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May 23, 2023

On the web

MiCA is the First Step in Robust Approach to Crypto Regulation


"The Markets in Crypto-Assets regulation being introduced by the European Commission will set the benchmark for governing the global cryptoasset industry. Other jurisdictions should take note. After being proposed by the Commission in September 2020 as part of its digital finance strategy, the European Parliament finally approved the MiCA regulation on 20 April, setting the wheels in motion for it enter into force in July."

May 15, 2023

On the web

Dozens of Democrats Defend CFPB at Supreme Court as Case Threatens Its Existence


"Over 140 current and former Democratic lawmakers filed an amicus brief in the Supreme Court on Monday to defend the country’s leading consumer protection agency from challenges to its regulatory authority. The brief, led by Democrats Sen. Sherrod Brown of Ohio and Rep. Maxine Waters of California, relates to the case Consumer Financial Protection Bureau v. Community Financial Services Association of America, which would threaten the constitutionality of the agency and undermine its funding and mandated authorities."

April 13, 2023

On the web

FTC, Florida Attorney General Sue Chargebacks911 for Thwarting Consumers Who Were Trying to Reverse Disputed Credit Card Charges

Federal Trade Commission

"The Federal Trade Commission and the State of Florida have filed suit against Chargebacks911 for unfairly thwarting consumers who were trying to dispute credit card charges through the chargeback process. In a complaint filed in federal court, the FTC and Florida charged that, since at least 2016, the “chargeback mitigation” company and its owners, Gary Cardone and Monica Eaton Cardone, have used multiple unfair techniques to prevent consumers from successfully winning chargeback disputes."

Are Payment Apps Systemically Important? CFPB's Chopra Thinks So

American Banker

"Rohit Chopra, the director of the Consumer Financial Protection Bureau, has concerns about peer-to-peer payment platforms such as PayPal, Venmo and Cash App.  During a webcast appearance on Tuesday, Chopra suggested that financial regulators should consider whether such money transmitter services should be designated as systemically important to ensure their customers' funds are adequately protected. (Subscription Required)"

April 3, 2023

On the web

Italy Bans ChatGPT Over Personal Data Risk

Silicon UK

"Italy’s data regulator has blocked ChatGPT in the country and launched an investigation into the Microsoft-backed chatbot’s use of personal data. The Garante regulator said there was concern about the massive amounts of data collected by ChatGPT from its users. It said there was no legal basis to justify “the mass collection and storage of personal data for the purpose of ‘training’ the algorithms underlying the operation of the platform”. Italy is the first Western country to ban OpenAI’s ChatGPT, which is blocked in countries including China, North Korea, Iran and Russia.  The regulator noted a 20 March software bug in the chatbot that exposed portions of users’ conversations and payment information to other users for about nine hours."

March 24, 2023

On the web

Florida Governor Ron DeSantis Introduces State Legislation Banning CBDC


Florida Governor Ron DeSantis proposed legislation on Monday that would ban central bank digital currencies (CBDCs) from the Sunshine State, portraying it as a measure to safeguard Floridians’ financial privacy. The legislation would prohibit in Florida any CBDC that the U.S. Federal Reserve could introduce and any created by a foreign government, outlawing the technology entirely from being used as a form of money within the state.

March 6, 2023

On the web

Menendez, Colleagues Urge Regulators to Hold Zelle Accountable for Inadequate Protections to Stop Fraudulently Induced Payments to Crooks


"U.S. Senator Bob Menendez (D-N.J.), alongside Sens. Jack Reed (D-R.I.), Elizabeth Warren (D-Mass.), Sherrod Brown (D-Ohio), and Mark Warner (D-Va.), led an effort urging financial institutions and regulators to help people keep their hard-earned cash safe from fraud and scams, especially as scammers find new ways and employ sophisticated schemes to dupe customers using instant peer-to-peer payment systems like Zelle to send money on the platform under fraudulent pretenses."

March 3, 2023

On the web

Consumer Use of Buy Now, Pay Later: Insights from the CFPB Making Ends Meet Survey

Consumer Financial Protection Bureau

"This report explores the consumer financial profiles of Buy Now, Pay Later (BNPL) borrowers using the Bureau’s Making Ends Meet survey and its association with credit bureau data. While many BNPL borrowers who we observed used the product without any noticeable indications of financial stress, BNPL borrowers were, on average, much more likely to be highly indebted, revolve on their credit cards, have delinquencies in traditional credit products, and use high-interest financial services such as payday, pawn, and overdraft compared to non-BNPL borrowers."

