National Crime Agency issues annual report
The UK’s National Crime Agency (NCA) has published its annual report and accounts to March 2023. Whilst the report focuses on many non-financial crime activities, it also notes some figures regarding cyber crime, fraud and money laundering that financial service institutions are exposed to.
During the 12 months to March 2023:
- There was an 82% increase in major cyber disruptions (from 11 to 20), these are assessed as having high levels of impact. Overall, the NCA’s cyber crime impact in the past year rose by 10% (from 216 disruptions to 237).
- There was a 27% increase in disruptions against the ransomware threat.
- The NCA collaborated with international partners to develop intelligence and understanding of the highest-harm cyber criminals to enable coordinated prioritisation of targets.
In the same period:
- NCA activity led to a 38% increase in disruptions against the fraud threat (from 341 disruptions in 2021-2022 to 472 in 2022-2023).
- The number of major and moderate fraud disruptions more than doubled in the last year, illustrating an improved ability to have a significant disruptive effect against fraud organised criminal groups.
And for illicit finance and money laundering:
- NCA activity contributed to a 29% increase in disruptions against money laundering (from 442 disruptions in 2021-2022 to 572 in 2022-2023).
- More than 100 disruptions were delivered by the Combatting Kleptocracy Cell against corrupt elites with links to the Russian state and their networks of enablers.
FTC cracks down on telemarketing
The US Federal Trade Commission (FTC) and more than 100 federal and state law enforcement partners have initiated “Operation Stop Scam Calls” to crack down on illegal telemarketing calls. The action targets companies responsible for billions of unwanted calls to U.S. consumers, including robocalls. The effort also focuses on lead generators and Voice over Internet Protocol (VoIP) service providers involved in facilitating these illegal calls. The FTC has previously taken 167 cases against illegal robocallers, securing over $2 billion in orders, with $394 million refunded to defrauded consumers. The joint initiative involves various federal agencies and state attorneys general working to protect consumers’ rights and privacy.
Commissioner Johnson outlines a plan for CFTC engagement in carbon markets
In a speech at CFTC’s voluntary carbon markets convening, CFTC commissioner Kristin Johnson emphasised the urgent need to address climate-related financial risks, as highlighted in a Bank of England report which stated that climate change not only affects the environment but also has far-reaching consequences for the global economy and financial systems.
Drawing attention to the alarming statistics, Johnson pointed out that since 1980, the United States has endured more than 300 weather and climate disasters, resulting in damages exceeding $1 billion each. Such events, including droughts, floods, storms, wildfires, and winter storms, have become increasingly frequent, severe, and costly, raising significant concerns.
She acknowledged President Biden’s Executive Order on Climate-Related Financial Risk, which directed the Secretary of the Treasury to engage with the Financial Stability Oversight Council (FSOC) to assess member agencies’ efforts in dealing with climate-related financial risk. In response to this order, the FSOC issued the Report on Climate-Related Financial Risk.
Johnson emphasised the need for a transparent approach to sustainability initiatives to prevent double-counting, ensure additionality, and prevent fraud and greenwashing in financial markets. The CFTC’s regulatory framework, she said, must keep pace with the rapidly growing markets and evolving products to ensure market integrity and support greenhouse gas emission reduction.
Johnson noted that she had re-established the Climate-Related Market Risk Subcommittee under the Market Risk Advisory Committee (MRAC). This subcommittee will provide valuable insights and recommendations on climate-related risks, the Commission’s regulatory role, market resilience, and the integrity of derivatives and financial products exposed to climate risks.
There are more than 200 environmental-based futures contracts traded in carbon markets in the US, with an emerging over-the-counter (OTC) market in swaps related to environmental and sustainability products. Johnson made it clear that the CFTC’s authority will be instrumental in enforcing anti-fraud and anti-manipulation measures in these markets.
APRA issues prudential guidance
The Australian Prudential Regulation Authority (APRA) has published Prudential Standard SPS 530 Investment Governance which sets out APRA’s requirements in relation to investment governance for a Registrable superannuation entity (RSE) licensee’s business operations.
The guide provides guidance RSE licensees in the formulation, implementation, maintenance and oversight of an investment strategy including:
- The role of the board
- Investment governance framework
- Formulating the investment strategy
- Giving effect to the investment strategy
- Stress testing
- Liquidity management; and
- Valuation governance.
A selected summary of key developments for regulated financial institutions
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