Latest Payments News: MEPs Adopt 'Landmark' AI Act With Regulatory Sandbox Provisions, and more

Kat Pilkington


March 18, 2024

Catch up on six of the stories our payments compliance analysts have covered lately, and stay up-to-date on the latest news.

MEPs Adopt 'Landmark' AI Act With Regulatory Sandbox Provisions

The European Parliament has approved the Artificial Intelligence Act this week, which aims to ensure safety and compliance with fundamental rights, while also boosting innovation.

The act, agreed in negotiations with member states in December 2023, was endorsed by members of the European Parliament (MEPs) with 523 votes in favour, 46 against and 49 abstentions.

“We finally have the world’s first binding law on AI to reduce risks, create opportunities, combat discrimination and bring transparency," said Brando Benifei, a co-rapporteur for the legislation.

One part of the regulation that encourages innovation is the launch of regulatory sandboxes and real-world testing.

These will have to be established at the national level and made accessible to small and medium-sized enterprises (SMEs) and start-ups, to develop and train innovative AI before its placement on the market.

"The AI Act is a starting point for a new model of governance built around technology. We must now focus on putting this law into practice," said Dragos Tudorache, fellow co-rapporteur.

India, Indonesia To Promote Use Of Local Currencies In Bilateral Transactions

The central banks of India and Indonesia have signed a memorandum of understanding (MoU) that will commit both to promoting the use of their local currencies in cross-border transactions.

The MoU establishes a framework for cooperation between the two countries and covers bilateral transactions in both capital and financial transactions.

Yogesh Dayal, chief general manager at the Reserve Bank of India, said the MoU marks a “key milestone” in strengthening bilateral relations between the two nations.

“This framework would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of a Rupee-Rupiah foreign exchange market,” said Dayal.

“Use of local currencies would optimise costs and settlement time for transactions.”

Klarna Hit By $730,000 Fine In Sweden For GDPR Breach

Sweden's fintech giant Klarna has been fined SEK7.5m ($733,324) after the Swedish Court of Appeal ruled that it had failed to comply with the General Data Protection Regulation (GDPR).

The buy now, pay later (BNPL) firm had failed to give customers sufficient information about how it would store their personal data, according to the court, which pointed out that this information was difficult to access.

In a statement shared with Vixio, Klarna's press office said that the decision concerns an old version of Klarna’s privacy notice that was used for three months between March 17, 2020 and June 26, 2020.

"It concerns how Klarna presented information about its data processing in its privacy notice, not about how Klarna collects or manages data," a Klarna spokesperson said.

"The notice has since been updated multiple times. We are reviewing the court's decision and our next steps."

Ukraine's IT Army Takes Down Moscow Metro Payment System

The IT Army of Ukraine, a voluntary force of hackers and cybersecurity specialists, has taken down the Troika payment system used on the Moscow Metro, among other targets.

According to a report from the Ministry of Digital Transformation of Ukraine, the IT Army launched a large-scale attack on a range of Russian government websites.

"The cyberarmy has attacked the Troika public transport payment system,” the ministry said. “This is one of the largest fare payment systems in Russia, operating in 38 regions."

The outage of the Troika system left passengers in Moscow and Kazan unable to pay for tickets, top up their travel cards or pay for parking, the ministry added.

EU Parliament Gives Backing To New Sanctions Violations Rules

Members of the European Parliament (MEPs) have approved new rules to harmonise the enforcement of EU sanctions across member states.

The new rules set consistent definitions for violations, such as not freezing funds, not respecting travel bans or arms embargoes, transferring funds to persons subject to sanctions, or doing business with state-owned entities of countries under sanction.

"We need this legislation because diverging national approaches have created weaknesses and loopholes, and it will allow for frozen assets to be confiscated," said Sophie in ’t Veld, a Dutch MEP.

"Parliament took an ambitious, harmonising approach to the law, and even though we could not close all the loopholes we wanted to, it is an improvement on the current situation and shows our strong support to Ukraine.”

Providing financial services or legal advisory services violating sanctions will also become a punishable offence.

The law, which still needs to be approved by the European Council, also defines the circumvention of sanctions and ensures this is a punishable offence.

Examples include concealing or transferring funds that should be frozen, hiding the true ownership of property and not reporting necessary information.

Australia's Commonwealth Bank To Enter Gen AI Partnership With Microsoft

Commonwealth Bank of Australia (CBA) has announced that it has signed a “letter of intent” with Microsoft that will lead to wider adoption of generative AI (Gen AI) solutions at the bank.

CBA intends to deploy Gen AI to improve customer service, to resolve queries faster and to offer more effective recommendations, and to develop cybersecurity tools and share cybersecurity intelligence.

Gavin Munroe, group executive for technology at CBA, said engineers from Microsoft’s Seattle HQ have already started working with CBA on experiments to improve our customer experience.

“We also see this as an opportunity to work together with leading global technology teams to ensure CBA’s safety and security is constantly upgraded and improved, to keep pace with the evolving threat landscape,” he said.

CBA is already leveraging the Gen AI–powered Copilot for Microsoft 365 to simplify internal operations, as well as GitHub Copilot, with the goal of delivering code faster and freeing up time for more creative work.

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