Week In Brief - December 23, 2021

December 23, 2021
In the last news roundup of the year, we are looking at a wide range of payments topics around the globe, including the FCA’s new rules on climate-related disclosures, the EC adequacy decision for South Korea, a U.S. buy now, pay later inquiry, Swiss e-ID principles and the latest AML fine, this time in Lithuania.

United Kingdom: FCA Issues New Rules On Climate-Related Disclosures

The Financial Conduct Authority (FCA) has published final rules and guidance aimed to guide public companies and asset managers on how to provide better climate-related financial disclosures.

From January 1, issuers of standard listed shares, or equity shares, must now include a statement in their annual financial reports setting out whether their disclosures meet the recommendations of the Taskforce on Climate-related Financial Disclosures, or explain themselves if they do not do so.

FCA-regulated asset managers will have to disclose how they take climate-related risks and opportunities into account in managing investments. These entities will have a phased implementation, with the rules initially applying to the largest firms and coming into effect for smaller firms one year later.

European Union: EU - South Korea Data Flow Gets Green Light

The European Commission (EC) has granted an adequacy decision to South Korea, enabling the transfer of personal data between the two jurisdictions under the General Data Protection Regulation (GDPR).

“Based on the decision, personal data will be able to travel safely from the EU to the Republic of Korea to the benefit of citizens and economies on both sides, without any need for further authorisations or additional tools,” the EC said in the press release.

The adequacy decision complements the EU-Republic of Korea Free Trade Agreement with respect to personal data flows.

South Korea is the 14th country to receive an adequacy decision from the EC, with the UK getting the nod in June with a sunset period of four years. However, the commission reserved the right to reverse this decision even during this period if it believes the UK no longer complies with the GDPR well enough.

United States: Federal Regulator Opens Inquiry Into BNPL Products

The Consumer Financial Protection Bureau (CFPB) issued a series of orders to Affirm, Afterpay, Klarna, PayPal and Zip aimed to collect information on the risks and benefits related to buy now, pay later (BNPL) products.

“Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too,” said CFPB director Rohit Chopra.

The inquiry follows a November hearing at Congress where experts called on the agency to conduct further research and publish aggregated findings on the insights learned from that exercise.

Switzerland: Data Privacy Will Be A Key Element Of New e-ID Law

The Swiss Federal Council has laid down principles for the design of future digital proof of identity, or e-ID, and is planning to consult on a new law in mid-2022.

In a March referendum, Swiss people voted against a former version of the digital identity scheme, called the Federal Act on Electronic Identification Services (e-ID Act). Their main reason to do so was mistrust over the use of personal data by private companies.

Since then, the Federal Council commissioned various government agencies to find a solution to these concerns and held a public consultation.

The new principles now state that data privacy will be guaranteed in part by the design of the system, but also by minimising the necessary data flows and decentralising data storage.

Public consultation on the new law is expected to begin in mid-2022.

Lithuania: e-Money Institution Fines For AML Failures

Latest in the line of recent AML fines, electronic money institution Wallter will have to pay €280,000 to the Bank of Lithuania for its flawed anti-money laundering (AML) risk management.

The Bank of Lithuania found that as Wallter’s customer risk assessment procedures could not identify money laundering and terrorist financing risks of its customers properly, it could not put its customers into the right risk groups.

In addition, Wallter’s know your customer (KYC) procedures were insufficient and the company failed to ensure the application of enhanced customer due diligence procedures to higher-risk customers and regular updates to customer verification information.

According to the Bank of Lithuania, the e-money institution had started to correct these violations and shortcomings on its own initiative during the investigation.

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