Daily Dash: SWIFT Low-Value Cross-border Payment Services Triples Users

December 2, 2022
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SWIFT’s low value cross-border payments solution triples membership among member banks, Indonesia publishes white paper on its central bank digital currency (CBDC) design, and HSBC closes UK branches and sells Canadian bank.

SWIFT Go Sign-Ups Triple Amid Push Toward G20 Cross-Border Payment Goals

Sign-ups to SWIFT Go, a new system for cross-border payments of up to $10,000, have tripled during 2022, bringing the total number of participating banks to over 500 in over 120 countries.

Launched in July 2021, SWIFT Go enables financial institutions to facilitate low-value transactions that are often required by small- and medium-sized enterprises (SMEs) to pay suppliers overseas, and by consumers sending money to friends and family.

SWIFT Go enables banks to provide users with a fast and predictable payments experience with upfront visibility in processing times and costs.

According to SWIFT, the success of SWIFT Go brings it closer to the goals of the G20 Roadmap for Enhancing Cross-border Payments, one of which is for the cost of remittances to be no more than 3 percent of the transaction value worldwide.

Bank Indonesia Publishes New White Paper On Digital Rupiah Design

Bank Indonesia (BI), the country’s central bank, has published a new white paper that describes the “high level design” of a digital rupiah, the country’s proposed CBDC.

The white paper outlines the risks and benefits to Indonesia of pursuing a CBDC, and considers various design infrastructures that may be appropriate.

In a statement, the BI said the white paper is the first step in its Garuda Project, which aims to explore CBDC in light of the digital transformation goals outlined in the the Indonesian Payment System Blueprint 2025 (BSPI 2025).​

The BI said the key drivers for the development of digital rupiah are: (i) Affirming the function of BI as the sole authority in issuing currency; (ii) Strengthening the role of BI in the international arena; and (iii) Accelerating the integration of EKD nationally.

HSBC To Close 114 UK Branches And Sell Off Its Canadian Business

HSBC UK has announced that it will close 114 branches from April 2023, citing new figures showing that 97.5 percent of the bank's transactions are now completed digitally.

At the same time, HSBC UK said it will invest “tens of millions” of pounds in updating and improving its remaining branch network, while continuing to support shared banking hubs and the Community Access to Cash scheme.

Over the past five years, HSBC UK said the use of its branch network by regular customers has fallen by 65 percent, and footfall at the vast majority of closing branches has reduced by at least 50 percent.

Meanwhile, in Canada, HSBC has announced that it will sell its entire Canadian business to the Royal Bank of Canada for CA$13.5bn ($10.1bn) in cash, with the transaction set to complete in late 2023.

EAEU, BRICS To Create 'Universal Payment System' As Alternative To SWIFT

The Eurasian Economic Union (EAEU) and the BRICS nations have announced that they will work together on building a “universal payment and settlement system” as an alternative to SWIFT.

Speaking at the BRICS International Business Forum in Moscow this week, Eurasian Economic Commission (ECC) chair Vladimir Kovalev said the universal payment system will allow “new models of corporation” to supplant “old economic paradigms”.

“The global financial system is changing,” he said. “The significant potential for cooperation between the EAEU and BRICS indicates the possibility of forming a new unit of account based on the basket of currencies of the two associations.”

Kovalev said the new system could involve issuing a common payment card, uniting the national payment networks of China (UnionPay), India (RuPay), Brazil (Elo) and the EAEU member states (Mir, Belkart and others).

Mastercard Loses Appeal On 3m Deceased People

The UK Court of Appeal has rejected an appeal by Mastercard as part of a consumer class-action lawsuit headed by former
Financial Services Ombudsman Walter Merricks regarding the card networks' excessive interchange fees. 

The appeal attempted to overturn a March ruling which allowed the claims of people who were alive in 2016 but have died since then to continue as part of the class action.

Merricks is seeking more than £10bn compensation from Mastercard on behalf of UK consumers who used Mastercard cards between 1992 and 2008.

The case is the first opt-out class action in the UK. It was filed in 2016, one year after the new legal regime was adopted and is considered precedent-setting in many ways.

In March, the Competition Appeal Tribunal (CAT) issued a ruling in relation to the domicile date that determines which individuals who otherwise meet the class definition and were alive are within the class. The court said that people who were alive when the case was filed in September 2016 but have died since then should be part of the class.

