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In this regular post, we round-up FinTech-related financial services regulatory developments for the week ending 14 June 2024.



BIS: Launch of Toronto Innovation Centre

The Bank for International Settlements (BIS) and the Bank of Canada have announced the launch of the BIS Toronto Innovation Centre. Toronto is the first BIS Innovation Hub (BISIH) in the Americas. The Toronto Innovation Centre will be headed by Miguel Diaz and will initially focus on projects to explore next-generation financial market infrastructures (FMIs), SupTech and open finance. [14 Jun 2024]  #SupTech #OpenFinance

BIS: Results of the 2023 survey on CBDCs and crypto

BIS has published a paper on the results of its 2023 survey on central bank digital currencies (CBDCs) and crypto. The results of the survey suggest that central banks are proceeding at their own speed, taking diverse approaches and considering different design features. Over the course of 2023, there has been a substantial increase in experiments and pilots with wholesale CBDCs in both advanced economies and emerging market and developing economies (EMDE). Overall, the likelihood that central banks will issue a wholesale CBDC within the next six years now exceeds the likelihood that they will issue a retail CBDC. [14 Jun 2024]  #CBDC #Crypto

BISIH and BoE launch Project Meridian FX

BIS has announced that the Eurosystem and London Centres of the BISIH, together with the Bank of England (BoE), have launched Project Meridian FX, to build on the findings of Project Meridian by focusing on foreign exchange (FX) transactions. The project will provide insights on how operators of real-time gross settlement (RTGS) systems could enable interoperability with new payments technologies, such as distributed ledger technology (DLT). [14 Jun 2024]  #DLT #Payments


ESMA: 2023 Annual Report

The European Securities and Markets Authority (ESMA) has published its 2023 Annual Report. Focusing on investor protection, risk monitoring and supervision, the report sets out ESMA's key achievements in the first year of implementing its new five-year strategy. Among the highlights are ESMA's work with the EBA and EIOPA to prepare for implementation of the Digital Operational Resilience Act (DORA) and work preparing for the Markets in Cryptoassets Regulation (MiCAR).   [14 Jun 2024]  #DORA #MiCAR #Crypto

EBA: PSD Q&As on fraud reporting and customer authentication

The EBA has published responses to the following Q&As relating to the Payment Services Directive (PSD):

  • Fraud reporting: How we should treat the transactions that are initiated by PSP? The EBA responds that payment transactions and fraudulent payment transactions where a payment card was used should be reported both by the payer’s payment service provider (PSP) (the issuer), and by the payee’s PSP acquiring the payment transaction (the acquirer).
  • Customer authentication – Question on whether mobile banking services can be provided on the same app as that used for customer authentication. The EBA responds that PSPs shall ‘ensure that the use of the elements of strong customer authentication referred to in Articles 6, 7 and 8 is subject to measures which ensure that, in terms of technology, algorithms and parameters, the breach of one of the elements does not compromise the reliability of the other elements’. In addition, PSPs should adopt security measures, where any of the elements of strong customer authentication or the authentication code itself is used through a multi-purpose device, to mitigate the risk which would result from that multi-purpose device being compromised. [14 Jun 2024]  #payments #mobilebanking 

EIOPA: 2023 Annual Report

The European Insurance and Occupational Pensions Authority (EIOPA) has published its 2023 Annual Report, outlining accomplishments of the past year. The report sets out how EIOPA has met its goals in line with its overall strategy, including key achievements in: sustainable finance; digitalisation; supervision; policy; risks and financial stability; and governance. [14 Jun 2024]  #Digitalisation

EBA publishes technical standards and guidelines under MiCAR

The European Banking Authority (EBA) has published the package of technical standards and guidelines under the Markets in Cryptoassets Regulation (MiCAR) on prudential matters, namely own funds, liquidity requirements, and recovery plans. The package comprises:

