Daily Dash: Wise Hit By $360,000 AML Fine In UAE

September 9, 2022
UAE authorities fine Wise for AML breach, Indian banks team up with Singapore’s DBS for real-time cross-border remittances and Nigeria looks to attract digital asset firms

Wise Hit By $360,000 AML Fine In UAE

A regulator in the United Arab Emirates (UAE) has issued a $360,000 fine to Wise for breach of anti-money laundering (AML) requirements.

In an enforcement decision, Wise’s local subsidiary was found to have “failed to establish and maintain adequate anti-money laundering policies, procedures, systems and controls to ensure compliance with all applicable requirements.”

During the period from July 2019 to September 2021, Wise failed to identify and verify source of funds and source of wealth of high-risk customers, and failed to “assess and consider” its customers’ nationalities when undertaking risk assessments.

Abu Dhabi Global Market (ADGM), which regulates the city’s free-zone financial centre, reduced the fine from $450,000 due an “early settlement” with Wise.

Indian Banks Eyeing Real-Time Remittance System With Singapore’s DBS

A new report has claimed that at least five Indian banks are in talks with Singapore’s DBS Bank on a new real-time remittance system.

According to sources quoted by India’s Economic Times, the five banks include State Bank of India (SBI) and ICICI Bank.

The proposed remittance platform will be a collaboration with Singapore’s PayNow funds transfer service, allowing users to send money between the two countries in real-time, or as close to real-time as possible.

Such a service would likely find a large active user base, due to the size of the Indian expat community in Singapore.

As of December 2018, India’s Ministry of External Affairs (MEA) estimated that there are 350,000 non-resident Indians in Singapore and 300,000 persons of Indian origin.

Nigeria Teams Up With Binance To Launch ‘Virtual Free Zone’

Nigeria is teaming up with the world’s largest crypto exchange on plans to launch a Virtual Free Zone in West Africa, along the lines of the Dubai Virtual Free Zone.

The effort is being led by the Nigerian Export Processing Zones Authority (NEPZA), which is looking to replicate Dubai’s success in attracting investment and licence applications from digital asset firms.

"Our goal is to engender a flourishing virtual free zones to take advantage of a near-trillion-dollar virtual economy in blockchains and digital economy," said Adesoji Adesugba, managing director of NEPZA, in a statement announcing the plans.

Belarusian banks planning to connect to China’s SWIFT alternative

Facing a lockout from SWIFT, Belarusian banks will soon begin connecting to the Cross-Border Interbank Payment System (CIPS), China’s homegrown alternative.

As reported by Belarusian news site BeITA, the country’s largest bank, Belarusbank, will be the first to make the switch.

The plans were revealed by Belarus’s First Deputy Prime Minister Nikolai Snopkov in a briefing to journalists.

Skupov also said Belarus will continue to implement China’s UnionPay International, with Belarusbank issuing UnionPay cards from December onwards.

“With these cards, Belarusians will be able to pay within the country, in China and in more than a hundred countries worldwide,” he said.

IMF Give Crypto Cautious Endorsement

The right rules could provide a safe space for innovation, the International Monetary Fund (IMF) has said in a new bulletin. 

Crypto assets have been around for more than a decade, but it’s only now that efforts to regulate them have moved to the top of the policy agenda.

Although the “regulatory fabric is being woven”, the worry is that the longer this takes, the more national authorities will get locked into differing regulatory frameworks.

With this, the IMF has advocated that there is a global response to crypto-asset regulation that is coordinated, so it can fill the regulatory gaps that arise from inherently cross-sector and cross-border issuance and ensure a level playing field. 

The agency has also said that regulation must be consistent, so it aligns with mainstream regulatory approaches across the activity and risk spectrum; and is comprehensive, so it covers all actors and all aspects of the crypto ecosystem.

“A global regulatory framework will bring order to the markets, help instil consumer confidence, lay out the limits of what is permissible, and provide a safe space for useful innovation to continue,” the IMF summarises.

