FinTech Global FS Regulatory Round-up – w/e May 27, 2022

In this regular update, we summarize FinTech-related financial services regulatory developments for the week ending May 27, 2022.

UK

CMA publishes findings of ‘lessons learned’ review in Open Banking

The Competition and Markets Authority (CMA) has published the conclusions and recommendations of a exam by Kirstin Baker, one of its Independent Non-Executive Directors, to identify lessons learned from Open Banking for the CMA’s approach to designing, implementing and monitoring solutions in its investigations Steps. The review makes the following recommendations to the CMA:

  • enhance the effectiveness of Board oversight and risk management of the end-to-end strategy for complex appeals;
  • define processes and governance for the CMA Board and management to oversee the execution and implementation of corrective actions;
  • consider implementation issues during the design phase of remedies;
  • ensuring that key factors are considered when a claim establishes a new significant and enduring CMA entity or function;
  • include gateways in the process of delivery and implementation of remedies;
  • implement effective and agile internal governance and stakeholder engagement in the provision and implementation of remedies; and
  • conduct a case study evaluation of complex market research solutions.

The CMA is committed to implementing the recommendations in full and announces that it will publish a further update next year on its progress in implementing the remedies work programme. [27 May 2022]

New edition – Grid of regulatory initiatives

The latest edition of the Financial Services Regulatory Initiatives Forum’s Grid of regulatory initiatives is out. The purpose of the Grid is to detail initiatives relevant to the financial services industry that are planned for the next 24 months, e.g. – Open Finance, Machine Learning, Crypto-assets, CBDC, etc. The Grid is prepared by members of the Forum – the Bank of England, the FCA, the Prudential Regulation Authority, the Payment Systems Regulator, the CMA, the Information Commissioner’s Office, the Pensions Regulator and the Financial Reporting Council (HM Treasury assists to the Forum as an observer).

For each initiative listed, the grid provides details on the responsible authority, milestones, indicative impact and likely timeline. Where applicable, it also indicates where an initiative’s times have changed since the previous edition of the Grid and it also indicates where a new initiative has been added.

The Forum aims to publish the Grid at least twice a year to help companies manage the operational impact of implementing initiatives. [25 May 2022]

PSR: Consultation Document on Requirements for Subsequent Participation in the CoP

The PSR has published a consultation document (CP22/2) on the conditions for subsequent participation in the Beneficiary Confirmation Service (CoP). In CP22/2, the PSR outlines its proposal to provide specific guidance requiring approximately 400 payment service providers (PSPs) to implement a system to offer CoP to their customers (both as payers and payees) .

Due to the volume of PSPs involved, the PSR proposes to provide guidance that divides the requirements for PSPs to implement a CoP delivery system into two groups:

  • The first group will be prioritized based on the complexity and size of the institution or business where adopting the CoP could have the greatest impact on preventing authorized push payment (APP) fraud. This group should have implemented the CoP before June 30, 2023.
  • The second group includes all other companies that either use unique sort codes or build companies using a Secondary Master Data (SRD) reference type. This group should have implemented the CoP before June 30, 2024.

Comments on the proposals are requested no later than July 8, 2022. If PSR decides to proceed with the proposed guidance, it expects to do so approximately eight to ten weeks after the July deadline. [24 May 2022]

EU

ECB article on risks to financial stability in the crypto-asset market

The European Central Bank (ECB) has published an article on risks to financial stability in the crypto-asset market. The article, which forms a special feature for the forthcoming ECB Financial Stability Review, examines market developments in recent years and the risks associated with crypto-assets, including the role of leverage and crypto loans. The articles come to the following conclusions:

  • The nature and scale of crypto-asset markets are changing rapidly, and if current trends continue, crypto-assets will pose risks to financial stability.
  • Systemic risk increases depending on the level of interconnectedness between the financial sector and the crypto-asset market, the use of leverage and lending activity. Based on the developments observed to date, crypto-asset markets are currently showing all signs of an emerging risk to financial stability. It is therefore essential that regulators and supervisors carefully monitor developments and coordinate globally to close regulatory gaps or opportunities for arbitrage.
  • It is important to close regulatory and data gaps in the crypto-asset ecosystem. [24 May 2022]

