Link: https://www.fintechnexus.com/compliance-isnt-just-for-banks/?utm_source=pocket_saves

Source: https://www.fintechnexus.com

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Link: https://www.investopedia.com/european-union-passes-first-crypto-regulation-7482999?utm_source=pocket_saves

Source: https://www.investopedia.com

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International Monetary Fund (IMF) Managing Director Kristalina Georgieva says crypto needs “more regulation.” She added, “We should not take off the table banning those assets,” if regulation fails or is too slow to implement.

By Kevin Helms

IMF’s Chief Calls for More Crypto Regulation

IMF Managing Director Kristalina Georgieva talked about crypto regulation Saturday on the sidelines of G20 meetings for finance ministers and central bank governors under India’s presidency in Bengaluru. Commenting on crypto oversight, she told reporters:

There has to be more regulation.

Her statement followed a roundtable discussion she co-chaired with Indian Finance Minister Nirmala Sitharaman. The IMF chief and India’s finance minister agreed that besides debt restructuring, regulating cryptocurrencies is a priority area for India.

Georgieva explained that the IMF, the Financial Stability Board (FSB), and the Bank for International Settlements (BIS) are committed to establishing a foundation for the regulation of cryptocurrencies that are not issued by governments or central banks. “We have to differentiate between central bank digital currencies [CBDCs] that are backed by the state and stablecoins, and crypto assets that are privately issued,” she stressed.

“There has to be very strong push for regulation,” the IMF chief emphasized, noting:

If regulation fails, if you’re slow to do it, then we should not take off the table banning those assets, because they may create financial stability risk.

The IMF executive board provided guidance this week to help countries develop effective crypto policies. While most executive board directors agreed that “strict bans are not the first-best option, but that targeted restrictions could apply,” a few thought that “outright bans should not be ruled out.”

In addition, the board advised: “Crypto assets should not be granted official currency or legal tender status in order to safeguard monetary sovereignty and stability.” Georgieva similarly said Saturday:

Crypto assets are nothing, they cannot be accepted as a legal tender.

The Fund has been against El Salvador accepting bitcoin as legal tender since the country made the crypto a national currency back in September 2021. However, the IMF said earlier this month that, so far, the risks from El Salvador adopting BTC as legal tender have not materialized.

Link: https://news.bitcoin.com/imf-calls-for-more-crypto-regulation-says-banning-should-be-an-option/

Source: https://news.bitcoin.com

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Link: https://www.techrepublic.com/article/data-governance-in-banking/

Source: https://www.techrepublic.com

The post How banks can benefit from implementing data governance appeared first on Fintech News.

ASA, an embedded fintech solution that connects financial institutions with customer-facing fintechs in a secure, compliant and easy to implement marketplace, today shared trends expected to most significantly impact the financial services landscape next year.

The rise in embedded fintech. As we continue to face thinning margins, skyrocketing customer expectations, quickly evolving technology and an increasingly competitive marketplace, banks and credit unions must quickly determine how to retain relevance and prominence in customers’ and members’ financial lives.

In response, more financial institutions will embrace embedded fintech, extending their brand and presence into everything the customer does in ecommerce. To do so successfully, banks and credit unions will look to a collaborative banking model.

Collaborative banking allows institutions to connect with customer-facing fintechs via digital rails that anonymize and tokenize all customer data. This removes the regulatory risk traditionally associated with bank-fintech partnerships and enables unprecedented innovation.

An influx of fintech regulation. Keep an eye on the regulatory and compliance landscape. With recent challenges exposed in the Buy Now Pay Later (BNPL) space and Banking as a Service models, more will prioritize account holder permissioned, anonymized, secure data transactions to enable access while reducing risk. The narrowed compliance focus for those who have pursued Banking as a Service especially will be a complex task as the players face increased regulatory scrutiny. Many will find themselves looking at alternatives to gain market share and meet customer needs.

