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Switzerland: Regulator Rules Against Two Banks For AML Breaches
The Swiss Financial Market Supervisory Authority (FINMA) has ruled against Banca Zarattini and Compagnie Bancaire Helvétique (CBH) for breaches in their obligations to combat money laundering.
FINMA opened its case against Banca Zarattini in 2019 relating to alleged corruption linked to the Venezuelan oil company PDVSA, while proceedings against CBH Bank, which began in 2020, also involved dealings with Venezuelan clients.
The proceedings found that both Banca Zarattini (between 2014 and 2018) and CBH Bank (between 2012 and 2020) were in breach of obligations to combat money laundering and their duties to put in place an appropriate risk management policy, representing a serious infringement of supervisory law.
The regulator also found that both banks failed to carry out sufficient economic background clarifications into business relationships and transactions with increased money laundering risks. Adequate documentation was also lacking in these areas.
According to FINMA, both banks cooperated with the proceedings and even before this had implemented operating, structural and HR-related measures to address their deficiencies in combating money laundering. “If they are implemented consistently, FINMA considers these measures to be suitable for addressing the identified shortcomings,” the regulator added.
United States: Digital Bank N26 To Pull Out Of Market
On Thursday (November 18), N26 announced that it was pulling out of the U.S. market, culminating in a bad couple of months for N26.
Earlier in November, Germany’s regulator Bafin placed binding restrictions on the neobank, which included limiting customer acquisitions to no more than 50,000 each month, until the bank had improved its business organisation to mitigate risks to the institution’s operational resilience.
Commenting on its U.S. exit, chief growth officer Alex Weber said in a blog post: “The US launch in 2019 was a very special one, as it had been our first market outside of Europe. Two years in, we have taken an honest look at where we are today, what the challenges and opportunities are in front of us as a business and what our focus should be for the years ahead.”
Despite attracting 500,000 customers, Weber noted that to meet its targets for the market would require significant investment and resources.
Looking forward, the bank plans to double down on existing markets and to expand a little closer to home. According to Weber, its strategy includes “deepening our footprint in existing core European markets, primarily Germany, France, Italy and Spain, as well as expanding our footprint into Eastern Europe”.
India: Partnership Announced To Help RuPay Go International
The National Payments Corporation of India (NPCI) has announced a partnership with payments infrastructure provider PPRO, to support the international expansion and acceptance of domestic card scheme RuPay, and instant payments service UPI.
“The agreement aims at expanding RuPay card and UPI acceptance across PPRO’s global clients such as payment service providers (PSPs) and global merchant acquirers,” an NPCI press release read.
The NPCI will hope to follow the example of UnionPay and Alipay in China, which have been successful over the last decade at growing international merchant acceptance to support the increasing number of Chinese travellers and Chinese diaspora. According to data from the UN, India has the largest diaspora population in the world.
A key target market for this growing international acceptance will be to support cross-border e-commerce.
According to the NPCI: “More than a third of the 777 million Indian online consumers shop across borders, with nearly a half of all transactions taking place with online shops in the United States and China. Enabling merchants in these and many other countries to accept payments through RuPay card and UPI will increase consumer reach significantly.”
Although RuPay has 635m cards issued to date, according to the NPCI, the real success story in the market has been UPI. As of 2021, it was the largest instant payments service globally with 19bn transactions, according to VIXIO research. According to the NPCI, UPI enabled commerce is worth $457bn, equivalent to approximately 15 percent of India’s GDP.
Canada: Payments Canada Launches Consultation To Update Direct Debit Framework
Payments Canada has launched a consultation to update the framework for processing direct debits, known as pre-authorised debits (PADs) in Canada, through the Automated Clearing Settlement System (ACSS).
Rule H1 outlines the procedures for the exchange, clearing and settlement of PADs that are supported by an ongoing agreement between a payor and/or a payee.
Among the changes include clarifications and amendments to wording in terms of requirements for establishing customer verification, the creation of a single PAD agreement (removing previous paper and electronic versions) to provide a consistent notification and waiver requirements applicable to all payor PAD agreements, and clarifications around requirements for making single use PAD payments.
The last major review of Rule H1 was in 2008. Since then there has been a significant growth in the use of third parties. According to Payments Canada, “the market for third-party/ Payment Service Providers (PSPs) in Canada has grown in recent years, and some businesses are outsourcing parts or all of their PAD processing to these providers.”
To accommodate this market shift, Payments Canada proposes that the payee letter of undertaking be updated to reflect what information the third-party/payment service provider (PSP) must ensure their client includes in the payor PAD agreement. Rule H1 will also be updated to ensure that the name of the ultimate beneficiary payee will be displayed as the debitor in the payor’s banking records (e.g., online or mobile banking applications), and not the PSP as it is today.
According to Payments Canada, in 2020, Canadians made just under 1bn PAD payments.
France: New Law Aims At Reducing Digital Wastage
The French government has introduced a new law aimed at reducing the environmental impact of digital technology adopted in France.
Law No. 2021-1485 covers a number of areas including making users aware of the environmental impact of digital technology, promoting more efficient use of data centres and networks, and responsible digital data strategies across the economy.
The law also aims to intervene in the market to reduce planned obsolescence (both hardware and software), as well as promote the reuse and repair of devices, such as mobile phones.
Encouraging the reuse of devices could have a significant impact. A recent French Senate report noted digital technology is responsible for, “3.7 percent of total greenhouse gas emissions in the world in 2018 and 4.2 percent of global primary energy consumption”. Of which, 44 percent was due to the manufacture of terminals, data centres and networks, and 56 percent due to their use.
