FinTech Global FS Regulatory Round-up – w/e 12 May 2023

The Bank for International Settlements Innovation Hub (BISIH) Nordic Center has published a handbook outlining the most important issues related to how central bank digital currencies (CBDCs) can work for offline payments. The manual addresses issues including security, privacy, risks, solution types and operational factors. It also addresses measures of resilience, inclusion, cash equality, affordability and other desirable characteristics. [11 May 2023]

The Wolfsberg Group has published its response to the Committee on Payments and Market Infrastructures (CPMI) report on ISO 20022 harmonization requirements for cross-border payments. The Wolfsberg Group welcomes the CPMI’s proposed format and analysis of ways to improve harmonisation. The group believes that the harmonization of payment and message formats globally around the ISO 20022 standard provides significant benefits for the industry in the form of more data, more structured data and potentially increased transparency. In its response, the group comments on the questions relating to financial crime risk. [9 May 2023]

Pay.UK has published a short interview with Mark Streather, Policy Lead on the implementation of ISO 20022 in Real Time Gross Settlement (RTGS) and the Clearing House Automated Payment System (CHAPS) at the Bank of England (BoE). Mr Streather explains the key drivers behind the move to ISO 20022 messaging standards, and outlines some of the expected benefits of the transformation. [10 May 2023]

In a press release, the European Parliament (EP) has announced that its Internal Market Committee (IMCO) and Civil Liberties Committee (LIBE) have adopted a draft negotiating mandate on the proposal for a regulation on harmonized rules for artificial intelligence (AI). Action). Among other changes, the committees have amended the proposed list of intrusive and discriminatory uses of AI to include a number of additional applications, with a particular focus on the use of biometric data, predictive policing systems and emotion recognition systems. They have also expanded the classification of high-risk areas to include damage to health, safety, fundamental rights or the environment.

As for the next step, the draft negotiating mandate requires the approval of the full Parliament, after which negotiations with the Council can begin. [11 May 2023]

The European Central Bank (ECB) has published calls for candidates for two of the dedicated work streams set up by the Chair of the Rulebook Development Group to support the design of the Digital Euro Scheme rulebook:

Applications are requested by 22 May 2023; applications may be accompanied by a nomination letter from a representative payment stakeholder association or a member of the Digital Eurosystem Rulebook Development Group. [8 May 2023]

M Denis Beau, First Deputy Governor of the Banque de France (BdF), joined a panel discussion on “The dangers and potential of digital currencies” at RAID (Regulation, Artificial Intelligence, Internet & Data) Digital 2023 on 3 May 2023. In his opening remarks M Beau briefly contextualized current discussions about – and developments around – central bank digital currencies (CBDCs) and stablecoins against the wider backdrop of transformation underway in financial services and the financial sector. He then went on to highlight some of the regulatory and supervisory issues that CBDCs and stablecoins present to central bankers with respect to their responsibilities for monetary and financial stability. [4 May 2023]

The HKMA has published the ninth edition of the Regtech Adoption Practice Guide. The current edition focuses on regtech solutions for customer data and privacy, which can help banks improve the effectiveness of their privacy activities and increase customer trust, amid the increasing volume of customer data being collected and processed.

This issue:

• Illustrates how regtech solutions can be used to address privacy risks and support customer data protection;
• Provides practical implementation guidance to help banks plan the use of regtech solutions for customer data and privacy, including key considerations when implementing such solutions and insights on successful approaches to implementation;
• Shares a use case of using regtech solutions to manage privacy risks, discusses the customer data protection challenges faced by a fintech company, how the regtech solution helped solve such challenges, and the key lessons learned from successful regtech implementation both from the perspective of the fintech the company and the regtech provider. [10 May 2023]

The HKMA has published its report ‘AML Regtech: Network Analytics’ to promote the use of network analytics capabilities to strengthen the response of banks’ anti-money laundering (AML) systems to financial crime.

