Daily Dash: US Authorities Get Tough With Amazon

June 23, 2023
The US Federal Trade Commission has sued Amazon, Google has entered the financial crime world with a new AI product, and Volt has announced a $60m funding round that will power its open banking expansion into APAC and the Americas.

Amazon Faces US Charges For Subscription ‘Trickery’

The US Federal Trade Commission (FTC) is suing Amazon.com, alleging it enrolled consumers into its Prime programme without their consent while knowingly making it difficult for consumers to cancel their subscriptions.

The agency argues that Amazon used manipulative user-interface designs, known as "dark patterns", to trick consumers into enrolling into automatically renewing Prime subscriptions.

Then, the online marketplace knowingly complicated the process of cancelling Prime. The complaint states Amazon leadership slowed or rejected changes that would have made cancellation easier, because those changes adversely affected Amazon’s bottom line.

“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” said FTC chair Lina Khan, while warning that her agency will continue to “vigorously protect Americans” from dark patterns and other unfair or deceptive practices in digital markets.

US consumer protection agencies are increasingly concerned about the use of dark patterns by subscription-based firms. 

The Consumer Financial Protection Bureau has already issued two notices in 2023 warning firms that signing up customers for services without their consent, or making these services difficult to cancel, may breach federal laws.

In March, the FTC also proposed a rule update to make it easier for consumers to cancel recurring subscriptions and consolidate the existing patchwork of laws and regulations.

Google Makes AML Move With AI Product

Google Cloud has announced the launch of "Anti Money Laundering AI" (AML AI), an artificial intelligence-powered product designed to help global financial institutions more effectively and efficiently detect money laundering in their systems. 

"Google is a pioneer in AI, and now we're making our tools, technologies and expertise available to solve one of the biggest and most costly challenges in the financial services industry," said Thomas Kurian, CEO of Google Cloud.

According to the big tech firm, the AML AI product has shown increased risk detection, lowered operational costs and improved governance and customer experience. 

Clients using the product thus far include HSBC and the Scandinavian digital bank, Lunar. 

In the future, Google Cloud has said that it plans to invest more, providing generative AI foundations for the financial services industry with the goal of boosting employee productivity. This includes reducing the time needed for an analyst to investigate potential suspicious activity.

Volt Sets Sights On APAC, Americas Expansion Following $60m Funding Round

Volt, a UK-based open banking firm, has raised $60m in Series B funding to expand into new markets in APAC and the Americas.

The funding round was led by IVP, a Silicon Valley investor that has previously backed Coinbase, Slack and mobile gaming developer Supercell. Volt said IVP’s investment is a “vote of confidence” in UK fintech. 

CommerzVentures also joined as a new investor, alongside existing funds EQT Ventures, Augmentum Fintech and Fuel Venture.

Volt is currently available in the UK, Europe and Brazil, but plans to enter the US and Australian markets in 2023. It also plans to expand its product suite to include cash management.

Earlier this month, Volt announced that it has entered new open banking partnerships with Worldpay from FIS in the US and Shopify in the UK, Europe and Brazil.

Wirecard Execs Given Jail Sentence In Singapore

Singapore has become the first jurisdiction to hand down criminal convictions against executives of the German payment giant Wirecard.

James Wardhana, international finance process manager, and Chai Ai Lim, head of finance at Wirecard Asia, were sentenced to 21 months and 10 months respectively for conspiring to misappropriate funds, the Financial Times reported.

Wirecard collapsed in June 2020 after an audit report revealed that half of its €2bn in annual revenue did not exist. In 2018 the German company had a €24bn market cap and was considered one of Europe’s most successful fintech stories.

Edo Kurniawan, former vice president of controlling and finance at Wirecard’s Asian arm and senior to Wardhana and Chai, is still on the run and has been issued an Interpol "red notice".

Trials against the German executives are still ongoing in Munich.

Singapore Fines Four Financial Firms For Wirecard AML Breaches

The Monetary Authority of Singapore (MAS) has fined three banks and one insurer a total of S$3.8m ($2.8m) for breaches of anti-money laundering/counter-terrorism financing requirements related to Wirecard.

