There were a number of regulatory updates in November, with speeches from the FCA and the Bank of England, as well as calls for closer supervision of Bank-FinTech relationships.
Here at Banking Circle, our Head of Web3, Daniel Lee, was joined by other regulatory experts from Ripple, Paxos and Blue Pool Communications to discuss the institutionalisation of digital assets in banking in this webinar with Coindesk. Read our wrap-up of this session here.
Our Head of Compliance and MRLO at Banking Circle, Mitch Trehan, was joined by speakers from Stripe, Dojo, and PPRO, to discuss if collaboration can help payments providers meet merchants’ payment expectations in this webinar with The Paypers. Read more about that here.
In another webinar, this time with Sifted, our Chief Growth Officer, Søren Skov Mogensen, was joined by speakers from Rapyd and Mollie, to discuss breaking the barriers to financial inclusion with interoperability. We also explore this topic in a little more detail in an article for the Sifted website.
We were also pleased to announce we were named Best Cross-Border Payments Infrastructure Provider of the Year, and B2B Payments Innovation of the Year at the 2022 Payments Awards.
Here are some other important stories from the industry you may have missed:
The EBA publishes final guidelines on remote customer onboarding
The European Banking Authority (EBA) has published guidelines outlining the steps credit and financial institutions need to take to ensure safe and effective remote customer onboarding practices in line with applicable AML/CFT legislation, and the EU’s data protection framework. Any credit and financial institutions that fall within the scope of the Anti-Money Laundering Directive (AMLD) are subject to these guidelines.
This final set of guidelines sets out the steps financial institutions must take when selecting customer onboarding tools and when assessing the adequacy and reliability of these tools.
They have been developed in response to the European Commission’s request in the context of its Digital Finance Strategy, published in 2020.
See the Guidelines here.
US Treasury calls for closer supervision of Bank-FinTech relationships
With FinTechs expanding into core consumer finance markets, the US Department of the Treasury is looking to protect consumers by bolstering regulation of Bank-FinTech partnerships.
Collaboration between Banks and FinTechs is increasing, and FinTechs are currently not subject to the same level of oversight as traditional Banks. The new report from the US Department of Treasury outlines a series of recommended steps for handling the relationships between Banks and FinTechs, aiming to provide a “clear and consistently applied supervisory framework.”
It claims that watchdogs should “robustly” supervise Bank-FinTech lending relationships for compliance with consumer protection laws and that regulators should also support innovations in consumer credit underwriting aimed to increase credit visibility, reduce bias, and prudently expand credit to underserved consumers.
Read the full report here.
New standard for mobile payment acceptance issued by the PCI SSC
The Payment Card Industry Security Standards Council (PCI SSC), has published a new standard with the aim of supporting the evolution of mobile payment solutions.
A Commercial Off The Shelf, or COTS, device is defined as a mobile device (e.g. a smartphone or tablet) that is designed for mass-market distribution. The new standard, PCI Mobile Payments on COTS (MPoC), PCI MPoC is a flexible mobile standard and programme for payment solution development. It builds on the existing PCI Software-based PIN Entry on COTS (SPoC) and PCI Contactless Payments on COTS (CPoC) Standards.
The new PCI MPoC is designed to increase flexibility in how payments are accepted, as well as in how COTS-based payment acceptance solutions can be developed, deployed and maintained.
Read more on that here.
Rolling regulation forwards FCA speech
Chief Executive of The Financial Conduct Authority (FCA), Nikhil Rathi, delivered a speech at the UK Finance annual dinner on Consumer Duty and the regulatory habit.
Within the speech on 16 November, he detailed how the Consumer Duty will help the FCA to manage the entry of Big Tech firms into the UK retail financial service, ensuring a level playing field.
A key theme of the talk was that firms should take advantage of digitalisation but market developments must not leave groups of consumers behind, in particular those considered to be the most vulnerable or the least digitally enabled.
The FCA is keen to work with the industry to ensure that the UK remains Europe’s FinTech investment hub.
Find out more on that here.
FATF issues new AML and CTF advice for EU states
The Financial Action Task Force (FATF) has offered a new set of recommendations for EU states on how to handle AML and terrorist financing threats. These were delayed a year because of the pandemic.
In the new recommendations, the FATF has recalculated the risk levels of the online gambling sector, as well as crypto assets, taking into consideration the impacts these factors have had on EU member states, especially with regards to rising money laundering risk levels throughout businesses and economic sectors.
In total, the FATF study on CTF and AML threats focused on more than 40 services or products included in eight different business categories.
Read more about that here.
BoE reflects on DeFi, digital currencies and regulation
In a speech given at Warwick Business School’s Gilmore Centre Policy Forum Conference on DeFi and digital currencies, Sir Jon Cunliffe, Deputy Governor, Financial Stability at the Bank of England (BoE), reflected on recent crypto market developments.
Sir John Cunliffe went on to discuss the work authorities are doing on the regulation of crypto stablecoins and the BoE’s work on a potential central bank digital currency (CBDC).
Read the speech in full here.
Twitter to enter the payments market?
In a live-streamed meeting with Twitter advertisers, Elon Musk outlined plans for his new acquisition to enter the payments market, claiming that in future, users would be able to perform actions like sending money to others on the platform, or extracting their funds to authenticated bank accounts.
He even revealed potential plans, further down the line, for Twitter users to be offered a high-yield money market account to encourage them to move their money to the platform. It could even make a small donation to users’ accounts to get them started.
Registration paperwork has already been filed to allow Twitter to process payments.
Elon Musk is also apparently considering the idea of establishing bank accounts on Twitter’s platform that would pay a high-interest rate to attract users.