Daily Dash: Economic Crime Levy On Way

March 10, 2023
The UK’s financial watchdog has confirmed it will be invoicing for the new economic crime levy from July this year, US agency calls for clarification on financial products that help gig workers and UK central bank joins Asian counterparts in cross-border payments workshop.

Economic Crime Levy To Kick In From July

The UK government has introduced an economic crime levy to fund the fight against economic crime, with collections being undertaken by the Financial Conduct Authority (FCA), the Gambling Commission and HM Revenue & Customs.

It targets a variety of industries including credit institutions, financial institutions and crypto-asset exchange providers.

Firms affected, which are those who are subject to the money laundering regulations between April 2022 and 2023, will see the new levy appear on invoices from July 2023, the FCA confirmed

The levy will be paid annually and determined by a firm’s UK revenue.  

To ensure firms are charged the right amount, all affected firms must submit their data via the new Reg Data Report from April 1, with a failure to submit in time potentially resulting in a £250 administrative fee.

US Agency Pushes For Earned Wage Access Rules

The Government Accountability Office (GAO) has found a lack of clarity regarding rules for earned wage access (EWA) products and urges the Consumer Financial Protection Bureau (CFPB) to address the issue.

According to the GAO, several fintech products can help underserved consumers to get access to financial services.

One such product is EWA, which enables customers, particularly gig workers, to get hold of the money they have already earned but have not yet received.

In 2020, the CFPB issued guidance clarifying that some of these products are not considered credit, which means that those providers are not required to disclose their charges.

“However, despite this guidance, some have expressed continued uncertainty about how the law applies to products that do not fall under the advisory opinion,” the GAO noted and recommended that the bureau clarify this issue.

BoE Wraps Up Payment Linkages Workshop In Indonesia With ASEAN Counterparts 

The Bank of England (BoE) has taken part in a three-day payment linkages workshop hosted by the Bank Indonesia and supported by the central banks of Malaysia, Philippines, Thailand and Singapore.

In a statement, the Bank Indonesia said the central banks worked together on enhancing real-time gross settlement (RTGS), integrating cross-border payment systems and exploring central bank digital currencies (CBDC).

Bank Indonesia also noted that the workshop was part of BI-BOE Structured Bilateral Cooperation (SBC) cooperation programme, which has been going on since 2019, with the support of the UK Foreign, Commonwealth and Development Office (FCDO).

As the 2023 chair of the Association of Southeast Asian Nations (ASEAN), Indonesia is taking a leading role on delivering payment system priorities both regionally and under the G20 goals.

Mercedes-Benz To Launch Native In-Car Payments With Biometric SCA

Mercedes-Benz will become the world’s first car manufacturer to use Visa’s Delegated Authentication and Visa Cloud Token Framework technology to enable native in-car payments.

In Germany, Mercedes-Benz customers can already make payments via an in-car fingerprint sensor, but these payments had to be authenticated using a smartphone or an infotainment system PIN code.

With its new digital payment service, Mercedes pay+, the vehicle itself can now be used for two-factor authentication in conjunction with the fingerprint sensor.

Mercedes-Benz Mobility will make use of Visa’s Delegated Authentication Service, making it possible to apply strong customer authentication (SCA) on behalf of participating issuers.

The new feature will launch first in Germany for digital services and on-demand hardware upgrades, and will then be expanded to other services, such as fuelling, and to other European markets later in the year.

ANZ To Trial Offline CBDC Payments

ANZ, one of Australia’s largest retail banks, has announced that it has been selected to act as nominated distributor for selected participants in the Reserve Bank of Australia (RBA) and Digital Finance Cooperative Research Centre’s (DFCRC) Central Bank Digital Currency (CBDC) pilot.

“The CBDC pilot is an important research opportunity for the Australian economy and broader payments ecosystem,” said Nigel Dobson, ANZ’s banking services lead. 

As a nominated distributor, ANZ will distribute CBDC to selected pilot participants on behalf of the RBA. 

ANZ has also been chosen to test three use cases across Super Fund payments, offline payments and the tokenisation of carbon credits.

The project is one of 14 pilot trials that are being conducted by the RBA to investigate potential use cases for a CBDC. 

CFPB Steps Up To Protect Gig Workers

The US Consumer Financial Protection Bureau (CFPB) has signed an information sharing agreement with the National Labor Relations Board.

The partnership will enable the two agencies to address practices that harm workers in the gig economy and other labour markets.

“Many workers discover that getting a job can mean piling up debt instead of making a living,” said CFPB director Rohit Chopra. 

