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Global Regulator & Central Bank News Roundup (Vol. 9/2023)

March 6 - March 12 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. authorities close Silicon Valley Bank and Signature Bank and take actions to protect depositors and limit system-wide stress

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AML & CFT⁠

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FATF releases updated guidance in support of reinforced global beneficial ownership standards

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Conduct & consumer protection⁠

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UK FCA releases finalized guidance for lenders on supporting mortgage borrowers struggling with payment difficulties

U.S. CFPB unveils supervisory highlights to combat unlawful fees in mortgage, student and payday markets

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Suptech & regtech⁠

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IOSCO and Cambridge Judge Business School pilot project to develop machine assisted capacity building tool for standards implementation

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Fintech & ecosystem innovation⁠

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Taiwan FSC to launch green FinTech thematic campaign

EIOPA launches survey on European insurers’ digital transformation strategies

UK FCA and Metropolitan Police join forces to crack down on illegal crypto ATMs in East London

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Payments & currency⁠

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BIS and the Central Banks of Israel, Norway and Sweden release results of Project Icebreaker

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ESG⁠

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OSFI releases new climate risk management guideline and announces launch of the climate risk forum

French AMF calls on listed companies to strengthen communication on climate strategy

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Other transversal themes⁠

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Authorities and standard setters reinforce focus on gender diversity on International Women’s Day

OSC whistleblower program resulted in CAD 9.3 million in awards to date

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Prudential & financial stability

U.S. authorities close Silicon Valley Bank and Signature Bank and take actions to protect depositors and limit system-wide stress

Late on Sunday, Federal Reserve Board and the New York State Department announced their decisions to close down both the California-headquartered Silicon Valley Bank and the New York state-chartered Signature Bank. The decision came in response to concerns over the banks’ viability and systemic risk. In both cases, the Federal Deposit Insurance Corporation (FDIC) has been appointed to lead the resolution process. In the case of Signature Bank, all deposits and assets were transferred to Signature Bridge Bank, N.A., which will operate under a board appointed by the FDIC and a newly appointed CEO, Greg D. Carmichael. In parallel, the Office of the Superintendent of Financial Institutions (OSFI) has taken over the Canadian Branch of Silicon Valley Bank Authorities have stressed that depositors will remain protected and that taxpayers will bear no losses, while on the other hand shareholders and certain unsecured debtholders will not be protected.

In order to limit stress on the financial system from the closure of the two banks, the Federal Reserve Board further announced that it will make available funding to eligible depository institutions to ensure banks have the ability to meet the needs of their depositors. The additional funding will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral.

The closure of the two banks came just on the heals of the collapse of Silvergate Bank earlier in the week.

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AML & CFT

FATF releases updated guidance in support of reinforced global beneficial ownership standards

Following its agreement in March 2022 to strengthen global beneficial ownership standards (Recommendation 24), the FATF has now released the accompanying updated guidance document. The guidance is intended to help countries identify, design, and implement measures to ensure that beneficial ownership information is held by a public authority or body, or an alternative mechanism that enables efficient access. It also explains types and sources of relevant information and mechanisms to obtain such information. This update is the result of months of consultations with external stakeholders and the private sector.

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Conduct & consumer protection

UK FCA releases finalized guidance for lenders on supporting mortgage borrowers struggling with payment difficulties

The UK Financial Conduct Authority (FCA) has published new data and analysis showing that 200,000 mortgage borrowers were in payment shortfall as of June 2022, and that 356,000 borrowers could face payment difficulties by the end of June 2024. The FCA has released finalized guidance for lenders on how to support customers worried about or already struggling with their mortgage payments due to the rising cost of living. Lenders have contacted 16.5 million customers to offer support in the past year and are expected to contact 20.5 million customers over the next year. The FCA is also working with the Money and Pensions Service and consumer groups to raise awareness of the help available and remind firms of the standards they should meet to support borrowers in financial difficulty.

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U.S. CFPB unveils supervisory highlights to combat unlawful fees in mortgage, student and payday markets

The U.S. Consumer Financial Protection Bureau (CFPB) has released a special edition of its Supervisory Highlights that reports on unlawful junk fees found in multiple loan servicing markets, including mortgage, student, and payday lending. These fees can harm families, increase costs, and can be difficult to avoid. The CFPB is taking action to root out these fees, including issuing guidance on surprise overdraft fees and refunding $30 million to 170,000 account holders. The Supervisory Highlights covers unlawful fees in the areas of bank account deposits, auto loan servicing, mortgage loan servicing, payday lending, and student loan servicing.

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Suptech & regtech

IOSCO and Cambridge Judge Business School pilot project to develop machine assisted capacity building tool for standards implementation

The IOSCO and the Cambridge Judge Business School have announced a new partnership to pilot a project for the development of a Machine Assisted Capacity Building for Standards Implementation (MASI). The objective of MASI is to provide emerging markets with a capacity-building tool to self-assess against IOSCO core principles and to compare with other regulatory frameworks from more advanced jurisdictions.

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Fintech & ecosystem innovation

Taiwan FSC to launch green FinTech thematic campaign

The Taiwan Financial Supervisory Commission (FSC) is planning to launch a Green FinTech thematic campaign this year to spur the development of Taiwan's Green FinTech ecosystem, it announced in a new statement. The campaign will involve various activities such as domestic and international conferences, business matching and proof-of-concept activities, and events. The FSC will also participate in the Global Financial Innovation Network's Cross Border Testing initiative and provide resources to encourage firms to take part in Green FinTech sandbox experiments, business trials, and proof-of-concept tests. The goal of the campaign is to increase the application of technology in the field of green finance and raise public awareness of the need for green sustainability.