DBS, OCBC and Citibank and the insurer Swiss Life accepted the penalties without dispute, which were related to transactions connected to Wirecard.

Among the breaches, MAS found that the firms had failed to establish the source of wealth of certain clients, had failed to conduct customer due diligence and, in Citibank’s case, had failed to identify an outflow to an entity accused of fraud.

“Although the breaches were serious, MAS did not find “wilful misconduct by any staff of these FIs [financial institutions],” noted the central bank.

“The FIs have taken prompt remedial actions to address the deficiencies identified by MAS.”

US Law Protecting Consumers Against Counterfeit Stolen Products To Take Effect

The US Federal Trade Commission has warned marketplaces that a new act aimed to protect consumers from counterfeit, unsafe, and stolen goods will take effect on June 27.

The new Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act (INFORM Consumers Act) will require online marketplaces to verify their high-volume third-party sellers’ identities and make it easier for consumers to report suspicious marketplace activity.

The consumer protection watchdog now warns businesses to be in compliance on day one.

“The Commission will enforce the Act to the fullest extent possible and will collaborate with our state partners to hold online marketplaces accountable,” Samuel Levine, director of the Federal Trade Commission’s Bureau of Consumer Protection said.

Non-compliant online marketplaces may face enforcement and civil penalties of $50,120 per violation.

CHAPS Transitions To Latest Global Financial Messaging Standard

The Bank of England (BoE) has successfully migrated CHAPS, the UK’s high-value payments system, to the new ISO 20022 messaging standard provided by SWIFT.

By working with its technology partner, Accenture, the BoE said the transition marks a “significant milestone” in the multi-year programme to renew the UK’s Real-Time Gross Settlement System. 

ISO 20022 allows more data to be sent with payments and in a more structured format. The UK and other jurisdictions have or are planning to implement ISO 20022 by November 2025 for high value payment systems, when SWIFT is scheduled to retire MT, its existing message standard, for cross-border payments.

Pay.UK’s New Payments Architecture, which will replace the UK’s Faster Payments system in “due course”, will also use ISO 20022.

Europe Is Not Doing Enough To Recover Assets, MONEYVAL Warns

In its annual report for 2022, MONEYVAL said the recovery of proceeds from crime across states is insufficient and urged EU governments to step up efforts to strengthen their national frameworks for asset management and recovery.

The council of Europe’s anti-money laundering (AML) body said that only a fraction of the proceeds of crime are recovered, which underscores the need to not only freeze but also to seize and confiscate criminal funds.

“States should not only improve their results in identifying and freezing criminal funds,” said Elżbieta Franków-Jaśkiewicz, chair of MONEYVAL.

“There is also an urgent need for them to greatly improve their results in confiscating and managing criminal assets, adopt stricter sanctions and increase the number of convictions for serious money laundering offences.”

The annual report also concluded that MONEYVAL members showed “excellent results” with regard to technical compliance with recommendations on legislative and institutional reforms, with 72 percent of the recommendations fully implemented.

IMF Endorses ‘Contracting Platforms’ To Solve Cross-Border Payment Pains

The International Monetary Fund (IMF) has published a blueprint for a new class of cross-border payment system based on a single ledger and using a contracting model.

The IMF said that multi-currency contracting platforms can offer safety, efficiency and interoperability benefits to cross-border payments participants, using either fiat currencies, tokenised assets or central bank digital currencies (CBDC).

For compliance professionals, the IMF said that cross-border contracting platforms allow the “unbundling" of settlement and non-settlement services, including compliance checks.

“This leads to a cleaner separation of responsibilities and for countries to retain jurisdictional control over compliance checks,” it said.

“Central banks would have a say over which firms can participate on the platform. And these firms would remain responsible for knowing their customers and properly monitoring transactions.”

Swiss Banks Come Together On Digital Currency Work

Some twelve banks, including Credit Suisse and UBS, have launched a project with the intention of introducing a digital Swiss franc, which will take the form of a tokenised currency. 

Coordinated by the Swiss Bankers Association, it is hoped that the digital currency can act as a public good and provide the foundations for new and innovative financial services in the country. 

Areas that the project is focusing on include regulatory compliance, technical viability and scalability. 

