FinTech Global Regulatory Round-up – w/e 3 December 2021

PSR consults on ending dual running, expanding CoP services

The Payments Systems Regulator (PSR) has published Consultation Paper 21/11 Confirmation of Payee (CoP): Ending dual running  (CP21/11). CP21/11 sets out  the next steps for the wider implementation of CoP including the next steps through Phase 2; it also contains a draft direction which aims to ensure that the migration to the Phase 2 environment is completed in a timely and coordinated manner by April 2022.

Responses to CP21/11 are requested by 17 December 2021. If the PSR decides to proceed with the proposed direction, it will do so by early February 2022. [2 Dec 2021]

#CoP 

FCA final rules on SCA-RTS

The FCA has published PS21/19 setting out its final rules for Regulatory Technical Standards on Strong Customer Authentication and Secure Communication (SCA-RTS). PS21/19 also sets out amendments to the ‘Payment Services and Electronic Money – Our Approach’ (Approach Document) and the Perimeter Guidance Manual (PERG). The FCA has also published the following Handbook instruments alongside PS21/19:

• Handbook Instrument: Perimeter Guidance (Payment Services) Instrument 2021 (FCA 2021/44), which comes into force on 30 November 2021; and
• Handbook Instrument: Technical Standards on Strong Customer Authentication and Common and Secure Methods of Communication (Amendment) (No 2) Instrument 2021 (FCA 2021/45), most of which come into force on 30 November 2021 (see the instrument for those articles coming into force later on 26 March 2022 and 26 May 2023).

Account servicing payment service providers (ASPSPs) offering personal payment accounts within the scope of the Payment Account Regulations 2015, equivalent payment accounts held by SMEs and credit card accounts operated for consumers or SMEs will need to have a dedicated interface in place no later than 18 months after the rules come into force. The FCA strongly encourages ASPSPs to apply the new exemption from the obligation to carry out SCA as soon as practicable after it has come into effect. Third party providers will need to reconfirm customer consent under Article 36(6) of the SCA-RTS no later than 4 months after the rules come into force. [29 Nov 2021]

Council of the EU: Transparency of cryptoasset transfers Regulation

The Council of the European Union (EU) has agreed on a mandate to negotiate with the European Parliament on a proposal to recast Regulation EU 2015/847 and update existing rules on information accompanying transfers of funds. The update aims to extend the scope of the rules to certain crypto-assets. The proposal forms part of an anti-money laundering and countering terrorism financing (AML/CFT) package of four legislative proposals presented by the European Commission (EC) on 20 July 2021. [2 Dec 2021]

#AML/CFT

ECB: Occasional paper on CBDCs

The European Central Bank (ECB) has published an occasional paper on central bank digital currencies (CBDCs). The paper considers the functional scope of CBDCs, pricing, and controls. [1 Dec 2021]

ECB: Opinion on a proposal for a regulation to extend traceability requirements to transfers of cryptoassets

The ECB has published an opinion welcoming the EC's proposal for a regulation to extend traceability requirements to transfers of cryptoassets. In the opinion, the ECB makes a number of general and specific observations about the proposed Regulation. In particular, the ECB calls for revisions in relation to:

• the definition of cryptoassets;
• reference to official currencies; and
• the date of application. [1 Dec 2021]

EPC: New SEPA RTP rulebook

The European Payments Council (EPC) has published the second version of the Single Euro Payments Area (SEPA) Request-to-Pay (SRTP) scheme rulebook which will come into effect from 1 June 2022. This new version includes enhanced functionalities and is based on the comments received in response to the three-month public consultation on the proposed change requests relating to the first version of SRPT scheme rulebook which ended on 27 August 2021. The related Implementation Guidelines will be published by 24 December 2021. [30 Nov 2021]

Insurance Authority Associate Director provides update on major policy initiatives in keynote speech 

The Insurance Authority has published a keynote speech delivered by its Associate Director of Policy and Development, Mr Tony Chan, on 23 November 2021 at the ASHK 19th Appointed Actuaries Symposium.

