Daily Dash: UK Open Banking Hits New Landmark

• UK Open Banking Reached New Milestone, CMA Says
• UK Cash Use On The Rise, Suggests Nationwide
• Danish Authorities Reveal Where Dirty Money Goes
• Indians Can Use UPI With UK Number From April
• UK Lobby Groups Establish New Crypto Alliance
• Canada’s Nuvei Set To Take Over Paya In $1.3bn Acquisition
• US Regulator Charges Crypto Trader With Fraud, Deception
• Jack Ma Cedes Control But Holds On To Minority Stake In Ant Group
• PayPal In Hot Water With Shareholder Activity Group
• Payment Apps Get One Year Escape From US Tax Reporting Rule
• Eight Percent Decrease In UK Fintech Funding, Trade Association Reveals
• Alipay+ Adds Another Mainland-HK Connection With Shenzhen Metro Deal
• Doomed From The Beginning: Silvergate Axes Diem
• RBI Reminds Banks To Provide Digital Channels For Re-KYC
• Malta Extends Crypto Consultation

UK Open Banking Reached New Milestone, CMA Says

The six largest banks in the UK have implemented fully open banking standards required by the Competition and Markets Authority (CMA), the agency announced.

The CMA’s retail banking order directed the nine largest retail banks to open up customer data using secure data protocols.

These six banks that have implemented all the requirements of the open banking roadmap are: Barclays, HSBC, Lloyds, Nationwide, NatWest and Santander.

The three remaining banks that have not implemented all of the requirements yet are Allied Irish Bank, Bank of Ireland and Danske. They will continue to work to implement the roadmap “as soon as feasible”.

The CMA said it will consider enforcement action “as appropriate” to ensure this happens in a timely way.

“The substantive completion of the roadmap signals the start of a new phase for open banking,” according to the agency.

UK Cash Use On The Rise, Suggests Nationwide

Cash usage in the UK has risen for the first time in 13 years amid the cost of living crisis.

“For the first time in years we are seeing a natural rise in cash withdrawals as people return to using cash to help avoid getting into debt from the rising cost of living. ATMs play a vital role in society, enabling people to easily access cash,” said Otto Benz, director of payments at Nationwide Building Society.

Data from the retail bank revealed more than 30.2m cash withdrawals were made from its ATMs last year — a 19 percent increase on 2021.

Over recent years the number of cash withdrawals had been steadily declining, with Nationwide stating that this was most sharply noticed at the start of the pandemic, when the number of withdrawals at Nationwide ATMs dropped more than 40 percent in a year — from 44.5m in 2019 to 26.4m the following year.

Data from the UK’s ATM network also shows a 4 percent rise in 2022. According to LINK, the total number of ATM withdrawals in the UK increased 4 percent during the year to 1.6bn.

However, VIXIO analysis also shows that a rise in ATM cash withdrawals does not necessarily translate into a rise in cash payments.

Danish Authorities Reveal Where Dirty Money Goes

The biggest risks for money laundering in Denmark have been mapped out by authorities as part of a new report, which also points to the crime areas where the profits are estimated to be the greatest.

Tax and VAT crime, IT-related economic crime, as well as drug trafficking, are the forms of crime in Denmark that currently provide the greatest profit for the criminal actors who launder money in order to use it in the legal economy, according to the document. 

In the report, it is estimated that a total of DKK68bn ($9.82bn) is laundered annually in Denmark. The figure covers both proceeds from crime committed in Denmark and abroad.

Different conditions argue for and against Denmark being vulnerable to money laundering. 

For example, the Nordic country has an open economy, but the report also points out that it has a high level of transparency, uses relatively less cash than the countries in the eurozone and is also assessed by the Basel Institute on Governance to be at low risk of being misused for money laundering.

Indians Can Use UPI With UK Number From April

Indians living outside the country but holding Indian bank accounts will be allowed to use Unified Payments Interface (UPI) platforms with international phone numbers, the National Payments Corporation of India (NPCI) has decided.

Initially, non-resident Indians will be able to onboard on UPI with a phone number in one of the ten countries listed by NPCI, which include the UK, the US, Australia, Singapore and many of the Gulf countries.

Further countries will be added “in the near future”, the NPCI assured.

The organisation said the decision to allow the use of foreign phone numbers on UPI follows requests from participants and customer demand. 

Market participants must ensure they comply with the NPCI directive by April 30.

UK Lobby Groups Establish New Crypto Alliance

Five trade associations have come together to form a new alliance, the UK Forum for Digital Currencies (UK FDC), which will celebrate innovation and collaboration across the payments industry. 

Its members are the City of London Corporation, Digital Pound Foundation, The Payments Association, TheCityUK and UK Finance, and the aim of the alliance is to develop better policies, practice and regulation around digital currencies.

Among their plans are education programmes and policy advocacy with the UK’s regulatory framework, building a better understanding of the operational impacts, challenges, risks and potential solutions. 

