Daily Dash: MAS Keeps Up Sustainability Agenda With New Hub

• MAS Launches ESG Hub
• US Agency Consults On Access To Self-Service Kiosks
• India's RuPay And UPI Could Be Headed For Oman Launch Following Latest MoU
• US Senator Says Zelle Does Facilitate Fraud, Based On Bank-Provided Data
• Finnish ATM Stops Accepting UnionPay After Russian Influx
• Green Payments Taps OVE To Launch New Fingerprint POS System
• FCA Announces Open Finance Policy Sprint
• Commission Hoping For AML Progress By End-2022
• CFPB Fines Small World Money Transfer For Remittance Failures
• Paraguay Senate Pushes Forward Crypto Bill After Presidential Veto
• Swedish Regulator Gives Bankgirot All-Clear After Probe Into IT Systems Integrity
• Barclays Says SCA A Success, But Businesses Still Missing Out
• Apple's South Korean HQ Hit With On-Site Investigation Over In-App Payments Probe
• The Clearing House Issues White Paper On Fraud Resolution Obligations For Intermediated Transfers
• Deutsche Bank Partners With Visa To Prevent Fraud In E-Commerce
• US Treasury Finalises Beneficial Ownership Rules
• FCA 90-Day SCA Amendment Now In Place
• SWIFT Teams Up With Chainlink To Test Blockchain Interoperability

MAS Launches ESG Hub

The Monetary Authority of Singapore (MAS) has launched an impact hub dedicated to environmental, social and governance (ESG) issues. 

The new initiative aims to encourage collaboration between fintech start-ups and solution providers, financial institutions and real economy stakeholders.

According to the MAS, the ESG Hub will facilitate the discovery, scaling and deployment of technology solutions to address ESG needs of corporates and financial institutions, notably in terms of accurate measurement, reporting and verification of climate and sustainability data.

In addition, the MAS aims to engage knowledge partners, financial institutions and investors to organise key ESG initiatives out of the hub, such as ESG fintech accelerator programmes, training and capacity-building workshops, and thought leadership events.

The regulator has also said that it will engage the hub community to deploy its programmes and solutions to drive material, quantifiable impacts that support sectoral transition efforts, with particular emphasis on the eight focus sectors identified by the Green Finance Industry Taskforce (GFIT).

“The establishment of the ESG Impact Hub is a critical milestone in Project Greenprint’s journey to build a vibrant and robust ESG ecosystem in Singapore, underpinned by technology and data,” said Darian McBain, chief sustainability officer at the MAS. 

McBain said that he hopes the new hub will augment the MAS’ plans to launch a digital Greenprint Marketplace next year to “catalyse the growth of the region’s online ESG community; and will serve as the launchpad for public-private partnerships that support Asia’s just and sustainable transition to a low carbon economy”.

US Agency Consults On Access To Self-Service Kiosks

The US Access Board has launched a proposed rulemaking on self-service kiosks seeking public input on improving accessibility for persons with disabilities.

Such kiosks are often used in the banking sector and could be customised to offer a wide range of services, such as the opening of bank accounts, instant card issuance, cheque depositing and money transfers.

The board intends to propose provisions for self-service kiosks based on both the ATM and fare machine technical requirements.

The American Bankers Association (ABA) warned that once these standards are finalised and added to the federal regulatory framework, they are unlikely to be changed.

Hence, “it is important that banks — including those currently using self-service kiosks and those considering employing them in the future — submit comments”.

The bankers’ group said it will create a working group to help the industry participate in the consultation.

India's RuPay And UPI Could Be Headed For Oman Launch Following Latest MoU

The Central Bank of Oman has signed a new memorandum of understanding (MoU) that could lead to closer payment linkages with its fifth largest trading partner, India.

In the MoU signed this week, the central bank agreed to study the potential of connecting India’s RuPay card payment network and its Unified Payments Interface (UPI), an instant payments system, with similar platforms and services in Oman.

The proposed cooperation will also consider the possibility of Omani bank-issued debit cards being accepted in India through OmanNet, the country's dominant card-based payment method.

Following the MoU, Oman could join the ranks of other Arab nations such as the United Arab Emirates, Bahrain and Saudi Arabia that have already established payment linkages with India, including through acceptance of RuPay cards.

US Senator Says Zelle Does Facilitate Fraud, Based On Bank-Provided Data

US Senator Elizabeth Warren (D-MA) says fraud and theft are rampant on Zelle and are increasing.

