In this regular update, we round-up FinTech-related financial services regulatory developments for the week ending 8 July 2022.

 

ICYMI

Recent updates from Herbert Smith Freehills include:

Global

CPMI: Report on a framework for cross-border payments 

The Committee on Payments and Market Infrastructures (CPMI) of the Bank for International Settlements (BIS) has published a report entitled ‘Interlinking payment systems and the role of application programming interfaces: A framework for cross-border payments‘. The report provides a framework to help payment system operators and authorities understand and evaluate the benefits, challenges and risks of interlinking arrangements. It also provides an overview of important trends in interlinking arrangements and the adoption of application programming interfaces (API) by payment systems. [8 Jul 2022]

#Payments

#API

FSB: Report on adoption of the LEI

The Financial Stability Board (FSB) has published a report exploring the options to improve adoption of the Legal Entity Identifier (LEI), in particular for use in cross-border payments. The report sets out a series of recommendations for promoting the use of the LEI in cross-border payments and highlights the potential benefits of the LEI in supporting straight-through processing and assisting in Know Your Customer (KYC). [8 Jul 2022]

#Payments
IOSCO: Crypto-Asset Roadmap 2022-23 

The International Organization of Securities Commissions (IOSCO) Fintech Task Force (FTF) has published the Crypto-Asset Roadmap 2022-23. The Roadmap sets out the FTF’s regulatory policy agenda and work program for the sector over the next 12 to 24 months.

The FTF will prioritise policy-focused work on crypto-asset markets and activities in its initial 12 to 24 months of operation, while continuing to monitor market developments associated with broader fintech-related trends and innovation. The FTF has set up two workstreams focusing on crypto and digital assets (CDA) and decentralised finance (DeFi). Each workstream is aiming to publish a report with policy recommendations by the end of 2023. [7 Jun 2022]

#CryptoAssets

#DeFi

FSB: Interim report on implementation approach for cross-border payments targets 

The Financial Stability Board (FSB) has published an interim report on the approach for monitoring progress toward meeting the targets for the G20 Roadmap for Enhancing Cross-border Payments. The report provides preliminary recommendations about key performance indicators (KPIs) that could be used to monitor progress over time and identifies existing and potential sources of data for calculating those KPIs.

Feedback on the interim report is requested by 31 July 2022. Responses will help to inform the FSB’s report to the G20 in October 2022. [7 Jun 2022]

#Payments

#CrossBorder

FSI: Insight on big tech interdependencies

The Financial Stability Institute of the Bank for International Settlements (BIS) has published an Insight entitled ‘Big tech interdependencies – a policy blind spot‘, and an accompanying executive summary. The Insight assesses the interdependencies inherent in big tech business models and outlines the regulatory implications of how big techs provide financial services. It further highlights the tools that financial authorities have at their disposal on how to address related risks. [5 Jul 2022]

#BigTech

 

EU

ESMA/ESAs: Mandate on Digital Operational Resilience

ESMA has published the mandate of the European Supervisory Authorities’ (ESAs) Sub-Committee on Digital Operational Resilience. The aim of the Sub-Committee is to support the ESAs in fulfilling their policy mandates under the Regulation on Digital Operational Resilience for the Financial Sector (DORA), and related tasks. The mandate sets out the tasks, type of deliverables, internal organisation, member and chairperson details, ongoing work and meetings; external relations; and interaction with the ESAs’ working groups. The mandate came into effect on 1 July 2022. [8 Jul 2022]

#OpRes

#DORA

ECB: Speech on current and future risks – credit, climate and cyber

The ECB has published a speech by Elizabeth McCaul, Member of the Supervisory Board of the ECB, on managing and supervising current and future risks. In her speech, Ms McCaul notes credit risk, cyber risk and climate risk as being key challenges in the banking sector. She also highlights the ECB’s supervisory focus on these priority areas and states that the ECB will publish the results of its bottom-up climate stress test on 8 July 2022. [7 Jun 2022]

#Cyber
EC adopts New European Innovation Agenda

The EC has announced that it has adopted a New European Innovation Agenda which sets out the EU’s approach to harnessing deep tech innovation. The New European Innovation Agenda sets out 25 dedicated actions under five flagships:

  • funding scale-ups by mobilising investment – including by introducing a Listing Act to simplify the listing process;
  • enabling innovation through experimentation spaces and public procurement – including through use of regulatory sandboxes, test beds, living labs and innovation procurement;
  • accelerating and strengthening innovation in European Innovation Ecosystems across the EU – including supporting the creation and connection of ‘regional innovation valleys’;
  • fostering, attracting and retaining deep tech talents; and
  • improving policy making tools and using data to inform policy making. [6 Jul 2022]
#Innovation 

 

Australia

ACCC publishes report compiling data on the impact of scams in Australia

The Australian Competition and Consumer Commission (ACCC) has published a report which reveals that Australians lost a record amount of more than $2 billion to scams in 2021, despite government, law enforcement, and the private sector disrupting more scam activity than ever. Investment scams were the highest loss category ($701 million) in 2021, followed by payment redirection scams ($227 million). ACCC Deputy Chair Delia Rickard stated that that the ACCC is particularly wanting banks to match payee information in ‘pay anyone’ transactions. Ms Rickard noted that this appears to have had a real impact in countries that have done so.  [4 Jul 2022]