“Information sharing with the National Labor Relations Board will support our efforts to end debt traps that stop workers from leaving one job for another.”

In addition to employer-driven debt, the CFPB is planning to examine potentially unlawful data harvesting practices by employers. 

“Workers may not realise that employer surveillance tools — used to track things like worker productivity — can continue to track them outside of working hours, and the companies that own the surveillance tools might sell worker data to financial institutions, insurers and other employers,” the CFPB said in the announcement.

The information sharing agreement is now “a step towards ensuring that workers are more fully protected from bad actors, debt traps, and illegal labor practice”, according to the consumer protection agency.

China’s e-CNY App Launches New WeChat Pay 'Express Payment' Option

China’s e-CNY app has added a new feature that allows users to make “express payments” using WeChat Pay.

As reported by South China Morning Post (SCMP), the new feature is now available to users of e-CNY in 26 cities and 5.6m merchants covered by the central bank’s ongoing pilot scheme.

The launch of WeChat Pay express payments comes three months after the e-CNY app added an identical feature for Alipay users.

The move is expected to increase uptake of e-CNY, which was added to China’s official cash in circulation statistics last December, as covered by VIXIO. By the end of 2022, there was 13.61bn e-CNY ($2bn) in circulation.

Brazil To Carry Out CBDC Tests 

Brazil is set to begin the development of a platform to test the digital real, the Brazilian Central Bank (BCB) has announced.

The digital real is a means of payment carried out on a multi-asset DLT platform, where multi-asset refers to the fact that different types of tokenised deposits could be added to the platform and transact among each other, such as bank deposits or e-money.

The test will be carried out in a simulated environment and will not involve real transactions. Overdrafts will not be allowed in any transaction with registered assets, according to the release.

The central bank emphasises that the tokenised assets “will follow their respective regulatory regimes, in order to prevent asymmetry between the current and tokenized forms of these assets”.

Fintech Sector Accelerates (Again) In Lithuania

Lithuania has signed off another successful year for fintech, with public authorities announcing that fintech sector employers grew by 18.6 percent compared with 2021. 

Fintech companies in the country attracted €69.9m of investment last year, according to the Bank of Lithuania, which pointed out that this represents 13 percent of all investments in Lithuanian companies. 

"The financial technology sector has already become an integral part of the Lithuanian economy, the last few years have tested and proven the resilience and flexibility of Lithuanian fintech and forced the sector to move towards maturity,” said Elijus Čivilis, chief executive of Invest In Lithuania. 

Lithuania is consolidating its position as a responsible and open fintech location in Europe, he continued, adding that although the number of newly joining market players is slowing down, the profits of fintech companies and the number of employees are growing steadily, and the focus on money laundering prevention is allowing the sector to continue to grow sustainably. 

"We aim for licensed FinTech institutions to create the greatest possible added value for society, and for Lithuania to be considered a reliable and safe jurisdiction in the international space,” said Simonas Krėpšta from the Bank of Lithuania.

Dutch Fraud Approach Gets Thumbs Up From Banking Lobby 

The Dutch Banking Association praised a public-private approach to tackling fraud. 

This follows a February announcement by the Dutch government that it is focusing on an integrated approach to online fraud prevention. 

“We now know each other well. The threshold for talking to each other is already much lower,” said the Dutch Banking Association’s Lynn van Meijgaard, stating that although a number of actions are on the agenda this year, this rapport can already be classed as an achievement. 

“The strength of the integrated approach lies in the fact that we work together with public and private parties to erect concrete barriers for criminals at all these different steps,” the lobby group said. 

Feedzai Joins Global Anti-Scam Alliance (GASA)

Feedzai, a UK-based financial RiskOps platform, has joined the Global Anti-Scam Alliance (GASA) as a corporate member.

By joining GASA, Feedzai will partner with governments, law enforcement, regulators and other financial institutions to share data, knowledge and research that can be used to fight scams.

GASA also serves as a forum to review and develop policy and legislation to protect against scams, and to educate the public about the nature and scope of scams they may be targeted by.

In 2022, according to GASA, more than 300m scam cases were reported to law enforcement agencies worldwide, and more than $55bn was lost by consumers.

This week, VIXIO spoke with Feedzai about how major jurisdictions are using data analytics and data sharing to combat money mules, a key component of online scams.

Amazon Pay Fined By India’s Central Bank Due To KYC Failures

Amazon Pay has been hit by a INR30.6m ($374,000) fine in India for non-compliance with prepaid payment instruments and know your customer legislation.

The two laws in question are the 2021 Master Directions on Prepaid Payment Instruments (PPIs) and the 2016 Master Direction on KYC.