The increasing importance of customer choice. Open banking has demonstrated the critical imperative of putting the account holder in control of their data and finances. However, most of the control that has been granted today is largely one sided; the customer can choose what technology they want, but that choice almost always results with the account holder having to share data or open accounts outside of their financial institution. More emphasis will be placed on giving customers and members control over not only the technology they adopt, but which institution (and therefore the type and level of trust and service) backs it.

“Despite recent challenges, the financial services industry continues to be filled with opportunity and innovation. It’s time for financial institutions and fintechs to reconsider how they work together,” said Landon Glenn, CEO and founder of ASA. “Next year, we expect to see the rise of embedded fintech, backed by a collaborative banking model. This will help solve increasing compliance and risk challenges while empowering the customer with greater control and choice.”

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Why should your geographic location limit your ability to send and receive money? Why should it affect your ability to buy goods and services from around the globe? And why should someone from Lagos or Kampala not have the same kind of access to global markets as someone based in London? These are the kinds of questions that many organisations looking to embrace Africa’s young, digitally-savvy population and fast-growing economies are asking; and these are questions that regulators and governments on the continent should be asking themselves too.   

As it turns out, one of the key factors helping create this kind of intracontinental and intercontinental economic freedom is interoperability. Simply put, interoperability is about ensuring that merchants are able to accept payments from any consumer, whether they’re using mobile money or a card and whether they’re online or offline. It also allows merchants to sell as easily to someone on the other side of the planet as they can to someone standing right in front of them.

Implemented properly, it’s something that can be wholly transformative for consumers and merchants alike. The former, frequently saddled with the inaccurate label of being “unbanked” can seamlessly access goods and services from around the world. The latter, meanwhile, can access new markets and previously unavailable opportunities. But in order for interoperability’s potential to be realised, regulatory frameworks that facilitate this seamless access are crucial. 

Understanding Africa’s monetary shifts 

In order to understand why this is so critical, it’s worth taking a look at some of the ways that the movement of money in Africa has changed over the years. Not too long ago, the picture that most people had in their minds was of small businesses using cash, and more recently, a domestic mobile money option like M-PESA or MTN MoMo to accept money.

But things have changed dramatically. Today’s African consumer is savvy, globally connected, and a digital native. They care about access more than the platform, meaning that the various available platforms being complementary is more important than any other sense of adversarial competition. 

Let’s take a small trader in Lagos as an example. Although she can send money via bank transfer to a family member in Port Harcourt, her options are limited. Transferring money to someone outside Nigeria through the same channel becomes tedious. If that businessman travels to Nairobi, he should be able to withdraw cash from his own account from a local M-PESA agent. It should be similarly easy for him to make a mobile payment to a driver in Cape Town if he takes a holiday there.

Her reality is something that we’ve worked hard to bring to people across Africa for the past decade because we know how big of an opportunity it presents. Right now, for example, just 15% of African trade is intra-continental. And even so, that number is distorted by countries like Nigeria, Egypt, and South Africa which have long established global trade relations. The African Continental Free Trade Area (ACFTA) should help bring that number up, but it can’t achieve its full aims unless consumers and merchants across the continent are given the freedom that true interoperability presents. 

Facilitating and embracing regulatory compliance 

As an organisation that specialises in interoperability, we know first-hand how important regulations and regulatory compliance are to achieving that vision. Among other things, regulations enable the efficiency and integrity of financial markets, promote the fair treatment of customers by financial institutions, provide financial education and promote financial literacy, and aid in maintaining financial stability. 

Those are all things that make life easier for those playing in the interoperability space. Stable and sensible regulations make it much easier for them to draw up lasting agreements with payment partners and other financial institutions, allowing for the legitimate free flow of money. It’s also important to remember that regulations are there to protect all players in the payments chain, including the end consumer. And when people feel that they and their money are safe, they’re much more likely to feel comfortable using new products and services. 

