Jun 19, 2024

This Week in Compliance Vol. 5

What's been occupying our compliance attention lately? Here's a rundown of notable updates and regulatory happenings from the past weeks.

BaFin Fines N26 €9.2M

German financial regulator BaFin has fined digital bank N26 €9.2 million for delays in reporting money laundering activities during 2022. This fine underscores the critical need for timely compliance in financial institutions. Despite this penalty, BaFin is considering lifting the cap on new customer acquisitions for N26, acknowledging the bank's significant investments in improving its compliance infrastructure. This case highlights the essential role of robust compliance processes and the potential benefits of integrating AI for better efficiency and accuracy in reporting.

Treasury Releases 2024 Anti-Illicit Finance Strategy

The U.S. department of the Treasury announced the 2024 National Strategy for Combating Terrorist and Other Illicit Financing. This strategy aims to close legal loopholes, enhance regulatory frameworks, improve law enforcement capabilities, and leverage technology to disrupt financial activities threatening national security. It targets risks such as fraud, ransomware, terrorist financing, and corruption by promoting transparency and strengthening international partnerships​

EBA Releases Governance Guidelines for Crypto-Assets Regulation

The European Banking Authority (EBA) has published three regulatory products under the Markets in Crypto-Assets Regulation (MiCAR) framework. These include guidelines on governance arrangements for issuers of asset-referenced tokens (ARTs), regulatory technical standards (RTS) for remuneration policies, and RTS for managing conflicts of interest. The aim is to enhance transparency, secure the crypto-assets market, and ensure sound risk management practices, in collaboration with the European Securities and Markets Authority (ESMA) and the European Central Bank (ECB).

US Treasury Assesses Illicit Finance Risks in NFTs

The U.S. Department of the Treasury has published its first-ever risk assessment on Non-fungible Tokens (NFTs), highlighting their susceptibility to exploitation by illicit actors for money laundering and other financial crimes. The report finds that NFTs are vulnerable to fraud, scams, and theft, often due to inadequate cybersecurity and regulatory controls. It recommends raising industry awareness, enforcing existing regulations, and considering further regulatory measures to mitigate these risks and enhance market integrity​.

Australia introduces BNPL rules

The Australian government has introduced new legislation requiring Buy Now, Pay Later (BNPL) firms to conduct credit checks on borrowers. This move aims to regulate the rapidly expanding sector, which has become particularly popular among young consumers. The legislation seeks to align BNPL services with other consumer credit products, ensuring that lenders assess the creditworthiness of potential borrowers before extending credit. This change is part of a broader effort to enhance consumer protection and financial stability in the BNPL market.

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