#Scams

 

Hong Kong

Updates from FATF

The SFC and Insurance Authority have published circulars to licensed corporations and associated entities (LCs and AEs) and insurance institutions respectively regarding various updates from the Financial Action Task Force (FATF). In relation to FinTech, this includes the outcomes of the FATF plenary held during 14 to 17 June 2022. The outcomes relate to (among others) the finalisation of a targeted update on implementation of the FATF standards on virtual assets and virtual asset service providers (a report which focuses on the implementation of the FATF’s travel rule and provides a brief update on emerging risks and market developments was published on 30 June 2022) and a public consultation white paper on potential revisions to Recommendation 25 on transparency and beneficial ownership of legal arrangements (comments are to be provided by 1 August 2022).

The Insurance Authority published a circular on 30 June 2022 regarding the above (see our previous update).  [5 Jul 2022]

#VASPs

#VirtualAssets 

 

Singapore

MAS response to Parliamentary Question – Interruption to digital banking services

MAS has published the response to a Parliamentary Question regarding interruption to digital banking services. The response provides information about the number, scale and causes of interruptions. It sets out action which MAS has taken in respect of specific incidents and more generally to ensure firms continually maintain and improve the security and resilience of their IT systems.  [5 Jul 2022]

#DigitalBanking
MAS response to Parliamentary Question – Cryptocurrency trading platforms

MAS has published the response to a Parliamentary Question on whether it will introduce further restrictions on cryptocurrency trading platforms to protect members of public. The response briefly summarises MAS’ actions to date in this area, and explains that MAS has been considering number of additional safeguards, such as placing limits on retail participation and/or rules on the use of leverage when transacting in cryptocurrencies.  However, given the borderless nature of cryptocurrencies, global regulatory cooperation and coordination are important; as such, MAS is actively engaging with international standard setting bodies.  [4 Jul 2022]

#Cryptocurrency 

 

India

SEBI modifies QRTA cyber security and cyber resilience framework – incident reporting

SEBI has issued a circular which makes partial modification in respect of the incident reporting requirements in the prescribed framework for Cyber Security and Cyber Resilience for all Qualified Registrars to an Issue and Share Transfer Agents (QRTAs).  The provisions in the circular come into force with immediate effect.  [6 Jul 2022]

#CyberSecurity

#CyberResilience

RBI report – Payment systems

The RBI has published a report, Benchmarking India’s Payment Systems, which provides a comparative position of the payments ecosystem in India relative to other major countries. This report presents the outcomes of a follow-on benchmarking exercise, covering the same countries and parameters which the RBI used in 2019. The RBI has identified a number of highlights from the latest exercise, including:

  • India has made significant progress and moved to a leadership position in large value payment systems and fast payment systems, which contributed to rapid growth in digital payments;
  • since the last exercise, India has demonstrated improvement in digital payment options available for bill payments, ticketing systems for public transportation, available channels for cross-border remittances and decline in cheque usage; and
  • there is scope for improvement in acceptance infrastructure;
  • the decline in India’s rating in some parameters involving currency in circulation against the 2019 exercise is explained by the increased demand for cash as a store of value during Covid-19 and the slowdown in economic growth during 2020.  [1 Jul 2022]
#Payments
IFSCA: Regulatory framework for angel funds

The International Financial Services Centres Authority (IFSCA) has published a framework for angel funds under the IFSCA (Fund Management) Regulations, 2022. The framework has been designed with early-stage investing in mind.  [1 Jul 2022]

#AngelFunding

 

Philippines

BSP reports that digital payments exceed 30% in 2021

The Bangko Sentral ng Pilipinas (BSP) has reported that the share of digital payments to total retail payments volume in the Philippines rose to 30.3% in 2021 from 20.1% in 2020. The value of digital payments in the country represented 44.1 percent of total retail payments in 2021, up from the 26.8 percent recorded a year earlier. The BSP has set a goal of converting at least 50% of retail payment transactions to digital form by the end of 2023 under the BSP Digital Payments Transformation Roadmap.  [5 Jul 2022]

#DigitalPayments

 

US

DoJ announces enforcement action charging six individuals with cryptocurrency fraud offenses in cases involving over $100 million in intended losses

The Department of Justice (DoJ), together with federal law enforcement partners, has announced criminal charges against six defendants in four separate cases for their alleged involvement in cryptocurrency-related fraud, including the largest known non-fungible token (NFT) scheme charged to date, a fraudulent investment fund that purportedly traded on cryptocurrency exchanges, a global Ponzi scheme involving the sale of unregistered crypto securities, and a fraudulent initial coin offering. [30 Jun 2022]

#Cryptocurrency

 

 

Ukraine-related sanctions information

Regular updates on sanctions and other developments that may impact businesses with interests or operations in Ukraine and/or Russia are available on our FSR and Corporate Crime Notes blog here.

 

 


Disclaimer

Herbert Smith Freehills LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.