The senator’s findings are based on data provided by four of the seven owner banks of Zelle. Three banks — JPMorgan Chase, Wells Fargo, and Capital One — have still failed to provide the requested information despite the senator’s intense pressure.

Data from the four banks show that scam and fraud claims increased from $90m in 2020 to surpass $255m in 2022. 

Despite their legal obligation and own statements to do so, banks failed to fully reimburse victims of unauthorised fraud. In fact, banks refunded only 47 percent of the dollar amount lost to fraud on Zelle in 2021 and the first half of 2022.

Meanwhile, consumers reported more than 190,000 cases of scams involving more than $213m of payments in 2021 and the first half of 2022. 

Banks are required by federal law to reimburse unauthorised payments, as well as authorised transactions when a consumer “is fraudulently induced into sharing account access information with a third party”.

Data now shows that banks repaid only 9.6 percent of scam claims and only $2.9m, representing 11 percent of payments.

“Big banks own and profit from Zelle, but are failing to make their customers whole for both authorized and unauthorized fraudulent activity on the platform, despite their claims that it is safe and that they have a ‘zero liability’ policy for fraud,” Senator Warren said.

She emphasised that the Consumer Financial Protection Bureau (CFPB) “must move quickly to strengthen and improve rules” to protect consumers.

Finnish ATM Stops Accepting UnionPay After Russian Influx

Nosto, a Finnish ATM network, has stopped accepting the Chinese payment system, which many Russians now use due to western sanctions. 

The decision to stop servicing the Chinese cards was allegedly made due to the increased demand for cash from Russians, who are fleeing to the border country due to concerns over the government’s mobilisation strategy.

Nokas CMS, which owns the Nosto ATM network, had warned recently that Russian citizens "emptied" its ATMs on the eastern border of Finland "in a matter of hours”.

It had also been reported in the local press previously that the amount of funds withdrawn from UnionPay cards has increased hundreds of times compared with 2021, reaching tens of thousands of euros per card.

It is unconfirmed whether Nokas will restore UnionPay cards to its network.

Green Payments Taps OVE To Launch New Fingerprint POS System

Green Payments, a US-based credit card processing and point of sale (POS) provider, has announced that it is working on a new fingerprint payment system in partnership with OVE Touch & Go.

Set to launch in January 2023, the new POS system will use OVE fingerprint sensors that connect to a digital wallet in an OVE app to charge customers.

Within the app, customers can link different payment options, such as a personal bank account, credit cards and cryptocurrencies, to different fingers.

Founded in 2014, Green Payments said its long-term goal is to eliminate the 2-3 percent processing fee charged to merchants by using novel technologies. 

Green Payments currently processes more than $1bn in payments each year.

FCA Announces Open Finance Policy Sprint 

The UK’s Financial Conduct Authority (FCA) has announced that it is hosting a two-day, in-person policy sprint regarding the issue of open finance between November 7-8.

At the event, discussion points will revolve around three problem statements, which the FCA says will inform its understanding of where the right balance is between regulation and industry-led initiatives and what this may look like.

Problem statements will cover the way in which open finance can be used to empower consumers, what standards, governance and interoperability are needed to develop an open finance ecosystem, and the approach to data sharing and the role of third parties.

"Open finance has the potential to transform the way consumers and businesses use financial services,” said Sheldon Mills, the FCA’s executive director. “It could help widen access, support decision making, facilitate comparison and switching and has the potential to improve competition among financial services providers.”

Mills stated that the FCA is committed to being a driver in bringing about change and welcomes the introduction of smart data legislation by the government’s business department. 

Commission Hoping For AML Progress By End-2022

Mairead McGuinness, the European Commission’s financial services chief, told EU finance ministers that she hopes “good progress” on the single anti-money laundering (AML) rulebook will mean that positions are established by the European Council, comprising national leaders and the European Parliament, so that it can progress to the trilogues by the beginning of 2023. 

Proposed last year, the AML regulation would be the first harmonised regime for the EU. Among other things, it proposes more detailed rules on customer due diligence, as well as new obligations and powers for supervisory authorities and financial intelligence units (FIUs). 

The commission’s ambition in creating a single rulebook is to rein in diverging strategies that have been taken by various member states. The EU has had its fair share of money laundering problems, considering the Danske Bank scandal in the Baltic region, as well as Malta being put on the Financial Action Task Force’s greylist in 2021, although it has now been taken off. 

