Daily Dash: UK Regulator Takes Action Against Money Transfer Firms

December 1, 2023
The UK’s financial watchdog has fined three money transfer firms for cartel behaviour, while bigtech companies have signed up to the UK’s new online fraud charter.

FCA Fines Three Money Transfer Firms For Breaking Competition Law

The Financial Conduct Authority (FCA) has imposed fines on three money transfer firms after they admitted to fixing prices charged to consumers in Glasgow.

Dollar East (International Travel & Money Transfer) Ltd; Hafiz Bros Travel & Money Transfer Limited; and LCC Trans-Sending Limited (including its parent company, Small World Financial Services Group Limited), trading as Small World, have been fined a combined total of more than £150,000 for breaching competition law.    

The FCA found that, between February 18 and May 31 2017, the firms coordinated on certain exchange rates offered to customers in Glasgow for converting UK pounds into Pakistan rupees, when transferring money to Pakistan.  

They were also found to have fixed the transaction fee charged to customers when making certain money transfers from the UK to Pakistan via Small World’s services.  

“We saw evidence of these businesses operating as a cartel, working together to fix their prices and exchange rates on money transfers,” said Sheldon Mills, the FCA’s competition and consumers chief. 

“This behaviour can lead to customers being ripped off, and it erodes public trust. We take this extremely seriously and will use our competition powers to protect consumers across the UK.”

UK Tech Firms Sign Up To Online Fraud Charter

Bigtech firms are due to sign up to the UK’s new Online Fraud Charter

Signatories include Google, Facebook and Amazon, and firms that have signed up will have a six-month window to implement measures in the charter. 

Requirements set out include firms needing to have a dedicated liaison who will respond to law enforcement requests, measures to detect and block fraudulent activity, and have a simple and quick route to report fraudulent activity. 

Meanwhile, firms will also need to take action against fraudulent content and users straight away and deploy measures to protect people from fraudulent adverts. 

The UK’s Joint Fraud Taskforce (JFT), chaired by the UK home office minister for security, will hold companies to account for delivering the actions.

Canada's 'Love-Hate Relationship' With Cash Continues, Survey Finds

A new survey by Payments Canada has found that use of cash is down but far from out, with Canadians sharply divided on the merits of going “cashless”.

From 2017 to 2022, cash payments fell almost 60 percent in volume. However, only half of Canadians believe the country will be fully “cashless” within ten years, while 55 percent say they have “no desire” to go cashless.

The survey found that almost a third of Canadians still use cash for day-to-day purchases, typically for small-value (less than C$20) items such as tips, taxis, restaurant bills and children’s pocket money.

Canadians were also divided on the issue of central bank digital currency (CBDC), with roughly even splits between those for and against the technology and those who are undecided.

Those who are anti-CBDC appear to have strong views on the topic. One in four Canadians said they would not use a CBDC if one was issued, and 63 percent said they would still continue to use cash.

In a hangover from the COVID-18 pandemic, one in four Canadians said they feel the need to “wash their hands” after handling cash.

Dojo Finance Launches In Ireland

Dojo, a trading name of Paymentsense Ireland Limited, has been granted an e-money licence (EMI) from the Central Bank of Ireland (CBI).

The business, which provides in-person and digital payment solutions, has confirmed Ireland as its European headquarters. 

In the UK market, Dojo has achieved significant growth in its customer base. It also reported revenue of €278m (£241m) in the 2023 fiscal year — a 48 percent increase over the previous year.

The fintech company serves more than 150,000 UK businesses and has ambitions to replicate its success in supporting small business growth in the UK across Ireland and the EU.

Volt Launches Instant Payment Solution In Australia Using PayTo

UK fintech Volt has announced its launch in Australia as an instant payments provider using the PayTo addressing system.

With a network of more than 5,000 banks, Volt said the Australia launch represents a “significant milestone” for the company and for the account-to-account (A2A) payments industry. 

Volt’s gateway will be integrated with PayTo, a bank-owned platform that enables consumers to authorise and control payments directly from their bank account.

The first merchant in Australia to integrate Volt’s technology will be ticketing platform Megatix, where customers will now see "Instant Bank Transfer" as a payment option at checkout.

Volt’s Australia launch follows a $60m Series B funding round and previous expansions in the EU, South America in 2021 and now APAC.

Worldline Secures Future UK Market Presence Following FCA Authorisation

Worldline has announced that it has been granted payment institution authorisation by the UK's Financial Conduct Authority (FCA). 

This means that it can continue its operations in the UK after the FCA's Temporary Permissions Regime (TPR) expires later this year.

“Worldline is committed to playing an important role in the post-Brexit payments landscape of the UK,” said Lee Jones, CEO of Worldline Merchant Services UK.

“I am proud that we have been granted our new licence, which guarantees an even stronger presence in the UK market. 

"Paramount for our local service scope and excellence, it sets us apart from many international competitors by bolstering our presence and enhancing our service capabilities, while providing more choice for UK merchants."

Have Your Say On DORA, Says European Commission

The European Commission has opened a consultation on requirements in the Digital Operational Resilience Act (DORA) until December 14.

This is due to the draft delegated regulation that will be in place from January 17, 2025. 

