Daily Dash: The Spy Who Fled Germany

September 28, 2023
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A fugitive former Wirecard executive has been accused of spying for Russia, EU financial regulators have released a report on critical ICT providers ahead of the Digital Operational Resilience Act, and US regulators have filed an anti-competition lawsuit against Amazon.

Wirecard Fugitive Accused Of Spying For Russia 

UK authorities suspect Wirecard's Jan Marsalek of spying for Russia, according to a new court case taking place in London. 

The public prosecutor's office in London accused the former chief operating officer of being part of a spy network as part of a case against five Bulgarian nationals in the UK that was made public last week.

The Austrian entrepreneur, who disappeared in mid-2020 after the rapid collapse of Wirecard, is said to have been a contact person for the oldest of the five people arrested, who is accused of coordinating and managing the spies' operations.

Marsalek is not being tried as part of the case. However, he is being tried in absentia in Munich for his role in the Wirecard scandal. 

EU Authorities Prep For DORA With ICT TPP Report

The European Banking Authority, European Securities and Markets Authority and European Insurance and Occupation Pensions Authority have published an indicative overview of information and communication technology (ICT) third-party providers (TTP) as part of their preparations for the incoming Digital Operational Resilience Act (DORA). 

This analysis aims to map the provision of ICT services by TPPs to financial entities in the EU and to support the European Supervisory Authorities' policy-making process in light of the European Commission’s call for advice to further specify the criteria for critical ICT TPPs and to determine oversight fees.

The data collection exercise on which the report is based is the first of its kind, covering ICT-related contractual arrangements for entities across the financial sector. 

Overall, the exercise has identified approximately 15,000 ICT TPPs directly serving financial sector entities across the EU. It has also been found that the most frequently used ICT TPPs support critical or important functions for their clients in a wide range of services. In addition, most critical services were classified as non-substitutable by financial institutions.

The data collection exercise has also revealed some valuable lessons for the implementation of DORA. 

For instance, the regulators have said it has underlined the importance of ensuring that financial entities provide unique identifiers in the data submitted and the need to develop an appropriate ICT services taxonomy.

Federal Trade Commission, US States Sue Amazon For Anticompetitive Conduct

The US Federal Trade Commission (FTC) and 17 state attorneys general have filed a lawsuit accusing Amazon of using illegal practices to maintain its monopoly.

According to the FTC, the e-commerce giant has used “a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power”.

For example, the agency says Amazon “strategically restricts” how shoppers can purchase the various services included in its Prime subscription, artificially increasing barriers to entry in the online superstore and online marketplace services markets.

The complaint quotes a former Amazon employee saying that the Prime subscription pricing "was never really about the seventy-nine dollars. It was really about changing people's mentality so they wouldn't shop anywhere else."

The agency stressed they are suing Amazon “not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging.”

This is the second big case the FTC filed against Amazon in the past year. Earlier in June, the agency alleged that Amazon enrolled consumers in Amazon Prime without their consent and made it overly difficult and complicated to cancel those subscriptions.

FCA, PRA Talk Up Diversity In Financial Services 

The UK Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have published consultation papers setting out proposals to boost diversity and inclusion in financial services.

Under the proposals, the regulators would require firms to develop a diversity and inclusion strategy that sets out how the firm will meet its objectives and goals.

Firms will also be required to collect, report and disclose data against certain characteristics and set targets to address under-representation.

The proposals, which place larger requirements on larger firms, also include guidance to make clear that misconduct, such as bullying and sexual harassment, poses a risk to a healthy firm culture.

The measures are intended to support “healthy work cultures”, reduce “groupthink” and “unlock talent”, the regulator said.

According to the FCA, the new requirements would set “flexible, proportionate minimum standards to raise the bar” for firms in the financial services sector.

Chase UK To Block All Payments ‘Related To Crypto-Assets’

Chase UK has launched a new crackdown on payments to crypto firms, in an effort to protect customers from losses to fraud and scams.

In an email sent to customers this week, the bank said that from October 16 onwards it will decline all payments “related to crypto-assets”.

“If you’d like to invest in crypto-assets, you can try using a different bank or provider instead,” it said.

“But please be cautious, as you may not be able to get your money back if the payment ends up being related to a fraud or a scam.”

Brian Armstrong, CEO of Coinbase, called the policy “totally inappropriate”, adding that crypto-holders should close their Chase UK accounts if “this is how they’re going to be treated.”

Deutsche Bank Subsidiary Fined In US Over AML, ESG Failures

The US Securities and Exchange Commission (SEC) has settled two separate enforcement actions with DWS Investment Management Americas Inc. (DWS), a subsidiary of Deutsche Bank.

One of these actions relates to DWS’s failure to develop a mutual fund anti-money laundering (AML) programme, and the other relates to misstatements regarding its environmental, social and governance (ESG) investment processes.

To settle the charges, DWS has agreed to pay a total of $25m in penalties.

In the AML action, the SEC found that the mutual funds the DWS advised failed to implement an AML programme that complies with the Bank Secrecy Act and regulations of the Financial Crimes Enforcement Network (FinCEN).

The SEC also found that the mutual funds failed to adopt policies and procedures to detect activities indicative of money laundering or to conduct AML training specific to their business.

“The SEC’s order finds that DWS advised mutual funds with billions of dollars in assets yet failed to ensure that the funds had an AML programme tailored to their specific risks, as required by law,” said Gurbir Grewal, director of the SEC’s enforcement division.