“The introduction of a digital Swiss franc on a blockchain infrastructure will represent a transformative step towards the future of Swiss Banking and is essential for the future competitiveness of the Swiss financial sector,” the trade association said in a statement. 

Thunes Opens Beijing Office

Thunes, the global B2B payment infrastructure platform, has opened a new office the Chinese capital.

The Singaporean company said that this move signifies its commitment to empowering Chinese businesses and consumers by providing faster and more affordable transactions with key international markets.

“With the establishment of our Beijing office, we have the opportunity to further enhance trade and economic opportunities between China and the rest of the world, and simplify access to international payments for China-based businesses and consumers, regardless of the country they intend to connect to or payment method used in that country,” said Peter De Caluwe, Thunes CEO. 

The CEO added that the firm is also looking to integrate with the domestic payment system, including connecting to the country’s central bank digital currency — e-CNY — ecosystem.

“The establishment of Thunes China is another achievement of Beijing in terms of its development and opening up of financial industry. This will further promote Beijing’s efforts in developing into a leading fintech hub globally,” commented LI Wenhong, Beijing’s director-general of financial regulation and supervision. 


Philippines And India Sign Fintech MoU

Filipino finance secretary, Benjamin E. Diokno, and India’s ambassador to the country, Shambhu Santha Kumaran, have signed a memorandum of understanding (MoU) to enhance collaboration in the fintech sector. 

“On the one hand, India is a rising economic powerhouse with a forte in digital technology. On the other, the Philippines hosts a young and tech-savvy talent pool that can provide the intellectual capital needed to succeed in the digital economy,” said Diokno. “Clearly, the possibilities between our two economies are boundless.”

The two countries will focus on areas including regulatory cooperation, the development of fintech solutions in the two economies and will develop international standards by encouraging the creation of an international application programme interface (API).

First Saudi Bank Pioneers Open Banking Services

Bank Albilad has become the first institution in Saudi Arabia to complete the technical permit requirements to enable open banking services. 

The Saudi Central Bank issued its open banking regulatory framework in November last year. 

This provided a comprehensive set of legislation, regulatory guidelines and technical standards based on international best practices to enable banks and fintechs to provide open banking services in the country.

The work on the open banking framework was first announced in early 2021 and forms part of Saudi Arabia’s fintech strategy, one of the pillars of the Financial Sector Development Program (FSDP) under Saudi Vision 2030.

"We took the initiative to enable the open banking services in order to support and enable the fintech system and innovation in the financial sector, as it is one of the pillars of the financial sector development program emanating from the Kingdom's Vision 2030," said Abdulaziz Al-Onaizan, CEO of Bank Albilad. 

Ripple Partners With Colombian Central Bank On High-Value CBDC Payments

Ripple and Peersyst Technology have launched a new pilot with the central bank of Colombia that will study high-value central bank digital currency (CBDC) payments using the Ripple CBDC Platform.

With support from Colombia’s Ministry of Information and Communications Technologies (MinTIC), the pilot will run throughout 2023 and will be one of the first real-world tests of the Ripple CBDC Platform, which was launched last month.

The Ripple CBDC Platform is powered by the core XRP Ledger — the same ledger on which the Ripple-issued XRP token also runs. 

The pilot, which is the third phase of MinTIC’s experiments using blockchain for payments, will study whether there are speed and efficiency benefits to be gained by using CBDC for high-value payments.

BIS And Bank of England Complete CBDC Collaboration

The Bank for International Settlements (BIS) and Bank of England have released a new report on the findings of Project Rosalind, a pilot focused on central bank digital currencies (CBDC).

Project Rosalind was designed to explore whether it was possible for an application programme interface (API) to connect central bank and private sector infrastructures, enabling retail CBDC payments.

The two institutions conclude in the report that a well-designed API layer could work with different private sector applications and central bank ledger designs, and that a set of simple and standardised API functionalities could support a diverse range of use cases.

During the project, 33 API functionalities were developed. 

The project also sought to develop a number of retail CBDC use cases. Overall, 30 retail CBDC use cases were explored, including peer-to-peer transfers and retail payments for goods and services.


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