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Global Regulator & Central Bank News Roundup (Vol. 17/2023)

May 1 - May 7 2023

Your weekly summary of key regulatory updates in an objective bite-size format, drawing on official news and press releases from 400+ financial services regulators, central banks as well as global and regional standard setters,

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At a glance - Highlights by topic

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Prudential & financial stability⁠

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U.S. FDIC appoints JPMorgan Chase Bank as receiver of closed First Republic Bank

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Cyber & operational resilience⁠

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BIS Innovation Hub launches Project Leap to protect financial data from quantum computing threats

US Department of Treasury and MAS strengthen protocols for cross-border cyber incident coordination and crisis management

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Conduct & consumer protection⁠

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Mexico CNBV and GIZ collaborate to analyze barriers to financial services for people with disabilities, develop recommendations for increased accessibility

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Fintech & ecosystem innovation⁠

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HKMA hosts inaugural data summit to promote Fintech 2025 Strategy and digital economy

UK FCA continues its crackdown on illegal crypto ATMs

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Payments & currency⁠

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RBI and BIS launch fourth G20 TechSprint Hackathon to improve cross-border payments

Buna’s 41st workshop to focus on the current state of CBDC

Central Bank of Kenya announces launch of Kenya Quick Response Code Standard

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ESG⁠

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ISSB seeks feedback on two-year work plan

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Other transversal themes⁠

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Bank of England and PRA propose changes to enforcement policies to increase clarity, speedier outcomes, and incentivize early admissions

EBA introduces interactive signposting tool to streamline bank compliance and reduce costs

U.S. SEC announces record-breaking $279 million whistleblower award

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Prudential & financial stability

U.S. FDIC appoints JPMorgan Chase Bank as receiver of closed First Republic Bank

Following the closure of First Republic Bank, San Francisco, California, by the California Department of Financial Protection and Innovation, the U.S. Federal Deposit Insurance Corporation (FDIC) has appointed JPMorgan Chase Bank as receiver. To that end, JPMorgan Chase Bank is assuming all of First Republic Bank's deposits and substantially all of its assets. All 84 offices in eight states were reopened as branches of JPMorgan Chase Bank, National Association, on Monday May 1st. The FDIC and JPMorgan Chase Bank, National Association, are also entered into a loss-share transaction on single family, residential and commercial loans purchased from First Republic Bank. The FDIC estimated that the cost to the Deposit Insurance Fund will be approximately $13 billion.

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Cyber & operational resilience

BIS Innovation Hub launches Project Leap to protect financial data from quantum computing threats

The Bank for International Settlements (BIS) Innovation Hub Eurosystem Centre has officially launched Project Leap. A collaboration with the Bank of France and the German Bundesbank, the Project seeks to build quantum-resistant IT environments for the financial system to strengthen resilience against possible future attacks by quantum computers. As quantum computers become more powerful, they could break current encryption methods, compromising sensitive financial data. Project Leap will test the implementation of post-quantum cryptographic protocols in central bank processes by implementing one traditional public key algorithm alongside a quantum-resistant algorithm in a hybrid cyphering mode with the aim of maintaining the confidentiality of messages sent across two or more IT systems and testing how existing products and processes perform under the quantum resistant technology. Complementary to these efforts, the Project is also intended to advance the central banking community’s knowledge of post-quantum cryptography. To that end, a dedicated report including details on the technical architecture will be published as a knowledge resource at the conclusion of the Project.

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US Department of Treasury and MAS strengthen protocols for cross-border cyber incident coordination and crisis management

The US Department of the Treasury and the Monetary Authority of Singapore (MAS) recently conducted a joint exercise to strengthen protocols for cross-border cyber incident coordination and crisis management. The exercise was conducted in response to the rising cyber threats targeting financial services, and the interconnectedness of the US and Singapore's financial ecosystems. The exercise was a key milestone in the two agencies' continued cooperation to strengthen their collective cybersecurity preparedness and safeguard financial stability. Following the exercise, the two agencies reviewed the lessons gleaned and discussed possible enhancements and involvement of other international partners in future exercises.

