Global Payments Newsletter, February 2022 | Hogan Lovells

On this E-newsletter:

For earlier editions of the World Funds E-newsletter, please go to our Financial Services practice page

Regulatory Developments

Africa: Pan-African Fee and Settlement System launched

On 13 January 2022, it was announced that the Pan-African Fee and Settlement System (PAPSS) had been launched. PAPSS was developed by the African Export-Import Financial institution (Afreximbank), and it’s anticipated to spice up commerce by facilitating intra-African funds, clearing and settlement. Specifically, the brand new system will:

  • Scale back the fee, length and time variability of intra-African cross-border funds;
  • Lower the liquidity necessities of economic banks for these funds; and
  • Strengthen central financial institution oversight of cross-border funds.

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United Kingdom: Fee Techniques Regulator consults on treatments regarding market evaluation into card-acquiring providers

On 26 January 2022, the Fee Techniques Regulator (PSR) published its session on treatments in relation to its card-acquiring providers market evaluation. The session follows on from the PSR’s November 2021 final report on its market evaluation, which discovered that the card-acquiring providers market was not working properly for smaller retailers (ie, these retailers with an annual card turnover of as much as £50 million). To be able to tackle these points, the PSR is contemplating 4 potential treatments:

  • Abstract data bins. These would comprise standardised key data (eg, key worth factors and non-price service parts). This could assist retailers to get the very best deal.
  • Stimulating digital comparability instruments for retailers. A key PSR precedence right here is to encourage digital comparability software suppliers to begin providing comparability instruments on this space.
  • Set off messages. These messages can be despatched from card acquirers to retailers forward of preliminary contract expiry after which yearly. This could encourage retailers to rethink their choices extra commonly, relatively than being caught in unsuitable agreements by inertia.
  • Addressing obstacles attributable to point-of-sale terminal contracts. The problem right here is that prolonged point-of-sale terminal contracts can tie retailers to a particular card-acquirer. The PSR needs to take away this barrier.

The PSR welcomes views on the session by 6 April 2022. As soon as this primary stage of session is accomplished, the PSR will situation a provisional determination, together with a draft treatments discover. Publication of the provisional determination will give all events a chance to touch upon its proposals and supporting evaluation in addition to the draft treatments discover.

The PSR will situation a remaining treatments discover following completion of session on the provisional determination. The ultimate treatments discover will embody data on implementation intervals for any modifications. Timing for each the provisional and remaining treatments notices just isn’t very particular, with the session referring solely to publication “in 2022”.

For extra on the session, check out this Engage article by members of Hogan Lovells’ London workplace.

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United States: Federal Reserve releases dialogue paper on CBDC

On 20 January 2022, the US Federal Reserve released a dialogue paper analyzing the professionals and cons of a US central financial institution digital forex (CBDC). The Federal Reserve had beforehand been reluctant to contemplate a US CBDC on account of issues that the prices would outweigh the advantages.

The paper notes that whereas CBDCs can present sure advantages (eg, assist quicker, cheaper funds and broaden shopper entry to the monetary system), there are additionally downsides. Specifically, CBDC might have an effect on the construction of the monetary sector, the fee and availability of credit score, and the efficacy of financial coverage. It additionally poses anti-money laundering and privateness points.

The paper then units out plenty of questions regarding the advantages and dangers of CBDC and likewise in relation to CBDC design, and asks for feedback on these questions by 20 Could 2022.

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European Union: EBA publishes Dialogue Paper on chosen cost fraud knowledge

On 17 January 2022, the European Banking Authority (EBA) published a Dialogue Paper containing its preliminary observations on chosen cost fraud knowledge underneath PSD2, as reported by the trade.

The EBA has analysed the cost fraud knowledge reported to it by trade, and from this it has recognized sure preliminary patterns. The EBA has additionally recognized areas the place patterns are inconclusive, which needs to be checked out in additional element.

The paper focuses on the EBA’s findings in three key areas: credit score transfers, card-based funds and money withdrawals. Preliminary patterns right here counsel that the regulatory necessities regarding cost safety are having their desired impact, because the variety of fraudulent funds is decrease for these funds that are authenticated with sturdy buyer authentication. Relatedly, fraud can also be increased in relation to transactions the place one of many events is outdoors the European Financial Space.

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United Kingdom: Financial institution of England revises its RTGS renewal programme timetable

On 17 January 2022, the Financial institution of England published an up to date webpage with up to date details about the implementation timetable for its Actual-Time Gross Settlement (RTGS) Renewal Programme.

Beneath the revised timetable:

  • The Financial institution of England will launch a brand new, end-to-end, enhanced ISO 20022-enabled CHAPS Pilot Platform in summer time 2022.
  • CHAPS will swap from the SWIFT MT to MX (ISO) networks, and assist enhanced ISO messaging in April 2023. Beforehand, the date for the assist of enhanced ISO messaging was February 2023.
  • The brand new RTGS core settlement engine will now be launched in spring 2024. Beforehand, it was set to be launched in autumn 2023. This new date is topic to a 3 month variance.

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European Union: European Fee explains view on compatibility of Fee Accounts Directive with unfavourable rates of interest

On 17 January 2022, the Danish Monetary Supervisory Authority (DFSA) revealed a letter despatched to it by the European Fee, setting out the Fee’s view on the compatibility of the EU Fee Accounts Directive (PAD) with charging unfavourable rates of interest on cost accounts.

The DFSA’s view is that Article 18 of PAD (which units out the “reasonableness” standards which apply to charges charged) solely regulates charges for the precise providers referred to in Article 17 of PAD. These providers solely relate to the transactions {that a} fundamental cost account should embody. Due to this fact, the DFSA is of the view that PAD doesn’t regulate unfavourable rates of interest.

