Daily Dash: Dutch Prosecutors Probe Rabobank

December 9, 2022
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Prosecutors in the Netherlands are investigating Rabobank over money laundering, the US House has elected its new banking chair and Nigeria is limiting ATM withdrawals in a bid to encourage digital payments.

Rabobank Investigated Over AML Compliance 

The Dutch Public Prosecution Service has informed Rabobank that it has been designated as a suspect in connection with violations of the Money Laundering and Terrorist Financing Prevention Act and that an investigation is underway into this, the Dutch cooperative bank announced. 

This follows an earlier announcement to Rabobank by the central bank, De Nederlandsche Bank, that a punitive enforcement process will be started. This announcement was made in 2021.

Rabobank is one of the Netherlands' three largest banks. Its main competitors in the EU member state are ING Group and ABN Amro, both of whom were issued with massive fines in similar situations. 

For example, ING was fined $900m in 2018 after it admitted that criminals were able to use its accounts to launder money. ABN, meanwhile, was fined $574m more recently in 2021.

Rabobank has said in a statement that it is fully cooperating with the investigation, and is currently unable to provide further information.

US House Financial Services Committee Selects Republican Chair

Congressman Patrick McHenry (R-NC) has been selected to head the US House Financial Services Committee after Republicans gained control of the legislative body.

“After serving on this committee for my entire tenure in Congress, I’m prepared to lead a dynamic group of Republican members as we work to deliver on our Commitment to America,” McHenry commented on the nomination.

“As chairman, I will pursue an innovation and opportunity agenda,” he added.

The North Carolina Republican is currently ranking member of the committee and will take over the leadership from Democratic lawmaker Maxine Waters (D-CA). The two are working on a comprehensive stablecoin legislation, which will remain on the top of the committee’s agenda under the new leadership, the lawmaker said.

McHenry has been a critic of the Biden administration’s environmental, social and governance (ESG) push, as well as of what he sees as an overreach of authority by the Securities and Exchange Commission (SEC) and the Consumer Financial Protection Bureau (CFPB).

“We will focus our efforts on conducting appropriate and aggressive oversight of the Biden administration, as well as pursuing bipartisan legislation to put Americans back in control of their personal financial data, [and] enhance capital formation opportunities,” the newly nominated chair said.

Nigeria Limits ATM Withdrawals Amid Push To Spur Digital Payments

The Central Bank of Nigeria has imposed a number of restrictions on the use of cash in an effort to increase the use of digital payments, including its eNaira, in the country.

Cash withdrawals from ATMs have been limited to NGN20,000 ($45) per day and NGN100,000 ($225) per week.

Meanwhile, weekly cash withdrawals over the counter by individuals and businesses have been capped at NGN100,000 ($225) and NGN500,000 ($1,125), respectively.

The central bank urges banks to encourage their customers to use alternative payment methods, such as online banking, mobile banking apps, card or the country’s central bank digital currency called eNaira.

Nigeria recorded growth of more than 40 percent across its instant payments (NIP) service, reaching 2.7bn payments in the first half of 2022 with a total value of NGN205.5trn ($488bn).

However, the eNaira digital currency, which launched more than a year ago, has reportedly yet to have taken off.

UK Government Considering Anti-Scam Taskforce

During Prime Minister’s Questions, Rishi Sunak told members of parliament (MPs) that the government is “looking at” setting up an anti-scam taskforce. 

This followed a question from Conservative MP Anthony Browne, who probed Sunak on if he “agrees” that one should be established. 

Sunak also implied that he was open to meeting with the MP, who previously worked for lobby groups such as TheCityUK and the British Bankers Association. While working at the latter, Browne helped set up its first consumer panel.

Browne sits on the cross-party Treasury Select Committee, which has criticised the government and financial institutions alike for their failure to deal with the UK’s fraud issues. 

He in particular has been a vocal member of the committee on this topic. In 2021, he asked Financial Conduct Authority lawyers to look at whether Google is corporately guilty of fraud by profiting from promoting fraud against UK citizens. 

Browne also probed former Prime Minister Boris Johnson on this issue in April last year, asking at PMQs whether the Prime Minister agreed that companies that profit from promoting fraud should help to pay the costs of fraud, and whether online platforms should compensate the victims whom they have helped to create. 

Razorpay Becomes India's First UPI-Ready Payment Gateway For Credit Cards

Razorpay, a payment gateway and business banking platform, has become the first company of its kind to support credit card payments using India’s Unified Payments Interface (UPI).

On Tuesday (December 6), Razorpay launched the service for customers of HDFC Bank, Punjab National Bank, Union Bank and Indian Bank.

