Daily Dash: Singapore Regulator Confirms Action After ’Unacceptable’ DBS Outage

• DBS In More Trouble With Singapore Watchdog After New Outage
• Germany To Form New Anti-Money Laundering Body
• New US Bill Requires Failed Bank Managers To Pay Earnings Back
• Bankman-Fried Pleads Not Guilty To Bribing Chinese Government
• Apple Launches BNPL Product
• US Court Trims FTC Suit Against Walmart
• UPI Remains Free To Use For Consumers, Says India’s NPCI
• White House Shifts Tone On Crypto
• Sunak's NFT Plans Shelved
• Telstra, Commonwealth Bank Launch New Pilot To Tackle Phone Scams
• US Regulator Charges Binance With 'Wilful Evasion' And Operating Illegally
• SWIFT Successfully Tests Blockchain Solution
• BIS Successfully Tests Instant Payment Connectivity Between EU, Malaysia, Singapore
• BoE Confirms Timetable For ISO 20022 Migration
• Amazon’s Palm-Reading Payments Tech Goes Live At Panera Bread

DBS In More Trouble With Singapore Watchdog After New Outage

The Monetary Authority of Singapore (MAS) has suggested more sanctions are on the way for DBS Bank, one of the largest in the city-state, after an outage took place. 

“Today’s disruption of DBS’ digital services is unacceptable, coming a year after a similar incident in November 2021,” said the regulator in a statement. “DBS has fallen short of MAS’ expectations to maintain high system availability and ensure its IT systems are recovered expeditiously.”

The MAS has instructed the bank to conduct a thorough investigation to establish the root cause of the disruption and submit its investigation findings. 

“MAS will take the commensurate supervisory actions after gathering the necessary facts.”

Last year, the MAS placed an additional capital requirement on the bank after the previous two-day outage.

Germany To Form New Anti-Money Laundering Body

Germany’s government will introduce a bill that lays the foundation for a new agency dedicated to tackling financial crime, according to the Financial Times.

Reports suggest that it will be called the Federal Authority for Fighting Financial Crime and will absorb the country’s existing anti-money laundering (AML) authority, the Central Office for Financial Transaction Investigations.

As well as AML, the authority is also due to support the country’s sanctions efforts. 

The country’s new agency comes after the Financial Action Task Force (FATF) said that the country needed to step up efforts to investigate and prosecute. 

In December 2022, the former head of the FIU was forced to resign his position after it was revealed that a backlog of suspicious activity reports had been kept from FATF. 

New US Bill Requires Failed Bank Managers To Pay Earnings Back

New legislation, introduced by Elizabeth Warren and a bipartisan group of senators, would require that, in the event of a bank failure, federal regulators could claw back all or part of the compensation received by bank executives in the five-year period preceding the failure. 

The Failed Bank Executives Clawback Act would give federal bank regulators the tools to hold executives of failed banks responsible for the costs of those failures and require the Federal Deposit Insurance Corporation (FDIC) to act to prevent the unjust enrichment of bank executives.

The move follows President Joe Biden’s statement in March 17, calling for more accountability for senior managers of failed banks in the wake of the collapse of Silicon Valley Bank (SVB).

“No one is above the law — and strengthening accountability is an important deterrent to prevent mismanagement in the future,” Biden said in the statement.

Members of Congress listened to the plea.

“It's time for Congress to step up and strengthen the law so bank executives bear the cost of failure, not line their pockets and walk away scot-free," Warren said, adding that “Americans are sick and tired of fat cat bankers paying themselves handsomely while risking other people's hard earned money.”

Bankman-Fried Pleads Not Guilty To Bribing Chinese Government

Former FTX CEO Sam Bankman-Fried has appeared in court in New York facing multiple new charges, including paying more than $40m in crypto to bribe one or more Chinese government officials.

In a new indictment published this week, five additional counts were added to the eight that featured in the original indictment. Bankman-Fried pleaded not guilty to all charges.

The attempted bribery charge dates back to November 2021, when FTX began its descent into bankruptcy. As alleged, Bankman-Fried attempted to arrange a bribe in order to regain access to $1bn of cryptocurrency that had been frozen by Chinese authorities.

The frozen cryptocurrency belonged to Alameda Research, the FTX-affiliated trading firm that was, at the time, headed by Bankman-Fried’s partner Caroline Ellison.

Apple Launches BNPL Product

Apple has introduced Apple Pay Later in the US, announcing that it is inviting users to access a pre-release version. 