The Fee’s view is that unfavourable rates of interest usually are not “charges” (as outlined in Article 2(15) PAD) and subsequently that there isn’t any requirement for unfavourable rates of interest to adjust to the “reasonableness” standards in Article 18, as these standards apply to charges.

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Tanzania: Financial institution of Tanzania prepares for roll-out of latest cost system

On 7 January 2022, it was reported that the Financial institution of Tanzania was anticipating to shortly roll-out its new cost system, after operating profitable trials. The brand new interoperable system (is aware of because the Tanzania Instantaneous Fee System) will permit the switch of funds between collaborating monetary service suppliers in actual time.

The brand new system is anticipated to be an enchancment on Tanzania’s current funds infrastructure. At the moment, sending cash to a special community in Tanzania entails plenty of steps and prices however underneath the brand new system this may all happen on the identical platform.

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Switzerland: Swiss Nationwide Financial institution efficiently exams wholesale CBDC

On 13 January 2022, it was announced that the Swiss Nationwide Financial institution, in partnerships with the Financial institution for Worldwide Settlements (BIS), SIX and 5 business banks, had efficiently carried out a check regarding the combination of wholesale CBDC settlement with business banks. The check was carried out throughout This fall 2021, and explored the settlement of interbank, financial coverage and cross-border transactions on the check programs of SIX Digital Alternate, the Swiss real-time gross-settlement system and core banking programs.

The BIS careworn that this experiment was exploratory in nature, and shouldn’t be interpreted as a sign that the Swiss Nationwide Financial institution plans to situation a wholesale CBDC.

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Belgium: Nationwide Financial institution of Belgium circulars on regulatory reporting by cost and digital cash establishments enter into power

On 1 January 2022, the Nationwide Financial institution of Belgium (NBB) circular NBB_2019_10 entered into power. The round, which was revealed on 19 October 2021, defines new guidelines for periodic reporting by digital cash establishments (EMIs) in accordance with the Regulation of 11 March 2018 on the standing and supervision of cost establishments and digital cash establishments, entry to the enterprise of cost service supplier and to the exercise of issuing digital cash and entry to cost programs (the Belgian PSD Regulation). The round offers with each periodic reporting on the solvency of the establishments in addition to monetary periodic reporting. Belgian EMIs should undergo the NBB an in depth monetary report and figures that are drawn up in accordance with the principles and pointers described within the round. The report have to be communicated to the NBB on a quarterly foundation, and on the newest by the primary working day of the second calendar month following the reporting date.

Additionally on 1 January 2022, circular NBB_2021_26 entered into power, changing round NBB_2020_24 which ceased to use from that date. Round NBB_2021_26, which was revealed on 23 November 2021, determines how cost establishments and EMIs ought to adjust to the reporting obligation imposed by Article 50, part 2 of the Belgian PSD Regulation.

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United Kingdom: PSR publishes coverage assertion on part 2 of Affirmation of Payee

On 10 February 2022, the Fee Techniques Regulator (PSR) published a coverage assertion (PS22/1) on the roll out of Part 2 of Affirmation of Payee (CoP).

CoP is a service that permits a payer to verify that the title linked to an account matches the title of the cost’s supposed recipient. Part 1 was launched in August 2019, and required the UK’s six largest banks to implement CoP. Part 1 of CoP solely utilized to accounts

with a novel type code and account quantity, whereas Part 2 covers a wider vary of accounts. Because of this there are at present two units of regulatory environments in operation, so the PSR is seeking to part out Part 1, and require all corporations to function underneath the Part 2 framework.

PS22/1 follows on from the PSR’s December 2021 session (see the December 2021 World Funds E-newsletter here for extra particulars), and confirms that the Part 1 setting will likely be phased out by 31 Could 2022. Because of this all cost service suppliers should migrate throughout to the Part 2 setting by this date.

To this finish, the PSR has revealed Particular Route 11 which, amongst different issues, requires:

  • Pay.UK to terminate the phrases and situations for collaborating in Part 1, withdraw every PSP’s CoP Part 1 accreditation, and retire the Part 1 guidelines and requirements on 31 Could 2022;
  • Part 1 cost service suppliers to solely use the Part 2 technical setting for the CoP service after 31 Could 2022;
  • Related cost service suppliers to commonly report back to Pay.UK on their progress in migrating CoP visitors to the Part 2 Open Banking setting by 1 Could 2022. Pay.UK can also be required to go this data to the PSR.

Particular Route 11 entered into power on 11 February 2022.

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United Kingdom: FCA publishes remaining report on strategic evaluation of retail banking enterprise fashions

On 20 January 2022, the FCA revealed a final report and supporting annexes on its strategic evaluation of retail banking enterprise fashions. The report offers an replace to the FCA’s December 2018 report and the evaluation is predicated on detailed monetary data, knowledge and paperwork from deposit-taking establishments, together with the most important banks and constructing societies and a number of smaller banks and specialist corporations. That is complemented by an in depth evaluation of information on customers and SMEs and their behaviour, together with knowledge from the FCA’s monetary lives survey, to supply a holistic view of the market.

Key findings embody:

  • Massive banks are in a robust place, however face growing competitors, particularly for private present accounts (PCAs).
  • Low ranges of shopper engagement have traditionally contributed to excessive obstacles to entry and growth. Digital challengers have quickly gained share within the PCA and enterprise present account (BCA) markets.
  • Elevated competitors and innovation have improved outcomes for some customers and small companies. Nonetheless, others, significantly customers with heavy department utilization or decrease balances, might have had worse outcomes.