Issuing the fine, the Reserve Bank of India (RBI) gave few details as to the nature of the offence.

“This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the entity with its customers,” said the RBI.

Amazon Pay has held a PPI licence in India since 2017. As of last month, Amazon Pay also received in-principle authorisation as an online payment aggregator.

ATMs Trigger Government Clash With Banks In Belgium

Belgium’s minister for the economy, Pierre-Yves Dermagne, has complained to local media that too little progress has been made on Project Batopin – which aims to tackle the dwindling number of ATMs in the Benelux country. 

If plans don't improve the situation quickly, Dermagne has promised a draft law to government partners by the end of March. This would propose cash points every two kilometres in urban areas, three kilometres in the suburbs, and five kilometres in rural areas.

The country’s banking lobby has said in response that it was “very surprised” by the intervention. 

“Talks with the government are ongoing and making progress,” Febelfin said in a statement. “We have made a number of constructive proposals, taking into account economic realities and societal needs, and look forward to the response of the authorities.”

The Batopin project, which is managed by Belfius, BNP Paribas Fortis, ING, and KBC, aims to ensure that 95 percent of Belgians can access a cash point within five kilometres of their home, which is also the guideline applied by the European Central Bank (ECB). 

Project Batopin hopes to realise this ambition by installing over 2,000 ATMs at some 700 locations throughout Belgium.

“As an industry, we remain strongly committed to reaching an agreement in the coming weeks, and are convinced that this is still possible,” Febelfin said.


WhatsApp Pay Lands In South Africa: Report

South Africans will soon be able to use WhatsApp to make payments, Neha Kumar, head of product partnerships at South African fintech Stitch, told a local newspaper.

South Africa is preparing for the launch of a new instant payment service called PayShap later this year.

PayShap is an industry-led initiative built by BankservAfrica, the country’s bank-owned ACH.

Once rolled out, it will enable South Africans without a bank account to make instant payments using a unique identifier, such as a phone number. 

According to Kumar, PayShap will be akin to Pix, Brazil’s instant payment system, and users in South Africa will be able to make instant payments via messaging applications such as WhatsApp.

After year-long negotiations, the Brazilian central bank allowed WhatsApp to offer peer-to-peer payments to its users in 2021. Last week, WhatsApp announced the expansion of its payment service in Brazil, which now includes people-to-merchant transactions, as reported by VIXIO.


BIS Seeks Input On ISO 20022 Harmonisation Rules

The Bank for International Settlements (BIS) has launched a consultation on proposed ISO 20022 harmonisation requirements for cross-border payments.

As most of the world's payment systems are preparing for the adoption of the ISO 20022 messaging standard by 2025, “the coming years will be crucial for converging on its harmonised use to fully leverage its full potential to make cross-border payments faster, cheaper and more transparent,” the international body said.

The BIS notes that current fragmentation and mixed use of payment messaging standards is a major friction in cross-border payments.

The global shift to ISO 20022 is now “an opportunity to promote greater interoperability in cross-border payments and support the G20 targets,” the body adds.

It is now seeking comments on a report prepared by a joint task force, which lays out harmonised usage requirements.

Comments can be submitted until May 10.

Philippines To Launch National QR Code Standard In 2023

By the end of June this year, all Philippines regulated financial institutions (FIs) and payment service providers (PSPs) must switch to the national QR code standard, known as "QR Ph".

In a new memorandum, the Bankgo Sentral ng Pilipinas (BSP) said that all proprietary QR codes shall be “disabled” on or after July 1 if not transitioned to QR Ph.

Additionally, all PSPs that participate in the InstaPay ACH have been asked to submit a notarised certification of deployment of QR Ph within 30 days of the memorandum.

The move towards a single QR code standard aligns with the aims of BSP’s Digital Payments Transformation Roadmap 2020-23. By the end of 2023, the BSP wants 50 percent of all retail payments to be digital and 70 percent of Filipinos to have bank accounts.

Senator Press US Regulators To Investigate Bank Branch Closures

A Democratic senator, Sherrod Brown, has sent a letter to acting comptroller of the currency Michael Hsu, expressing concerns about bank branch closures in low- to moderate-income communities.

“I am concerned about bank branch closures in low- to moderate-income (LMI) communities in Ohio and across the country,” said Brown, who serves as chair of the senate’s banking, housing and urban affairs committee.

“I hope that your agency will work to prevent branch closures and encourage investment in LMI communities, and develop a new approach to bank merger reviews that supports access to traditional financial services and economic prosperity for all.”


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