IA Fintech Member Insights: Clausematch 

RegTechXWeekly68

Good morning!

I hope you had a great weekend.

In this week’s edition of RegTech X, Deutsche Bank is back in the news after the bank ignored suspicious transactions that were flagged by staff, while in other money laundering news, the UK government has just hit a London-based payments firm with a record fine of £8 million.

In the RegTech space, according to a recent report, the industry generated revenue of $5 billion last year, however, the report also found that RegTech companies are still facing some challenges.

In addition, you’ll find recent developments in relation to Facebook’s cryptocurrency Libra. European regulators say that it falls into a “big gap” in EU regulation, however, according to one blockchain expert, Libra could actually help in the fight against money laundering.

Read on to find out more! ☕

Cheers,

Evgeny

 


Regulator UK 
The Chair of the Financial Conduct Authority (FCA), Charles Randell, has called on the world’s technology giants to play a greater role in tackling financial crime. Randell told the Cambridge Economic Crime Symposium last week that financial crime has reached “epidemic proportions.” (City AM) 2 mins

The FCA is also looking into restricting the sale of high-risk assets. However, it warned that banning unregulated products altogether was “not quite so simple.” (FT Adviser) 2 mins

Lighter regulation of financial firms is essential if the UK financial services sector is to thrive post-Brexit, top bankers told the UK’s chancellor of the exchequer, Sajid Javid, in a meeting last week. Among those present at the meeting were the chief executives of Lloyds Bank, HSBC, Barclays, as well as the bosses of Aviva, Prudential and Legal & General. (Irish Times) 2 mins


 

Regulator EU

More than 100 London-based asset managers, investment firms, and trading platforms have obtained licences to run their businesses in the European Union after Brexit, the European Securities and Markets Authority (ESMA) said last week. Licences are granted by national regulators but ESMA is responsible for ensuring they don’t offer sweeteners to UK-based firms. (Reuters) 2 mins

Facebook’s proposed cryptocurrency Libra falls into a “big gap” in European Union financial regulation at a time when money laundering is already a huge problem, said Jose Manuel Campa, chair of the European Banking Authority (EBA) last week. The problem is that financial assets are covered by EU investment laws while electronic payments come under payments rules. (Channel News Asia) 2 mins

The Netherlands’ central bank has said that regulation of crypto-asset firms in the country will commence in January 2020. According to a statement from De Nederlandsche Bank, crypto-asset firms will be obliged to register with the central bank in order to remain within the law. (Coin Geek) 2 mins

Meanwhile, in Malta, the Malta Financial Services Authority (MFSA) has said that it will “actively monitor” licensed cryptocurrency businesses in the country to prevent money laundering. The regulator published its three-year strategic plan last week and said that it plans to ‘modernise’ its regulatory approach. (The Block Crypto) 1 min

 


Regulator US

In the US, the Financial Services Institute (FSI) has launched a lobbying initiative in an effort to stop “drive-by regulation without rules” from the US Securities and Exchange Commission (SEC). The FSI is concerned that the SEC is moving the goalposts on firms that are complying with existing regulations. (FA Mag) 3 mins


 

Regulator Asia 

In China, regulatory shortcomings are threatening the survival of the peer-to-peer (P2P) lending industry. As regulators have struggled to implement new rules, the number of P2P firms in China has shrunk to just over 700, down from around 6,000 in 2015. (Deal Street Asia) 2 mins

In Singapore, the Monetary Authority of Singapore (MAS) and the Singapore Academy of Law (SAL) have rolled out a payments regulatory evaluation programme designed to help connect the payments industry with legal service providers. The programme provides Fintech firms with a streamlined process to gain access to lawyers specialising in payment services regulations. (The Business Times) 2 mins


 

Compliance 

The Senior Managers and Certification Regime (SM&CR) is the key focus for CEOs of financial institutions right now according to the latest Pimfa CEO Sentiment Survey. Other key concerns are MiFID II and issues with the Financial Ombudsman Service. (FT Adviser) 2 mins


