Eva Dauberton
News Editor
Innovate Finance Global Summit: Key Takeaways from PSR Aidene Walsh’s speech
Supporting UK’s FinTech Sector
In a speech at the Innovate Finance Global Summit, Aidene Walsh, chair of the Payment Systems Regulator (PSR) in the UK, emphasised the vibrant FinTech ecosystem in the UK, which hosts 10 per cent of all global FinTechs. The UK aims to increase this to 12% by 2030. Walsh highlighted the PSR's crucial role in fostering innovation and maintaining a strong relationship with the FinTech community.
Focus on sustainable innovation
Walsh stressed the importance of sustainable innovation that customers trust, citing statistics indicating a 70-90 per cent failure rate for innovations. The PSR aims to support innovations that lead to sustainable growth, contribute to UK competitiveness, and which address the challenges posed by rapid technological advancements.
Open banking advancements
Walsh discussed the progress made in open banking, with UK businesses adopting account-to-account payments and the government integrating open banking into its systems. Despite the advancements, Walsh highlighted the need to develop further open banking retail payments and Variable Recurring Payments (VRP). The PSR, he noted, is committed to pressing forward with this agenda, seeking industry consensus while addressing differing views to ensure progress.
Fraud prevention and customer trust
Addressing fraud and building customer trust remain key priorities for the PSR. Walsh emphasised the importance of safe payment systems and the role of trust in driving customer adoption. The PSR's work on tackling Authorised Push Payment (APP) scams aims to protect users and build a sustainable customer base for businesses but Walsh recognises there is more to do and will be providing further fraud prevention tools such as enhanced fraud data.
Infrastructure upgrades
Walsh acknowledged the need to update the existing Faster Payments infrastructure to support new and existing payment methods. The PSR has engaged with Pay.UK to discuss further investments in Faster Payments to meet the evolving needs of open banking and retail payments.
Global interoperability and Big Tech influence
Walsh highlighted the increasing role of Big Tech companies in payments globally and the need for the UK to adapt to global interoperability trends. Collaborative efforts are essential for the UK payments ecosystem to meet the opportunities and challenges posed by global developments.
Conclusion
In conclusion, Walsh reaffirmed the PSR's commitment to supporting sustainable innovation and competition in payments. She encouraged closer collaboration with the FinTech community, promising an open dialogue to address concerns and seize opportunities. Walsh expressed confidence in the FinTech community's ability to drive a sustainable and innovative payments system in the UK.
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FinCEN issues notice on counterfeit US passport card fraud schemes
The US Financial Crimes Enforcement Network (FinCEN), in close coordination with the Department of State’s Diplomatic Security Service (DSS), has issued a notice to financial institutions regarding fraud schemes involving counterfeit US passport cards. The notice provides an overview of the different types of fraud associated with US passport cards, highlights specific warning signs to help financial institutions detect and report suspicious activity, and reminds them of their reporting obligations under the Bank Secrecy Act (BSA).
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EU regulators collaborate to develop DPM standards
The European Insurance and Occupational Pensions Authority (EIOPA), the European Banking Authority (EBA), and the European Central Bank (ECB) have signed a Memorandum of Understanding (MoU) to collaborate on developing and maintaining the Data Point Model (DPM) Standards.
Some context
The DPM is a data dictionary that provides a structured representation of the data required for regulatory purposes. It encompasses regulatory processes and integrates data from various EBA Technical Standards and Guidelines.
The EBA has been using DPM Standard 1.0 since its inception and has collaborated with the EIOPA on a DPM Refit project to develop a common DPM Standard 2.0. This standard was published in June 2023.
Key takeaways
Following the publication of DPM Standard 2.0, the two European Supervisory Authorities, along with the ECB, have agreed on the governing arrangements for their future cooperation beyond this standard.
Through the MoU, they aim to facilitate the definition and exchange of regulatory data within the financial sector, enhance efficiency, minimise duplication of efforts, and establish streamlined processes for defining and communicating reporting requirements, as well as collecting and exchanging data and metadata among reporting entities, national authorities, and European authorities.
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MAS, IBF, and WSG publish Sustainable Finance Jobs Transformation Map
The Monetary Authority of Singapore (MAS), Institute of Banking and Finance (IBF), and Workforce Singapore (WSG) have jointly published the Sustainable Finance Jobs Transformation Map (JTM).
The JTM is based on a KPMG study and explores the impact of sustainability trends on jobs in Singapore’s financial services industry. It highlights the emerging skills that the workforce will require to meet the increasing demand for global sustainable financing.
Financial institutions can use the analysis to set the overall direction and initiatives for talent development. It can also help ensure that staff are equipped with the right skills and capabilities to support the organisation’s sustainability and risk management strategy. Individuals can use the report to plan for a transition into related job roles and to identify the skills needed in their current or new job roles.
Key findings
The study shows that:
- Over 50,000 professionals in the financial services sector will need to add new sustainable finance-related tasks to their jobs to a moderate to high degree.
- 20 unique job roles are high-priority roles for upskilling.
- New job roles will emerge in areas such as sustainability risk and sustainability strategy.