ESMA newsletter: Spotlight on Markets

The European Securities and Markets Authority (ESMA) has published the latest edition of the Spotlight on Markets newsletter which rounds-up the authority's recent activities. Topics covered in this edition include: recommendations to strengthen EU capital markets and address the needs of EU citizens and businesses; guidance to firms using artificial intelligence (AI) in investment services; guidelines on funds’ names using ESG or sustainability-related terms; and the final rules on conflicts of interests of crypto-asset service providers (CASPs) under the Markets in Crypto Assets Regulation (MiCAR). [12 Jun 2024]  #CASPs #AI #MiCAR #Crypto

ECB: OP on digital innovation and banking regulation

The European Central Bank (ECB) has published an Occasional Paper (OP) on digital innovation and banking regulation. The OP reflects that while there has been cross-sectoral legislation in the EU on areas such as artificial intelligence (AI), cloud computing and cryptoassets, the impact of these changes has yet to be fully articulated in the prudential regime for banks.  The OP considers how to foster a risk-based Pillar 2 prudential framework, as well as market discipline through harmonised Pillar 3 disclosures. The OP concludes that these can help reconcile the challenges stemming from the short-term horizon applied in prudential assessment and the longer-term horizon over which digital innovation will take place in the banking sector. [10 Jun 2024]  #Cryptoasset #AI #Cloud


APRA releases cross-industry guidance on operational resilience

The Australian Prudential Regulation Authority (APRA) has released its Prudential Practice Guide CPG 230 Operational Risk Management (CPG 230), which is designed to help banks, insurers and superannuation trustees strengthen their operational risk management and improve business continuity planning. CPG 230 is intended to assist in the implementation of Prudential Standard CPS 230 Operational Risk Management (CPS 230), which is effective from 1 July 2025. Key amendments to CPG 230 include: that non-Significant Financial Institutions have an additional 12 months to comply with certain business continuity and scenario analysis requirements in CPS 230; a 'day one' checklist to assist entities in their implementation of CPS 230; and a three-year forward plan of its intended approach to supervising CPS 230.   [13 Jun 2024]  #OpRes

Hong Kong

SFC gives briefing on regulatory expectations to VATP applicants that are deemed to be licensed following end of non-contravention period

The SFC has held a briefing to explain its regulatory expectations to the virtual asset trading platform (VATP) applicants that are now deemed to be licensed from 1June 2024.

The SFC gave a comprehensive overview of the competencies expected of the applicants and the licence application process. It also introduced its on-site inspection programme, which aims to ascertain the applicants' compliance with the relevant regulatory requirements.

The non-contravention period for VATPs operating in Hong Kong under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) came to an end on 1 June 2024 (see our previous update).  All VATPs operating in Hong Kong must be either licensed by the SFC, or be VATP applicants that are deemed to be licensed by operation of the AMLO.  [12 Jun 2024]  #VATP #VirtualAsset #AML/CTF 


MAS and BIS Innovation Hub develop climate risk platform blueprint

The Monetary Authority of Singapore (MAS) and the Bank for International Settlements (BIS) Innovation Hub have developed a blueprint for a platform that integrates regulatory and climate data to help financial authorities identify, monitor and manage climate risks in the financial system. 

The blueprint lays out the key features and metrics required for a climate risk platform. These incorporate data and information on financed emissions, physical risk exposure and forward-looking assessments under different climate scenarios.  [12 Jun 2024]  #ClimateRiskPlatform

ABS launches social, environmental and anti-scam initiatives

The Association of Banks in Singapore (ABS) has announced the launch of a $4 million programme to support 10,000 low-income households and fight scams. The programme will encompass two pillars: Social and Environmental Focus, and a new Anti-Scam Campaign. While the programme is the first combined banking industry effort, it is over and above each individual bank’s ongoing community, environmental and anti-scam activities.  [8 Jun 2024]  #Scams