With interoperability being a significant contributor to financial inclusion and economic growth, Regulators can play an important role in providing a regulatory environment which fosters digital payments and interoperability within their domestic markets and across the continent. 

As a business, we take a proactive approach to compliance by scanning the environment for emerging trends in the payment space and how this may affect our partners, and MFS Africa as an organisation. With this approach, we can effectively address any emerging risks within the confines of local and international law and best practice.

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Currencycloud, the experts simplifying business in a multi-currency world, have contracted Clausematch, the global regulatory technology (RegTech) company and compliance experts, to implement its policy management solution.

Clausematch’s solution will allow Currencycloud to effectively manage its evolving suite of policies, procedures and other business-critical documentation. Clausamatch’s solution will facilitate ongoing compliance with a rapidly-changing global regulatory landscape, enable smarter collaboration across Currencycloud’s expanding global footprint, and automate previously manual, time-consuming document management tasks.

Prior to the relationship with Clausematch Currencycloud’s policies and procedures were developed and maintained using conventional office software. Sharedrives had to be organized, approval processes designed, reviews scheduled and versions managed, all as manual processes. Clausematch’s solution automates all of this and includes additional features such as document connections and attestations that will significantly reduce the time spent on these tasks and enhance the level of sophistication of document management.

Tanya Ziv, Chief Compliance Officer at Currencycloud, commented, “We are delighted to be working with Clausematch to enhance our policy management solution. They will be able to support us in managing the critical evolution of our policies and procedures as we continue to grow and expand.”

Evgeny Likhoded, Clausematch’s founder and CEO said: “We’re thrilled to have Currencycloud onboard. It is a great opportunity for Clausematch to work with a high-growth Fintech company to show its capabilities when it comes to supporting our clients with tricky compliance regulations across different geographies.”

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The RegTech Market revenues were estimated at US$ 8.2 Bn in 2021 and is anticipated to grow at a CAGR of 16.2% from 2022-2032, according to a recently published Future Market Insights report. By the end of 2032, the market is expected to reach a valuation of US$ 45.3 Bn. Market revenue through cloud-deployed RegTech grew at a CAGR of 22.6% during 2015 – 2021.

While the pandemic has created numerous issues for businesses throughout the world, it has also created a new digital gap in the market for the RegTech industry. Money laundering suspicious activity reports are at an all-time high in a number of countries, including Germany and Switzerland. In the United Kingdom, the UKFIU received and processed 573,085 suspicious activity reports (SARs) in 2019-20, reaching a record high (a 20 percent increase on the previous period). Financial technology (fintech) organizations had the greatest growth in SARs. They submitted 83,609 SARs in 2019-20, a 263.94 percent increase over the previous year (22,973). Fintech accounted for 64% of the overall increase in SARs.

According to Muinmos CEO Remonda Kirketerp-Mller, prior to the crisis, RegTech was already a rapidly developing sector, and the pandemic has undoubtedly boosted its growth. The pandemic’s increase in online financial activities, combined with the need for robust, remote solutions for compliance officials working from home, generated an unprecedented demand for RegTech solutions.

The new environment created by the pandemic has tested operational workflows of all companies across multiple verticals. Many businesses realized that their procedures are not as impermeable and automated as they believed. The realization imparted a sense of strong necessity to automate and digitize as many regulatory procedures and workflows as feasible.

In other words, it increased the demand for RegTech solutions. The automation of regulatory duties makes them dependable support of the business, and there is no going back. As a result, the pandemic aided in raising the prior status quo to a higher level, which now serves as the foundation for further automatization and digitization in the regulatory environment.

Key Takeaways

• Global RegTech Market is expected to reach a market size of US$ 10.1 Bn by 2022.

• The Cloud deployment segment is expected to account for the highest CAGR of 15.8% during the forecast period.

• United States is projected to remain the most dominant market with absolute dollar growth opportunity of US$ 12 Bn during 2022 – 2032.