This, the UK FDC said, includes the development of common terminology which embraces existing definitions used in the sector into a single lexicon.

“While there are risks, the UK FDC recognises this growing interest and the adoption of new forms of digital money across the globe and how it will open many opportunities for the UK to remain competitive in fintech, while leading financial innovation with the right regulatory framework,” said the UK FDC in a statement.

Canada’s Nuvei Set To Take Over Paya In $1.3bn Acquisition

Nuvei Corporation, a Canadian fintech, has announced that it has signed a definitive agreement to acquire Paya, a US-based payment solutions firm, in an all-cash deal worth $1.3bn.

In its rationale for the acquisition, Nuvei said the deal enhances its ability to execute on high-growth integrated payment opportunities, by leveraging Paya’s software integrations with more than 300 independent software vendor (ISV) platforms.

An integrated payments solution is one that automates accounting processes at the time of sale, allowing businesses to bypass manual data entry processes.

In a statement, Nuvei chair and CEO Philip Fayer said the acquisition is a “powerful next step” in Nuvei’s evolution, creating a diversified technology provider with strong positions in e-commerce, integrated and B2B payments.

According to data cited by Nuvei, integrated payments is the highest-growth card payments distribution channel in the US. In 2021, about 41 percent of new merchants in the US were signed from an integrated payments channel.

US Regulator Charges Crypto Trader With Fraud, Deception

In the first case of its kind, a US regulator has charged a crypto trader with conducting a “fraudulent and deceptive” scheme to steal funds from Mango Markets, a decentralised finance (defi) platform.

On Monday (January 9), the Commodity Futures Trading Commission (CFTC) sued Avraham Eisenberg for unlawfully obtaining $110m from Mango Markets by manipulating the price of its native token, known as Mango (MNGO).

In October last year, according to the CFTC, Eisenberg purchased a large amount of MNGO-USDC swaps on Mango Markets.

He then used three separate exchanges to purchase further large amounts of MNGO to increase its price, and then as the value of his swaps rose, he used them as collateral to borrow $114m worth of crypto-assets from Mango Markets’ decentralised liquidity pools.

As the CTFC said in its complaint, this was “virtually all” of Mango Markets' available liquidity at the time, and it was then withdrawn by Eisenberg. Ultimately, Eisenberg returned about $67m to Mango Markets and kept $47m. He has also been issued criminal fraud charges by the Southern District of New York.

Jack Ma Cedes Control But Holds On To Minority Stake In Ant Group

Ant Group, parent company of Alipay, has announced that founder Jack Ma is no longer in control of the company, but will retain a minority shareholding under a new governance structure.

Prior to the adjustment, Ma could exercise control over Ant Group by being the largest shareholder in Yunbo Investment, which held 53.46 percent of shares in Ant Group.

As part of the adjustment, Ma agreed to terminate his acting-in-concert agreement with the other shareholders in Yunbo Investment, and then agreed to sell his shares in Yunbo for a 20 percent stake in another holding company known as Hangzhou Xingtao.

Hangzhou Xingtao now holds 31.04 percent of Ant Group shares, while Yunbo Investment holds 22.42 percent of Ant Group shares. Effectively, this means that no one individual, or group of individuals working in concert, holds a controlling stake in Ant Group.

“As a result of the Adjustment, the shareholding structure of Ant Group will be more transparent and diversified, which will facilitate the steady development of the company,” Ant Group said in a statement.

PayPal In Hot Water With Shareholder Activity Group

Tulipshare, a platform that encourages social change through becoming a shareholder at companies, has launched a campaign targeting PayPal's “financial discrimination”.

The group’s proposal comes after campaigns launched by the American Civil Liberties Union (ACLU), as well as Change.org asking PayPal to end what they say are biased practices in account suspensions.

For example, some reported actions, such as suspending the accounts of sex workers, are believed to disproportionately harm minority communities. 

In addition, Tulipshare accused PayPal of routinely targeting users for speech protected by the First Amendment. For example, the company has stalled efforts to provide bail support to protestors, froze the accounts of trade association News Media Canada for a payment to submit an article about Syrian refugees for an award and terminated service to a user for using an open-source software that enables anonymous communication.

“By not being transparent with its users, PayPal is missing out on the opportunity to service these users, which is discriminatory, but also hinders PayPal’s ability to acquire a greater market share and generate revenue,” the campaign group argues.

According to Tulipshare, a “win” would be PayPal agreeing to revise its Transparency Reports to provide clear explanation on the number and categories of account suspensions and closures that may reasonably be expected to limit freedom of expression or access to information or financial services. These revisions may exclude proprietary or legally privileged information.

Payment Apps Get One Year Escape From US Tax Reporting Rule

The Internal Revenue Service (IRS) has delayed a rule that requires third-party payment platforms to report transactions over an annual aggregate threshold of $600 to the tax agency.

The rule would apply to payment apps such as Venmo, PayPal or CashApp, as well as platforms such as Etsy and Airbnb.