Razorpay said the new merchant acceptance feature was made possible after the Reserve Bank of India approved the linking of RuPay credit cards to UPI earlier this year.

This was followed by a circular from the National Payments Corporation of India, published in October, which outlined steps for issuers, merchants and acquirers to upgrade their systems to enable the new functionality.

CIPS 'Not Adequate' As SWIFT Alternative, Says BIS' Carstens

The head of the Bank for International Settlements (BIS) has said he does not believe that China’s Cross-Border Interbank Payment System (CIPS) offers a potential replacement or alternative to SWIFT.

“In this space, it is not probably adequate to think about substitutes,” said BIS general manager Agustin Carstens. 

“It is not a race. SWIFT covers some forms of payments initiated by different types of intermediaries, while other systems could cover others.”

Speaking to the South China Morning Post (SCMP), Carstens also downplayed the idea of a currency war between the US and China forcing economies into separate payment systems.

“That alarm is a little bit too extreme,” he said. “Again I would not put things as a race. I think there are many needs among societies and I think that we need to let the different solutions flourish.”

MercadoLibre Suing Apple Ahead Of 'Biggest' App Store Update

MercadoLibre, the largest e-commerce platform in Latin America, has filed antitrust complaints against Apple in Brazil and Mexico, accusing it of “anti-competitive” practices in app distribution and in-app payments.

In the two lawsuits, MercardoLibre alleges that Apple has monopolised iOS app distribution to exclude rivals and has excluded third parties from offering in-app payment services to favour its own billing system.

Jacobo Cohen Imach, senior vice president of legal and public affairs at MercadoLibre, said that prior to filing the complaints, the ecommerce giant had tried unsuccessfully to lobby Apple to modify its rules and policies.

One day after MercadoLibre’s complaints were first reported by Reuters, Apple announced the “biggest upgrade” to its App Store pricing system, with the introduction of 700 new price points in 175 jurisdictions, which will take effect between now and Spring 2023.

180-Day SCA Official For EU

The European Banking Authority’s (EBA) amended Regulatory Technical Standards (RTS) have been published in the Official Journal of the EU and will take effect in 20 days' time.

Earlier this year, the EBA amended its technical standards on strong customer authentication (SCA) SCA and common secure communications (CSC), with a view to reduce friction for customers using account information services.

The amendments introduced a new mandatory exemption that require account servicing payment service providers (ASPSPs) not to apply SCA when customers use an account information service provider (AISP), provided certain conditions are met. 

The changes also extended the frequency of the renewal of SCA from 90 to 180 days.

ECB Appoints Key Digital Euro Role

The European Central Bank (ECB) has unveiled Christian Schäfer as its digital euro scheme rulebook manager. 

Schäfer, who serves as director of payments at Deutsche Bank, will now lead the work on the digital euro rulebook. 

As chair of the Rulebook Development Group, he will report to the digital euro programme manager in the central bank’s Directorate General Market Infrastructure and Payments (DG-MIP).

Schäfer is now tasked with managing the work and coordinating the group that will draft a potential digital euro scheme rulebook, a set of rules for payment transactions with a digital euro.

A digital euro scheme has been identified by the ECB as being best suited to achieve the objectives of a digital euro and harness the strengths of the public and private sectors, the central bank said. 

2C2P Partners With Pine Labs For Southeast Asia BNPL Expansion

2C2P, a Singapore-based payments platform, has partnered with Indian fintech Pine Labs to expand its BNPL offering in Singapore, Malaysia, Hong Kong, Indonesia, the Philippines and Thailand.

In a statement, Pine Labs said its BNPL offering differs from that of other providers by working with issuing banks to enable multiple and longer instalment tenures. Additionally, users do not have to download a mobile app or subscribe to any additional e-wallet or payment services.

Pine Labs Pay Later is already active in India and Singapore, where it has attracted technology brands such as Samsung and Chinese smartphone maker OPPO as clients.

“Having Pine Labs as a payment option enables us to give our customers more flexibility in how they pay for their purchases,” said Winston Tan, head of sales at OPPO.

“We believe the option will make it easier and more attractive for price-sensitive customers to afford large-ticket items, and help with cash flow management and budgeting.”

Thailand, Brunei Central Banks Sign MoU On Financial Connectivity

The central banks of Thailand and Brunei Darussalam have signed a new memorandum of understanding (MoU) to promote knowledge sharing and financial connectivity between the countries.

Both partners said they plan to work together to promote financial development through the exchange of views and experiences in central bank bank operations, with the aim that this will lead to greater economic development and financial modernisation.