• The market in Japan is set to experience the highest CAGR of 14.6% during the 2022-2032 forecast period.

“During the projected period, the growing need for risk and compliance management can become a key driver in raising the RegTech market revenue. Furthermore, increased investments by key corporations for the launch of innovative solutions will benefit the RegTech industry trends in the coming years.” comments a Future Market Insights analyst.

Competitive Landscape

The market is fiercely competitive, where key players are increasingly focused to obtain a competitive advantage. The key companies in the RegTech Market are focused on R&D to produce innovative technological solutions.

• In April 2022, GBG formed separate Americas and Global Product units to consolidate its recent biometrics acquisitions. According to the release, the merger makes GBG the Americas’ largest pure-play digital ID verification and fraud protection technology supplier. GBG also acquired Cloudcheck, a selfie biometrics business located in New Zealand, earlier this year. According to the release, the merger of Acuant and IDology establishes a network that already has 450 million digital identities, which can aid in the battle against synthetic identity theft.

• In April 2022, ComplyAdvantage, a worldwide data technology business that increases the identification of financial crime, has released a new Anti-Money Laundering Essentials Guide for Startups. The new guide was created in collaboration with ComplyLaunch, a program that gives qualifying firms free access to ComplayAdvantage’s anti-money laundering and KYC solutions, as well as other resources.

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Even before the Russian invasion of Ukraine, the lack of faith in the country’s markets and financial infrastructure made it an ideal case for the introduction of cryptocurrency, whose strength lies in eliminating the need for third-parties to verify transactions.

As mentioned by Investors Observer: “Russia’s invasion only exacerbated the problem, with many citizens fearing that money stored in savings accounts would be lost forever. With the threat of banks being destroyed, as well as the corruption rife in Ukranian society, it’s not surprising that aid initiatives in the early months of the war have gravitated towards crypto as a medium of exchange”.

In the last couple weeks, Ukraine has sought to streamline its donation process by creating an integrated platform that accepts all types of donations, including both crypto and fiat currency. As explained by Finance Magnates: “In addition to the expanded list of supported coins, the new initiative enables donors to choose where to allocate their funds, making it different from Ukraine’s previous fundraising attempts. There are currently three areas for users to choose from: defence and demining, humanitarian and medical care, as well as reconstruction of Ukraine, according to the website”.

Collected funds will be deposited to accounts at the National Bank of Ukraine assigned to the Ministry of Defense, Ministry of Healthcare, and the Ministry of Infrastructure, which will use the money to cover the most pressing needs. They will report on the distribution of the donations every week.

Netherlands-based blockchain investigative tool Crystal Blockchain announced that as of May 12, 2022, Ukraine had taken in more than $125 million in crypto donations.

Aid packages sent to Ukraine in fiat money from the United States and the European Union dwarf cryptocurrency donations, but the latter allow individuals to get involved.

BlackRock’s CEO, Larry Fink, commented in a March 24 letter to shareholders “We’ve never seen a sovereign nation fund their defense efforts in crypto before. It does prove out a lot of the crypto argument.”

Caroline Malcolm, head of international public policy and research at Chainalysis, told AFP that the conflict in Ukraine “is forcing governments to develop their understanding of cryptocurrencies and their regulation”.

She believes that such discussions can be beneficial to the crypto industry, leading to “proportionate and effective regulatory policies”.

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As nations worldwide continue to sanction Russia in condemnation of their invasion of Ukraine, companies have now joined the movement to exclude the Russian government — and sometimes Russians— from their list of clients. 

Some of these companies have decided to ban them as a recommendation to the international sanction provisions from The Office of Foreign Assets Control (OFAC). 

Others have taken this decision as a show of solidarity with the Ukrainian people. However, not all fintech companies are placing blanket boycotts on Russian citizens. The most notable holdouts are Binance and Kraken, who cite the argument that banning “innocent Russians” goes against the philosophy behind cryptocurrencies.

