News In Brief - September 30, 2021

September 30, 2021
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BaFin has fined N26 for anti-money laundering (AML) failures, while Banca d’Italia and ARPCSO have brought an experiment in cross-border, cross-currency, instant payments to a successful conclusion.

Germany Fines N26 €4.25m

BaFin, Germany's federal authority for financial services, has fined neobank N26 for anti-money laundering failures, the bank has made public.

The regulator imposed the fine because the firm was tardy in submitting fewer than 50 suspicious activity reports in 2019 and 2020.

According to N26, whose headquarters are in Berlin, the bank has already paid the fine in full in July and related proceedings have been closed. It took steps to improve the way it reported suspicious activities earlier this year.

Although N26 has made its position known, BaFin has yet to publish a statement on its website.

Italian Central Bank And Arab Payments Body Complete Cross-Border, Instant Payment

Banca d’Italia and the Arab Regional Payments Clearing and Settlement Organisation (ARPSCO) have announced the successful completion of a joint experiment aimed at linking Europe's TARGET Instant Payments (TIPS) and BUNA, which the Arab Monetary Fund (AMF) owns.

The experiment simulated the payment of one euro by a current account holder of Banca Intesa Sanpaolo in favour of a customer of Jordan Ahli Bank’s who received the money in Jordanian dinars.

The experimenting banks settled some cross-currency transactions in both TIPS and
Buna IPS, by debiting Intesa Sanpaolo’s TIPS account in euros and crediting Jordan Ahli’s dinar account in BUNA, with the average end-to-end response for these transactions taking approximately 15 seconds.

"The excellent results of this proof-of-concept demonstrate that different clearing and settlement mechanisms can interact with each other without necessarily requiring new technical infrastructures and the significant investment this would entail," said Mehdi Manaa, chief executive of ARPCSO.

Meanwhile, Banca D'Italia's Piero Cipollone, who serves as its deputy governor, said that great opportunities existed for a "whole new range of 24/7 services” for firms.

Switzerland Approves First Crypto-Fund

FINMA, the Swiss federal Financial Market Supervisory Authority, has approved the first crypto-fund to operate in line with Swiss law.

The fund is restricted to qualified investors and invests primarily in so-called crypto-assets, that is to say in assets based on the blockchain or distributed ledger technology. It goes by the name of the “Crypto Market Index Fund”, an investment fund according to Swiss law belonging to the category "other funds for alternative investments" with particular risks.

To facilitate serious innovation, FINMA applies the existing provisions of financial market laws in a consistently technology-neutral way, i.e. in keeping with the “same risks, same rules” principle.

In imposing safeguards, FINMA is insisting that the fund may only invest in established crypto-assets with large enough trading volumes. Furthermore, it has dictated that firms can only make the investments through established counterparties and platforms that are based in countries that are members of the Financial Action Task Force (FATF) and are subject to corresponding anti-money laundering regulations. It has also imposed specific requirements with regard to risk management and reporting for institutions involved in the management and custody of the tokens.

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