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- UK Politicians Critique Regulatory Oversight
- P27 Withdraws Clearing Licence Application In Sweden
- New York AG Issues Data Security Guide Based On Enforcement Experience
- ACI Worldwide Brings Fraud-Fighting Service To FedNow
- Bank of England, BIS Tests Blockchain Connection To RTGS System
- Bank of Lithuania Fines Three E-Money Firms
- Estonia Charges Six In Danske Bank Case
- US Justice Department Sues Nexway Over Credit Card Laundering
- Lloyds Bank Launches New B2B Instant Payments Service
- Visa Surcharge Cap Cut Comes Into Effect
- Klarna Greets Instant Payments Regulation 'Great Step Forward'
- BoE, CFTC Expand Cooperation On Supervision Of Cross-Border Central Counterparties
- Spain Probes ChatGPT, EU Launches Dedicated Task Force
- Key EU Crypto Votes This Week
- Musk Aims To Sweeten Payments Deal For Twitter Creators
UK Politicians Critique Regulatory Oversight
The lack of democratic oversight of regulators is holding back UK productivity and economic growth, a group of Conservative parliamentarians have said.
According to the report, regulators in the UK have a lack of strategic direction, and strained relationships with industry as well as other regulators.
There is also a need to build up greater skills and knowledge within regulators and support them with sufficient resourcing, the report says.
The cohort, which includes Lord Andrew Tyrie, who previously chaired the Competition and Markets Authority (CMA), and Vicky Ford, who previously served as chair of the EU’s internal market committee, have said that they are calling for “a systematic evolution of the regulatory system”, with more of a focus on consumer outcomes and democratic accountability.
P27 Withdraws Clearing Licence Application In Sweden
P27 Nordic Payments has announced that it has withdrawn its clearing application in Sweden due to a rethink of its cross-border payment plans.
“Our vision was to provide a better payments infrastructure to the 27m people living in the Nordics, with an optimistic timeline,” said Paula da Silva, CEO of P27.
“Lately, it is evident that our vision was too ambitious and complex. Hence, we need to reassess our future ambition in the Nordic payments market.”
In 2019, P27 first applied for a clearing licence from Sweden’s Finansinspektionen. That application was withdrawn in light of new regulations that “challenged” P27’s operating model. P27’s second application was submitted in 2022.
New York AG Issues Data Security Guide Based On Enforcement Experience
New York Attorney General Letitia James has released a guide to help businesses adopt data security measures.
The guide is drawn from the Office of the Attorney General’s (OAG) experience investigating and prosecuting businesses following cybersecurity breaches.
According to the announcement, in 2022, OAG received 1,876 data breach incident reports that involved the exposure of social security numbers, affecting more than 3.2m New Yorkers.
The guide discusses some data security failures found in these investigations and recommends practices that businesses should adopt to improve the security of their systems.
“In today’s digital world, companies cannot afford to take risks with consumers’ personal information. Businesses can and must do more to protect New Yorkers from identity theft and fraud,” James said.
ACI Worldwide Brings Fraud-Fighting Service To FedNow
ACI Worldwide has announced that ACI Real-Time Payments Cloud is now available for US customers preparing for the launch of FedNow in July.
Featuring integrated fraud protection in partnership with Microsoft Azure, ACI Real-Time Payments Cloud is a multi-tenant SaaS platform.
In the US, where ACI Worldwide has been designated as a FedNow Instant Payment Pioneer by the Federal Reserve, the platform could already connect with the The Clearing House real-time payments network.
In a statement, ACI Worldwide said its fraud protection services are used in 24 programmes globally, including in the UK, Europe, India and the Middle East. It currently processes more than 500m instant payments monthly across its cloud and on-premises platforms.
Bank of England, BIS Tests Blockchain Connection To RTGS System
The Bank of England and the Bank for International Settlements (BIS) Innovation Hub London Center have completed an experiment to interlink RTGS systems with other financial market infrastructures (FMIs) and ledgers, automatically orchestrating the exchange in ownership of funds and assets.
The study, known as Project Meridian, aims to develop a prototype for settling transactions using central bank money in an RTGS system and another ledger via a synchronisation network.
Researchers have now demonstrated that a distributed ledger technology (DLT) network could connect to the conventional centralised systems, including the RTGS operator, using open-standard application programming interfaces (APIs).
