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US Treasury Seeks Input On AI Risk In Financial Services
The US Department of the Treasury has issued a request for information (RFI) regarding the uses, opportunities and risks of artificial intelligence (AI) in the financial services sector.
The authority has said it wants to gather public comments to better understand the current applications and potential of AI within financial services.
“Treasury is proud to be playing a key role in spurring responsible innovation, especially in relation to AI and financial institutions,” said Nellie Liang, under-secretary for domestic finance. “Our ongoing stakeholder engagement allows us to improve our understanding of AI in financial services.”
Key areas of interest include identifying obstacles to responsible AI use by financial institutions, assessing the impact of AI on consumers, investors, businesses and regulators, and recommending improvements to legislative and regulatory frameworks.
“The Biden Administration is committed to fostering innovation in the financial sector while ensuring that we protect consumers, investors and our financial system from risks that new technologies pose," said Liang.
FDIC Issues Warning To Neobank Users: Funds May Not Be Protected
The Federal Deposit Insurance Corporation (FDIC) has issued a warning to users of neobank and fintech apps, highlighting that deposits to these platforms may not be protected.
Increasingly, consumers are choosing to open accounts through non-bank companies that may or may not have business relationships with banks.
“If and how a bank is involved is key to understanding whether or not your money is protected by deposit insurance,” said the FDIC. “However, in some cases, it is not always clear to consumers if they are dealing directly with an FDIC-insured bank or with a nonbank company.”
The regulator noted that nonbank companies themselves are “never” FDIC-insured. “Even if they claim to work with FDIC-insured banks, funds you send to a nonbank company are not eligible for FDIC insurance until the company deposits them in an FDIC-insured bank and after other conditions are met,” it said.
“If the nonbank company deposited your funds in a bank, then, in the unlikely event of the bank’s failure, you may be eligible for what is referred to as “pass-through” FDIC-deposit insurance coverage. However, the nonbank company must take certain actions for your funds to be eligible for FDIC insurance.”
BIS, Central Banks Launch Multi-Currency CBDC Platform: Project mBridge
The central banks of Hong Kong, the United Arab Emirates (UAE), China and Thailand have launched a minimum viable product (MVP) version of Project mBridge, a multi-currency central bank digital currency (CBDC) platform for wholesale cross-border payments and settlement.
Developed under the leadership of the Bank for International Settlements (BIS) Innovation Hub in Hong Kong, Project mBridge is the first multi-CBDC platform to reach the MVP phase, and is now ready for use by early adopters.
Separately, the Saudi Arabian Monetary Authority (SAMA) announced that it has joined Project mBridge as a participant. There are also more than 26 entities signed up as “observing members”, according to the BIS.
A number of UAE licensed financial institutions (LFIs) have been onboarded onto mBridge, with collaborative efforts underway to accelerate its adoption.
Onboarded LFIs are now ready to initiate and process cross-border CBDC payments with their counterparts of the participating jurisdictions.
The UAE’s participation in Project mBridge hit a milestone in January 2024, when the UAE central bank made its first cross-border Digital Dirham payment to China worth AED50m ($13.6m).
Dutch Regulator Updates Anti-Money Laundering Guidelines
The Dutch Authority for the Financial Markets (AFM) has released updated guidelines on the Money Laundering and Terrorism Financing (Prevention) Act (Wwft) and the Sanctions Act (Sw).
The reason for the update is due to research findings, increased attention on sanctions regulations and a further explanation of the risk-based approach.
The updates include detailed measures for identifying and verifying UBOs, enhanced guidance on sanctions regulations, and clarifications on risk-based approaches to AML, covering risk assessments, policy integration and customer due diligence.
The AFM also announced that it will begin supervising crypto-asset service providers (CASPs) under the Wwft and Sw at the end of 2024. This means that it will publish a supplement to the Wwft/Sw guidelines specifically for CASPs in the near future.
