specifically the failure to make use of the proportionality that’s central to the risk-based method, can result in or compound monetary exclusion. Rules-based necessities improve inclusion limitations as monetary establishments and designated non-financial companies and professions should not prepared to tackle or mitigate the AML/CTF dangers.
- Undue concentrating on of NPOs: The evaluation right here concludes that the undue concentrating on of NPOs within the context of purported or actual AML/CTF implementation (each professional or in any other case) could also be associated in some circumstances to poor or negligent implementation of FATF’s risk-based method.
- Curtailment of human rights: Here, FATF identifies plenty of ways in which misapplication of the Standards might be related: (i) excessively broad or obscure offences in authorized counterterrorism financing frameworks, which may result in wrongful utility of preventative and disruptive measures together with sanctions that aren’t proportionate; (ii) points related to investigation and prosecution of CTF and AML offences, such because the presumption of innocence and an individual’s proper to efficient safety by the courts; and (iii) incorrect implementation of UN Security Council Resolutions and FATF Standards on due course of and procedural points for asset freezing.
Back to the highest
Payment Market Developments
United States: Clickatell publicizes new cost capabilities in its Chat Commerce Platform
In October 2021, Clickatell introduced that it’s including new cost capabilities to its Chat Commerce Platform. Clickatell introduced the next new features:
- “Connect” allows messaging and notifications, similar to a financial institution sending a buyer a bank card transaction verification alert.
- “Interact” offers back-end system integration and orchestration full with chat bot and agent desk functionality.
- “Transact” helps API funds and digital transactions capabilities by way of Clickatell’s new Chat 2 Pay. Chat 2 Pay allows companies to securely settle for funds in chat messaging by sending shoppers a cost hyperlink by way of SMS or WhatsApp.
Back to the highest
Guernsey: Jacobi receives approval for the world’s first tier one Bitcoin ETF
On 15 October 2021, it was reported that Jacobi Asset Management had acquired approval from the Guernsey Financial Services Commission for the world’s first tier one bitcoin ETF (exchange-traded fund). Jacobi plans to record the bitcoin ETF on the Cboe Europe fairness change, topic to FCA approval.
Back to the highest
Russia: UnionPay and Solidarnost launch Money Express service
On 20 October 2021, it was reported that UnionPay International, a worldwide cost providers supplier, is partnering with Solidarnost Bank to launch its Money Express service. The service will permit Solidarnost clients to make transfers from their account or card to China or CIS nations with out having to go to a Solidarnost department.
Back to the highest
Global: Mastercard companions with Previse on Mastercard Cross-Border Services
On 18 October 2021, it was reported that Previse is integrating Mastercard Cross-Border Services into its InstantPay platform. InstantPay analyses invoices to determine these which might be more likely to be rejected, which allows different invoices to be paid faster. It is subsequently hoped that the brand new integration will speed up instantaneous funds in over 100 nations.
Back to the highest
Romania: Smart Fintech receives Open Banking authorisation
On 20 October 2021, it was introduced that Smart Fintech had develop into the primary Romanian third-party supplier authorised to offer each Open Banking providers, particularly account data providers and cost initiation providers. This will permit Smart Fintech to supply its clients built-in cost and account data aggregation providers.
Back to the highest
North America: TransferMex and Tern Commerce companion on remittances
On 20 October 2021, it was reported that Tern Commerce, a “fintech as a service” firm, is granting entry to its identical day cross-border remittance capabilities to TransferMex. US employers utilizing TransferMex will have the ability to pay seasonal staff utilizing a pay as you go card. It additionally permits staff to ship same-day funds to Mexico.
Back to the highest
United States: Klarna buys Inspirock
On 22 October 2021, it was introduced that Klarna is buying Inspirock, the net journey planner. According to Klarna, the acquisition will “bring enhanced advertising and content capabilities for retailers at critical point in the travel planning journey”.
Back to the highest
Global: Nium launches crypto-as-a-service world platform
On 25 October 2021, it was introduced that Nium is launching the business’s first world crypto-as-a-service platform. This will permit monetary establishments to entry new providers regarding cryptocurrency funding. The new providers embody “Comprehensive Cryptocurrency Investment Services”, “Stablecoin Support”, and “Cryptocurrency Compliance Services”.
Back to the highest
Nigeria: MFS Africa acquires Baxi
On 26 October 2021, it was reported that MFS Africa, an African digital funds hub, had agreed to purchase Baxi, a Nigerian agent community. The deal is topic to approval from the Central Bank of Nigeria. MFS Africa hopes that the deal will permit it to increase its African community and join Nigerian enterprise to the remainder of Africa and the world.
Back to the highest
Israel: BlueSnap launches native buying in Israel
On 25 October 2021, it was reported that BlueSnap, a worldwide cost know-how firm, had acquired licensing and financial institution approval for native buying in Israel. The transfer permits companies working in Israel to course of digital funds domestically, with out incurring cross-border charges. Israel is the forty-seventh nation that BlueSnap has launched native buying providers in.
Back to the highest
United Kingdom: PayPal launches Zettle Terminal
On 26 October 2021, it was reported that PayPal is launching the Zettle Terminal, an all-in-one point-of-sale cost answer for small companies. The terminal comes with a SIM card, which signifies that it has WiFi and mobile connectivity, permitting funds to be made away from tills. It additionally has a touchscreen, and an built-in barcode scanner.
Back to the highest
Mongolia: Tranglo opens cost route
On 2 November 2021, it was introduced that Tranglo, the cross-border funds hub, is launching a brand new cost hall to Mongolia.
Back to the highest
Surveys and Reports
Global: FATF publishes outcomes of survey on enhancing cross-border funds
On 22 October 2021, FATF printed the outcomes of its cross-border funds survey. The survey considers plenty of areas, together with:
- What respondents’ greatest obstacles are. On this level, the preferred response by a big margin was “Identifying & verifying customers & beneficial owners”. The second largest concern was “Targeted Financial Sanctions screening”.
- The destructive impacts of nationwide AML/CFT measures. The hottest reply right here was elevated prices, adopted by diminished velocity, limiting entry and diminished transparency.
- The challenges associated to data sharing. 72% of respondents thought of the challenges posed by constraints on data sharing as “significant” or “most significant”.
Back to the highest
Global: Blockchain can cut back cross-border settlement prices, report exhibits
On 8 November 2021, it was reported that Juniper Research had launched a report which concluded that banks might save billions within the long-term by utilizing blockchain for cross-border settlement. The report predicts that financial savings can be greatest in giant buying and selling nations just like the US and China, which see a excessive quantity of remittances and profit from a beneficial regulatory surroundings.
The report additionally notes that the reluctance of key funds establishments to maneuver away from legacy programs is slowing wider blockchain adoption.
Back to the highest
South-east Asia: 162% e-commerce spending improve anticipated by 2025
On 3 November 2021, it was reported that IDC had launched a report which predicts that e-commerce funds in South-East Asia will improve by 162% by 2025, to USD 179.8 billion. The largest e-commerce markets are anticipated to be Indonesia, Vietnam and Thailand. The report additionally predicts that using cellular wallets and Buy-Now Pay-Later will develop by roughly 30% between 2o2o and 2025. Indonesia alone is predicted to have over 100 million cellular pockets customers by 2025.
Back to the highest
Hogan Lovells (Luxembourg) LLP is registered with the Luxembourg bar