The FCA summarises its subsequent steps on a associated webpage. It explains that the complete affect of the uncertainty attributable to COVID-19 will take time to be totally understood. It’ll proceed to watch developments and use its full array of regulatory instruments to make sure the markets work in addition to doable, producing good outcomes and honest remedy of customers. Most instantly, the FCA will likely be discussing the factors raised within the report with corporations and shopper organisations. It will additionally like to listen to from different stakeholders, who can ship written submissions to a devoted e mail tackle by 31 March 2022.

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United Kingdom: Ring-Fencing and Proprietary Buying and selling (RFPT) Evaluate Panel publishes interim assertion

On 19 January 2022, the Ring-Fencing and Proprietary Buying and selling (RFPT) Evaluate Panel (established by HM Treasury) revealed an interim statement on its evaluation of RFPT, offering an replace on the Panel’s findings forward of its remaining report and suggestions. The interim findings cowl:

  • Monetary stability: The RFPT reforms have contributed to a extra resilient UK banking sector. The ring-fencing regime has insulated key retail banking providers, akin to deposits and overdrafts, from the dangers related to funding banking actions. Nonetheless, these advantages haven’t been noticed by smaller and fewer complicated banks with restricted funding banking actions.
  • Competitors, competitiveness and prospects: The ring-fencing regime has had no important affect on competitors in retail banking or its sub-markets. Commentary about “trapped” liquidity attributable to the regime just isn’t supported by proof. The regime has the potential to constrain the competitiveness of UK banks.
  • Operation of the regime: The present guidelines have resulted in unintended penalties that create pointless rigidity for purchasers, banks and regulators. Specifically, absolute restrictions on ring-fenced our bodies from servicing monetary establishments, working in some geographical areas and offering a variety of banking providers, have resulted in a regime that’s overly inflexible.
  • Proprietary buying and selling: That is now not an exercise being systematically undertaken by UK banks. As a substitute, it’s largely being undertaken by the non-bank monetary sector.

The Panel is finalising its suggestions primarily based on the findings set out within the assertion and stays on monitor to ship its report back to HM Treasury in early 2022.

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United States: IRS requires cell cash apps to report extra transactions

It has been reported that from 1 January 2022 the IRS is requiring cell cost apps to report business transactions of over $600 a yr to the Inside Income Service (IRS). The reporting obligation is triggered the place an individual cumulatively makes transactions of over $600 in a yr. Nonetheless, the duty solely applies to business funds and to not private funds.

The change in legislation was handed as a part of the American Rescue Plan Act, which was handed in March 2021.

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United Kingdom: HM Treasury publishes response to session on cryptoasset promotions

On 18 January 2022, HM Treasury published its response to its July 2020 session on bringing cryptoasset promotions throughout the scope of the monetary promotions regime.

The UK’s monetary promotions regime prohibits monetary promotions in relation to “managed actions” and/or “managed investments” which aren’t made or accredited by an FCA-authorised individual.

HM Treasury plans so as to add “qualifying cryptoassets” to the listing of “managed investments”, and likewise to combine the time period into sure “managed actions”, together with arranging offers in investments, managing investments, and advising on investments. The definition of

“qualifying cryptoasset” is but to be finalised, however HM Treasury have stated that the ultimate definition will:

  • Embody an exclusion for transferability. That is designed to exclude tokens akin to journey passes and grocery store loyalty schemes (ie, tokens used for funds to a particular vendor solely).​
  • Retain fungibility. Because of this non-fungible tokens will likely be outdoors the definition’s scope.​
  • Take away the reference to distributed ledger know-how within the definition. That is to future-proof the definition if underlying cryptoasset know-how modifications.​
  • Not embody digital cash or central financial institution forex throughout the definition.​

The next day (19 January 2022), the FCA published a session containing particulars of the way it plans to manage cryptoasset promotions. The FCA plans to use its new “Restricted Mass Markets Investments” regime to cryptoassets. It is a regime that has been designed particularly for sure high-risk investments. The session states, amongst different issues, that:

  • The mass‑advertising and marketing of cryptoassets to retail customers will likely be permitted, topic to assembly the necessities of the FCA’s proposed monetary promotion guidelines (eg, danger warnings and a ban on inducements to take a position); and
  • “Direct supply” monetary promotions (ie, promotions which specify how customers ought to reply or features a type to reply) can solely be made if sure necessities are met.

The FCA welcomes suggestions on its proposals by 23 March 2022, and intends to publish a Coverage Assertion and remaining Handbook guidelines this summer time. In relation to cryptoasset promotions, the FCA proposes that any modifications apply from the date that qualifying cryptoassets are introduced throughout the monetary promotions regime.

For extra data on the HM Treasury session, check out this HL Interact article, written by members of the Hogan Lovells London workplace.

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El Salvador: IMF recommends that El Salvador removes Bitcoin’s authorized tender standing

On 25 January 2022, the IMF concluded its Article IV session with El Salvador. In its report, the IMF recognises the significance of boosting monetary inclusion and the way digital technique of cost might help with this (akin to by the Chivo e-wallet). Nonetheless, the IMF additionally recommends that El Salvador take away Bitcoin’s standing as authorized tender, stressing that there are excessive dangers related to using Bitcoin (for instance, in relation to monetary stability and monetary inclusion). Nonetheless, on 31 January 2022 it was reported that El Salvador’s authorities had rejected this suggestion.

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Thailand: Plans for a 15% crypto tax dropped

On 1 February 2022, it was reported that Thailand had dropped plans for a 15% crypto tax. The plans have been introduced earlier this yr, however had confronted sturdy opposition from supporters of the crypto market, who argued that the tax would suffocate a market that has turn into more and more well-liked over the previous 18 months. Regulators in Thailand had already banned non-fungible tokens. It’s anticipated that crypto will nonetheless be taxed in some type.