Last month, as reported by VIXIO, the central banks of Thailand, Indonesia, Malaysia, the Philippines and Singapore signed an MoU on cooperation in regional payment connectivity.

The agreement aims to work towards a common QR code payment area and further instant payments linkages that will build on existing bilateral agreements.

US Consumer Watchdog Launches First Crypto Probe

Crypto firms cannot escape the oversight of the US Consumer Financial Protection Bureau (CFPB), a new petition published on the agency website shows, revealing that the consumer watchdog is scrutinising Nexo, a company offering interest-bearing crypto lending products.

According to the document, the CFPB sent a civil investigative demand (CID) to Nexo last December, which is the first step in an investigation that allows the agency to collect information.

Nexo challenged the CID arguing that the US Securities and Exchange Commission (SEC) “made patently clear” that interest-bearing crypto lending products, like Nexo’s product, are securities and, as such, they are exempt from electronic transfer rules.

The CFPB, however, disagreed with Nexo, saying that it first must look at the information to determine whether the product is exempt from its rules. The agency denied the petition and summoned the crypto firm to a hearing on December 19.

This is the first time it has been revealed that the CFPB is investigating a crypto product, although the agency’s growing activity in the space is noticeable.

Last month, the CFPB published a report analysing more than 8,300 complaints it had received over the last four years regarding crypto products and warned that fraud is the largest issue consumers are complaining about.

Singapore CBDC Could Include Programmable Spending Restrictions, Says MAS

Singapore’s top central banker has hinted that a digital Singapore dollar could be programmed so that it can only be spent at certain merchants or within a certain timeframe.

In a parliamentary Q&A hearing, Singapore central bank chair Tharman Shanmugaratnam said that CBDC is “essentially money that can be digitally programmed to impose conditions under which the money can be spent”.

“For example,” he added, “merchants and issuers of digital Singapore dollars can specify the types of shops and validity period for their use prior to consumers receiving this money. 

“When consumers make payment at these permitted shops, the digital Singapore dollars are transferred to the shop owners with the programmed conditions removed.”

Shanmugaratnam was asked about CBDC ahead of upcoming trials of a Singapore digital currency for use in government payouts and vouchers.

The trial will go ahead despite the fact that, last year, several top officials at Singapore’s central bank said they did not see an “urgent” or “compelling” case to issue a retail CBDC, as covered by VIXIO.

FCA Consults On Consumer Duty Amendments

The UK’s Financial Conduct Authority has used its latest Quarterly Consultation Paper to seek views on elements of the Consumer Duty that it wishes to fine tune before the regulation goes into effect next year. 

These include ensuring that firms using the Temporary Marketing Permissions Regime (TMPR) are in scope. Firms using the TMPR to access the UK market are those who previously could passport through the UK’s membership of the EU’s single market. 

The FCA has also attempted to close loopholes in the new regime, such as ensuring that investment funds are not able to be exempt by taking advantage of the exclusion for non-retail financial instruments. 

Stakeholders have until January 9, 2023 to respond to the consultation.

Sweden Investigates Payment Firms Over Money Laundering Concerns

The Swedish Financial Supervisory Authority (FSA) has launched an investigation into Amal Express, Amiin Capital, Hayat and Taran Express over concerns that they violated the country’s money laundering rules when processing cross-border transactions.

According to the regulator, these firms offer fast cross-border payments carried out outside the traditional banking system. 

As a result, the FSA said there is a higher risk that the firms might be engaging in money laundering and terrorist financing.

The agency is scrutinising how the firms comply with the requirements of the money laundering regulations, including general risk assessment, risk assessment of customers, due diligence and reporting obligations.

Germany Strengthens Sanctions Enforcement

German lawmakers have passed the Sanctions Enforcement Act II in an effort to make sanctions enforcement faster and more effective.

The act upgrades the country’s Sanctions Enforcement Act I, passed in May, which enables regulators to take short-term measures, such as identifying and seizing sanction-specific assets.

At the same time, the Ministry of Finance announced it is considering further measures to combat money laundering to ensure the consistent fight against financial crime. Specifically, federal finance minister Christian Lindner laid out plans to bring the most important competencies under the umbrella of a new federal authority.

Argentina Mulls AML Law Reform

Argentina’s Chamber of Deputies has discussed a proposed amendment to the country’s anti-money laundering (AML) law in an effort to bring the legal framework up to modern standards.

The proposed changes would strengthen the country’s financial intelligence unit and address strategic deficiencies identified by the Financial Action Task Force (FATF), which is scheduled to evaluate the country’s AML framework over the next 12 months.

The amendment also introduces definitions for virtual assets and proposes the creation of a register for virtual asset service providers (VASPs).

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