Archive: May 2017

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Voice biometrics and fraud prevention in payments
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K&L Gates hosts FinTech event in Perth
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European Commission to set up a blockchain observatory
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U.S. Government Accountability Office Issues Long-Awaited Report on Fintech Industry
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CFPB Finalizes Extension of Prepaid Account Rule Effective Date

Voice biometrics and fraud prevention in payments

By Claire de Koeyer and Jim Bulling

The ability to transfer funds from one account to another in near real-time using just an email address or mobile number is getting closer for Australians with the RBA advising that developments are on track to allow the first payments to be made through a new payment platform towards the end of 2017. The new platform, the development of which was commenced by the RBA in 2012, allows for near real-time funds transfer between bank accounts, regardless of who people bank with.

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K&L Gates hosts FinTech event in Perth

By Adam Levine and Ben Kiernan-Green

On 19 April 2017 the K&L Gates Perth office hosted a Perth FinTech Meetup, chaired by ASIC Commissioner John Price. The event provided clients, lawyers and members of the FinTech and crowd-funding communities an opportunity to hear about ASIC’s involvement and commitment to the development of the ASIC Innovation Hub, ASIC’s regulatory sandbox and RegTech.

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European Commission to set up a blockchain observatory

By Giovanni Campi and Jonathan Lawrence

The European Commission recently announced that it is working on setting up an EU blockchain observatory. This will be a pilot project to build up technical expertise and regulatory capacity on topics related to blockchain and distributed ledger technology (DLT).

The EU blockchain observatory is being developed under the framework of the European Commission’s Task Force on FinTech, which was established following the adoption by the European Parliament of an own-initiative report on virtual currencies on 26 May 2016. Co-chaired by the European Commission’s Directorate Generals on Financial Services (DG FISMA) and on the Digital Single Market (DG CONNECT), the Task Force was set up in November 2016 to explore policy responses to FinTech. It is expected to deliver its final recommendations in the course of 2017.

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U.S. Government Accountability Office Issues Long-Awaited Report on Fintech Industry

By Judith Rinearson and Eric A. Love

The U.S. GAO has issued a long-awaited report on the fintech industry, which focuses on the regulation of marketplace lenders, mobile payments, digital wealth management platforms and distributed ledger technology (“DLT” – often referred to as blockchain). For each of these fintech industry “subsectors,” the GAO report details the nature of the subsector and how it operates, as well as its potential benefits and risks.  Moreover, the GAO report addresses industry trends, regulation and oversight for each subsector.

Marketplace lenders.  The GAO report indicates that marketplace lenders may provide expanded and quick access to credit at lower cost than banks, although the report also notes risks related to loan term transparency and certain protections for small business borrowers.   Read More

CFPB Finalizes Extension of Prepaid Account Rule Effective Date

By Judith Rinearson and Eric A. Love

 On April 20, the CFPB issued a final rule to delay for six months the October 1, 2017 effective date of its comprehensive Final Rule amending Regulation E and Regulation Z as applied to prepaid accounts. The Final Rule will now become effective on April 1, 2018.

In announcing the delay, the CFPB indicated that it has decided to “revisit at least two substantive issues” in the Final Rule through a separate rulemaking process. Based on CFPB Director Richard Cordray’s recent testimony before the House Financial Services Committee, the two substantive issues most likely relate to: (1) the Final Rule’s applicability to “the linking of credit cards to digital wallets that are capable of storing funds,” and (2) error resolution for unregistered prepaid cards.  The CFPB can be expected to issue a proposal on these issues “in the coming weeks.”

Notably, the CFPB’s action could help to address concerns raised by Congressional Republicans about the scope of the Final Rule and its potential impact on industry participants and consumers, thus complicating ongoing efforts in Congress to repeal the Final Rule using the Congressional Review Act (CRA). In order to repeal the Final Rule utilizing the CRA, Congress would be required to pass a repeal bill by May 9, 2017.

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