Regulation

Amid AML Efforts, Regulators Focus On FinTech

Much regulatory focus this past week came with headlines on anti-money-laundering efforts, aided by tech.

As reported, a number of regulatory agencies — among them the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Financial Crimes Enforcement Network, the National Credit Union Administration and the Office of the Comptroller of the Currency (OCC), in tandem with the Financial Crimes Enforcement Network — issued a joint statement. The statement gave a nod to “private sector innovation” that can use tech to detect and report financial crimes such as money laundering and terrorist financing.

“Some banks are becoming increasingly sophisticated in their approaches to identifying suspicious activity, commensurate with their risk profiles — for example, by building or enhancing innovative internal financial intelligence units devoted to identifying complex and strategic illicit finance” said the agencies in their joint statement. According to the statement, the agencies said they would consider bank pilot programs.

The announcement comes in the wake of testimony from several executives of those regulatory agencies before the Senate Committee on Banking, Housing, and Urban Affairs on anti-money laundering at the end of last month. And as reported by sites such as American Banker and National Law Review, a bipartisan group of senators is working on a bill that may reform the Bank Secrecy Act, which in turn may raise the threshold for reporting currency transaction reports to $30,000, from the current levels of $10,000.  The threshold for suspicious activity reports may get a boost to $10,000 from $5,000. There may also be a new federal requirement for companies to disclose beneficial owners upon a company’s incorporation.

Separately, but still within the scope of efforts from the Federal Reserve and the OCC, along with the FDIC, the agencies last week released a proposal that would increase the threshold of real estate transactions that require appraisal from $250,000 to $400,000. This would be the first boost in 25 years. The agencies said that the threshold increase comes as exemptions had not kept pace with the price appreciation that has come in the last few decades.

CoinGeek reports that the Swiss financial regulator (specifically the Federal Council of the Swiss Financial Market Supervisory Authority) last week has put in place rules that would allow FinTech startups to accept public deposits to up to the equivalent of $100 million USD which reflects a bid to increase innovation in the sector. The initiative to embrace deposits comes tied to new rules governing the banking sector that looks to increase options for crowd-lending activity in the country.

In China, China’s banking and insurance regulator, as reported by Reuters, wants banks to meet credit demand from private firms “to the greatest possible extent.” Over the weekend, a journal published by the Communist Party said that banks should not apply what Reuters termed a “one size fits all” approach to loans, and that banks should aid companies that have been impacted by the trade war between China and the U.S. Reuters reported at the end of the week that new bank loans in China “likely rebounded” last month after an October drop. The rebound would come amid regulatory efforts there than cut reserve requirements four times through the past year, as the People’s Bank of China seeks to inject liquidity into the marketplace.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 AML/KYC Tracker provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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