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EIOPA launches survey on European insurers’ digital transformation strategies

The European Insurance and Occupational Pension Authority (EIOPA) has launched a dedicated new Digitalisation Market Monitoring Survey to monitor the development of European insurers' digital strategies and understand the use of new business models, technologies, and partnerships. The survey will assess the deployment of technologies such as blockchain and AI, as well as the governance measures insurers are adopting. The results will help EIOPA strengthen its risk-based supervisory approach to protect consumers and ensure good outcomes as insurers embrace digital solutions. The survey is being distributed to insurance undertakings via national competent authorities and is open to any undertaking.

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UK FCA and Metropolitan Police join forces to crack down on illegal crypto ATMs in East London

The UK Financial Conduct Authority (FCA), alongside the Metropolitan Police, has conducted an inspection in East London at several sites suspected of hosting illegally operating crypto ATMs as part of their crackdown on the illicit sector. This follows similar action in Leeds and is intended to reinforce the message that the FCA will continue to identify and disrupt unregistered crypto businesses in the UK. As part of its efforts, the FCA will continue to work with the National Economic Crime Centre to coordinate action against operators of illegal crypto ATMs.

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Payments & currency

BIS and the Central Banks of Israel, Norway and Sweden release results of Project Icebreaker

The Bank for International Settlements alongside the Central Banks of Israel, Norway and Sweden have released the outcome of the joint Project Icebreaker. Project Icebreaker was a collaborative effort to study the potential benefits and challenges of using a retail CBDC in international payments. The project tested the technical feasibility of conducting cross-border and cross-currency transactions between different experimental retail CBDC system with the goal of exploring to interlink these systems through a hub and spoke solution. Under the tested model, a cross-border transaction is broken up into two domestic payments, one in each domestic system and settlement takes place via a coordinated payment-versus-payment arrangement using Hash Time Locked Contracts. Besides demonstrating reduced settlement risk and a high transaction speed, the Project highlighted that central banks can retain full autonomy when designing their domestic rCBDC system while still being able to participate in a formalised interlinking arrangement to enable cross-border payments.

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ESG

OSFI releases new climate risk management guideline and announces launch of the climate risk forum

The Office of the Superintendent of Financial Institutions (OSFI) has released the new Guideline B-15: Climate Risk Management. The Guideline sets out OSFI’s expectations towards entities with respect to the governance and management of climate-related risks as well as climate-related financial disclosures. For Domestic Systemically Important Banks and Internationally Active Insurance Groups headquartered in Canada the Guideline will enter into force at fiscal year-end 2024, while for all other in-scope institutions it will become effective at fiscal year-end 2025. The release of the Guideline follows an extensive consultation process with over 4,300 submissions from various respondents. In conjunction with the release, OSFI has also announced the launch of its Climate Risk Forum later this spring, which will serve as a further vehicle for stakeholder engagement on climate risk management related work.

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French AMF calls on listed companies to strengthen communication on climate strategy

In a new statement, the France Autorité des marchés financiers (AMF) has stressed that listed companies must include information on their environmental and climate policies in their management reports, and that must communicate plans to ensure their business model and strategy are compatible with the transition to a sustainable economy. Specifically, the AMF calls on companies to strengthen their dialogue with shareholder on climate strategy in the context of their general meeting.

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Other transversal themes

Authorities and standard setters reinforce focus on gender diversity on International Women’s Day

On the occasion of the International Women’s Day, authorities and standard setters across the globe have reiterated the importance of gender diversity through several new publications and initiatives. Key highlights include inter alia:

123 exchanges and central clearing counterparties globally participating in the 9th annual “Ring the Bell for Gender Equality” Initiative in an effort to promote diversity and inclusion in the workplace

A new European Banking Authority report on gender diversity and the gender pay gaps in management that among other things evidences a positive correlation between gender balance and return on equity as well as shows that women on average earn 9.48% less than mal executive directors and 5.9% less than male non-executive directors

The UK Financial Conduct Authority announcing the planned release of a new consultation paper on diversity and inclusion in the financial sector later in the year and an update with respect to the Parker Review which examines the ethnic and cultural diversity of boards

The Central Bank of Kuwait publicly reaffirming its commitment towards empowering women in the banking sector in line with the national strategy, highlighting that to date women represent 35% of all local bank staff and 41% of senior positions

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OSC whistleblower program resulted in CAD 9.3 million in awards to date

The Ontario Securities Commission (OSC) has provided an update on its Whistleblower Program. The update highlights that since inception of the program in 2016, information originating from whistleblowers have led to successful enforcement actions against 19 respondents and approximately, resulting in approximately CAD 48 million in monetary sanctions and over CAD 9.33 million awarded to whistleblowers. Furthermore, the program has achieved a global reach with tips having been submitted from six continents and 30 countries. Under the program, which is a unique program across Canada, individual whistleblowers may be awarded up to CAD 5 million. As part of its ongoing optimization, the OSC is considering the potential issue of a higher volume and larger awards as well as looks to further enhance outreach efforts with a view to attracting more tips with respect to emerging and novel issues including inter alia greenwashing, auditor misconduct, improper tied selling or the misuse of algorithms and artificial intelligence.

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International cooperation

The Central Banks of Jordan and Egypt have entered into an agreement to enhance cooperation in the areas of payment systems and services as well as financial technology activities and innovations.

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At a glance - Highlights by topic

Prudential & financial stability

AML & CFT

Conduct & consumer protection

Suptech & regtech

Fintech & ecosystem innovation

Payments & currency

ESG

Other transversal themes