Singapore

MAS and the Swiss State Secretariat for International Finance publish a statement on promoting data connectivity

DSS has published the joint declaration of intent between MAS and the Swiss State Secretariat for International Finance (SIF) to promote data connectivity for financial services. The statement indicates recognition by both parties of the importance of data connectivity in financial services and confirms their intention to work together and with other countries and authorities to promote an enabling environment for growth and development. [24 May 2022]

Malaysia

BNM Deputy Governor Speaks at InsurTech Conference

Bank Negara Malaysia (BNM) has published remarks delivered by the Deputy Governor at the InsurTech Leaders Summit on May 18, 2022. The Deputy Governor focused on three areas where the pursuit of innovation and the role of industry i.e. its role as a connector with the ability to link information to unlock the value of innovation – are critical: bridging the gap in insurance coverage and protection; redraw the borders for more efficiency; and broadening the horizons for the future of insurance beyond protection towards prevention. [24 May 2022]

Philippines

BSP Governor Addresses ISOG Forum on Metaverse and Cybersecurity

PASB has published Governor Benjamin E Diokno’s keynote address at the Metaverse: I am Secure cybersecurity virtual forum hosted by the Information Security Officers Group (ISOG). The Governor spoke of the potential and challenges presented by the metaverse, noting that as companies work to create a metaverse, cyber threat actors will similarly work on their own capabilities. In response, the BSP will be vigilant, adopting “a holistic, agile, risk-based and engaging approach to cybersecurity.” Governor Diokno highlighted four major initiatives PASB is currently working on:

  • The PASB is developing a Financial Services Cyber ​​Resilience Plan that will serve as the main framework covering strategies and plans to strengthen cyber resilience in the financial services sector. This is part of BSP’s role as the leader of the Banking Computer Emergency Response Team under the Department of Information and Communications Technology.
  • The BSP is implementing the Advanced SupTech Engine for Risk-Based Compliance (ASTERisC*) which is a unified regtech and suptech solution to streamline and automate regulatory oversight, reporting and assessment of risk management compliance. cybersecurity risks for supervised institutions.
  • BSP collaborates with the banking industry through the Bankers Association of the Philippines Cyber ​​Incident Database (BAPCID) – a web portal where participants can report incidents and threats anonymously and receive threat intelligence feeds and BSP threat advisories.
  • BSP is currently coordinating with relevant government agencies and industry associations on a joint consumer protection campaign to amplify key messages and raise national awareness of cybersecurity. [18 May 2022]

UNITED STATES

CFTC Charges Oregon and Illinois Residents and a Florida Company with Misappropriation of $44 Million in Ongoing Digital Asset and Commodity Futures Fraud

The CFTC has announcement that he filed a civil lawsuit in the U.S. District Court for the Northern District of Illinois, accusing the defendants of fraudulently soliciting at least $44 million for interests in a so-called income fund invested in digital assets and other instruments. The enforcement action also accuses the defendants of operating an illegal commodity pool and failing to register as a commodity pool operator.

The complaint alleges that since at least January 2021, the defendants have used a website, YouTube videos and other means to solicit more than $44 million from at least 170 participants to buy, hold and trade digital assets. , commodities, derivatives, swaps and commodity futures. contracts. The Complaint further alleges that instead of investing the Participants’ Pooled Funds as depicted, the Defendants misappropriated the Participants’ Funds by distributing them to other Participants, in a manner akin to a Ponzi scheme. The Complaint also alleges that the Defendants transferred participant funds to other accounts under their control and for their benefit. The defendants also transferred millions of dollars to an offshore entity which, in turn, may have transferred funds to a foreign cryptocurrency exchange. None of these funds were returned to the pool.[19May2022[19May2022[19mai2022[19May2022

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