CFPB Fines Small World Money Transfer For Remittance Failures

Choice Money, which operates as Small World Money Transfer, has been ordered to pay a $950,000 penalty to the Consumer Financial Protection Bureau (CFPB) after the agency found it failed to provide customers with key information related to money transfers.

The company did not accurately disclose important prepayment information to remittance senders, such as money transfer fees, current exchange rates and the date the recipient would receive the funds, according to the CFPB.

The firm also failed to maintain proper company policies and procedures and retain evidence demonstrating compliance with error resolution requirements.

The company’s inadequate recordkeeping practices gave the CFPB an incomplete view into the firm’s practices, the agency said.

Small World Money Transfer is now ordered to pay $950,000 in fines and implement a wide-ranging set of compliance provisions to improve its policies and procedures, error resolution practices, record retention, compliance management, training, and audit and monitoring functions. 

Small World Money Transfer is a subsidiary of UK-based Small World Financial Services Group Limited. In the US, it is incorporated in New York as a non-bank remittance provider.

Paraguay Senate Pushes Forward Crypto Bill After Presidential Veto

Paraguay’s Senate has rejected a veto by the country’s President against a bill that would regulate crypto-related activities in the country.

The bill would require crypto firms to register with the country’s Ministry of Industry and Commerce (MIC), which receives supervisory and enforcement authority over crypto-asset service providers and crypto miners.

In parallel, Paraguay’s National Securities Commission (CNV) will be responsible for regulating and supervising issuers, traders, custodians and intermediaries of crypto-assets that are similar to securities.

The bill was passed by the country’s legislature in July and vetoed by President Mario Benitez the following month.

Benitez raised concerns regarding a conflict of competencies between agencies, inconsistent definitions and the difficulty of promoting crypto mining in a sustainable future. Hence the President sent the bill back to the legislative body.

The Senate has now rejected the veto and decided to bring the proposal back. 

The bill will now go to the Chamber of Deputies, which has 60 days to rule in favour or against the proposal. Should it vote in favour, the bill would return to the President who will be obliged to sign it.

Swedish Regulator Gives Bankgirot All-Clear After Probe Into IT Systems Integrity

Sweden’s Financial Supervisory Authority (FI) has completed an investigation into the IT systems integrity of national payments processor Bankgirot.

After launching the investigation in April this year, the FI has found that there are “no deficiencies” in Bankgirot’s critical IT infrastructure, and no further action is needed.

The case has now been closed, with the FI concluding that Bankgirot has in place effective procedures to detect and protect against IT risks and prevent contagion effects on Sweden’s wider payment system.

As part of the investigation, FI investigators spent seven days on site at Bankgirot, followed by meetings with Bankgirot operational risk staff in September.

Barclays Says SCA A Success, But Businesses Still Missing Out

Strong customer authentication (SCA) rules in the UK have led to a drop in online card fraud, but businesses that are failing to comply miss out on £2.07m in sales every day, according to the retail banking giant. 

After the introduction of SCA in March this year, 73 percent of retailers have seen online payment fraud decline. 

Among those experiencing a decline in fraudulent activity, the average reduction is around 25 percent. 

As a result, almost two thirds (63 percent) with an e-commerce platform believe that SCA has had a positive impact on their business.

Yet, Barclay’s research also revealed that 28 percent of businesses are still not fully compliant with SCA. 

This comes at the same time as SCA receives a thumbs up from consumers, with 80 percent suggesting that they are happy to go through additional checks if it helps reduce the risk of being defrauded. 

Apple’s South Korean HQ Hit With On-Site Investigation Over In-App Payments Probe 

South Korea’s Fair Trade Commission (FTC) has conducted an “on-site investigation” at Apple HQ regarding suspected in-app payments breaches.

Last week, the regulator led an action at Apple’s office in Gangnam, Seoul, after accusing the company of over-charging customers on in-app payments commissions.

According to South Korean news site Chousun Biz, the FTC said Apple has “recently” charged a 33 percent commission on in-app payments, exceeding the legal limit of 30 percent.

The FTC is looking into whether Apple abused its market dominance or applied unfair trading practices in its commissions process. 

Such was the allegation made by the Korea Mobile Game Association last month, which opened up the case.

The Clearing House Issues White Paper On Fraud Resolution Obligations For Intermediated Transfers

The Clearing House (TCH), the US private sector clearing house, has published guidance on how financial institutions should resolve fraud disputes in an intermediated transaction.

Intermediated transactions are those where a transfer provider facilitates the payment at the instruction of the consumer from one financial institution to another.