UK Shared Bank Hub Scheme Expands 

It has been announced that another 13 locations have been approved for shared banking hubs in areas where the last branch has closed.

The first two bank hubs were launched last year in the Scottish city of Glasgow and English county of Essex. 

Consisting of services from five high street banks, they are run by the Post Office. 

The initiative was devised as a method to counteract the widespread closures of banks across the country, particularly in rural or deprived areas, as consumers switch to online banking and drastically move away from cash payments. 

Customers are able to access services such as cash deposits and a representative from each of the banks involved will visit the hubs once a week to deal with more sensitive matters.

New destinations include four additional hubs in Scotland, one in Northern Ireland and others located in rural areas of England such as Devon.

Revolut In Trouble With UK Audit Regulator 

The fintech Revolut is facing questions over its internal controls after it was criticised by the UK’s Financial Reporting Council (FRC) for an unacceptably high risk of "material misstatement" in its account auditing.

According to reports in the Financial Times, the challenger bank’s audit, which was carried out by BDO, was undertaken with an inadequate approach to revenue recognition.

This resulted in "the risk of an undetected material misstatement” being “unacceptably high”.

Meanwhile, the FRC also had concerns over how BDO tested payment processes.

In recent months, Revolut’s compliance department has experienced a clearout, with staff such as its chief risk officer and money laundering reporting officer leaving the company.

Online, Mobile Banking Payments Hit Record High In Ireland

Online and mobile banking volumes grew to 36m payments in the second quarter of 2022, the highest level since the data series began in 2016, according to the Banking and Payments Federation Ireland (BPFI). 

Meanwhile, the value of contactless payments rose by 40 percent to more than €4.5bn. 

The BPFI also said that this was the first time that digital banking payments outnumbered direct debit payments, which stood at €34.9m.  

Cheque payments meanwhile fell by 2.6 percent year on year to €4.8m. This is about half the volume when compared with the same period in 2018.

Payments Companies Raided By Indian Authorities

Payments institutions Razorpay, Cashfree and Paytm have been searched by authorities in India that are investigating a Chinese loan app. 

The Enforcement Directorate (ED), India's anti-money laundering agency, conducted the search operations in the Indian city of Bengaluru on Friday amid allegations of extortion and harassment of customers involving the Chinese app, the agency confirmed in a press statement.

“During enquiries, it has emerged that these entities are controlled/operated by Chinese Persons,” the ED said. “The modus operandi of these entities is by using forged documents of Indians and making them as dummy directors of those entities, they are generating proceeds of crime. It has come to notice that the said entities were doing their suspected/illegal business through various Merchant IDs/Accounts held with Payment Gateways/banks.”

As it stands, the ED has seized 170m rupees ($2.1m).

Both Paytm and Razorpay have confirmed to the press that they are cooperating with the authorities. 

Almost Nine In Ten Payments Via Contactless, Says Lloyds

According to data from Lloyds Bank, nearly 90 percent of in-person debit card purchases are now contactless.

The financial institution said that spend on debit cards made in-person using contactless technology has gone from 65 percent to 87 percent in the last three years.

Over 90 percent of consumers turn to contactless when eating out, with a similar number using the technology for their trip to the supermarket.

The bank suggests that this shift is in part down to policy changes. For example, in April 2020, during the pandemic, the contactless limit was increased from £30 to £45, rising to £100 in October 2021.

“These higher limits have helped cement contactless as the preferred payment method of customers when out and about,” the bank said. 

However, since Lloyds introduced a feature in Autumn 2021 that allowed customers to set their contactless limit, 800,000 debit card customers have used it to freeze contactless payments, or choose an alternative limit.

60 percent of debit card customers who have set their own limit have opted for one under £50 and a further 25 percent have set the highest bespoke limit of £95.


China’s UnionPay Limits Card Acceptance In Russia 

UnionPay, China’s homegrown card payments network, has suspended acceptance of its overseas cards at Russian banks that are under Western sanctions.