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Conduct & consumer protection

Mexico CNBV and GIZ collaborate to analyze barriers to financial services for people with disabilities, develop recommendations for increased accessibility:

The National Banking and Securities Commission (CNBV) of Mexico has released a new study, in collaboration with the German Society for International Cooperation (GIZ) and the ICT and Disability Consultancy, which analyzes the barriers people with disabilities face when interacting with financial services. The study was conducted in three phases: a questionnaire based on the National Survey of Financial Inclusion (ENIF) 2021, 15 focus groups, and an evaluation of web accessibility and usability of mobile banking. The identified barriers were grouped into four categories: appropriation of the financial system, accessibility in the use of financial channels, perception of treatment received, and contracting of financial products. Recommendations were developed to increase access and accessibility of persons with disabilities to the financial system. The study is available in an accessible version, suitable and labeled for screen readers, as well as in contrast of color and font suitable for easy reading. The CNBV is committed to generating data and statistical information for greater financial inclusion in the country.

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Fintech & ecosystem innovation

HKMA hosts inaugural data summit to promote Fintech 2025 Strategy and digital economy

The Hong Kong Monetary Authority (HKMA) has hosted its inaugural Data Summit on May 4th, with over 260 senior representatives from more than 60 banks, data analytics service providers, and data providers in attendance. The Summit was part of the HKMA’s “Fintech 2025” strategy to encourage the use of alternative data in banks and promote the development of a data-driven economy. Discussions focused on streamlining banking operations through digitalisation, enhancing data analytics capabilities with the use of alternative data, and developing innovative products and services. The HKMA also shared the latest development of its Commercial Data Interchange (CDI), which has facilitated over 3,100 loan applications since October 2022. Mr Howard Lee, Deputy Chief Executive of the HKMA, emphasized the importance of developing the digital economy of Hong Kong and unlocking the potential of data.

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UK FCA continues its crackdown on illegal crypto ATMs

The UK Financial Conduct Authority (FCA) has continued its crackdown on illegal crypto ATMs by carrying out further inspections in Exeter, Nottingham and Sheffield. The inspections were carried out in a joint operation with the South West Regional Organised Crime Unit, Yorkshire and Humber Regional Organised Crime Unit and the Nottinghamshire Police force. Commenting on the operation, Ramona Senior, Head of Economic Crime at the Yorkshire and Humber Regional Organised Crime Unit (YH ROCU), stressed: “Machines such as these are a key component in the facilitation of money laundering and the movement of funds acquired through criminal activity”. As a next step, the FCA will review evidence gathered during inspections and consider taking further action where necessary.

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Payments & currency

RBI and BIS launch fourth G20 TechSprint Hackathon to improve cross-border payments

The Reserve Bank of India (RBI) and the Bank for International Settlements (BIS) have formally kicked off the fourth G20 TechSprint hackathon for global innovators. Open to developers worldwide, the competition seeks solutions to improve cross-border payments and will conclude in Q3 2023. The competition focuses on three problem statements on cross-border payments, including reducing illicit finance risk, foreign exchange and liquidity technology solutions, and technology solutions for multilateral cross-border central bank digital currency platforms. Shortlisted teams will be eligible for a stipend of INR 8,00,000 (approximately USD 10,000) and the winners of each problem statement will receive an award of INR 40,00,000 (approximately USD 50,000). The RBI and BIS are inviting developers worldwide to participate in the G20 TechSprint 2023 to explore solutions to improve efficiency in the cross-border payments space.

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Buna’s 41st workshop to focus on the current state of CBDC

Buna, the cross-border payment system operated by Arab Regional Payments Clearing and Settlement Organization (ARPCSO) and owned by the Arab Monetary Fund (AMF), will be hosting its 41st virtual workshop on Thursday, May 4th, 2023. The workshop will explore the status of Central Bank Digital Currencies (CBDCs), current initiatives, and their outlook. High-level guest speakers from the Bank of International Settlement (BIS), Banque de France, Banca d'Italia, and SWIFT, among others, will provide a comprehensive overview of the topic from practical and strategic perspectives. Over 200 senior officials from central banks and a wide spectrum of regional and global financial institutions are expected to attend. The goal of the workshop is to anticipate potential future developments relating to CBDCs and how the financial industry can prepare for the changing landscape.