February 24, 2023

On the web

Regulators: Banks That Offer Crypto Deposits Must Mitigate Risks

ABA Banking Journal

"Banking regulators today issued a joint statement reminding financial institutions of their risk management obligations should they offer depository services for cryptoassets. In the statement, the Federal Reserve, FDIC and the Office of the Comptroller of the Currency said that banks are neither prohibited nor discouraged from providing banking services that are permitted by law or regulation. However, “certain sources of funding from cryptoasset-related entities may pose heightened liquidity risks to banking organizations due to the unpredictability of the scale and timing of deposit inflows and outflows,” they said."

February 23, 2023

On the web

February 1, 2023

On the web

January 19, 2023

On the web

CFPB Issues Guidance to Root Out Tactics Which Charge People Fees for Subscriptions They Don’t Want

Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau (CFPB) issued a new circular affirming that companies offering “negative option” subscription services must comply with federal consumer financial protection law. Negative option programs include subscription services that automatically renew unless the consumer affirmatively cancels, and trial marketing programs that charge a reduced fee for an initial period and then automatically begin charging a higher fee.

January 17, 2023

On the web

US Lawmakers Create 'Congress' First Ever' Digital Assets Subcommittee

Bitcoin News

U.S. Congress’ “first ever” subcommittee on digital assets has been created as part of the House Financial Services Committee. “We want to create a regulatory legal framework for digital assets … that makes America a leader from an innovation point of view but also protects consumers and investors,” explained Congressman French Hill, who will lead the digital asset subcommittee.

January 5, 2023

On the web

Why the FTC Isolated Mastercard With Its Pre-Christmas Consent Order

Digital Transactions

“When the Federal Trade Commission announced two days before Christmas it had leveled a preliminary consent order against Mastercard Inc. to correct what the agency saw as roadblocks the card company had erected against routing online debit transactions to competing networks, the move may have surprised at least some observers. The surprise lay not in what the FTC had to say, but in what it omitted: the order left out Visa Inc., Mastercard’s main rival and a company the Commission had identified only two months earlier as a fellow actor in blocking debit routing to other networks.”

January 3, 2023

On the web

Agencies Issue Joint Statement on Crypto-Asset Risks to Banking Organizations

Board of Governors of the Federal Reserve System

“Federal bank regulatory agencies today issued a statement highlighting key risks for banking organizations associated with crypto-assets and the crypto-asset sector and describing the agencies’ approaches to supervision in this area. In particular, the statement describes several key risks associated with crypto-assets and the crypto-asset sector, as demonstrated by the significant volatility and vulnerabilities over the past year. Given these risks, the agencies continue to take a careful and cautious approach related to current and proposed crypto-asset-related activities and exposures at banking organizations.”

December 23, 2022

On the web

FTC Orders an End to Illegal Mastercard Business Tactics and Requires it to Stop Blocking Competing Debit Card Payment Networks

Federal Trade Commission

“The Federal Trade Commission is ordering an end to illegal business tactics that Mastercard has been using to force merchants to route debit card payments through its payment network, and is requiring Mastercard to stop blocking the use of competing debit payment networks. Under a proposed FTC order, Mastercard will have to start providing competing networks with customer account information they need to process debit payments, reversing a practice the company allegedly had been using to keep them out of the ecommerce debit payment business and, according to the FTC, that violated provisions of the 2010 Dodd-Frank Act known as the Durbin Amendment and its implementing rule, Regulation II.”

FTC Orders Mastercard to Open Tokens to Rival Debit Networks

American Banker

“Mastercard must provide competing debit networks with the keys needed to convert tokenized card account information — which has been encoded for security purposes — back to the original account number for online transactions, the Federal Trade Commission announced on Friday. The FTC voted 4-0 to issue an administrative complaint and approve a proposed consent order alleging that Mastercard’s practices for e-commerce transactions violate provisions of the 2010 Dodd-Frank Act known as the Durbin amendment, the agency said in a press release. (Subscription required)”

December 21, 2022

On the web

CFPB Orders Wells Fargo to Pay $3.7 Billion for Widespread Mismanagement of Auto Loans, Mortgages, and Deposit Accounts

Consumer Financial Protection Bureau

“The Consumer Financial Protection Bureau (CFPB) is ordering Wells Fargo Bank to pay more than $2 billion in redress to consumers and a $1.7 billion civil penalty for legal violations across several of its largest product lines. The bank’s illegal conduct led to billions of dollars in financial harm to its customers and, for thousands of customers, the loss of their vehicles and homes. Consumers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank.”