MAS and IBF Initiatives
To meet the growing need for skilled professionals, MAS and IBF have launched initiatives to support upskilling. These initiatives include:
- Expanding the suite of sustainable finance courses for individuals with the development of two undergraduate programs focusing on sustainable finance and the launch of more than 65 new executive courses and new executive masters in sustainable finance this year.
- Implementing an IBF Skills Badge to recognise industry professionals’ acquisition of sustainable finance skills and serve as an industry benchmark to recognise individuals’ skills mastery and support skills-based hiring and promotion by employers.
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HKMA issues circular to virtual asset service providers regarding AML guidelines
The Hong Kong Monetary Authority (HKMA) has recently issued a circular reminding all licensed corporations, SFC-licensed virtual asset service providers, and associated entities to comply with Chapter 6 of the Anti-Money Laundering and Counter-Financing of Terrorism Guideline (AML/CFT Guideline). This reminder is issued considering the recent release of an updated list of “individuals and entities” under section 31 of the United Nations Sanctions (Democratic People’s Republic of Korea) Regulation (Cap. 537AE).
In particular, the HKMA reminds firms to:
- Screen new designations against their client lists as soon as practicable whenever there are updates.
- Report any transactions or relationships they have or have had with any designated person or entity to the Joint Financial Intelligence Unit.
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HKMA issues circular on DLT risk management
The Hong Kong Monetary Authority (HKMA) has issued a circular to authorised institutions (AIs) on risk management considerations regarding the use of Distributed Ledger Technology (DLT).
Some context
Since the Hong Kong Government published its “Policy Statement on Development of Virtual Assets (VAs) in Hong Kong” in 2022, the HKMA has noticed an increasing interest from AIs in exploring the application of DLT in traditional financial market operations. Consequently, more AIs have approached the HKMA to seek views on planned initiatives.
Key takeaways
The circular aims to support AIs by outlining supervisory considerations the HKMA considers when reviewing proposals and determining whether an AI has implemented adequate systems and controls to manage the additional risks associated with DLT adoption.
Key considerations include:
- Governance: The HKMA expects an AI’s board and senior management to take full responsibility for adopting DLT and managing related risks. This includes implementing sufficient systems and controls to mitigate these risks.
- Application design and development: The HKMA expects AIs to fully understand the different types of DLT networks available and make an appropriate choice based on the nature and risks of the application in question. AIs must also ensure that smart contracts are “fit for purpose” and understand and mitigate potential legal risks associated with third-party involvement. Additionally, AIs must safely enable interoperability and connectivity.
- Ongoing maintenance and monitoring: the HKMA expects AIs to establish a level of cybersecurity commensurate with traditional technology applications. AIs must also securely manage private keys, comply with data privacy and protection requirements, and develop tailored contingency plans and testing arrangements.
Additional note
These considerations are non-binding and non-exhaustive and will continue to evolve as the market and related technologies develop. While AIs may refer to them as a reference when designing and developing their DLT-related solutions, the HKMA’s detailed supervisory expectations will continue to be discussed with AIs on a bilateral basis to ensure that they are suitable for the specific case at hand.
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RBI issues consultation on Payment Aggregators
The Reserve Bank of India (RBI) has released, for consultation, two draft directions regarding the regulation of Payment Aggregators (PAs).
Some context
The regulations applicable to PAs only cover the processing of online or e-commerce transactions and do not apply to offline PAs who handle proximity/face-to-face transactions.
In 2022, considering PAs significant role in the payments ecosystem, the RBI shared plans to extend the current regulations to offline PAs.
Key takeaways
The consultation covers:
- New draft directions to bring offline PAs under the current regulations.
- Amendments to the existing directions on PAs to update requirements considering the growth of digital transactions.
Next steps
The deadline for comments is 31 May 2024.
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ASIC announces senior leadership changes
The Australian Securities and Investments Commission (ASIC) has confirmed significant changes to its senior executive leadership team.
Current ASIC CEO Warren Day will join the Commonwealth Director of Public Prosecutions (CDPP) on secondment as the Director’s Executive Officer, effective from 1 June 2024. Following the CDPP secondment, Day has indicated that he will not return to ASIC.
Greg Yanco, the current Executive Director of Regulation and Supervision at ASIC, will step in as the Interim CEO from 1 June 2024. He previously served as Executive Director Markets from January 2019 to June 2023. Yanco has informed the Commission of his intention to retire in mid-2025, and a search for a permanent CEO will commence in early 2025.
Tim Mullaly, Executive Director of Enforcement and Compliance with 25 years of service at ASIC, will retire at the end of July 2024. Mullaly has played a crucial role in overseeing enforcement and compliance outcomes, leading the Financial Services Enforcement team for 11 years and the Enforcement and Compliance team for the last year.
Joanne Harper has recently been appointed as the Executive Director for Data, Digital, and Technology.
ASIC’s executive leadership team will be strengthened with the addition of a new Executive Director role for Registry and Intelligence, following the transition of Registry services back to ASIC from the Australian Tax Office. Additionally, a Chief People and Culture Transformation Officer will be appointed to drive organisational culture and development.
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