So, let’s go through the reactions of fintech companies to the Russian invasion and explore how they affect the socio-economic climate in Russia and the rest of the world.

SWIFT

As pressure mounted on The Society for Worldwide Interbank Financial Telecommunication (SWIFT) to respond to the Russian invasion, the payment network obliged by suspending 7 major Russian banks from performing transactions indefinitely, setting the marker for other financial houses.

Although banning SWIFT stops these Russian banks from accessing their global economic resources, the country has outlined measures to combat the hard-hitting impacts of the SWIFT suspension.

In anticipation of incoming economic sanctions, the Russian government developed SPFS (System for Transfer of Financial Messages) — a SWIFT equivalent that works only in Russia and some banks in Switzerland, Kazakhstan, Azerbaijan, Cuba, and Belarus.

Russia now has to rely on China’s more formidable Cross-border Interbank Payment System (CIPS) for international transactions.

VISA

According to Statista, VISA owns 12% of all credit payment cards in the world (335 million credit cards), accounting for about 50% of the overall market shares. 

The company reacted to the Russian invasion by halting all its operations within Russia and banning Russian VISA cardholders from processing transactions. 

Mastercard

Mastercard has maintained the same ironclad stance as VISA on the Russian invasion. The credit card company has reportedly forfeited about 4% of potential revenue by excluding Russians from its services.

Amex

American Express has also joined the ranks of Visa and Mastercard in suspending all operations in Russia and Belarus.

PayPal

Despite being under no obligations to react, PayPal has taken the initiative to join other world-renowned payment services in halting all operations in Russia until further notice.

Payoneer

Payoneer’s reaction to the Russian aggression was to stop all issuance of cards to customers with postal or residential addresses within the Russian Federation.

According to the company’s updated FAQs, Russian citizens with Payoneer cards issued outside Russia can still conduct transactions without restrictions. 

Revolut

As a company with a Ukrainian co-founder Vlad Yatsenko, Revolut has provided unwavering support for the Ukrainians suffering from the war.

The current CEO Nikolay Storonsky, born in Russia to a Ukrainian father, released an open letter, categorically condemning the war, saying that “this war is wrong and totally abhorrent” and that “…not one more person should die in this needless conflict.”

In a statement titled “The War on Ukraine: Our Response,” Revolut has affirmed its dedication to uphold and impose sanctions placed on Russia.

As part of its support to Ukraine, Revolut has removed transfer fees for every transaction going into the country. The company has also pledged to match every donation made to the Red Cross Ukraine appeal.

Apple (Apple Pay) and Google (Google Pay)

Apple and Google set rivalries aside to impose a collective ban on the Russian government and its citizens for their actions in Ukraine. 

According to NPR, Apple will stop shipping products to Russia with immediate effect. This announcement sent shockwaves around the tech world because of the company’s global influence. 

In the same vein, Google has also removed media platforms RT and Sputnik from its services, banning their content within EU countries.

But that’s not even half of it. Apple has furthered its crackdown on Russia by deactivating its payment service Apple Pay in the region — 29% of Russians rely on Apple Pay for contactless payments. 

Similar to Apple, Google Pay (used by 20% of Russians) has also ceased all digital payments by Russian citizens within occupied territories.

Money transfer services

According to Statista, the value of cross-border money transfers made by Russians in 2020 were worth over $40 billion, which is by almost $8 billion less than in 2018.

In 2022, however, this sum is likely to be much lower taken the situation with the money transfer services that are leaving the Russian market.  

Western Union

On March 10, 2022, Western Union issued a press release announcing that all the company’s operations in Russia and Belarus will be suspended with immediate effect. 

For the people of Ukraine, Western Union has created a donation portal to address the humanitarian and refugee crisis, according to Elizabeth Executive Director of the Western Union Foundation. 

Wise

Before the 2022 Russian-Ukrainian war, Wise (formerly TransferWiser) had already placed a 200 USD limit for Russian account owners.