As covered by VIXIO this week, the Swiss National Bank has completed similar tests in partnership with the BIS, and is currently exploring a range of tokenised settlement models.
Bank of Lithuania Fines Three E-Money Firms
Lithuania’s central bank has fined three electronic money institutions for internal audit failures.
Contis Group, Glocash Payment and PCS Transfer were fined €18,000, €10,000 and €6,000 respectively.
According to the central bank, Contis had improperly stored customer funds and violated capital requirement rules. The company not only kept clients' but also partners' funds in the same account, undermining EU payments law, it said.
Contis also failed to monitor the process of protecting clients' funds, and provided incorrect information to the Bank of Lithuania.
Meanwhile, Glocash Payment has been accused by the regulator of not performing an internal audit that meets the requirements of legal acts, nor appointing someone responsible for this area since 2020.
PCS Transfer also got in trouble for failing to perform an internal audit, as well as not fulfilling equity capital requirements.
Estonia Charges Six In Danske Bank Case
Six former employers of Danske Bank have been charged with laundering more than $1bn and €6m, according to Maria Entsic, Estonia’s state prosecutor.
These former employees intentionally concealed the ownership of funds of suspected criminal origin, said Entsic.
These funds were transferred into Danske Bank accounts between 2007 and 2015.
These charges bring the latest action against Danske Bank and its employees for money laundering at its Estonian subsidiary. So far, it has shut down its Estonian office, forfeited $2bn in a pact with the US authorities and is awaiting the outcome of a French investigation too.
US Justice Department Sues Nexway Over Credit Card Laundering
The US Department of Justice (DOJ) has filed a lawsuit accusing French payment processing company Nexway for helping technology support scammers via a scheme called credit card laundering.
According to the agency, Nexway acquired credit card merchant accounts and used those accounts to collect money from consumers on behalf of the scammers.
In a typical scam, Nexway’s client caused deceptive pop-up notifications to appear on a consumer’s computer screen, warning that the computer was infected with a virus or freezing the screen and displaying a phone number to call for help.
Consumers who called reached call centres in India and were convinced to pay for repairs. The payments were processed via Nexway’s credit card merchant account for which Nexway charged a fee.
The DOJ alleges that Nexway and its executives knew or “consciously avoided knowing” that they were assisting in telemarketing fraud and other deceptive practices.
The agency is asking for $650,000 in consumer redress from Nexway and its CEO Victor Iezuitov and chief strategy officer Casey Potenzone. The government is also seeking a fine of $16.5m, which is partially suspended due to the defendants’ inability to pay the full amount.
Lloyds Bank Launches New B2B Instant Payments Service
The UK’s Lloyds Bank has launched a new business-to-business (B2B) instant payments service that allows users to make one-off payments without knowing the beneficiary’s bank details.
Using Lloyds Bank PayMe, businesses do not have to gather or manage account information or register one-off suppliers.
Once a payment is approved, companies can simply send a secure link to the beneficiary — via email, SMS or QR code — who then inputs their account information. After being reviewed and verified, the payment is sent directly to the beneficiary.
“Businesses across all sectors can use Lloyds Bank PayMe in a range of ways including for one-time vendor payments, goodwill gestures, compensation payouts, refunds, hardship payments, volunteer expenses and grants,” the bank said in a statement.
Funds are also received by the beneficiary “within minutes”, rather than the usual wait of up to three working days.
Visa Surcharge Cap Cut Comes Into Effect
A new rule that cuts the amount of Visa credit card surcharge in the United States came into effect on Saturday (April 15).
The card giant announced on January 12 that it will lower the maximum amount for a credit card surcharge in the US from 4 percent to 3 percent. Additionally, merchants will need to only notify their acquirers, not Visa, 30 days in advance of assessing surcharges.
The new surcharge cap is now in effect for Visa credit cards in US states where surcharges are not prohibited by local law. To date, Connecticut, Maine, Massachusetts and Oklahoma have laws that prohibit surcharging, while merchants located in Colorado may not surcharge more than 2 percent as per state law.
Although several news sites indicated that Visa left merchants in the dark about whether the changes had actually come into effect on Saturday, the card network’s merchant surcharge Q&A has been officially updated to reflect the changes.
The new surcharge rules concern credit cards only on the Visa network. Discover and Mastercard still apply the 4 percent cap, while the surcharge on Amex OptBlue remains at 3.5 percent.