EPI Unveils 'Wero' As Commercial Name For Digital Wallet 

"Wero" is to be the commercial name for the European Payments Initiative’s (EPI) digital wallet solution, which is expected to launch next year.

Wero will eventually be available through EPI’s member banks’ applications and as a mobile application on both Android and iOS platforms.

According to the EPI, choosing the name was a “meticulous process” involving extensive research, and quantitative and qualitative feedback from consumers. 

“In a market filled with predictable ‘pay’ brand names, wero stood out from a list of 238 candidate names we considered, since it combines different elements which we stand for,” said Martina Weimert, chief executive of the EPI.

Weimert explained that this includes the collective European character of the “we” and a pronunciation close to the word “Euro”.

Finally, wero is close to vero, which means true in Latin-based languages.

“I personally find it catchy, with its simple yet memorable structure,” said Weimert. “The short and snappy sound resonates with the fast-paced nature of digital transactions.”

Conceived in 2020, the EPI has had a bumpy ride, with some founding banks like Germany’s Commerzbank exiting in 2021 and the project moving away from its original plans to launch a card solution in 2022.

However, 2023 has proved to be more positive, and in April the EPI unveiled its planned acquisition of Dutch payment solution iDEAL and payment solutions provider Payconiq International (PQI).

US Regulator Proposes To Remove Medical Bills From Credit Reports

The US Consumer Financial Protection Bureau (CFPB) has outlined new proposals to remove medical bills from US credit reports.

The proposed rule would amend the Fair Credit Reporting Act that establishes rights and protections for consumers whose information is collected by consumer reporting agencies.

According to the agency, around 20 percent of Americans have medical debt, but medical billing data on a credit report is less predictive of future repayment than reporting on traditional credit obligations. Mistakes and inaccuracies in medical billing are also too common, the agency said.

“Research shows that medical bills have little predictive value in credit decisions, yet tens of millions of American households are dealing with medical debt on their credit reports,” said CFPB director Rohit Chopra. 

“When someone gets sick, they should be able to focus on getting better, rather than fighting debt collectors trying to extort them into paying bills they may not even owe.”

If adopted, the proposed rule would remove medical bills from consumers’ credit reports, stop creditors from relying on medical bills for underwriting decisions and stop coercive collection practices.

No More Revenue-Based Finance Loans For Merchants, Says Uncapped

Uncapped, a provider of credit to small businesses and start-ups, has announced the retirement of its revenue-based finance (RBF) service for merchants.  

The move comes after Uncapped had already reduced its issuance of RBF loans to almost zero over the past year, and had only offered them if customers specifically asked for them.

“Unfortunately, RBF loans are not the best funding product for high-quality businesses,” the company said.

‍”The best clients kept growing fast (and accelerated further after they took funding from us!) which meant they repaid loans much sooner than expected.

“On the other hand, worse quality clients didn’t see revenues materialising, and repayments took much longer time.”

In place of RBF, Uncapped has moved to fixed-term loans, where the lender agrees the loan amount upfront with the client and when it will be repaid.

US, UK Renew International Scam Fighting Commitment

US agencies have signed a memorandum of understanding (MOU) with other national regulators to promote cross-border collaboration against scams, email and text spam and illegal telemarketing. 

Signed by the Federal Trade Commission (FTC) and Federal Communications Commission (FCC), the agreement is an initiative of the Unsolicited Communications Enforcement Network (UCENet), whose members include the UK, Canada, Australia, South Korea and New Zealand.

In 2016, UCENet members signed an MoU aimed at facilitating information sharing, capacity building and enforcement assistance among the partners. The MoU also facilitated communication about emerging threats and complaint trends related to spam, scams and illegal telemarketing.

The FTC said members of the collaboration have decided to “renew and make evergreen” the MoU given the success of the original agreement.

If You’re A Fortnite Player, You May Be Eligible For A Refund, Says FTC

The US Federal Trade Commission (FTC) has announced that consumers who have made in-game purchases on Fortnite, the popular video game, may be eligible to receive a refund.

Last week, the FTC began sending emails to “millions” of Fortnite gamers, asking them whether they had ever been charged for unwanted items and, if so, to claim their refunds. The FTC added it will continue to send follow-up emails for one more month.

In December 2022, the FTC disclosed that Epic Games, the publisher of Fortnite, had agreed to pay a $275m penalty for violating children’s privacy law, and had agreed to pay out $245m in refunds to customers.

According to the FTC, Epic Games charged parents and gamers of all ages for unwanted items and locked the accounts of customers who disputed wrongful charges with their credit card companies.

During the lawsuit, the FTC argued that Fortnite’s payment system was “counterintuitive, inconsistent and confusing”, and had used so-called dark patterns to trick customers into making unwanted purchases.

Stripe Launches Major Updates To Global Checkout Suite

US payment firm Stripe has announced the launch of what it calls the “largest bundle of new payments optimisations to date” to its global checkout suite.

The upgrades will allow merchants to plug into more than 100 payment methods, now including RevolutPay, Denmark’s Mobile Pay, US bank transfers and Sweden’s Swish.

Stripe has also launched a A/B testing tool that allows merchants to identify the best-performing payment methods in their checkout and make data-driven improvements over time.

Finally, a new feature known as the Express Checkout Element will allow merchants to display multiple one-click payment buttons (such as Apple Pay, Google Pay, or LINK) with a single component.

In other words, payment methods will be presented in the order most relevant to a customer, showing only the ones supported by the device or browser a customer is using.

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