FinTech Global Regulatory Round-up – w/e 11 March 2022

FCA: Warning on illegal crypto ATMs operating in the UK

The FCA has published a warning on illegal crypto ATMs operating in the UK. In the warning, the FCA notes that crypto ATMs offering cryptoasset exchange services in the UK must be registered with the regulator and comply with UK Money Laundering Regulations (MLRs). In addition, the warning states that the FCA will contact any illegal operators to instruct them to shut down the machines or face further action. [11 Mar 2022]

PRA: PS on operational resilience and OCIR

The PRA has published Policy Statement 2/22 (PS2/22) on operational resilience and operational continuity in resolution (OCIR). In PS2/22, the PRA sets out its final policy following feedback to its November 2021 consultation on operational resilience and OCIR (CP21/21). Alongside this, the PRA has also published the following:

• PRA Rulebook: CRR Firms, SII Firms: Operational Resilience Instrument 2022 (PRA2022/1);
• a revised version of the PRA supervisory statement, Operational resilience: Impact tolerances for important business services (SS1/21); and
• PRA Rulebook: CRR Firms: Operational Continuity Instrument 2022 (PRA2022/2).

The PRA's new rules and guidance on operational resilience will come into force on 31 March 2022 and its rules on OCIR will come into force on 1 January 2023. [11 Mar 2022]

HMG makes changes to the Online Safety Bill and DCMS consults on online advertising programme

In a press release, HM Government (HMG) has confirmed the addition of a new duty to the Online Safety Bill to bring fraudulent paid-for advertising on social media and search engines within scope of the Bill. The Office of Communications (Ofcom) will set out further details on what platforms will need to do to fulfil the new duty in codes of practice. However, this may, among other things, include a requirement to ensure that financial promotions are only made by firms authorised by the FCA.  HMG's press release includes a quote from the FCA's Director of Enforcement and Market Oversight, Mark Steward, welcoming the change to the Bill.

In addition to the change to the Online Safety Bill, the Department for Digital, Culture, Media & Sport (DCMS) has published a consultation on reform of online advertising regulations. The Online Advertising Programme will review the regulatory framework of paid-for online advertising in an effort to ensure transparency and accountability across the whole supply chain. Among the options being considered by HMG are strengthening the existing self-regulation approach which is currently overseen by the Advertising Standards Authority (ASA) or creating a new statutory regulator with tough enforcement powers. Feedback is requested by 1 June 2022. [9 Mar 2022]

#OnlineSafetyBill

DCMS: Letter to DRCF on digital regulation

The DCMS has published a letter from Secretary of State Nadine Dorries to the Digital Regulation Cooperation Forum (DRCF). The letter sets out the HMG's priorities for the digital regulatory landscape and highlights cross-cutting policy areas where HMG sees opportunities for collaboration with the DRCF. The DRCF brings together the Competition and Markets Authority (CMA), the FCA, the Information Commissioner's Office (ICO) and Ofcom. [9 Mar 2022] 

HoL Fraud Act 2006 & Digital Fraud Committee: Call for evidence

The House of Lords (HoL) Committee on the Fraud Act 2006 and Digital Fraud has published a call for evidence inviting views on measures that should be taken to tackle the increase in fraud cases. This forms part of a larger inquiry in which the Committee will look at the following issues:

• how the provisions laid out in the Fraud Act 2006 are used in practice for the detection, prevention and prosecution of fraud;
• whether the act is in need of reform;
• how the Act is being applied to tackle fraud committed online or through digital means; and
• what more needs to be done across the public and private sector to stop fraud committed through digital services.

Feedback is requested by 22 April 2022. [9 Mar 2022]

FCA: New webpage on operational and cyber resilience – Ukraine

The FCA has published a new webpage in the 'Firms' section of its website setting out points that firms should consider regarding their operational and cyber resilience in light of the Ukraine conflict. The page covers:

• cyber security, where the FCA makes reference to the National Cyber Security Centre (NCSC) guidance;
• important business services;
• business continuity and incident management;
• reporting incidents, where the FCA provides a link to the instructions on how to report an operational incident; and
• the risk of false information being shared about a particular firm or financial services sector. [8 Mar 2022]

#CyberResilience 

Agencies form Digital Platform Regulators Forum

The Australian Competition and Consumer Commission (ACCC) has announced that together with the Australian Communications and Media Authority, the Office of the Australian Information Commissioner, and the Office of the eSafety Commissioner, it has formed the Digital Platform Regulators Forum.