December 15, 2022

On the web

FinCEN Issues Notice of Proposed Rulemaking Regarding Access to Beneficial Ownership Information and Related Safeguards


“The Financial Crimes Enforcement Network (FinCEN) today issued a Notice of Proposed Rulemaking (NPRM) that would implement provisions of the Corporate Transparency Act (CTA) that govern the access to and protection of beneficial ownership information. This NPRM proposes regulations that would govern the circumstances under which such information may be disclosed to Federal agencies; state, local, tribal, and foreign governments; and financial institutions, and how it must be protected. The proposed regulations specify how government officials would access beneficial ownership information in order to support law enforcement, national security, and intelligence activities. They also describe how certain financial institutions and their regulators would access such information in order to fulfill customer due diligence requirements and conduct supervision. The proposed rule also sets forth high standards for protecting this sensitive information consistent with the goals and requirements of the CTA. The NPRM also proposes amendments to the final reporting rule to specify when reporting companies may report FinCEN identifiers associated with entities.”

December 6, 2022

On the web

Sanctions Compliance Guidance for Instant Payment Systems

Treasury | Office of Foreign Assets Control

“In recent years, the financial sector has introduced payment systems that allow users to send and receivefunds almost instantly, at any time of the day, on any day of the year. These systems—which allow a payment’s transmission and the availability of funds to payees to occur almost in real-time (referred to herein as “instant payment systems”)1 —are being developed both in the United States and abroad. The high velocity of instant payments, along with increasing values and volumes of such payments, have led to questions across the financial sector, particularly from participating banks, about how best to implement sanctions compliance measures in this context. Each instant payment system has its own unique characteristics; for example, some allow for domestic payments only, while others permit cross-border payments. Accordingly, as the financial system innovates to improve efficiency, OFAC continues to encourage financial institutions to adopt a risk-based approach to ensure their sanctions compliance controls and related technology solutions remain commensurate with the sanctions risks presented by instant payment systems. To that end, in the context of instant payment systems, OFAC is issuing this guidance to: (i) reaffirm that financial institutions should take a risk-based approach to managing sanctions risks; (ii) highlight key factors that may be relevant in determining that risk-based approach;(iii) encourage the development and deployment of innovative sanctions compliance approaches and technologies to address identified risks; and (iv) encourage developers of instant payment systems to incorporate sanctions compliance considerations as they develop new payment technologies. This guidance should aid financial institutions in determining how best to allocate their compliance resources consistent with their particular sanctions risks.”

November 30, 2022

On the wires

Fraud, Transaction Problems Highlight US Consumer Complaints Over Crypto


“Fraud and transaction problems were leading factors in a surge of US consumer complaints related to cryptocurrencies & other digital assets. The report from the US Consumer Financial Protection Bureau (CFPB) comes as the high-profile failure of the FTX crypto exchange has seized the attention of regulators and shaken the crypto industry. “Our analysis of consumer complaints suggests that bad actors are leveraging crypto-assets to perpetrate fraud on the public,” said CFPB Director Rohit Chopra.  Even before the collapse of FTX, complaints from consumers who were hit by other types of digital currency losses have been rising at an alarming rate, the CFPB reported. The CFPB report said the crypto market has become a magnet for fraudsters who see little chance that their schemes will be detected due to the absence of investor protection and the opaque nature of the market.”

November 29, 2022

On the wires

Brazil to Allow Credit Fintechs to Initiate Payment Transactions


“Brazil’s National Monetary Council on Friday decided to allow credit fintechs to initiate payment transactions, the central bank said, a move that will in practice clear them to provide payment services to consumers and business establishments. To operate as payment initiators, fintechs currently need to open another company specifically for this purpose. With the change, they will be able to offer this service within their routine operation, said the central bank. Payment initiators, according to the central bank, “initiate a transaction ordered by the final user but never manage the payment account, nor hold the funds of the transactions.” The central bank stressed that the change should promote innovations in the financial system and increase competition between companies authorized to provide this service.”

