At the Crossroads of Law, Innovation and Commerce
The Cambridge Centre for Alternative Finance sits within the University of Cambridge Judge Business School and has recently published its 4th UK Alternative Finance Industry Report entitled “Entrenching Innovation”. The Centre defines alternative finance as financial channels and instruments that emerge outside of the traditional financial system (i.e. regulated banks and capital markets).
By Dan Cohen
The FinTech charter may have an important new, if tepid, ally: U.S. Comptroller of the Currency Joseph Otting. Speaking at a press conference on December 20th, Comptroller Otting signaled a cautious openness to the charter, stating, according to various media outlets, that although he is “not sure what it [FinTech charter] looks like and how it’s funded…there’s a space there that a technology solution can solve.” The key question to him is “what is the requirement…to get that charter”, a topic on which he did not elaborate.
2018 may prove to be a pivotal year for Islamic finance stakeholders and their approach to developments in FinTech.
Potential areas where FinTech is likely to have an impact on Islamic finance are remittances, insurance (or takaful), investment advisory services and online trading. The overlap between Islamic finance and ethical finance and the opening of financial services to the “unbanked” are important issues to be tackled. In the coming years, demand from consumers (mostly millennials who form a large part of the populations of Muslim-majority countries) is expected to give rise to the faster adoption of these technologies across various verticals in the banking and financial sector.
Rob Gruppetta, Head of the Financial Crime Department at the UK Financial Conduct Authority (FCA), recently gave a speech at the FinTech Innovation in Anti-Money Laundering (AML) and Digital ID regional event, London about “Using artificial intelligence to keep criminal funds out of the financial system”. He considered whether machine learning and artificial intelligence (AI) techniques could help. Better transaction monitoring is not the only way AI can aid the fight against money laundering. The Financial Stability Board (FSB) published a report on 1 November about the impact of AI that identified other ways it can help. Examples include AI-driven anti-impersonation checks that evaluate whether photos in different identity documents match, and using machine learning to identify customers that may pose a higher risk and so warrant, say, a deeper probe into the sources of their wealth.
By Cameron Abbott and Harry Crawford
With 2017 at a close, US banks have set out their 2018 FinTech new year resolutions. According to American Banker, US banks are likely to focus their FinTech investment in 4 major areas in 2018:
By Eric A. Love and Dan S. Cohen
With Office of Management and Budget Director Mick Mulvaney in place as Acting Director of the Consumer Financial Protection Bureau (CFPB) and a legal challenge to his appointment to that position brought by CFPB Deputy Director Leandra English continuing to proceed through the courts, prepaid industry participants are rightly asking what this ongoing leadership dispute means for the CFPB’s sweeping Final Rule amending Regulation E and Regulation Z as applied to prepaid accounts.
By Jim Bulling, Michelle Chasser and Edwin Tan
The Australian Securities & Investments Commission (ASIC) released a consultation paper on 12 December 2017 seeking feedback on its fintech licensing exemption, also known as the regulatory sandbox. Following comment, ASIC will review whether the exemption is operating as intended, and consider whether it should be broadened or changed in any other way.
The licensing exemption allows eligible businesses to provide certain financial products and services for up to 12 months without a valid Australian Financial Services or credit licence. Contrary to the strategy of the UK Financial Conduct Authority, ASIC does not take an active approach in selecting applicants and negotiating individual terms for each entity using the exemption.
Andrew Bailey, the Chief Executive of the UK Financial Conduct Authority (FCA), recently gave an interview to the BBC in connection with bitcoin. In remarks on 14 December, Mr Bailey said that he currently sees no systemic risk in bitcoin and is not pushing the UK government to make the cryptocurrency part of the FCA’s regulatory remit. He emphasised that investors should be prepared to lose everything if they buy bitcoin, however as long as people understood the risks of what he termed “a very volatile commodity”, he would not press the UK government to legislate that the FCA regulate it. He said “I don’t think bitcoin is prevalent enough at the moment to be a systemic threat in the way we experienced during the financial crisis other threats; it needs watching carefully but I don’t think we’re there yet… If I thought there was evidence of people saying: ‘You know what I’m going to put my pension into? bitcoin!’ I’d be very concerned, but we don’t see that at the moment.”.
By Rizwan Qayyum
The UK Financial Conduct Authority (FCA) has released a feedback statement on the Distributed Ledger technology discussion paper from April 2017 (DP17/3).
As a part of this, they commented on ICOs, noting:
“On the Initial Coin Offering (ICO) market, the FCA will gather further evidence and conduct a deeper examination of the fast-paced developments. Its findings will help to determine whether or not there is need for further regulatory action in this area beyond the consumer warning issued in September”
The feedback is available here.
By Jim Bulling, Michelle Chasser and Edwin Tan
The Australian Securities & Investments Commission (ASIC) has announced a new Cooperation Agreement with the Canadian Securities Administrators (CSA), a year after entering into a similar agreement with the Ontario Securities Commission. The CSA is made up of the following Canadian regulators:
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