1 9 June 2007

News:

VocaLink is selling to banks a pan-European Clearing and Settlement Mechanism (€CSM), which will support clearing and settlement services under the Single European Payment Area (SEPA) from January 2008, when the SEPA comes into effect. The service will also work with bank customers to help them reduce the costs of SEPA compliance.

The European Union has received undertakings from the US Treasury that it is set to comply with EU data protection laws in their handling of personal data from global payments processor SWIFT.

The UK's Joint Money Laundering Steering Group (JMLSG) is seeking comments on proposed changes to its riskbased guidance to take account of new money laundering regulations.

Features:

On 27 June 2007, E-Finance & Payments Law & Policy held a full day intensive on the EU's Payment Services Directive ('PSD'). From the discussions, one theme was clear; the PSD is not just a compliance issue, but very much a board room issue for both EU banks and other payment service providers.

The decision by some of the UK's major banks to introduce two-factor authentication technologies to combat fraud will only provide a short-term solution, argues Dave Birch, Director of Consult Hyperion. In this article, he highlights the weaknesses of two-factor authentication and describes the need for industry adaptation of public key infrastructure (PKI) technologies.

The UK Financial Services Authority has announced that it will be incorporating industry recommendations in its regulation of outsourcing, reflecting a wider change of policy from the use of detailed rules to principles-based industry regulation. Tim Wright and Dominic Hodgkinson, of Pillsbury Winthrop Shaw Pittman LLP, examine the issues.

The Financial Services Authority's review of controls over insider information in relation to public takeovers, highlighted a number of concerns about adequate protection of data and information, and offered guidance to FSA-regulated firms. Jonathan Marsh, Brian McDonnell and Anne Conaty, of Berwin Leighton Paisner LLP, discuss the importance of following the guidance for FSA-regulated firms.

The European Commission recently issued its plans for tackling cyber crime, citing rapid increases in the instances and types of crimes being committed due to significant developments in internet technologies. The Commission identifies European law enforcement co-operation, public-private partnership and a common European approach to international cooperation as the key methods to be deployed, but cites legislation as ineffective in the current climate. Catherine Stromdale, a solicitor at Wragge & Co LLP, analyses the Commission's plans.

Banking in Ireland owes a lot to its colonial history. The core systems, payment instruments, standards and legislation are almost identical to Britain - but in certain aspects they are a couple of years behind in terms of development and/or market penetration. Politically, the Irish are committed Europeans and participation in European monetary initiatives, including adoption of the Euro, has benefited the economy greatly. The Irish have been very successful in implementing national projects which have a sharp edge and clear objectives - the smoking ban and the Euro currency are good examples. There are also very good national and regional initiatives in waste collection and recycling. SEPA is a different story.

Most major banks have announced that they will send chip and pin reading devices to their customers in an effort to combat online fraud. Alessandro Liotta, of Pillsbury Winthrop Shaw Pittman LLP, highlights potential issues with the new system.

The use of mobile phones to deliver financial services is developing in emerging markets, largely because access to basic banking and financial products is limited or inadequate. In this article, Ivan Mortimer-Schutts, research associate with the Groupe d'Economie Mondiale of the Fondation Nationale des Sciences Politiques, highlights policy issues of which regulators need to be aware.