 

RegTech

The global RegTech industry generated approximately $5 billion in revenue last year, according to a new Global RegTech Industry Benchmarking Report released last week by the Cambridge Centre for Alternative Finance (CCAF). The report found that the industry still faces many challenges, including long sales cycles, complex IT planning within client institutions, difficulties in establishing trust, and high levels of competition. (A-Team Insight) 2 mins

X The rapid growth of the RegTech industry in recent years has led to the development of supervisory technology, or ‘SupTech,’ which offers a technological opportunity to supervisory agencies in the same way that RegTech helps financial institutions and industry regulators. In addition to operational efficiency enablement, SupTech is driving innovation in policy making and regulatory strategy. (Go Medici) 5 mins

Vizor, which develops regulatory reporting software and counts numerous central banks among its clients, has recently won the award for Global RegTech Provider of the Year at the 2019 Fintech and RegTech Global Awards. You can find a full list of all award winners here(Central Banking) 3 mins

A typical European bank could save up to €10 million per year while also avoiding regulatory fines by implementing technology that improves ‘Know Your Customer’ (KYC) processes, according to a report from Mitek and Consult Hyperion. The report found that the annual cost of punitive non-compliance fines has risen to €3.5 million. (Help Net Security) 2 mins

And finally, great news: open banking and compliance platform Railsbank has raised $10 million in Series A funding. The capital will be used to further expand beyond Europe, including the US, Australia and South East Asia. (TechCrunch) 2 mins


 

Technology

2019 has ushered in a tidal wave of tech innovations, from the rise of social robots to Amazon Prime’s one-day delivery gamble. Here’s a look at seven technology trends for 2020. (Entrepreneur) 3 mins

FinTech companies often experience considerable regulatory pain when entering new markets as catering to new regulatory obligations from different jurisdictions is a burden. This is where artificial intelligence (AI) can play a key role. (Finextra) 3 mins

43% of global banks are now using AI across a wide variety of use cases, from credit decision making to customer service, according to Craig Macdonald, digital transformation lead at Accenture. With AI-augmented operations, a bank can expect cost savings of 20-25%, says Macdonald. (Finextra) 3 mins

Digitisation is crucial for tackling regulatory fragmentation, says Randeep Buttar, interim head of transformation and innovation at HSBC. As the number of rules increases, along with their interpretations by individual regulators, firms will need digital solutions so as not to become completely overwhelmed. (Global Risk Regulator) 3 mins

Stablecoin operator Paxos is launching PAX Gold (PAXG), a gold-backed Ethereum (ETH) token. PAX Gold will be the first crypto-asset that is redeemable for physical gold. Interestingly, the New York State Department of Financial Services (NYDFS) put forward their approval of the issuance of this altcoin in an official statement. (Reg Innovate) 2 mins


 

AML 

HM Revenue and Customs has fined London-based payments company Touma Foreign Exchange Ltd a record £7.8 million for breaching anti-money laundering regulations. Details of the fine were published on GOV.UK last week. (gov.uk) 2 mins

US investigators have found that Deutsche Bank may be responsible for possible lapses in money laundering controls involving Russian clients. Sources say Deutsche ignored concerns about transactions that were flagged by staff. (Yahoo) 2 mins

The Central Bank of Ireland has published new guidelines to help financial firms prevent money laundering and the financing of terrorism. Financial institutions in Ireland have been urged to watch out for crime gangs, drug dealers, human traffickers, terrorists that use the financial system. (Belfast Telegraph) 2 mins

Facebook’s digital currency Libra could actually help in the fight against money laundering, says Neepa Patel, chief compliance officer at blockchain firm R3. If built on a secure foundation of permissioned blockchain, the crypto-asset could set an example for future coin issuers, and help improve industry standards, according to Patel. (City Am) 2 mins