A Fintech Member Insights: Clausematch 

 

Happy Monday! Hope you had a nice weekend!

In this week’s RegTech X, UK regulators are in the spotlight. Not only has the Bank of England warned financial institutions that enforcement activity could be increased, but insurance firms have been told to clean up their act.

Artificial intelligence (AI) in banking is another theme of this week’s report. In Hong Kong, the Hong Kong Monetary Authority recently published a report on how AI can have a positive impact on the financial industry. I also look at how banks such as HSBC and JP Morgan are investing heavily in the technology in an effort to reduce risk.

You’ll also find news and developments in relation to AML, machine-readable regulation, crypto regulation, and FinTech.

Read on to find out more.

Have a great week! ☕

Evgeny

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Regulator UK 

Deputy Bank of England (BoE) governor Sam Woods has warned financial institutions that they could face a crackdown by regulators as they try to ensure the financial system remains safe a decade on from the Global Financial Crisis. “You may see more enforcement activity,” he said recently. (City AM) 2 mins

The Financial Conduct Authority (FCA) has issued a warning to UK insurance companies that they must clean up their act. In a letter to the CEOs of general insurance firms, the regulator said that the Senior Managers and Certification Regime provides “an opportunity and catalyst to transform the culture in financial services.” (The National Law Review) 3 mins

The FCA has also recently launched a probe into authorised corporate directors (ACDs) in light of the Woodford Equity Income fund suspension. The probe will focus on the commercial conflicts faced by external providers of oversight service. (Portfolio Adviser) 2 mins

The FCA and the BoE are urging banks and insurers to accelerate plans to transition away from the discredited Libor interest rate benchmark. In a recent letter to senior managers of UK banks and insurers, the regulators wrote: “The intention is that sterling Libor will cease to exist after the end of 2021. No firm should plan otherwise.” (City AM) 2 mins

UK-based companies that deal in crypto assets are now regulated by the FCA after an amendment to the UK’s AML/CFT laws came into play on 10 January. As a result, crypto firms will need to have policies, systems, and controls in place to mitigate the risk of the business being used for the purposes of money laundering or terrorist financing. (FCA) 2 mins


Regulator US 

The Commodity Futures Trading Commission (CFTC) has settled a spoofing case with South Korea’s Mirae Asset Daewoo, who the regulator alleges profited by entering spoofing orders in futures traded on the Chicago Mercantile Exchange (CME). Daewoo will pay $700,000 to settle the case, although it didn’t admit or deny the agency’s allegations. (Finance Magnates) 2 mins


Regulator EU

The European Securities and Markets Authority (ESMA) recently issued a series of documents relating to the Securities Financing Transaction Regulation (SFTR). SFTR came into force in January 2016, and the reporting obligations will go live on 13 April. (The National Law Review) 3 mins


Regulator Asia

The Hong Kong Monetary Authority (HKMA) has published a report on how artificial intelligence (AI) can have a positive impact on the banking industry. You can find a link to the report here. (Crowdfund Insider) 3 mins

China is finalising rules for online-only banks in an effort to reduce financial uncertainty. The new rules will apply to foreign financial institutions already doing business in China, including Citigroup, HSBC, and Standard Chartered, and empower them to establish independent online banks. (Pymnts.com) 2 mins


Regulator Australia 

In a submission to the Senate select committee on financial and regulatory technology, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) has detailed its vision for Commonwealth legislation to be published in machine-readable code. CSIRO believes machine-readable regulation would boost the adoption of new regulatory technology across Australia, improving compliance while reducing costs. (Financial Review) 3 mins

Australia’s financial regulators have been operating in the dark when assessing the risks that non-bank lenders and FinTech firms pose to financial stability, according to internal Reserve Bank of Australia (RBA) documents. In response to a Freedom of Information request, the RBA released 153 pages of documents. (ABC) 4 mins


RegTech 

A single source of trade data is needed to future proof RegTech, says Richard Bentley, chief product and engineering officer at Calypso. The effective management and storage of data will ensure that technology used to comply with current regulations remains usable for future requirements, according to Bentley. (Bobsguide) 3 mins

RegTech is ready for a breakthrough in Latin America, says Craig Dempsey, CEO and Co-Founder of Biz Latin Hub. Dempsey believes that the region’s vulnerabilities make it an ideal environment for RegTech solutions that assist financial entities. (Nasdaq) 3 mins

Former FCA insider Michael Sicsic has partnered with Governor Software to help brokers and insurers digitalise key compliance processes in a changing regulatory environment. The two parties are working together to launch a live version of the FCA’s handbook that would enable firms to map, track and report regulatory compliance. (Insurance Age) 2 mins

ETF provider WisdomTree recently announced a strategic investment in blockchain-based compliance and financial markets infrastructure start-up Securrency Inc. This is an interesting development as it signals that a large buy-side institution is throwing its weight behind blockchain technology. (Forbes) 3 mins

Luxembourg-based RegTech firm Governance.com has announced that it will raise €3 million to expand its digital governance solutions for financial institutions. The firm, which serves Tier 1 banks and asset managers in Luxembourg, Ireland and Switzerland, has previously been named as one of the hottest European FinTechs. (Eu-Startups) 2 mins


FinTech

In a sign of the times, Visa has announced the purchase of FinTech group Plaid for $5.3 billion. Visa believes the acquisition will position it at the epicentre of the FinTech world, expanding its total addressable market, and accelerating its long-term revenue growth trajectory. (Crowdfund Insider) 3 mins

UK-based digital bank Revolut is set to achieve a $5 billion valuation in an upcoming funding round. Investor Technology Crossover Ventures (TCV) is leading the funding round that is expected to close in January, according to documents seen by Financial News. (City AM) 2 mins

2020 could be a tough year for challenger banks though, according to Romain Dillet, senior writer at TechCrunch. Dillet believes that retail banks won’t sit around and watch start-ups eat their lunch. (TechCrunch) 3 mins


Technology

Given the agonisingly slow speed at which policymaking tends to move at relative to the speed of technological change, financial regulators face a huge task this decade. This article looks at what regulators can do to catch up. (American Banker) 5 mins 

Banks are investing heavily in artificial intelligence (AI) in an effort to reduce risk. This article looks at how HSBC, JPMorgan, and Danske Bank are using AI to combat fraud, comply with anti-money laundering (AML) regulation, and protect themselves against cyber threats. (Towards Data Science) 5 mins 

Venture capital funding for UK technology firms hit £10.1 billion last year, up 44% year on year, and breaking the all-time high set two years earlier. By contrast, tech funding in the US was up 20%. (City AM) 2 mins


AML 

Global money laundering fines totalled $8.1 billion last year. Regulators in the US were most active, handing out 25 fines totalling $2.3 billion, while UK regulators dished out 12 fines totalling $388.4 million. Swiss bank UBS was hit with the largest fine of $5.1 billion. (International Investment) 2 mins

AML regulations are becoming more stringent every year and it’s not an easy task for financial institutions to conduct manual verifications on customers coming from all over the world. That’s where artificial intelligence can be of assistance, as the technology can help firms reduce the compliance burden. (Shufti Pro) 3 mins


Opinion 

The FCA needs more than data to detect risks to the financial system, says Simoney Kyriakou, deputy editor of Financial Adviser. Kyriakou argues that to catch criminals, you need humans with knowledge and insight. (FT Adviser) 2 mins