The white paper argues that both financial institutions involved in the transfer have error resolution obligations under federal law. The scope of their obligations, however, differs.

In the case of an unauthorised transfer dispute, both financial institutions must investigate and resolve the error.

However, if the sender asserts a payment was delivered to the wrong person in an authorised transaction, only the transfer provider must investigate and resolve the error.

The white paper says this is because the intermediated transfer is made up of two distinguishable transactions: a funding transaction in which funds are debited from the sender’s account and delivered to the transfer provider; and a payment transaction in which funds are sent to the receiver’s account.

In the case of an authorised transaction, the dispute involves the payment transaction component of the transfer and it does not involve the sender’s bank.

The TCH white paper seeks to provide additional information and clarity on several issues related to the application of the Electronic Fund Transfer Act (EFTA) and Regulation E, after fraud resolution processes by banks in P2P transfers have been criticised by the public and some lawmakers.

Deutsche Bank Partners With Visa To Prevent Fraud In E-Commerce

Deutsche Bank has announced that it will implement Visa-owned Cybersource solutions to prevent payments fraud among online retailers.

Merchants that process their e-commerce payments via Deutsche Bank can now use Decision Manager, an automated fraud detection system offered by Cybersource.

Decision Manager is a risk management system that calculates a risk value for each individual transaction using artificial intelligence (AI) and specified rules. 

It uses advanced risk models and global data intelligence from billions of Visa network data points, allowing good transactions to be accelerated and suspected fraudulent transactions to be blocked. 

In 2021, according to Cybersource, Decision Manager prevented the equivalent of more than $22bn in potential fraud worldwide (this figure represents the value of transactions rejected as fraudulent).

US Treasury Finalises Beneficial Ownership Rules

The US Treasury’s Financial Crimes Enforcement Network (FinCEN) has finalised the long-awaited rule establishing beneficial ownership information reporting requirements.

A historic step in the US anti-money laundering efforts, the rule will require most corporations, limited liability companies and other entities created in or registered to do business in the country to report information about their beneficial owners.

The rule was issued in accordance with the Anti-Money Laundering Act of 2020 and will become effective on January 1, 2024.

It was originally due by the end of last year, provoking criticism from experts and journalists.

FinCEN will now move on to establish further rules for who may access the beneficial ownership information, for what purposes, and what safeguards will be required to ensure that the information is secured and protected.

Treasury secretary Janet Yellen welcomed the rules as “a major step forward” that “builds on years of bipartisan work by Congress, Treasury, national security and law enforcement agencies, and other stakeholders to bolster corporate transparency”.

Democrats have been pushing FinCEN for a broad implementation of the rules. 

Last year, Democratic lawmakers told FinCEN that Congress “intended for the [law] to be interpreted and implemented broadly and flexibly, and in a manner that evolves to address new strategies that sophisticated criminals employ to hide and launder their illicit assets.”

Taking a different approach, Congressmen on the other side of the aisle gave a dress down to the rules. 

Republicans Patrick McHenry and Blaine Luetkemeyer claimed the rule is “overly broad and injects unnecessary complexity by taking 10 pages of legislative text and turning it into a more than 300-page final rule.”

FCA 90-Day SCA Amendment Now In Place

The UK Financial Conduct Authority’s (FCA) changes to strong customer authentication (SCA) have now been implemented.

This means that UK consumers will no longer need to reauthenticate permissions with account servicing payment service providers (ASPSPs) every 90 days if accessing account information through a third-party provider.

The re-authentication rule has long been controversial with third-party providers, and many have complained that it has caused unnecessary friction between them and customers. 

The issue has also been a cause of contention in the EU. 

As a result, the European Banking Authority in April this year introduced a new mandatory exemption to SCA that will require account providers not to apply SCA when customers use an account information service provider to access their payment account information, provided certain conditions are met.

SWIFT Teams Up With Chainlink To Test Blockchain Interoperability

SWIFT is using Chainlink’s Cross-Chain Interoperability Protocol (CCIP) in an initial proof of concept, Chainlink announced in a Twitter post.

The protocol will enable SWIFT messages to instruct on-chain token transfers, helping the SWIFT network become interoperable across all blockchain environments, according to the announcement.

SWIFT, which facilitates international payments by providing an interbank messaging network, has been involved in a number of initiatives to ensure it does not stay behind in a potentially blockchain-based future.

SWIFT is also experimenting with standardisation and interoperability of domestic central bank digital currencies (CBDCs), as reported by VIXIO.