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United States: Arizona Senator introduces invoice to make Bitcoin lawful state forex

On 28 January 2022, it was reported that an Arizonan senator had launched a bill to make Bitcoin authorized tender within the state of Arizona. It isn’t clear whether or not a vote will likely be held on the invoice within the Arizonan Senate. In close by Texas, one of many candidates for governor has reportedly stated that he’ll search to make Bitcoin authorized tender within the state if he wins election.

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United Kingdom: Parliament launches all occasion crypto group

On 10 January 2022, it was reported {that a} cross-party group of MPs and Lords had launched a brand new All Celebration Parliamentary Group for Crypto and Digital Belongings. All Celebration Parliamentary Teams are casual teams which haven’t any official standing inside Parliament, however which generally permit for engagement on key points between Parliamentarians and stakeholders. For instance, there are already All Celebration Parliamentary Teams for different finance and fintech.

The group plans to have a look at the state of the UK’s crypto market, with a specific concentrate on crypto promoting and the necessity for regulation to maintain tempo with modifications within the sector.

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Belgium: Federal parliament adopts legislation introducing AML/CFT regulatory framework for Belgian-based digital forex service suppliers

On 27 January 2022, the Belgian federal parliament adopted a law on the standing and supervision of suppliers engaged in trade providers between digital currencies and fiat currencies and custodian pockets suppliers (the VCSP Regulation), amending the Regulation of 18 September 2017 on prevention of cash laundering and terrorist financing and limiting using money (the Belgian AML Regulation), to create a regulatory framework for Belgian-based digital forex service suppliers (VCSP). VCSPs embody (i) ATMs that are put in on Belgian territory and permit the trade of digital forex for fiat forex and (ii) custodian pockets suppliers.

Extra particularly, the VCSP Regulation amends the Belgian AML Regulation to:

  • require VCSPs to be registered with the Belgian Monetary Companies and Markets Authority (the FSMA);
  • empower the FSMA to oversee VCSPs; and
  • prohibit third-country individuals and entities from offering digital forex providers in Belgium.

Breach of the VCSP Regulation is a legal offence. It additionally offers for administrative sanctions.

The VCSP Regulation is anticipated to be revealed within the Belgian State Gazette in the midst of February 2022, together with an implementing Royal Decree.

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European Union: EBA launches AML and CFT central database

On 31 January 2022, the European Banking Authority (EBA) launched its central database for anti-money laundering and counter-terrorist financing (EuReCA). EuReCA will comprise data on materials weaknesses in particular person monetary establishments within the EU that competent authorities have recognized. Examples of such weaknesses embody the absence of transaction monitoring on the group stage and the absence of insurance policies and procedures for high-risk prospects.

The EBA will even share data from EuReCA with the related competent authorities, particularly in situations the place it has recognized particular AML/CFT tendencies or dangers. On this method, it’s hoped that EuReCA can act as an early warning software and might help competent authorities tackle dangers and tendencies earlier than they turn into severe.

EuReCA is not going to begin to acquire private knowledge till the draft Regulatory Technical Standards (RTS) on a central database on AML/CFT in the EU are accredited by the European Fee.

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United Kingdom: New FCA webpage on figuring out competency of heads of compliance and MLRO candidates

On 28 January 2022, the FCA revealed a brand new webpage to assist corporations determine if a person candidate is suitably competent and able to successfully performing the position of head of compliance or cash laundering reporting officer (MLRO). That is primarily based on the FCA’s expertise of accredited functions. The webpage consists of steering on coaching, expertise, assist from third events, and capability.

Even when an applicant believes they’ve ample expertise or coaching, the FCA states that it might nonetheless request an interview to check this and also will think about the applicant’s response to questions requested through the utility course of.

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United Kingdom: Treasury Committee studies on fraud, scams and financial crime

On 2 February 2022, the Home of Commons Treasury Committee published a report on fraud, scams and financial crime. The report comes as the federal government’s 2019 to 2022 Financial Crime Plan enters its remaining yr, providing a chance for thought in regards to the strengths and weaknesses of the plan.

The report makes plenty of suggestions, together with:

  • The federal government ought to think about whether or not a single enforcement company needs to be created to combat financial crime.​
  • The federal government ought to think about new measures to deal with fraud through internet advertising, and will make sure that the FCA has ample powers to implement monetary promotions guidelines on-line. Associated to this, the report means that on-line advertisers needs to be required to carry out KYC checks on their advertisers.​
  • Deliberate Suspicious Exercise Reviews reforms are probably to enhance AML programs, however it’s disappointing that this reform program just isn’t but full. Linked to that is the continued poor efficiency of the Workplace for Skilled Physique Anti-Cash Laundering Supervision almost 4 years after it was arrange.​
  • The FCA ought to report yearly on the variety of de-risking selections being taken and on progress to make sure that banks usually are not unfairly de-risking prospects.

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India: RBI plans to arrange new fintech division

On 9 January 2022, it was reported that the Reserve Financial institution of India (RBI) had arrange a fintech division, with a concentrate on facilitating innovation within the fintech sector. It’s anticipated that the brand new division will even establish challenges and alternatives for the fintech sector, and supply a framework for additional analysis on efficient coverage interventions that the RBI might implement.

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United Kingdom: OFSI publishes revised sanctions penalty steering

On 29 January 2022, the Workplace for Monetary Sanctions (OFSI) published revised steering on financial penalties for breaches of economic sanctions.

The up to date steering covers the next areas:

  • OFSI’s compliance and enforcement strategy;
  • Steerage on how OFSI assesses potential breaches of economic sanctions;
  • The penalty course of, together with when OFSI will determine to impose a penalty and the way OFSI will then determine on the penalty quantity;
  • The process for imposing a penalty, together with the correct of a celebration to make representations; and

The suitable of ministerial evaluation and the correct of enchantment.