Mastercard challenged the decision, arguing that the class was certified in 2021 and the class should include only those who were alive at that point. According to the estimates, this concerns around 3m people with valid claims.

The Court of Appeal has now sided with CAT and rejected the card giant’s appeal.

Wise Fares Well Amid Industry Downturn

UK fintech unicorn Wise has reported a strong 60 percent revenue growth in the last quarter of the year, disproving worries that fintechs are struggling with the changing macroeconomic landscape.  

Wise revenue hit £211.5m, a 60 percent increase on the same period last year.

The growth is largely driven by the company’s growing 5.5m active user base, who are using Wise more often to transfer money and keep funds in Wise accounts. Customer balances brought the company £17m in interest income in the quarter.

Matthew Briers, CFO of the company, said it sees “strong momentum in the business” and the company expects that total income growth for the year will be between 55 percent and 60 percent.

“You can see in the business that yes there is a lot of uncertainty and there is a lot of volatility but actually we have got very strong healthy momentum in our base,” Briers said at an earnings call.

BlockFi Confirms Bankruptcy Filing Following FTX Collapse

BlockFi, a New Jersey-based crypto lending platform, has confirmed that it has filed for Chapter 11 bankruptcy in its home state following the collapse of FTX.

In a statement, BlockFi said its restructuring efforts would focus on recovering all obligations owed to the company by its counterparties, including FTX and its subsidiaries.

In June, BlockFi signed a $400m revolving credit facility with FTX, with an option for FTX to acquire BlockFi for $240m based on certain performance triggers.

When FTX filed for bankruptcy earlier this month, a balance sheet obtained by the Financial Times showed that it had $215m in liabilities to BlockFi.

Due to the FTX bankruptcy, BlockFi said it expects “recoveries from FTX will be delayed”.

Crypto Exchange Pays $360,000 Over US Sanctions Violations

Kraken has agreed to pay $362,158 to settle a case by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) which found “apparent violations” of sanctions against Iran.

Although the crypto exchange had an anti-money laundering and sanctions compliance programme in place, it did not have IP address blocking on transactional activity across its platform.

As a result, it allowed more than 800 transactions, totalling approximately $1.68m, to flow through its systems on behalf of individuals who appeared to have been located in Iran.

The issue was discovered by Kraken, which alerted the OFAC of the potential sanction violation and promised to invest $100,000 in additional sanctions compliance controls.

Kraken has a crypto state bank licence in Wyoming and is also registered as a crypto business with the Financial Conduct Authority in the UK.

Denmark Probes Jyske Bank Over AML Failures

The Danish Financial Supervisory Authority (DFSA) has reported Jyske Bank to the police after it found significant shortcomings in the bank’s anti-money laundering (AML) controls.

Specifically, the DFSA found that Jyske, the country’s third largest bank, failed to carry out enhanced due diligence and to investigate suspicious transactions in its Keyplan Mortgage portfolio, which secured loans against private property in Spain, Portugal and France.

The bank said in a statement that it sees “a limited risk that the bank has been exploited for money laundering”.

The portfolio under investigation is a small portfolio with 210 mortgages, and that the foreign clients in question have no access to payment accounts or cards with Jyske Bank, it added.

ING Promises To Fix AML Controls In Australian Probe

ING Bank Australia group has committed to uplifting its compliance with anti-money laundering and counter-terrorism financing (AML/CTF) laws to end an investigation by Australia’s financial intelligence unit AUSTRAC.

The agency found shortcomings in relation to ING’s AML/CTF program, monitoring systems and controls, and reporting. The shortcomings were discovered and reported to AUSTRAC by the bank, according to the release.

ING has now undertaken to improve its AML/CTF program, money laundering risk assessment, suspicious matter reporting and transaction monitoring.

“ING have been fully cooperating with AUSTRAC throughout our regulatory inquiries and have demonstrated an ongoing commitment to addressing concerns about the effectiveness of their AML/CTF systems and controls.” AUSTRAC CEO Nicole Rose said.

Pakistan Central Bank To Launch QR Code Payment System In 2023

The State Bank of Pakistan (SBP), the country’s central bank, has said it plans to launch a QR code-based person-to-merchant (P2M) payment system in 2023.