MoneyGram

According to Quartz, MoneyGram still works both in Ukraine and Russia since the sanctioned banks — Sberbank (Russian) and VTB — are not involved in the transactions directly. This same report also shows that, on the first day of the invasion, US-based remittances to Ukraine spiked 120%, while the number rose to 50% in Russia. 

Nevertheless, MoneyGram has removed all fees on transfers going to Ukraine from the US, Canada, and EU.

“The Big Four”

Members of the Big Four — Deloitte, Ernst & Young, KPMG, and PwC — have also enforced the sanctions imposed on Russia by the US and EU nations. 

At the time of compiling this report, the aforementioned companies are not in a hurry to impose blanket sanctions on all Russian citizens since a combined 1.1% (around 13000 people) of their global workforce is in Russia.

The crypto world 

Although the major players in fintech are equivocal in their condemnation and boycott (full or partial) of Russia, the crypto community maintains partial neutrality. 

The overarching sentiment within the world of crypto is that private citizens should not suffer due to the actions of their governments. After all, some of these individuals might be using cryptocurrencies to oppose these tyrannical regimes.

Notwithstanding, the Russian Central Bank has proposed a ban on mining and trading cryptocurrencies. With Russia occupying third place among Bitcoin mining regions globally, the impacts on the value and volatility of the crypto market might be extensive.

On its part, Ukraine has also used crypto assets to fund its defense against Russian aggression. 

Ukraine’s Deputy Prime Minister Mykhailo Fedorov has also posted wallet addresses for the Ukrainian Army and Civil Defense support.

Here are the reactions of specific crypto exchanges to the sanctions and proposed boycotts.

Kraken

CEO of Kraken, Jesse Powell released a Twitter thread in response to the Ukrainian Prime Minister’s call on crypto exchanges to block addresses of all Russian users. 

Binance

Binance CEO, Changpeng Zhao, released a detailed statement refuting claims that “Binance doesn’t apply sanctions.” He expressed that Russian individuals banned by US and EU sanction regulations are not allowed to trade on Binance.

KuCoin

KuCoin CEO Johnny Lyu also refuses to freeze the accounts of Russian users, unless there is a legal precedent to do so on a case-by-case basis.

In a statement to CNBC, the CEO expressed KuCoin’s stance on the issue:

“As a neutral platform, we will not freeze the accounts of any users from any country without a legal requirement. And at this difficult time, actions that increase the tension to impact the rights of innocent people should not be encouraged.” 

Coinbase

According to Coinbase’s Chief Legal Officer Paul Grewal, the company has blocked over 25000 accounts linked with “illicit activity” with the Russian government and its allies. 

While the crypto exchange is dedicated to helping the Ukrainians, they refused to freeze the assets of “ordinary Russians.”

Nevertheless, Coinbase has implemented measures to monitor attempts by sanctioned individuals to evade the restrictions. The crypto exchange will also follow recommendations that align with government recommendations, provided they don’t interfere with individual rights.

Mintos

The loan management platform Mintos has removed loans from Russian and Ukrainian lending platforms as a “cautionary measure” to protect lenders from the unprecedented repercussions of the invasion.

Conclusion 

The Russo-Ukrainian war has plunged the entire financial sector into a new reality, which follows the post-pandemic inflation. We are now wittnessing the unprecedented situation –  financial institutions and fintech companies are reacting in real time to impose sanctions and boycotts on Russia and its citizens.

Numerous companies that aren’t obliged by law or sanctions, take the initiative to leave the Russian market. These decisions cost each of them a significant part of revenue, yet they demonstrate the willingness to pay this price in order to help stop the atrocious war. United in an effort to protect democracy, they put human values above their economic interests.

As Russia continues to get more isolated from the rest of the world, Kremlin is using this opportunity to boost isolationist systems like Mir and SPFS. In the long run, it looks like Russia will continue to suffer from the fallout of these sanctions and boycotts.

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