According to two bank officials who spoke with Russia’s RBC news agency, UnionPay made the decision due to fears that secondary sanctions may be applied against it.

The move means that Chinese tourists — the primary users of overseas UnionPay cards in Russia — cannot use their UnionPay cards at point-of-sale (POS) terminals connected to sanctioned Russian banks.

One source said that UnionPay had already disabled acceptance of such cards between April and May this year, without making a formal announcement of doing so.

As reported by VIXIO last month, co-badged Mir-UnionPay cards have exploded in popularity since the exit of Visa and Mastercard from Russia in March this year.

Federal Reserve Ends HSBC Enforcement

The US Federal Reserve announced that it has discontinued decade-long enforcement action against the UK-based HSBC bank. 

"Over the last decade HSBC's employees have worked hard to transform the bank's financial crime risk management capabilities," the bank said in a statement.

The enforcement action dates back to 2012, when the bank admitted that it had violated its anti-money laundering rules.

This allowed drug cartel money to be passed through the bank’s Mexico subsidiary and led to sanction evasion, with money moved through banks in Cuba, Iran, and Libya among others.

The bank had agreed to pay $1.92bn in fines, then a record breaker. It also had to abide by a business improvement order after acknowledging it failed to maintain an effective programme against money laundering and conduct basic due diligence on some of its account holders.

"We are pleased with the Federal Reserve's decision to terminate the 2012 consent order and remain committed to our efforts to combat financial crime,” the bank’s statement said. 

“We Won’t Give Up The Fight” - UK Serious Fraud Tsar Speaks Out

Rising fraud has filtered into the mainstream press throughout the last year, as trends such as authorised push payments and romance scams increase. 

Now, Lisa Osofsky, the UK’s Serious Fraud Office (SFO) chief, has insisted that the authority is working hard to deliver justice in a letter to City A.M. 

“We are bringing eight cases to trial this financial year and we’ve already secured convictions in three of those cases, holding to account the criminals responsible for over £360m of fraud,” she wrote. 

For Osofsky, the rise in the value of the frauds is not just about volume and value — it has also become about complexity. “Increasingly, fraud spans not only multiple countries but also involves hidden offshore accounts or shell companies, emerging technologies and vast amounts of complex data.”

This is making it harder for law enforcement to investigate and prosecute, warned Osofsky.

Credit Karma Pays $3m To Settle FTC Claim Over ‘Dark Patterns’ Credit services company

Credit Karma has agreed to pay $3m to settle charges that it deployed dark patterns to induce consumers into using its services.

According to the US Federal Trade Commission (FTC), Credit Karma used dark patterns to make consumers believe that they were pre-approved for credit card offers and had 90 percent odds, whereas in many instances they did not qualify for those loans.

During this exercise, Credit Karma amassed more than 2,500 data points on each consumer, including credit and income information, which it then used to send targeted advertisements and recommendations for financial products, like credit cards.

“Credit Karma’s false claims of ‘pre-approval’ cost consumers time and subjected them to unnecessary credit checks,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection.

Denied credit checks could unnecessarily damage consumers’ credit scores, the FTC argued.

The agency ordered the company to stop deceiving consumers and pay $3m in consumer redress.

Google Launches Major Pilot Of User Choice Billing For In-App Payments

Google has announced that its pilot scheme for alternative billing systems that process in-app payments is now live.

From September 1, developers of non-gaming Android apps can enrol, and can offer apps using third-party billers to users in India, Indonesia, Australia, Japan and the European Economic Area (EEA).

For participants in the pilot, service fees owed will continue to apply, but when a consumer uses an alternative billing system rather than Google Play’s own, the fee charged per transaction will be reduced by 4 percent.

The pilot comes in the wake of pressure from Europe, Australia and the US for Google to open up its “monopolistic” in-app payments ecosystem to third-party billers.

Last year, as reported by VIXIO, South Korea became the first jurisdiction to force Google to allow third-party billing systems, following the passage of the Telecommunications Business Act.

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