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European Union: European Parliament adopts Digital Companies Act with amendments

On 20 January 2022, it was announced that the European Parliament had agreed to the Digital Companies Act, with amendments.

The European Parliament’s amendments embody the next:

  • Middleman service suppliers are prohibited from utilizing nudge strategies to affect service person behaviour. Examples of such practices, that are listed within the new Article 13a of the Act, embody giving better prominence to consent choices.
  • On-line platforms should use finest efforts (versus affordable efforts) to verify sure data offered to them by merchants that promote through their platform.
  • On-line platforms should give service customers extra details about how their knowledge is used (and the way it’s monetised). Customers who refuse to consent to this should nonetheless have affordable entry to the platform.
  • There are new provisions in relation to processing of the non-public knowledge of minors.

The amended textual content will now be used as a foundation for negotiations with the French presidency of the Council of the European Union.

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United Kingdom: DCMS publishes replace on Nationwide Knowledge Technique Discussion board workstreams

On 7 February 2022, the Division for Digital, Tradition, Media & Sport (DCMS) revealed an up to date webpage with extra data on the Nationwide Knowledge Technique Discussion board’s (Discussion board) workstreams and affirmation of the Discussion board’s focus of consideration for the following six months. The Discussion board’s goal is to develop programmes of labor to form and assist the supply of the National Data Strategy (NDS), and champion its targets through participant networks.

Progress to this point on the Discussion board’s 5 workstreams and subsequent steps embody:

  • Unlocking the facility of information for everybody, all over the place: This workstream will now concentrate on improvements in knowledge sharing structure, utilizing a regional “future situations” workshop to assemble concepts and proof of finest follow.
  • Belief in knowledge: The Nationwide Knowledge Technique Discussion board Belief in Knowledge Working group has begun its work analyzing public attitudes in direction of knowledge use and discovering examples of information use that ship societal and financial advantages throughout sectors. Throughout the subsequent six months, this group will proceed to collate constructive case research of accountable knowledge use.
  • Knowledge reform: The Discussion board helped promote the federal government session Data: a new Direction (September 2021) and hosted roundtable discussions on eradicating data-related obstacles to commerce and creating a extra innovation-friendly knowledge safety regime, that underpins the reliable use of information. A response to the session will likely be revealed in Spring 2022.
  • Internet Zero: This workstream has highlighted how revolutionary use of information might help fight local weather change and hosted an occasion at COP26. It’ll proceed to stage occasions and discussions in 2022 to display the essential contribution that knowledge could make to the federal government’s Internet Zero targets.
  • Measuring the info ecosystem: Mapping how stakeholders work together throughout the UK’s knowledge ecosystem will enhance the federal government’s understanding of how that interplay works and assist develop means of creating knowledge extra broadly accessible. The NDS monitoring and analysis framework and NDS indicator suite have been each launched in 2021 to assist ship this workstream. Their improvement is ongoing.

The DCMS invitations contact and participation with the Discussion board through

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United Kingdom: DCMS broadcasts members of Worldwide Knowledge Switch Skilled Council appointed to advise on authorities world knowledge plans

On 25 January 2022, the Division for Digital, Tradition, Media & Sport (DCMS) has announced the members of the Worldwide Knowledge Switch Skilled Council. The 20 sturdy membership is comprised of main knowledge privateness consultants with backgrounds in varied consultant organisations, trade sectors, authorized follow and academia. A full listing of the appointees is about out within the announcement.

The Council will meet quarterly to pool concepts and supply steering in assist of the federal government’s aim to unlock worldwide knowledge transfers by creating reforms able to eradicating any present obstacles to the free stream of information world wide. Realising this ambition is a key part of the federal government’s National Data Strategy.

At its first assembly on 25 January 2022, the Council mentioned the worldwide alternatives and challenges for worldwide transfers and the way the UK generally is a world chief in eradicating obstacles to cross-border knowledge flows. Within the months forward, it would additionally cowl subjects together with future knowledge adequacy partnerships, the event of latest knowledge switch instruments, and the way governments can work collectively to advertise better belief in sharing private knowledge for legislation enforcement and nationwide safety functions.

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European Union: European Fee adopts Communication on establishing a Declaration on digital rights and rules

On 26 January 2022 and following a European Fee Roadmap and public session in Could 2021, the Fee adopted a Communication on establishing a Declaration on digital rights and rules. The Communication was accompanied by a associated Commission Staff Working document, a press release and a factsheet.

The (draft) Declaration goals to present everybody a transparent reference level in regards to the sort of digital transformation Europe promotes and defends. It’ll additionally present a information for coverage makers and firms when coping with new applied sciences.

The Declaration is carefully linked to and enhances the proposal for the “Path to the Digital Decade” which was adopted in September 2021. As set out within the Path to the Digital Decade proposal, an efficient monitoring of the rules enshrined within the Declaration will likely be introduced yearly, along with a yearly Eurobarometer on the European residents’ notion of the actions and measures taken.

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European Union: European Parliament to contemplate proposed Regulation on pilot regime for market infrastructures primarily based on DLT at 23 to 24 March plenary session

On 8 February 2022, the European Parliament up to date its procedure file on the proposed Regulation on a pilot regime for market infrastructures primarily based on distributed ledger know-how (DLT) (2020/0267(COD)) to point that the Parliament will think about the proposed Regulation throughout its plenary session to be held from 23 to 24 March 2022. This follows its Financial and Financial Affairs Committee’s (ECON) approval on 13 January 2022 of the textual content agreed on the first studying interinstitutional negotiations.