Mr Chan provided updates on major policy initiatives involving the insurance industry, including an update on technology. The Insurance Authority will establish a working group on open API to serve as a platform to exchange ideas on key issues, scope, pilot use cases, and implementation timeline. The implementation of open API could facilitate data sharing within and beyond the insurance industry. [23 Nov 2021]

#DataSharing

SECT consults on draft regulations for the supervision of digital asset custodial wallet providers

The Securities and Exchange Commission Thailand (SECT) has published draft regulations for the supervision of digital asset custodial wallet providers and the provision of services to customers’ wallets.

On 1 July 2021, the SECT passed a resolution approving a review on the digital asset business regulations to specify the digital asset custodial wallet provider as a digital asset business that would be required to apply for a license. The SECT later conducted a public hearing on a proposal to revise the regulations in this matter to ensure safe and standardized digital asset custody. The SECT has drafted relevant regulations.

Feedback on the draft regulations is requested by 31 December 2021. [2 Dec 2021]

BOT considers guidelines on use of digital assets for payments

In a press release, the BOT advised that, in coordination with the SECT and other relevant agencies, it is considering guidelines to regulate the usage of digital assets as a means of payment for goods and services. The BOT reiterated that it does not support the use of digital assets as a means of payment for goods and services, highlighting both high price volatility and the association with cyber theft, personal data leakage and money laundering.

The BOT concluded that it will place priority on the usage of technology to promote financial innovation, enhancing the efficiency and security of the payment system, and safeguarding the stability of the overall economic and financial system.  [1 Dec 2021]

#Payments 

SECT: Cooperating across law enforcement – capital markets and digital assets

The SECT has published a press release announcing that it has met with the Central Investigation Bureau (CIB) and the Economic Crime Suppression Division (OCC) to discuss cooperation during investigations and investigating crimes related to capital markets and digital assets. [1 Dec 2021]

#CapitalMarkets

SEC Charges Latvian Citizen With Digital Asset Fraud 

The Securities and Exchange Commission (SEC) charged a Latvian citizen with defrauding hundreds of retail investors out of at least $7 million through two separate fraudulent digital asset securities offerings.

According to the civil complaint the defendant defrauded U.S. and foreign investors through the unregistered offer and sale of digital asset securities in an initial coin offering (ICO) and a purported digital asset cloud mining program.  The defendant allegedly used fake names, fictitious entities, and fraudulent profiles to perpetrate his schemes, and misappropriated nearly all of the investor funds that were raised. In the first scheme, the complaint alleges that, from January 2018 through March 2018, the defendant fraudulently offered and sold unregistered digital tokens as part of an ICO of a purported "multi-currency debit card platform." Specifically, the complaint alleges that the defendant falsely claimed debit card platform enabled users to store their digital assets in a secure digital wallet and then spend them "like any other debit card" which could be provided by a credit card issuer. In fact, the complaint alleges, all of the claimed products or services being offered were fictitious, including the relationship with the credit card issuer. Finally, the complaint alleges that the defendant misappropriated all of the ICO’s proceeds.

In the second scheme, the complaint alleges that, from April 2019 to July 2019, the defendant fraudulently offered the unregistered securities of a company, which purportedly offered a cloud mining program.  According to the complaint, the defendant claimed that investors could contribute digital assets to the cloud mining company, and then the company would perform mining activities and provide investors with a daily "automatic payout . . . in whichever coin they mine." The complaint alleges that these promises were untrue, and that the defendant misappropriated nearly all of the funds raised in the offering.

The SEC’s complaint charges the defendant with violating the antifraud and registration provisions of the federal securities laws, and seeks permanent injunctions, including conduct-based injunctions, disgorgement plus prejudgment interest, civil penalties, and an officer-and-director bar against him.  [2 Dec 2021]