The report highlights the potential of combining intelligence-led analytical tools with rules-based monitoring systems to help banks improve their anti-fraud efforts. It also shares the experiences of banks already using this capability, providing practical insights and expert perspectives to guide banks in their exploration and use of network analytics. This capability, along with intelligence shared through the Fraud and Money Laundering Intelligence Taskforce, has resulted in banks increasing the number of intelligence-led suspicious transaction reports by 319% in 2022 compared to 2021, leading to a 113% increase in criminal proceeds. or confiscated.

Under its ‘Fintech 2025′ strategy, the HKMA will continue to support innovation and banks’ retech adoption. An upcoming initiative involves hosting another AMLab with Cyberport, which will involve all retail banks and have a deep dive into the technology and data requirements that underpin anti-fraud efforts. [9 May 2023]

MAS has published the panel discussion involving Leong Sing Chiong, Deputy Managing Director (Markets and Development), at the Indonesia Digital Economy and Finance Festival. Mr Sing Chiong joined the panel: “Promoting Digital Payments Inclusion in the Region through Cross-Border Interoperability Initiatives”. The panel debate can be seen here. [8 May 2023]

Bank Negara Malaysia (BNM) and Bank Indonesia (BI) have announced the commercial launch of the Indonesia-Malaysia cross-border QR payment link. The commercial launch of this link follows the successful completion of the pilot phase of the link announced on 27 January 2022.

The link will see the number of participating financial institutions, which include non-banks, increase. This will enable more Indonesians and Malaysians to make instant retail payments in both countries by scanning Quick Response Code Indonesian Standard (QRIS) or DuitNow QR codes at brick-and-mortar stores or online merchants using services offered by participating financial institutions. [8 May 2023]

In a press release, the Reserve Bank of India (RBI) has announced that it will be among 13 international regulators participating in the Global Financial Innovation Network’s (GFIN’s) first ever Greenwashing TechSprint.

GFIN is a group of over 80 international organizations committed to supporting financial innovation in the interests of consumers; it is currently managed by the UK Financial Conduct Authority (FCA). RBI as a participating member invites firms from India to participate in this Greenwashing TechSprint. The application window closes on 21 May 2023.

Companies whose applications are successful will proceed to boarding on 1 and 2 June. This will provide companies with training in the Digital Sandbox and a thorough overview of the TechSprint process. TechSprint will be launched on 5 June and will run for 3 months, ending with an exhibition day in September 2023. [11 May 2023]

The Bangko Sentral ng Pilipinas (BSP) has announced that it held an information session for journalists in Northern Luzon as part of efforts to explain and update local and regional media on current central banking topics, such as digital payments and gold purchases in the Cordillera region. The participants also received a refresher course in the basics of central banking. The two-day session was held in Baguio City from April 25 to 26, 2023. [9 May 2023]

The Consumer Financial Protection Bureau (CFPB) has published the comments of Seth Frotman, General Counsel and Senior Advisor to the CFPB Director, at the Innovative Payments Conference. Frotman spoke about the current payment landscape and consumer financial protection, covering: data collection and privacy; payment of gig and other non-standard workers; and liquidity and stability in the peer-to-peer payment system. [9 May 2023]

New York Attorney General Letitia James has announced legislation to tighten regulations on the cryptocurrency industry to protect investors, consumers and the broader economy. Attorney General James’ program proposal aims to “increase transparency, eliminate conflicts of interest and impose common sense measures to protect investors, consistent with regulations imposed on other financial services”.

The bill would require independent public audits of cryptocurrency exchanges and prevent individuals from owning the same companies, such as brokerages and tokens, to stop conflicts of interest. Crypto platforms will also have responsibilities to customers similar to banks under the federal Electronic Funds Transfer Act by requiring platforms to reimburse customers exposed to fraud. The bill would also strengthen the New York State Department of Financial Services (NYDFS) regulatory authority for digital assets. [5 May 2023]