The Council of the EU and the Parliament reached political settlement on the proposed Regulation on 24 November 2021.

The European Fee adopted the proposed Regulation in September 2020 as a part of its Digital Finance Technique.

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European Union: ESAs publish response to European Fee name for recommendation on digital finance and associated points

On 7 February 2022, the European Supervisory Authorities (ESAs) (that’s, the EBA, ESMA and EIOPA) revealed a report (dated 31 January 2022) containing their response to the European Fee’s February 2021 name for recommendation on technical recommendation on digital finance and associated points.

In response to the Fee’s name for recommendation, ESMA launched a survey to nationwide competent authorities (NCAs) in February 2021 and a common name for proof on digital finance in Could 2021. ESMA has revealed studies summarising the responses that it acquired to the survey (see the report here) and name for proof (see the report here), which have been to tell the findings within the ESAs’ report and their suggestions.

The ESAs’ report units out the findings of an evaluation of market developments and the dangers and alternatives posed by digitalisation in finance. The ESAs make ten cross-sectoral and two insurance-specific suggestions supposed to strengthen EU monetary providers regulation and improve supervisory capabilities consistent with these developments.

The ESAs’ suggestions embody that the Fee ought to:

  • Present additional steering on the definition of cross-border providers in a digital context and strengthen cross-border supervisory co-ordination.
  • Take particular actions supposed to advertise a convergent strategy to money-laundering and terrorism financing dangers in a digital context.

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United Kingdom: Parliamentary committee opens inquiry into the way forward for retained EU legislation and authorities broadcasts intention to introduce “Brexit Freedoms” Invoice

On 31 January 2022, the Home of Commons European Scrutiny Committee launched an inquiry, Retained EU Law: Where next? This inquiry examines the way forward for retained EU legislation within the context of the UK authorities’s opinions into the substance and standing of retained EU legislation as announced in September 2021 (and adopted by a December 2021 update). The deadline for submission of proof is 14 March 2022. The Committee is to listen to from a broad vary of stakeholders, together with legal professionals, lecturers, consultant our bodies and suppose tanks.

In a associated improvement on 31 January 2022, the UK authorities additionally announced its intention to convey ahead a “Brexit Freedoms” Invoice to make sure that retained EU legislation will be extra simply amended or repealed, to finish the particular standing of EU legislation within the UK authorized framework and to make any additional modifications really useful by the federal government’s retained EU legislation standing evaluation. This announcement was accompanied by a cross-sector coverage paper, “The benefits of Brexit – How the UK is taking advantage of leaving the EU”, which incorporates sections on monetary providers, digital financial system, digital know-how in commerce and cyber safety, amongst others.

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United Kingdom: Home of Lords European Affairs Committee launches new inquiry into UK-EU monetary providers relationship

On 4 February 2022, the Home of Lords European Affairs Committee announced the launch of a brand new inquiry into the UK-EU relationship in monetary providers, with an accompanying webpage. The inquiry will think about issues together with:

  • The affect to date on the UK monetary providers sector of the UK’s departure from the EU single market.
  • The affect of the absence of a functioning framework for UK-EU regulatory co-operation.
  • The way forward for cross-border UK-EU monetary providers commerce within the absence of equivalence.
  • The affect of regulatory divergence and agreements with third nations on UK-EU monetary providers commerce.

The Committee expects to report by Could 2022.

The press launch additionally refers back to the UK-EU commerce and co-operation settlement (TCA), which comprises restricted provisions on the commerce in monetary providers between the UK and the EU. It states that for the reason that signing of the TCA, the EU has to date granted the UK two equivalence selections for monetary providers, each of which have been time restricted and one among which has now expired. Conversely, the UK has granted equivalence to EEA member states in 28 of the 32 areas recognized for the equivalence course of.

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United Kingdom: FCA confirms strategy to TPR corporations not assembly its expectations

On 18 January 2022, the FCA revealed a brand new webpage on its strategy to corporations within the short-term permissions regime (TPR) that don’t meet its expectations. The FCA’s place is that the TPR ought to solely be utilized by corporations desirous to function within the UK within the long-term, getting ready for full UK authorisation and assembly the required requirements.

The FCA will search to make sure that corporations, the place applicable, can not broaden their UK enterprise whereas within the TPR. If corporations don’t voluntarily depart the TPR, the FCA will take motion to take away them. This will likely end result within the FCA contacting a agency’s dwelling state regulator and issuing a remaining discover within the UK.

The webpage highlights 4 situations the place this is able to apply: FSMA corporations (that’s, corporations within the TPR that beforehand passported into the UK underneath Schedule 3 or Schedule 4 to the Monetary Companies and Markets Act 2000 (FSMA)) that miss their touchdown slot to use for full authorisation, corporations that fail to reply to necessary data requests, corporations that don’t intend to use for full authorisation and corporations whose authorisation utility is refused. The actions the FCA will take towards such a agency might contain:

  • Taking steps to take away them from the TPR.
  • Asking the agency to substantiate they’ve voluntarily stopped endeavor new enterprise (that’s, onboarding new prospects) or, if they don’t voluntarily comply with this, searching for to make use of FCA powers to stop corporations from endeavor new enterprise.
  • Directing a FSMA agency to use in a touchdown slot earlier than the prevailing touchdown slot.
  • For funds and e-money corporations, requesting the agency specify a date when they may stop to interact in new enterprise. In the event that they fail to take action, the FCA might specify the date.

Corporations might keep away from these actions in the event that they voluntarily apply to cancel their short-term permission fully and, if eligible, enter the supervised run-off (SRO) mechanism throughout the monetary providers contracts regime (FSCR).