BNM DG discusses developments in payments system

Bank Negara Malaysia (BNM) has published a speech by its Deputy Governor, Jessica Chew, at the Central Bank Payments Conference. Ms Chew discussed the evolution of payments, central banks' mandate for payments, and developments in Malaysia and the Association of Southeast Asian Nations (ASEAN).  [13 Jun 2024]  #Payments


BoT launches Programmable Payment project

The Bank of Thailand (BoT) has announced the launch of the Programmable Payment Innovation Test Project, which involves the use of technology to automatically set transaction conditions. The programme is open to financial service providers supervised by BoT and other interested firms – applications can be submitted by 13 September 2024.  [11 Jun 2024]  #Payments


RBI: Statement on developmental and regulatory policies

The Reserve Bank of India (RBI) has published its latest statement on developmental and regulatory policies which sets out various policy measures relating to regulations, payment systems and fintech. With respect to regulation, the RBI proposes to revise the definition of bulk deposits as ‘Single Rupee term deposits of ₹3 crore and above’. It has also proposed to set up a digital payments intelligence platform which will harness advanced technologies to mitigate payment fraud risks.  [7 Jun 2024]  #Fintech #Payments


BSP issues standards on consumer redress mechanism for EFTs 

The Bangko Sentral ng Pilipinas (BSP) has announced that it has approved a circular on the timely resolution of customer concerns relating to electronic fund transfers (EFTs). The circular sets out industry-wide expectations on participating banks and electronic money issuers (EMIs) of the InstaPay and PESONet Automated Clearing Houses and clearing switch operators.

With this new regulatory issuance, the originating financial institution (OFI) shall notify the sender regarding the accurate status of EFTs. The circular also covers the required turnaround time for the OFI to return the funds to the sender’s account for EFTs not received by the beneficiary.  [11 Jun 2024]  #EFTs #Payments


SEC charges founder of AI hiring startup with fraud

The SEC has charged the CEO and founder of a now-shuttered artificial intelligence (AI) recruitment startup with defrauding investors of at least $21 million by making false and misleading statements about the quantity and quality of its customers, the number of candidates on its platform, and the company’s revenue.

According to the SEC’s complaint, the startup claimed to use AI to help clients find candidates to fulfil their diversity, equity, and inclusion hiring goals. To raise money, the complaint alleges that the CEO falsely told investors that the startup had more than 100 customers, including Fortune 500 companies, and provided investors with fabricated testimonials.  The CEO also allegedly lied to investors that the company had earned more than $1 million in revenue and was working with more than 100,000 active job candidates. When an investor grew suspicious, the CEO allegedly provided falsified bank statements and forged contracts in an effort to conceal the fraud. According to the complaint, the scheme unravelled in mid-2023 when the investor confronted the CEO, who admitted to forging bank statements and contracts and to lying about revenue and the number of customers.

The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges the CEO with violating the antifraud provisions of the federal securities laws and seeks a permanent injunction, civil money penalties, disgorgement with prejudgment interest, and an officer-and-director bar against the CEO.

In a parallel action, the U.S. Attorney's Office for the Southern District of New York has announced criminal charges against the CEO. [11 Jun 2024]  #AI

NY Fed speech: Risk management in a complex and interconnected world

The Federal Reserve Bank of New York (NY Fed) has published the keynote delivered by Mihaela Nistor, Chief Risk Officer and Head of the Risk Group at the XLoD Global – New York Conference.  Ms Nistor discussed the overall risk landscape and set out some perspectives on the development of risk management practices, including as regards AI. In the latter half of the speech, she outlined four areas where AI could be leveraged in support of enhancing risk management: predictive analytics; monitoring and response capabilities; enhanced data integration and analysis; and scenario simulation and stress testing. [11 Jun 2024]  #AI

Key contacts

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Cat Dankos

Regulatory Consultant, London

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Rashid Ahmed

FSR & CCI Professional Support Paralegal, London

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Vasuki Balasubramaniam

FSR & CCI Professional Support Paralegal, London

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