Archive: November 2021

The Financial Action Task Force (FATF), the global anti-money laundering watchdog, released updated guidance in October 2021 to help the private sector and jurisdictions apply the FATF’s risk-based approach to virtual asset (VA) activities and virtual asset service providers (VASPs). The FATF initially released its virtual asset guidance in 2019 attempting to bring VAs and VASPs in line with traditional financial institutions. The FATF has continued to review and update this guidance based on feedback from the industry. Importantly, the FATF acknowledges function over form and explains that VA activities should be analyzed based on the services provided rather than whether they fit into the specific wording of the definitions. The guidance notes “countries should not apply their definition based on the nomenclature or terminology which the entity adopts to describe itself or the technology it employs for its activities. . . . The obligations in the FATF Standards stem from the underlying financial services offered without regard to an entity's operational model, technological tools, ledger design or any other operating feature.”

How do you balance sharing and protecting your business’ data? Unlike tangible assets, which can be protected primarily through physical means, intangible assets such as data require additional considerations. One key strategy to protect your business’ data is to characterize, and protect, that data as intellectual property.

Hong Kong - How are FinTech companies most commonly structured and financed?

Every month we provide the Global Blockchain Business Council’s Post-Trade Distributed Ledger group with a global regulatory FinTech updater, the latest version of which can be found here.

On 7 October 2021, the Committee on Payments and Market Infrastructures (CPMI) issued a call for ideas on payment-versus-payment (PvP) mechanisms.

On 22 October 2021, the Financial Action Task Force (FATF) published the results of its survey that was designed to identify key areas of divergence in the implementation of its AML/CFT requirements across different states, which create frictions for cross-border payments and their potential solutions. The survey results highlight, among others, that lack of a risk-based approach and inconsistent implementation of the AML/CFT requirements increases cost, reduces speed, limits access and reduces transparency. Inconsistent national approaches also create obstacles in identifying and verifying customer and beneficial owners, effective screening for targeted financial sanctions, sharing of customer and transaction information where needed, and establishing and maintaining correspondent banking relationships.

On 28 September 2021, there was published in the Official Journal of the EU, Commission Delegated Regulation 2021/1722 of 18 June 2021 supplementing the revised Payment Services Directive (PSD2) with regard to regulatory technical standards specifying the framework for cooperation and the exchange of information between competent authorities of the home and the host Member States in the context of supervision of payment institutions and electronic money institutions exercising cross-border provision of payment services.

On 29 September 2021, the Payment Systems Regulator (PSR) published revised guidance on the Interchange Fee Regulation. It replaces the earlier version of the guidance that the PSR published in 2020 (previously named Guidance on the PSR’s approach as a competent authority for the EU Interchange Fee Regulation). The revised guidance reflects changes arising from the UK’s withdrawal from the European Union and other changes to the regulatory framework.

On 7 October 2021, Pay.UK and the Bank of England (BoE) issued a joint consultation response on Purpose Codes in ISO 20022 payment messaging.

On 11 October 2021, the Payment Systems Regulator (PSR) published Policy Statement 21/2: Consumer protection in interbank payments – response to CP21/4 (PS21/2).