The Financial Services Commission (‘FSC’) of the Republic of Korea (hereafter ‘Korea’) has published new guidance on preventing money laundering in activities related to virtual currency, the purpose of which is to both further clarify the provisions of a number of AML/virtual currency acts in Korea, and also to provide requirements for financial companies to comply with to effectively prevent money laundering and terrorist financing. You Chull Jung, Partner at Lee & Ko, provides an overview of these guidelines. / read more

New technologies, increased competition and a favourable regulatory environment are among the factors driving innovation across the financial services industry. Major banks and financial institutions are facing increasing competition from FinTechs that offer flexible products through digital banking apps, as well as from tech firms that are also entering the sector. Dr Andreas Fillmann, Partner in the Financial Services Practice and Member of the global FinTech Group at Squire Patton Boggs, provides insight into the opportunities presented by the revised Payment Services Directive (‘PSD2’) and Open Banking for banks and the importance of Application Programming Interfaces (‘APIs’) within this changing landscape. / read more

As part of its ‘New Era of Smart Banking,’ the Hong Kong Monetary Authority (’HKMA’) launched a consultation on 6 February 2018 on updating its guidance for virtual banking applicants. Proposed changes include the promotion of financial inclusion and the removal of the need to establish a physical branch locally. John M. Casanova, a Member of the Payments & FinTech Lawyer Editorial Board, alongside Annie Lau and Heather Ong, all of Sidley Austin LLP, discuss the proposed changes and what they aim to achieve. / read more

Financial institutions are investing heavily in technology to improve the onboarding process. But as they digitally transform their processes, many organisations are struggling to accommodate risk and compliance on the one hand, and customer convenience and innovation on the other. Josje Fiolet, Digital Customer Onboarding Lead at consultancy for digital transactions INNOPAY, discusses here how the European Supervisory Authorities, supporting new customer due diligence technologies, have provided a pragmatic guide for organisations considering how to strike the right balance, with the release of their Opinion ‘on the use of innovative solutions by credit and financial institutions in the customer due diligence process.’ / read more

In February 2018, the Swiss Financial Market Supervisory Authority (‘FINMA’) published a draft of a partial revision of its Circular 2016/7, ‘Video and online identification.’ The Circular, which entered into force approximately two years ago, sets out the anti-money laundering due diligence requirements that Swiss financial intermediaries must follow when opening new business relationships via video chat or via the internet. The consultation period on this partial revision ran until 28 March 2018. In this article, Grégoire Tribolet and Caroline Clemetson of Schellenberg Wittmer Ltd provide a brief overview of both the current regulatory framework in Switzerland for opening business relationships via digital channels, how financial intermediaries are making use of the potential for technological innovation in the area of client onboarding and finally the key changes proposed by FINMA to its Circular 2016/7. / read more

On 8 March 2018 the European Commission (‘EC’) put forward a proposal for a regulation on crowdfunding service providers (‘Proposal’), which aims to address what the EC views as an underdeveloped market by providing common rules across the EU. The Proposal was released as part of the EC’s FinTech Action Plan, which features 19 steps designed to “harness the opportunities presented by technology-enabled innovation in financial services.” / read more

The UK Government’s HM Treasury launched on 22 March 2018 its FinTech Sector Strategy (‘Strategy’), a policy paper which aims at “securing the future of UK FinTech,” by preserving and extending the UK’s success in this area. / read more

On 27 November 2017 the European Commission adopted Regulatory Technical Standards (‘RTS’) on strong customer authentication (‘SCA’) and common and secure communication (‘CSC’), supplementing Article 98(1) of the revised Payment Services Directive (‘PSD2’). The RTS were based on draft standards produced by the European Banking Authority (‘EBA’). The Commission made what it termed “limited substantive amendments” to the EBA’s version of these important RTS, and the Commission’s adopted version has gone forward to the Council of the EU and the European Parliament. The Commission’s amendments have led to some concerns from the EBA, which were expressed by Andrea Enría, Chairman of the EBA, in a letter published on 26 January 2018. Tim Wright, Partner at Pillsbury LLP, explains the process taken in creating the RTS and the EBA’s concerns about the amendments. / read more

The Malta Financial Services Authority’s (‘MFSA’) discussion paper on initial coin offerings (‘ICOs’), virtual currencies (‘VCs’) and related service providers (the ‘Paper’), released at the end of last year, has provided a sense of Malta’s approach to creating a new legislative framework in this nascent field. Malcolm Falzon, Partner at Camilleri Preziosi, discusses here the approach taken by the MFSA in its Paper, which would effectively see the regulation of certain VCs and activities associated thereto, and the difficulties of balancing regulation and innovation in this fast moving area. / read more

Jacqui Hatfield, Partner at Orrick, discusses the European Commission’s draft FinTech Action Plan for the EU, which was leaked in early February 2018; Jacqui comments on what the Action Plan gets right and its omissions. / read more