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European Union: EDPB publishes pointers on proper of entry

On 28 January 2022, the European Knowledge Safety Board (EDPB) revealed Guidelines 01/2022 on data subject rights – Right of access.

The Tips set out common rules and a proof of the correct of entry, they usually additionally cowl subjects akin to confirming whether or not the info is held, offering a replica, limitations on the correct and figuring out the info topic. Extra specialist subjects akin to requests made through third events and on behalf of kids are additionally lined and the Tips take a look at key ideas akin to manifestly unfounded and extreme requests and timescales.

The Tips have been adopted on 18 January 2022 at its 59th Plenary and are open for public session till 11 March 2022.

For extra on this improvement, check out this Engage article by members of Hogan Lovells’ Madrid workplace.

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United Kingdom: UK monetary regulatory our bodies set up Wider Implications Framework

On 25 January 2022, the Monetary Ombudsman Service (FOS) revealed a press release on the institution of the Wider Implications Framework, along with a webpage on the Framework and the terms of reference for the Framework.

The Framework has been agreed by the FOS, the FCA, the Pensions Regulator, the Monetary Companies Compensation Scheme (FSCS) and the Cash and Pensions Service (MaPS). It’s a formal settlement that units out a construction for its members to collaborate on issues of frequent curiosity with the goal of attaining a greater consequence for customers, small companies and the monetary providers trade.

The Framework’s goal is to ascertain a process in step with every member’s unbiased position and statutory features to debate dangers and points that will have wider implications as quickly because the members turn into conscious of them and agree probably the most applicable strategy to managing dangers and points, together with which member(s) ought to lead on that strategy.

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European Union: ESRB publishes suggestion on establishing pan-European systemic cyber incident co-ordination framework

On 27 January 2022, the European Systemic Threat Board (ESRB) revealed a recommendation (ESRB/2021/17) on the institution of a pan-European systemic cyber incident co-ordination framework (EU-SCICF). The important thing goal is to construct on one of many envisaged roles of the European Supervisory Authorities (ESAs) underneath the proposed EU Regulation on digital operational resilience for the monetary sector (DORA) of regularly enabling an efficient EU-level co-ordinated response within the occasion of a significant cross-border data and communication applied sciences (ICT) associated incident or associated risk having a systemic affect on the EU’s monetary sector. This course of will result in the creation of the EU-SCICF for related authorities. The advice was adopted by the ESRB Board on 2 December 2021.

The ESRB has additionally revealed a report on mitigating systemic cyber danger, constructing on a February 2020 ESRB report on systemic cyber danger. It explains how the EU-SCICF would facilitate an efficient response to a significant cyber incident and assesses the power of the present macroprudential framework to deal with the dangers and vulnerabilities stemming from systemic cyber danger. The ESRB concludes that the macroprudential mandate and toolkits of economic authorities should be expanded to incorporate cyber resilience.

The ESAs have issued a statement welcoming the advice and noting that it units out some concrete steps for them.

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United Kingdom: Cyber safety incentives and regulation evaluation 2022 and two consultations on bettering cyber resilience revealed

On 19 January 2022, the federal government revealed a review detailing the progress made in bettering cyber resilience between 2016 and 2021 and what motion is required to additional improve cyber resilience within the UK.

The evaluation:

  • Assesses enhancements in cyber resilience within the UK since 2016, together with the constructive affect of latest laws (UK GDPR, Knowledge Safety Act 2018 (DPA 2018) and Community and Data Techniques Rules 2018 (SI 2018/506)) within the administration of cyber danger.
  • Units out additional actions that the federal government intends to take to make sure that companies and organisations throughout the digital financial system are sufficiently protected towards cyber threats.
  • Concludes that the market has failed to enhance its safety practices at a sufficiently fast price to maintain tempo with cyber threats and the affect these have on an more and more related society. The federal government subsequently intends to take a extra interventionist strategy to encourage organisations to cut back their cyber dangers.

The important thing outcomes the federal government seeks to attain are to:

  • Perceive why authorities recommendation just isn’t reaching or being acted upon by the target market.
  • Improve cyber resilience inside organisations by elevated uptake of the Cyber Necessities scheme.
  • Enhance resilience inside important providers and digital providers.
  • Improve accountability for cyber safety in enterprise.
  • Make clear expertise and {qualifications} throughout the cyber safety career.

Similtaneously publishing this evaluation, the federal government introduced two consultations for new laws to improve the cyber resilience of organisations which are important to the UK economy (closing 10 April 2022), and embedding standards and career pathways across the cyber profession by 2025 (closing 20 March 2022).

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United Kingdom: HM Treasury broadcasts interim FCA and PSR Chair appointments

On 4 February 2022, HM Treasury revealed a press release saying that:

  • Richard Lloyd, FCA Senior Unbiased Director, would be the interim Chair of the FCA from 1 June 2022 till the following everlasting Chair takes up their publish. This follows his latest reappointment for a second three-year time period on the FCA board, commencing on 1 April 2022.
  • The FCA has appointed Aidene Walsh as interim Chair of the Fee Techniques Regulator (PSR) from 1 April 2022 till the following everlasting PSR Chair takes up their publish. Ms Walsh has been a non-executive director on the PSR board since June 2020.

It was introduced in October 2021 that Charles Randell was stepping down as Chair of the FCA and the PSR.

HM Treasury has launched a recruitment marketing campaign to nominate the following Chair of the FCA. It’ll launch a separate marketing campaign for the appointment of the following PSR Chair in the end.

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Fee Market Developments

United States: Ford picks Stripe to boost e-commerce capabilities

On 17 January 2022, it was announced that Ford and Stripe had entered right into a 5 yr settlement, pursuant to which Stripe would be the premier cost service supplier for Ford and its sellers throughout North America and Europe. Collectively, the 2 corporations plan to develop the net funds infrastructure serving prospects and sellers in Europe and North America. One instance of that is by using Stripe Join, which facilitates funds between third-party patrons and sellers.