“There’s no one-size-fits-all approach when it comes to how people manage their finances. Many people are looking for flexible payment options, which is why we’re excited to provide our users with Apple Pay Later,” said Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet.

The full rollout will be delivered in the coming months, the company confirmed. 

Apple Pay Later allows users to split purchases into four payments, spread over six weeks with no interest and no fees.

Users can apply for Apple Pay Later loans of $50 to $1,000, which can be used for online and in-app purchases made on iPhone and iPad with merchants that accept Apple Pay.

“Apple Pay Later was designed with our users’ financial health in mind, so it has no fees and no interest, and can be used and managed within Wallet, making it easier for consumers to make informed and responsible borrowing decisions,” said Bailey.

US Court Trims FTC Suit Against Walmart

A US district court has struck out part of the Federal Trade Commission’s (FTC) lawsuit against Walmart which claims the retail giant knew that it was processing fraudulent money transfers and failed to protect consumers.

Walmart provided money transfer services, allowing customers to send and receive funds from its stores. Telemarketers conned consumers into sending money using Walmart’s services.

The FTC argued that Walmart turned a blind eye to fraud and let several of its consumers, especially the elderly, fall victim to various scams. According to the FTC, these were fraudulent telemarketing-related payments which are prohibited under the US Telemarketing Sales Rule.

But in a March 27 order, judges struck out this argument, stating that that the telemarketing rule does not prohibit fraud generally or all fraud involving phone calls “and so it’s not enough that a large number of fraudulent transfers at Walmart made use of phones”.

At the same time, the court said that the FTC “has shown some reason” to believe that Walmart violated the FTC Act, which prohibits unfair or deceptive practices, and decided to keep that part of the claim open. 

UPI Remains Free To Use For Consumers, Says India’s NPCI

The National Payments Corporation of India (NPCI) has dismissed reports that consumer charges have been introduced to the UPI instant payments system.

On April 1, the UPI ecosystem will open up to prepaid payment instrument (PPI) wallets, and PPI merchant transactions of more than ₹2,000 ($24) will be charged a 1.1 percent fee when using UPI.

In a statement, the NPCI said the fee will be covered by merchant acquirers as opposed to consumers.

“The interchange charges introduced are only applicable for the PPI merchant transactions and there is no charge to customers,” said the NPCI. 

“It is further clarified that there are no charges for bank account to bank account-based UPI payments (i.e. normal UPI payments).”

White House Shifts Tone On Crypto

In an annual report compiled by President Biden’s economic aides, the White House says crypto-assets have so far failed to bring their perceived benefits, while their costs are substantial and imminent.

The Economic Report of the President shows a significant shift in the administration’s approach to crypto-assets. 

Last March, Biden directed federal agencies to work together in a comprehensive digital assets strategy, emphasising that the US wants to embrace responsible innovation and take leadership in the sector.

Now, the report says that despite their promises, crypto-assets are mostly speculative investment vehicles, they are not as effective payment tools as fiat money, and there are significant issues regarding consumer and investor protection.

Although a stricter tone from policymakers does not come as a surprise following last year’s events, the report goes even further to question the benefits of the underlying distributed ledger technology.

“Many prominent technologists have noted that distributed ledgers are either not particularly novel or useful or they are being used in applications where existing alternatives are far superior,” the report says.

Sunak's NFT Plans Shelved

The UK government has dropped its plans to produce a non-fungible token (NFT) for sale through the Royal Mint.

“In consultation with HM Treasury, the Royal Mint is not proceeding with the launch of a non-fungible token at this time but will keep this proposal under review,” said the UK’s City minister in response to a question from Harriet Baldwin, the Conservative chair of the Treasury Select Committee. 

The news comes just a year after Sunak unveiled the project while he was serving as the UK’s Chancellor of the Exchequer. 

“Rishi Sunak should never have been wasting money on this gimmick in the first place,” said Tulip Siddiq, Labour’s treasury minister, in response to the news. “Under the Tories, millions of people's savings have been put at risk by the collapse of cryptocurrencies and the surge in scams. We need a new approach.”

Telstra, Commonwealth Bank Launch New Pilot To Tackle Phone Scams

Commonwealth Bank (CBA) has announced that it has partnered with Telstra, an Australian telco, to launch a Scam Indicator pilot, an initiative to tackle phone scams.

Currently in its proof-of-concept stage, CBA said that Scam Indicator could double the success rate of phone scam detection and prevention for joint customers, and could mitigate losses of up to A$15-20m per year.