ACCC Chair Rod Sims commented, "The forum will help to streamline our approach to the regulation of digital platforms in Australia.”   It will do this by providing a forum for increasing co-operation and information sharing amongst digital platform regulators.  [11 Mar 2022]

ASIC amends market integrity rules and other ASIC-made rule books

The Australian Securities and Investments Commission (ASIC) has introduced new market integrity rules which set minimum expectations and controls to mitigate technological and operational risks for securities and future market operators and participants. The new technological and operational resilience rules will apply from 10 March 2023.  They cover: change management; outsourcing; information security; business continuity planning; governance and resourcing; and trading controls (market operators only). [10 Mar 2022]

#Outsourcing

ASIC releases report on feedback in ePayments Code review

ASIC has published a report, Report 718: Response to submissions on CP 341 Review of the ePayments Code: Further consultation (REP 718), on updates to the ePayments Code (Code).

REP 718 relates primarily to updates in the following areas of the Code:

• compliance monitoring and data collection;
• mistaken internet payments;
• unauthorised transactions;
• complaints handling; and
• facility expiry dates.

In March 2022, ASIC will begin engaging with a range of key stakeholders to request their feedback on the technical details of a draft updated Code.  [7 Mar 2022]

MAS notice on disclosures and communications – digital payment tokens

MAS has issued revised Notice PSN08 which sets out the requirements for licensed and exempted payment services providers to provide certain disclosures to customers and potential customers. The amendments relate to digital payment token service risk disclosures; the amending notice is with effect from 7 April 2022.  [7 Mar 2022]

SECT partners with World Bank Group on new study

The Securities and Exchange Commission, Thailand (SECT) has announced that it is collaborating with the World Bank Group on a study of the securities business landscape following Covid-19 and in light of digital disruption. The study will take approximately a year; it commenced on 1 March 2022.

RBI launches new payments initiatives

The Reserve Bank of India (RBI) has launched two new initiatives:

• UPI123Pay – Option to make Unified Payments Interface (UPI) payments for feature phone users; and
• DigiSaathi - a 24x7 Helpline to address the queries of digital payment users across products.

While launching the two initiatives, RBI Governor Shri Shaktikanta Das highlighted the importance of these initiatives in enhancing the diversity, utility and transformational power of digital innovations in the country.  [8 Mar 2022]

President Biden Signs Executive Order on Ensuring Responsible Development of Digital Assets

President Biden has signed an Executive Order outlining the first ever whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology. Under the Order, President Biden directed the Treasury Department and other federal agencies to study the impact of cryptocurrency on financial stability and national security. The Order lays out a national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit finance; US leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation. Specifically, the Order calls for measures to: (i) protect US consumers, investors, and businesses; (ii) protect US and global financial stability and mitigate systemic risk; (iii) mitigate the illicit finance and national security risks posed by the illicit use of digital assets; (iv) promote US leadership in technology and economic competitiveness to reinforce US leadership in the global financial system; (v) promote equitable access to safe and affordable financial services; (vi) support technological advances and ensure responsible development and use of digital assets; and (vii) explore a US central bank digital currency (CBDC). [9 Mar 2022]

CFTC Charges Four Operators for $44 Million Bitcoin Ponzi and Misappropriation Schemes

The Commodity Futures Trading Commission (CFTC) has filed a federal civil enforcement action charging of four individuals with fraud for operating Ponzi schemes involving bitcoin, for fraudulently soliciting more than $44 million of investments, and misappropriating millions of dollars. The complaint alleges that the defendants operated websites, through which they fraudulently solicited individuals of more than $23 million of bitcoin. The complaint also alleges that the defendants and an accomplice operated a website through which they fraudulently solicited individuals of more than $21 million of bitcoin. According to the complaint, the websites all promised customers that professionals would trade their bitcoin and they guaranteed that the resulting profits would be paid daily. In reality, the complaint states that the customers’ bitcoin were either misappropriated by the defendants and their accomplice, or used to make supposed profit payments to other customers that were Ponzi payments. In its continuing litigation, the CFTC seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged. [8 Mar 2022]