Speaking at the Pakistan Fintech Forum last week, SBP governor Jameel Ahmad said the new payment system will include request-to-pay functionality, allowing merchants to receive instant payments from consumers.

Ahmad added that the QR code-based payment system will rapidly improve financial inclusion in Pakistan, a country where 38 percent of adults do not have a bank account.

“Today in Pakistan, we have most of the factors in place that allow the blossoming of a tech-based financial ecosystem,” said Ahmad.

“These include a fully functional digital ID system, ubiquity of mobile devices, penetration of mobile and broadband services, availability of faster payments, remote account opening processes and facilitative regulatory frameworks for non-bank entities.”

Citigroup Must Address Data Management Weaknesses, US Fed Says

After concluding the review of US eight largest banks’ resolution plans, the US Federal Reserve (Fed) and the Federal Deposit Insurance Corporation (FDIC) said Citigroup must address a shortcoming related to data quality and data management.

The review was part of the agencies’ exercise to assess the resolution plans, also known as living wills, of the eight largest US banks, which describe the banks' strategy for rapid and orderly resolution in bankruptcy. 

According to the Fed, a shortcoming in Citi’s data integrity and data management raises questions about whether Citi can reliably produce, in stressed conditions, data needed to execute its resolution strategy.

Citi was the only bank that had a weakness in its resolution plan. 

The bank said in a statement that it is “completely committed to addressing the shortcoming” and it is making significant investments in data integrity and data management.

The review was ordered by post-financial crisis legislation intended to end the notion of “too big to fail” financial institutions.

Commenting on the announcement, Rohit Chopra, director of the Consumer Financial Protection Bureau (CFPB), said “ending “too big to fail” continues to be a goal, but it is not yet a reality”.

Although these plans help to facilitate a resolution, he stressed it still “seems like a fairy tale” to state they will work in a court-supervised bankruptcy proceeding.

Conduent Combines Zelle, Real-Time Payments Features In New Business Hub

Conduent, a US-based, NASDAQ-listed business process company, has announced the launch of its new Digital Integrated Payments Hub.

Designed for business and state agencies, the new digital platform brings together features of both Zelle and Real-Time Payments (RTP), from The Clearing House, including refunds, rebates and request-to-pay options.

In a statement, Conduent said the Digital Integrated Payments Hub is built around payments infrastructure provided by US bank BNY Mellon, the first institution to originate a payment on the RTP network.

“By adding BNY Mellon as our payments infrastructure provider, we can now offer clients across the government, commercial and transportation segments new payment options that reduce costs, mitigate fraud and provide timely benefits,” said Rob Houser, global head of strategy and corporate development at Conduent.

Payment Systems See Surge In Politically-Motivated DDoS Attacks, Says Report

A new report by Russian cybersecurity firm Kaspersky has found that politically-motivated denial-of-service (DDoS) attacks on payment systems rose significantly in Q3 this year.

According to Kaspersky’s quarterly DDoS report, both pro-Russian and pro-Western payments targets were hit by an overall rise in DDoS attacks amid the war in Ukraine.

Killnet, a pro-Russian hacktivist group, took responsibility for cyberattacks that brought down Estonia’s ESTO AS payment system and the US Electronic Federal Tax Payment System.

In turn, Russian targets that were hit by pro-Ukrainian hacktivists include the Unistream, Korona Pay and Mir payment systems, and the Russian National Payment Card System.

Russia’s Sberbank reported 450 repelled DDoS attacks in the first two months of Q3, more than in the previous five years combined.

Experian Appointed To Operate Singapore’s BNPL Bureau

The Singapore FinTech Association (SFA) and the Buy Now, Pay Later (BNPL) Working Group have appointed Experian to provide credit check infrastructure for Singapore BNPL providers.

The appointment means that Experian will receive information about BNPL users, such as outstanding BNPL balances, missed payments and delinquencies, that will be used to facilitate creditworthiness checks by Experian.

In a statement, Experian said the information will be leveraged by accredited BNPL providers in accordance with Singapore's new BNPL Code of Conduct that was published last month.

The BNPL Working Group, formed by the SFA and industry stakeholders such as Atome, Grab Financial Group and ShopBack, produced the BNPL Code of Conduct under the guidance of Singapore's central bank.

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