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United States: Visa launches cloud-based funds

On 13 January 2022, Visa announced the launch of a brand new platform referred to as Visa Acceptance Cloud. The brand new platform will permit acquirers, cost service suppliers and level of sale suppliers (amongst others) to maneuver cost processing software program to the cloud from {hardware} gadgets.

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Philippines: Mocasa launches Purchase Now Pay Later providers

On 26 January 2022, it was reported that Mocasa had launched its Purchase Now Pay Later providers within the Philippines. By means of Mocasa’s app, customers pays for merchandise immediately from 1000’s of offline and on-line retailers and repay this quantity with no curiosity.

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India: Metropolis Union Financial institution launches cost answer for smartwatches

On 24 January 2022, it was reported that Metropolis Union Financial institution had launched a contactless debit card in a health watch. That is the second wearable cost product launched by the financial institution, following the launch of its wearable key chain in December 2021. One security characteristic of the machine is {that a} textual content message is distributed to the registered cell quantity each time a cost is made.

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Spain: Sq. launches in Spain

On 25 January 2022, it was announced that Sq., the software program funds and {hardware} options firm, had launched in Spain. Companies in Spain will now have entry to Sq.’s merchandise, which embody assist in accepting bodily and on-line card funds. Sq. additionally presents three level of sale software program merchandise and three varieties of cost terminal.

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United States: Fb and Instagram reportedly creating NFT capabilities

On 20 January 2022, it was reported that Fb and Instagram have been creating non-fungible token (NFT) improvement and promoting capabilities. In response to the studies, Meta is creating methods to create, show and promote NFTs on Fb and Instagram.

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South America: Paysafe completes acquisition of SafetyPay

On 31 January 2022, it was announced that the funds platform Paysafe had accomplished its acquisition of SafetyPay, a number one South American funds platform. The acquisition follows on from Paysafe’s latest buy of Peruvian funds platform PagoEfectivo.

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Europe: Modulr and Ripple accomplice to spice up funds within the UK and Europe

On 1 February 2022, it was announced that cost platform Modulr is partnering with Ripple, a crypto options agency. It’s hoped that the partnership will supply a substitute for the correspondent banking mannequin of cross-border funds, and can permit for quicker, extra dependable and cost-effective funds between European nations, together with the UK.

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United Arab Emirates: Accenture chosen by UAE’s central financial institution to execute Nationwide Fee Techniques Technique

On 2 February 2022, it was announced that Accenture had been chosen by UAE’s central financial institution to execute its Nationwide Fee Techniques Technique. Over the following 5 years, Accenture will construct and function the Nationwide Instantaneous Fee Platform, which it’s hoped will remodel the monetary providers ecosystem within the UAE.

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Russia: Sberbank launches cash switch service to China

On 1 February 2022, it was announced that Sberbank has launched a cash switch service to China. Clients can use the brand new service by offering the telephone quantity and full title of the supposed recipient. The service has been launched in partnership with Western Union and a switch price of 1% will likely be charged on funds.

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United Kingdom: Verto companions with Acquired on multi-currency digital funds

On 8 February 2022, it was announced that foreign exchange agency Verto has partnered with the funds agency Acquired to ship a multi-currency digital pockets answer. The collaboration will permit on the spot top-up funds and cost collections worldwide.

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India: Revolut acquires Arvog Foreign exchange

On 12 February 2022, it was reported that Revolut India had acquired worldwide cash switch agency Arvog Foreign exchange. It’s thought that the acquisition will strengthen Revolut’s presence in India and speed up its plans to supply remittance and foreign exchange providers to Indian prospects.

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Surveys and Reviews

United States: 61% of customers are contemplating shopping for crypto in 2022

On 20 January 2022, cryptocurrency platform Voyager Digital published the findings of its first Crypto Confidence Survey.

Of US customers surveyed:

  • 64% believed that cryptocurrency will acquire worth in 2022.
  • 37% say that it’s reasonably or very probably that they may purchase crypto in 2022.
  • Males are twice as probably as girls to personal crypto at present (30% versus 15%).
  • 48% consider that cryptocurrencies will likely be broadly accepted within the subsequent three years.
  • 50% would personal extra cryptocurrency in the event that they understood it higher.

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United Kingdom: Regular rise in contactless funds

On 26 January 2022, it was reported that new knowledge from Barclaycard confirmed that 91.1% of card transactions within the UK in 2021 have been made utilizing contactless cost strategies. Yr-on-year, the whole worth of contactless funds elevated 40.2%.

On the particular person stage, the typical contactless person made 180 contactless funds in 2021, value a complete of £2,293. This is a rise on the 2020 figures, which indicated that the typical person made 140 funds value £1,640.

It’s thought {that a} important think about these will increase is the rise within the contactless restrict in October 2021 from £45 to £100.

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World: Small companies and customers anticipate shift to digital funds

On 12 January 2022, Visa published the sixth version of its World Again to Enterprise Examine. A key theme of this version was the rise of digital funds. Specifically, the examine discovered that:

  • 73% of small companies surveyed stated that new types of digital funds are elementary to their progress.
  • 59% of small companies stated that they’re both already cashless, or plan to be throughout the subsequent two years. Nonetheless, 16% say that they may by no means make the shift to digital funds solely.
  • 41% of customers plan to shift to digital solely funds within the subsequent two years, or are already cashless. Nonetheless, 23% say that they may by no means make this shift.

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Global Payments Newsletter, February 2022 | Hogan Lovells

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