Under the current rules, they must report the transactions if a user has more than 200 transactions per year, exceeding an aggregate amount of $20,000.

The IRS has decided to delay the effective date of the new provision by one year following successful lobbying by the Electronic Transaction Association (ETA). 

The association said it would use the additional year to educate consumers about the new reporting requirements.

Eight Percent Decrease In UK Fintech Funding, Trade Association Reveals

The UK fintech sector received $12.5bn of investment (£10.4bn) in 2022, an 8 percent decrease from 2021, Innovate Finance data has revealed.

However, this was a much smaller drop than the majority of other fintech hubs, the trade association pointed out. 

The report shows that the UK is still receiving more investment in fintech than all of the next ten European countries combined, for example.

“Despite global headwinds, British fintech firms showed great resilience last year and helped boost the UK's status as a world leader in tech, delivering jobs and huge benefits for our economy,” commented Paul Scully, the UK’s digital minister. 

The total capital invested into fintech globally reached $92bn in 2022, a decrease of 30 percent compared with 2021, when total investment amounted to $130bn. 

Meanwhile, the capital invested in fintech in 2022 was spread across 5,263 deals, compared with 6,146 deals in 2021. 

Overall, the US received the most investment in 2022, bringing in more than $39bn in fintech capital, with the UK in second place. Other leading markets include India with $5.5bn, Singapore with $4bn and Germany with $2.9bn.

Alipay+ Adds Another Mainland-HK Connection With Shenzhen Metro Deal

Alipay+, a provider of cross-border digital payment solutions, has announced that AlipayHK users can now use their Hong Kong-based e-wallet app to pay for metro rides in Shenzhen.

The agreement between Alipay+ and Shenzhen’s metro operator builds on similar agreements the firm has brokered on the mainland between AlipayHK and bus operators in several cities in Guangdong province.

In a statement, a spokesperson for Alipay+ parent company Ant Group said the metro integration comes at an ideal time, coinciding with the lifting of quarantine requirements for travel between Hong Kong and the mainland, which had been in place for almost three years.

Last November, Alipay+ announced that it is also working with South Korea’s Kakao Pay and Malaysia’s Touch 'n Go to facilitate payments by international visitors to China ahead of the 2022 Asian Games in Hangzhou.

Similarly, in September last year Alipay+ announced that it has successfully integrated four Asian e-wallets — AlipayHK, Touch n Go, Gcash (Philippines) and TrueMoney (Thailand) — for use in South Korea.

Doomed From The Beginning: Silvergate Axes Diem

The last nail has been put in the coffin of the Diem stablecoin project after new owners Silvergate announced that it had written off $196m from its books assets related to Diem.

Silvergate acquired Diem, originally a project by Meta (Facebook), last January for $201.2m after the social media company failed to get it off the ground following criticism from regulators.

The deal included certain intellectual property and other technology assets related to running a blockchain-based network designed to facilitate payments for commerce and cross-border remittances. It also had proprietary software elements that would ensure a regulatory-compliant stablecoin network. 

Silvergate said its decision to wind down the project was based on the “significant changes” in the digital asset industry landscape and its belief that the launch of a blockchain-based payment solution by Silvergate “is no longer imminent”.

The company noted that it will continue to look for opportunities to realise value from the acquired technology assets.

At the same time, Silvergate announced it will lay off around 200 employees, or 40 percent of its workforce, to “account for the economic realities facing the business and industry today”.

The company’s shares plummeted by more than 50 percent following the announcement.

RBI Reminds Banks To Provide Digital Channels For Re-KYC

The Reserve Bank of India (RBI) has issued a statement reminding banks to provide “self-declaration facilities” through “non-face-to-face channels” when updating KYC, also known as re-KYC.

As noted by RBI chief general Yogesh Dayal, if there is no change to the customer’s details during re-KYC, a simple self-declaration is sufficient to complete the process.

Similarly, if the customer wishes to change only their address during re-KYC, a simple self-declaration is sufficient, followed by a verification process completed by the bank within two months.

As outlined in Section 38 of the RBI Master Direction on KYC, published in May 2021, permissible digital channels include registered email, phone number, ATMs and an online or mobile banking app.

Dayal stressed that a visit to the branch, or use of a video-based customer identification process (V-CIP), is only necessary in cases of expired, mismatched or potentially invalid ID credentials.

Malta Extends Crypto Consultation

The Malta Financial Services Authority (MFSA) has announced an extension of the deadline to submit comments to its consultation on the Virtual Financial Assets (VFAs) Framework with regard to non-fungible tokens (NFTs). 

The MFSA was due to conclude the consultation on January 6, but has now extended its search for responses until January 20.

In the consultation, the MFSA is seeking feedback on whether NFTs should be excluded from the country’s crypto framework due to the fact that “their uniqueness and lack of interchangeability, limit the extent to which such assets may be used for investment or payment purposes”.