Scam Indicator is designed to detect high-risk scam situations in real time using a Telstra API that CBA will call on as part of its scam detection processes. 

This enables CBA to check if a customer is on a phone call — the prime indicator that a scam is occurring — and then gives CBA the opportunity to try to contact the customer or put in additional checks.

According to research cited by CBA, the average Australian is targeted by 250 scam attempts every year.

US Regulator Charges Binance With 'Wilful Evasion' And Operating Illegally

After multiple reports indicating that US regulators are building a case against Binance, the Commodities Futures Trading Commission (CFTC) has become the first agency to sue the company and its founder.

On Monday (March 27), the CFTC said it has charged Binance and founder and CEO Changpeng Zhao with “numerous” violations of the Commodity Exchange Act (CEA) and CFTC regulations.

In its complaint, the CFTC alleges that Zhao operates the Binance exchange through a web of “intentionally opaque” holding companies as part of a “calculated strategy” of regulatory arbitrage.

“For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance,” said Rostin Behnam, chair of CFTC.

“The defendants’ own emails and chats reflect that Binance’s compliance efforts have been a sham and Binance deliberately chose to place profits over following the law,'' added Gretchen Lowe, enforcement lead and chief counsel at CFTC.

SWIFT Successfully Tests Blockchain Solution

Global messaging network SWIFT has announced that it completed a test on an “innovative blockchain-based solution” that could help listed companies communicate significant corporate events to investors.

SWIFT said the new solution could reduce significant friction in how corporate events, such as a merger, general meeting, dividend payment or other corporate actions, are communicated to investors.

Jonathan Ehrenfeld, SWIFT’s securities strategy director, said its analysis showed that “asset managers often receive notifications from up to 100 different sources about the same corporate event, and the data is often different or contradictory from one source to another”.

This means asset managers need to manually comb through the different sources to a gain single view of the event before they can make necessary decisions.

The pilot, which involved SWIFT and six leading securities industry participants including American Century Investments, Citi and Northern TrustDuring, could “give all market participants a single, accurate view of a corporate action event”, said Tom Zschach, chief innovation officer at SWIFT.

BIS Successfully Tests Instant Payment Connectivity Between EU, Malaysia, Singapore

The Bank for International Settlements' (BIS) Innovation Hub has announced the successful connection of the test versions of the instant payment systems in the eurozone, Malaysia and Singapore.

The test was carried out as part of the BIS’ Nexus project and enabled participants to send payments across the three countries using only mobile phone numbers or the recipients’ company registration numbers.

The connection took place between the Eurosystem’s TARGET Instant Payment System (TIPS), Malaysia’s Real-Time Retail Payments Platform (RPP) and Singapore’s Fast and Secure Transfers (FAST) payment system.

In the next phase, BIS and the central banks of Indonesia, Malaysia, Philippines, Singapore and Thailand will jointly work towards connecting their domestic instant payment systems through Nexus.

BoE Confirms Timetable For ISO 20022 Migration

The Bank of England (BoE) has published a final schedule for the migration of high-value payment systems to the ISO 20022 messaging standard.

On June 19, both the Clearing House Automated Payment System (CHAPS) and Real-Time Gross Settlement System (RTGS) will go live using the ISO 20022 standard.

To continue using CHAPS after June 19, the BoE said that firms may need to make changes to the way they send and receive payments. They must also adapt to new data requirements that will become mandatory in November 2024.

In the “next few years”, the BoE and Pay.UK also want to see retail interbank payments in the UK migrate to ISO 200022.

Last week, as reported by VIXIO, SWIFT confirmed that its previous messaging standard, MT, will run in parallel with ISO 20022 until it is retired in November 2025.

Other major RTGS systems, including those of the EU, Canada and Australia, have already migrated to ISO 20022.

Amazon’s Palm-Reading Payments Tech Goes Live At Panera Bread

Panera Bread, a US bakery chain, has announced that it will become the first national restaurant brand to use Amazon One’s palm-reading technology for payments and customer loyalty interactions.

The Amazon One palm-reader will be launched as a contactless payment method and authentication channel for MyPanera, a loyalty scheme with 52m members. It will first be deployed in Panera’s hometown of St Louis, Missouri, before being expanded in the coming months.

Panera Bread said that using the Amazon One terminal, customers will receive tailored rewards and recommendations based on previous orders, and staff will be able to “greet guests by name”.

All palm images will be encrypted and sent to a secure area in the cloud where Amazon One palm signatures are created. Palm images are not stored on Amazon One devices.