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Central Bank of Kenya announces launch of Kenya Quick Response Code Standard

The Central Bank of Kenya (CBK) has announced the issuance and implementation of the Kenya Quick Response Code Standard 2023, which serves as guidance to payment service providers and banks on how to issue Quick Response (QR) codes to consumers and businesses that accept digital payments. The Standard is based on the EMVCo QR Code Specification and has been developed through collaboration between the CBK and various stakeholder groups including, payment service providers, banks and card schemes. The launch marks an important step in the implementation of Kenya’s National Payments Strategy 2022 - 2025 and is intended to deliver practical benefits to businesses and customers, such as faster, more convenient and secure digital payments while also promoting inclusion by enabling institutions of various sizes to increase adoption of digital payments. Roll-out of the Standard will be undertaken through a phased approach.

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ESG

ISSB seeks feedback on two-year work plan

The International Sustainability Standards Board (ISSB) is seeking feedback on its two-year work plan and has identified four potential projects: three sustainability-related research projects—1) biodiversity, ecosystems and ecosystem services; 2) human capital; 3) human rights—and a fourth project researching integration in reporting. Stakeholders are asked to provide feedback on the strategic direction and balance of the ISSB’s activities, criteria for assessing which sustainability-related matters to prioritize, and scope and structure of potential new research and standard-setting projects. The feedback will inform both the ISSB’s work plan and its approach to future projects. The ISSB has committed to balancing advancing new projects in a timely manner with its focus on ensuring the comprehensive global baseline of sustainability-related disclosures, delivered through its initial two Standards, is implemented effectively. The survey is open for comments until 1 September 2023.

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Other transversal themes

Bank of England and PRA propose changes to enforcement policies to increase clarity, speedier outcomes, and incentivize early admissions:

The Bank of England and the Prudential Regulation Authority have published a consultation paper proposing changes to their enforcement policies. Among other things, the proposed amendments are intended to (1) provide a route for early cooperation and thus faster investigatory outcomes in appropriate cases, (2) incentivize early admissions through the introduction of an enhanced settlement discount of up to 50%, (3) provide more clarity in relation to the Bank’s enforcement powers, (4) clarify the Bank’s approach and procedures regarding financial market infrastructure enforcement investigations as well as (5) amend the methodology for calculating the financial penalty for PRA-regulated firms in the interest of greater consistency. The consultation is open until 4 August 2023, and the Bank will be holding in-person roundtable discussions in June to provide an additional opportunity for external stakeholders to engage and provide feedback.

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EBA introduces interactive signposting tool to streamline bank compliance and reduce costs

The European Banking Authority (EBA) has launched an interactive signposting tool to help banks identify and understand the applicable supervisory reporting requirements. Specifically, the new tool is intended to help credit institutions to identify the relevant reporting requirements and templates based on the institution type and scope of activities. The tool was developed in response to recommendations on the cost of compliance in relation to supervisory reporting requirements. By supporting credit institutions in the compliance process and establishing a common business logic, it is intended to aid in the reduction of compliance and reporting efforts and costs, particularly for small and non-complex institutions. The tool is meant to be used solely for orientation purposes and has no legal effect.

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U.S. SEC announces record-breaking $279 million whistleblower award

The U.S. Securities and Exchange Commission (SEC) today announced the largest-ever whistleblower award of nearly $279 million to an individual whose information and assistance led to successful enforcement of SEC and related actions. This award more than doubles the previous record of $114 million and is intended to incentivize whistleblowers to come forward with accurate information about potential securities law violations. The whistleblower's assistance was critical in expanding the scope of misconduct charged and resulted in orders requiring bad actors to disgorge more than $4 billion in ill-gotten gains and interest.

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At a glance - Highlights by topic

Prudential & financial stability

Cyber & operational resilience

Conduct & consumer protection

Fintech & ecosystem innovation

Payments & currency

ESG

Other transversal themes

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