Nonetheless, certain payment processors have already indicated that they will use a 3 percent surcharge rule on all credit cards given the rule of parity across all card brands.
Klarna Greets Instant Payments Regulation 'Great Step Forward'
The EU’s proposed instant payments regulation has continued to spur conversation in the financial sector, with buy now, pay later (BNPL) giant Klarna commenting that it is “excited” and hopes that instant payments become “the norm throughout Europe soon”.
The Swedish fintech believes that the regulation will make things fairer for payment providers and encourage competition.
“This means customers will have more choice, smoother payment options, and lower costs for businesses.”
According to Klarna, traditional banks have been “too slow” to implement instant payments without a compliance requirement. “Do we really need this regulation? We say yes!”
In its blog post, the BNPL company has endorsed a price cap for instant payments and said that the EU should stick to its “ambitious timeline”.
Further, Klarna has said that the proposal is missing an “important element” in a notification requirement to oblige sending payment service providers (PSPs) to inform the payer and potential payment initiating party instantly and free of charge that the payment has been executed or rejected.
BoE, CFTC Expand Cooperation On Supervision Of Cross-Border Central Counterparties
The Bank of England (BoE) and the US Commodity Futures Trading Commission (CFTC) have announced plans to expand their cooperation on the supervision of cross-border central counterparties (CCPs).
Following the UK’s withdrawal from the EU, the BoE has responsibility for recognising and supervising non-UK CCPs that intend to provide clearing services in the UK.
Under this responsibility, the BoE is tasked with “tiering” non-UK CCPs based on the level of systemic risk they pose to the UK financial system.
But where the BoE determines that it can rely on the quality of regulation and supervision in the CCP’s home country, it will defer to that authority, as will be the case with the CFTC.
“The CFTC and the bank reaffirm the primacy of the UK and US home authorities in their respective jurisdictions and recognize the importance of deference,” the two regulators said in a joint statement.
Spain Probes ChatGPT, EU Launches Dedicated Task Force
Spain’s data protection watchdog, Agencia Española de Protección de Datos (AEPD), has become the latest to announce an investigation into ChatGPT, OpenAI’s popular generative AI chatbot.
The move comes hot on the heels of a parallel announcement by the European Data Protection Board (EDPB), which decided to set up a task force dedicated to ChatGPT.
Italy was the first European country to launch a probe into ChatGPT on April 4 over data privacy concerns, which included a temporary ban on the use of the AI tool until further measures.
Since then, other member states have indicated that they are also looking at the legality of ChatGPT’s data collection and security practices.
Officials from the German, French and Irish authorities told media outlets they are in talks with their Italian counterpart and may initiate their own enforcement actions against the popular chatbot.
The EDPB said the task force will help member states’ data protection authorities to cooperate and exchange information on possible enforcement actions.
Key EU Crypto Votes This Week
The European Parliament will vote on Thursday this week (April 20) to formally adopt the Markets in Crypto Assets (MiCA) regulation as well as the Transfer of Funds Regulation (TFR).
Although MiCA is considered one of the world’s most comprehensive pieces of crypto legislation, the TFR will implement the crypto Travel Rule (which is derived from Financial Action Task Force guidance) at EU level, having already been adopted in countries such as Germany.
Parliamentarians are expected to debate the topic on Wednesday before making way for official passage and adoption.
MiCA was first proposed by the European Commission in September 2020.
Musk Aims To Sweeten Payments Deal For Twitter Creators
As Twitter moves in on the world of subscription-based services, CEO Elon Musk has announced that paying users are now able to charge their followers for access to “bonus content”.
“Apply to offer your followers subscriptions of any material, from longform text to hours long video,” Musk wrote in a tweet, announcing the new feature. “Just tap on ‘Monetisation’ in settings.”
For the next 12 months, Musk said that Twitter will not take a cut from these payments, allowing creators to keep all funds paid by subscribers (minus commissions paid to Apple and Google and fees to payment processors). “You will receive whatever we receive,” said Musk.
After the first year, the Apple and Google commissions will drop from 30 to 15 percent per transaction, and at that point Twitter will add a “small amount” on top for itself, Musk said.
The move builds on Musk’s launch of Twitter Blue in December last year, which opened up a suite of new features to paying subscribers, including tweet editing, longer tweets and videos and “blue-tick” verification. Twitter Blue typically costs about $8 per month.
