SEC files charges in fine wine investment fraud scheme
The Securities and Exchange Commission (SEC) has filed fraud charges against Charles Winn LLC, its senior managers, and sales representatives for allegedly defrauding at least 121 investors of $8.5 million through the fraudulent and unregistered sale of fine wine investments. The defendants allegedly misrepresented to investors that their money would solely be used to purchase and store wine, and falsely promised returns ranging between 10% to 45%, and that the company would not receive any compensation or profit until the wine was sold. The SEC claims that the defendants used no more than 43% of the investors’ money for the purchase and storage of wine and misused investor funds for non-wine uses, including payments to sales representatives, back-office staff, and defendants themselves. The defendants have not yet responded to the charges.
DFPI crackdown on AI-assisted investment schemes
The California Department of Financial Protection and Innovation (DFPI) has announced a number of cease-and-desist orders against entities using artificial intelligence (AI) to facilitate fraudulent investment schemes. The five entities named in the order have allegedly violated California securities laws by offering and selling unqualified securities and making material misrepresentations and omissions to investors. The entities solicited funds from investors by claiming to offer high yield investment programs (HYIP) that generate incredible returns by using AI to trade crypto assets.
NCUA seeks climate risk feedback
The National Credit Union Administration Board has confirmed it is seeking comments on current and future climate and natural disaster risks to federally insured credit unions, related entities, their members, and the National Credit Union Share Insurance Fund.
The decision, made at the fourth NCUA open meeting, provides stakeholders with an opportunity to advise the NCUA on enhancing supervision and regulation of each climate and natural disaster risks. NCUA Chairman Todd M Harper said. “This request for information is essential to furthering our understanding of these issues and their implications for the overall resiliency of individual credit unions, the vibrancy of the credit union system, and the strength of the National Credit Union Share Insurance Fund.”
Fed publishes digital dollar feedback
The report summarizes the comment submissions received in response to the 22 questions posed in the Money and Payments paper which discussed the pros and cons of a potential US central bank digital currency.
Amongst other areas, the summary report covers responses concerning
- improvements to cross-border payments
- supporting the dollar’s international role
- financial inclusion
- Extension of public access to safe central bank money
- changes to the financial sector market structure
- safety and stability of the financial system.
AUSTRAC consults on AML/CTF regime
AUSTRAC (Australian Transaction Reports and Analysis Center) the Australian Government agency responsible for detecting, deterring and disrupting criminal abuse of the financial system, has announced a major new consultation aimed at simplifying and modernizing the country’s anti-money laundering and counter-terrorism financing (AML/CTF) regime.
The CP is split into two parts: part one looking at simplification of the regime; part two looking at extending the regime to certain high-risk professions.
Part one of the consultation includes plans to:
- lower the reporting thresholds for the gambling sector
- amend the tipping-off offense
- extend the regulation of digital currency exchanges
- modernize the travel rule
- provide a statutory exemption for assisting an investigation of a serious offense
- amend revised obligations during COVID-19 pandemic, and
- repeal the Financial Transaction Report Act 1988.
Part two of the paper recommends extending the regime to “Lawyers, accountants, trust and company service providers, real estate agents, and dealers in precious metals and stones (known as tranche-two entities)”. The consultation notes that out of more than 200 jurisdictions, Australia is now one of only five jurisdictions in the FATF Global Network, alongside China, Haiti, Madagascar and the United States, that do not regulate tranche-two entities.
The consultation deadline closes on 16th June.
FCA consults on multi-occupancy building insurance
The Financial Conduct Authority has published CP 23/8 to consider changes to their rules regarding the multi-occupancy buildings insurance market. The FCA’s previous research has shown that often there are poor outcomes for leaseholders who bear the costs of multi-occupancy insurance. The consultation, relevant to regulated insurers and intermediaries and related stakeholders, proposes changes to the following areas of the FCA Handbook:
- the Insurance Conduct of Business sourcebook (ICOBS) requirement on acting honestly fairly and professionally in the customer’s best interests and to introduce new leaseholder focussed information disclosure obligations;
- the Product Intervention and Product Governance sourcebook (PROD) so that leaseholders and others are explicitly taken into account by firms for requirements on product design, approval and distribution and bring certain large risks contracts into scope; and
- the Senior Management Arrangements, Systems and Controls sourcebook (SYSC) requirements on remuneration practices.
The consultation ends on 9th June.
A selected summary of key developments for regulated financial institutions
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