To address potential systemic and concentration risks posed by the financial sectors’ reliance on a small number of third-party providers of information communication technology (ICT) services, DORA introduces an EU oversight framework for ICT critical third-party service providers (CTPPs). 

It empowers the European Commission to further specify the criteria for determining whether a third-party provider of ICT services is critical for the financial sector. 

Furthermore, to ensure that the national regulators have the necessary resources to effectively conduct oversight tasks, DORA empowers them to charge fees to each designated CTPP to cover all the expenditures incurred in relation to the conduct of oversight tasks.

The feedback that the commission is seeking links to these areas.

Hong Kong Launches Faster Payment System Suspicious Proxy ID Alert

The Hong Kong Monetary Authority (HKMA) has launched a new Faster Payment System (FPS) Suspicious Proxy ID Alert system, designed to help FPS users manage fraud risks.

The alert system is based on information available from the Scameter, an anti-fraud search engine developed by the Hong Kong Police Force and launched in October last year.

All FPS participants that provide real-time fund transfer services to personal users where FPS proxy IDs are used, including a total of 44 banks and store-value facilities (SVFs), have launched the Suspicious Proxy ID Alert.  

Users will be alerted of the high risk of fraud if the payee’s FPS proxy ID (mobile number, email address or FPS Identifier) falls within the list of proxy IDs labelled as “High Risk” on Scameter.

An alert message will then be displayed to users, reminding them to think twice before deciding whether to continue with the payment or cancel the transaction.

Dutch Banks Issue Guidelines To Tackle Sex Worker De-Risking

The Dutch Banking Association has adopted a new Sector Standard to help sex workers get access to payment accounts. 

This has taken place after negotiations with the central bank, De Nederlandsche Bank, and representatives of the sex work industry. 

According to the association, sex workers have experienced problems opening and maintaining business bank accounts because a lot of payments are made in cash. 

This makes it difficult to recognise when a payment is unusual and may be related to money laundering.

Going forward, the Sector Standard specifies that banks may use sex workers' tax returns to determine where their income comes from. 

So if a sex worker, in addition to accounting and registration with the Chamber of Commerce, can submit the income tax return, or if this is not yet available, the VAT return, this will make it easier to open a bank account. 

"You cannot do business without a bank account,” said Helène Erftemeijer, sector coordinator for anti-money laundering.

“I am therefore pleased that with this Sector Standard, we are making arranging banking matters easier for sex workers.”

EU Council Adopts New Law On Harmonised Data Rules

The European Council has adopted a new regulation on harmonised rules regarding fair access to and use of data. 

The Data Act imposes obligations on manufacturers and service providers to let their users access and reuse the data generated by the use of their products or services. It also allows users to share that data with third parties.

The new law also aims to ease the switching between providers of data processing services. It also puts in place safeguards against unlawful data transfer and provides for the development of interoperability standards for data to be reused between sectors.

Subsequent to the Council's approval, the law will enter into the Official Journal of the EU in the coming weeks, and will come into force after the 20th day.

Most of its rules shall apply from 20 months from the date of its entry into force.

Hong Kong Launches Anti-Deception Alliance Between Banks, Law Enforcement

The Hong Kong Police Force (HKPF), with the support of the central bank and the Hong Kong Association of Banks (HKAB), has launched a new initiative known as the Anti-Deception Alliance (ADA).

The ADA aims to improve Hong Kong’s anti-money laundering ecosystem to detect, disrupt and deter scams. It will also strengthen the effectiveness of Hong Kong’s 24/7 stop payment mechanism operated by the HKPF.

By bringing together officers of the police’s Anti-Deception Coordination Centre and staff of ten participating banks, the ADA aims to identify potential victims of scams and intercept crime proceeds rapidly.

“The integrated work environment of ADA, together with analytics capabilities of banks driven by our work in AML/CFT Regtech, will boost intelligence sharing, enable swift decision-making and close cooperation among all stakeholders,” said the central bank.

European Payments Council Publishes SPAA Business Terms

The European Payments Council (EPC) has published the business conditions for the SEPA Payment Account Access (SPAA) scheme.

This provides a default remuneration model for those partaking in the scheme. 

“Together with various stakeholders, we are creating the right conditions for a vibrant European ecosystem for open banking,” said Gijs Boudewijn, managing director of the Dutch Payments Association and co-chair of the SPAA Multi-Stakeholder Group (SPAA MSG).

SPAA includes rules and agreements for account information services and payment initiation services with added value — "premium" — services. 

Banks can offer these premium services to to third-party providers. 

EBA Consults On Crypto Transfer Guidelines

The European Banking Authority (EBA) has launched a public consultation on new guidelines for preventing the abuse of funds and certain crypto-assets transfers for money laundering and terrorist financing purposes. 

Stakeholders have until February 26 to respond to these guidelines, which specify the steps that payment service providers and crypto-asset service providers should take to detect missing or incomplete information that accompanies a transfer of funds or crypto-assets. 

The guidelines also detail the procedures that these providers should put in place to manage a transfer of funds or a transfer of crypto-assets that lacks the required information.

The EBA will also hold a virtual public hearing on the consultation paper on January 17, which stakeholders can sign up to here.

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