August 4, 2023 | Greg Kilminster
Estimated reading time: 4 minutes
CUBE RegNews July 2023 summary
Stay informed with our monthly regulatory and compliance recap, providing you with a comprehensive overview of the latest regulatory events. For daily updates, check out our RegNews summaries here.
Towards the end of the month, the Prudential Regulation Authority (PRA) announced a record fine against Credit Suisse for significant compliance and risk failures which, ultimately, led to the bank being acquired by UBS Bank in March of 2023. The fine would have been even larger by 30% had Credit Suisse not complied fully. The UK’s other main regulator, the Financial Conduct Authority (FCA) got in on the act too, executing only its sixth financial penalty of the year with a £2.5m fine for Bastion Capital London Limited for serious financial crime control failings in relation to cum-ex trading,
In the United States, Bank of America was fined $60m by the Office of the Comptroller Currency (OCC) for duplicating fees for retail customers and Merrill Lynch was fined $6m by both the US Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) for Anti-Money Laundering (AML) failings. The SEC also issued fines of $11m collectively to Emerson Pires and Flavio Goncalves, for their involvement in a fraudulent trading scheme and to the former Chairman of Cool Holdings, Inc, Andrew DeFrancesco, who was hit with a fine of nearly $2m for his part in a fraudulent scheme involving false statements, omissions, and a pump-and-dump operation of Cool Holdings’ stocks.
In keeping with previous months, crypto entities were also on the receiving end of regulators’ penalties with the Commodity Futures Trading Commission (CFTC) fining Andrew Todd’s Digitex LLC $12m and the FBI announcing a nine-year prison sentence for Eddy Alexandre’s part in defrauding thousands of investors via his cryptocurrency and foreign exchange (“forex”) trading platform, EminiFX. Alexandre was also ordered to pay a total forfeiture of a colossal $248,829,276.73 and restitution amounting to $213,639,133.53.
The UK government issued its consultation on a new AML and counter-terrorism financing (CFT) supervisory regime and the UK’s Joint Money Laundering Steering Group consulted on changes arising because of amendments relating to the Travel Rule. Elsewhere the FCA began its consultation into financial promotions via social media. The FCA also published its consultation on establishing a Consolidated Tape, which collates market data, such as prices and volumes associated with trades. In the US a number of agencies announced a consultation into capital requirements for large banks.
In Europe, the European Central Bank (ECB) announced a consultation on its Guide on effective risk data aggregation and risk reporting, and the EBA began its consultation on implementing draft templates to gather climate-related data from EU banks. European Securities and Markets Authority (ESMA) also announced technical consultations on the Markets in Cryptoassets regulations and the Digital Operational Resilience Act (DORA).
Policies and Procedures
The current hot topic of artificial intelligence was commented on by two of the big regulators in July. The FCA’s CEO Nikhil Rathi mentioned, amongst other things, the potential benefits of AI in financial services, whilst in the US SEC chief Gary Gensler noted similarly that the “SEC also could benefit from staff making greater use of AI in their market surveillance, disclosure review, exams, enforcement, and economic analysis”.
In the UK, the FCA published its new guidance on finalised insurance guidance on supporting customers in financial difficulty, and the PRA issued its new credit union rules.
The Monetary Authority of Singapore produced some new AML guidance; and the European Banking Authority published its latest AML risk outlook. Away from AML, the US Federal Trade Commission announced a crackdown on telemarketing abuses and the FCA reminded its registered crypto firms of their forthcoming financial promotion requirements.
Finally, the UK’s new Consumer Duty came into effect at the end of the month.
Struggling to keep up with the volume and velocity of regulations? Get in touch below to find out how CUBE’s AI can automate the entire compliance process, saving your business time and money.
Discover how CUBE can help your firm keep on top of emerging regulations.