November 23, 2022

On the wires

NY Gov Signs Novel Law That Limits Cryptomining, For Now


“New York is taking a first-in-the-nation step to tap the brakes on the spread of cryptocurrency mining, under legislation that Gov. Kathy Hochul signed Tuesday. The measure comes amid growing scrutiny of the cryptocurrency industry following this month’s collapse of the FTX exchange. But New York’s measure, which passed the state Legislature in June, is specifically concerned with the environmental aspects of crypto. “I will ensure that New York continues to be the center of financial innovation, while also taking important steps to prioritize the protection of our environment,” Hochul, a Democrat, said in a message explaining her approval. The new law sets a two-year moratorium on new and renewed air permits for fossil fuel power plants used for energy-intensive “proof-of-work” cryptocurrency mining — a term for the computational process that records and secures transactions in bitcoin and similar forms of digital money. Proof-of-work is the blockchain-based algorithm used by bitcoin and some other cryptocurrencies.”

November 22, 2022

On the web

Afterpay, Zip, React To Proposed Buy Now Pay Later Regulations

Channel News

“Afterpay and Zip have shared differing opinions on new regulatory options put forward by the Treasury will impact the buy now, pay later sector. In the Treasury’s paper, three options are offered. The first would amend the Credit Act to require that BNPL providers check that a certain product is affordable for a customer before it is offered. The second option requires BNPL providers to gain a credit licence and operate within responsible lending regulations. The third, and more strict option, would see BNPL loans enforced under the same laws as home loans, with the tighter checks this brings. Treasury is seeking consultation by December 23, with plans to legislate in 2023. Not surprisingly, Afterpay favours the first, least restrictive, option.”

November 10, 2022

On the web

FCA Threatens BNPL Bosses With Jail Time and Fines As Laybuy Nears Profitability


“The Financial Conduct Authority ( FCA) has written to ‘buy now, pay later’ (BNPL) execs warning they could face jail time if they fail to comply with financial promotion rules. Although not all BNPL ‘agreements’ are required to be authorised by the FCA, it said that financial promotions do fall within its jurisdiction, and therefore must still comply with “certain regulatory requirements”, in a letter seen by AltFi. As first reported by City AM , the FCA has warned that communication or explainers about products constitute “financial promotions” and so fall under its remit. The letter outlined that financial promotions must be “clear, fair and not misleading”, with the offence for non-compliance carrying a maximum sentence of two years imprisonment, a fine, or both.”

November 8, 2022

On the web

CFPB Seeks Further Public Input on Big Tech Payment Platforms

Consumer Financial Protection Bureau

“In October 2021, the CFPB ordered six large technology and peer-to-peer platforms that operate payment services (Amazon, Apple, Facebook, Google, PayPal and Square) to provide information about their business practices, including their data collection and use, their policies for removing individuals or businesses from their platforms, and their policies and practices for adhering to key consumer protections like addressing disputes and errors. Today, the CFPB is announcing that it will re-open the public comment period for 30 days and add additional questions. Faster payment systems are increasingly popular and offer many benefits to consumers, like sending money directly to other consumers or engaging in quicker transactions. But the scale and market power of large technology companies raise concerns about potential new risks to consumers and to broader competition in the marketplace. The CFPB continues to analyze the responses to the October 2021 orders and public comments and to share our insights with the public. For example, in August, the CFPB released a report , The Convergence of Payments and Commerce, that outlined consumer risks stemming from financial services companies’ ability to aggregate and monetize consumer financial data.”

November 1, 2022

On the web

FinCEN Analysis Reveals Ransomware Reporting in BSA Filings Increased Significantly During the Second Half of 2021


“The Financial Crimes Enforcement Network (FinCEN) today issued its most recent Financial Trend Analysis of ransomware-related Bank Secrecy Act (BSA) filings for 2021, indicating that ransomware continued to pose a significant threat to U.S. critical infrastructure sectors, businesses, and the public. The report focuses on ransomware trends in BSA filings from July-December 2021, and addresses the extent to which a substantial number of ransomware attacks appear to be connected to actors in Russia… FinCEN issued today’s report pursuant to the Anti-Money Laundering Act of 2020 and in response to an increase in the number and severity of ransomware attacks against U.S. critical infrastructure since late 2020. Analysis covers pertinent ransomware activities for calendar year 2021, focuses on the second half of 2021, and builds on the BSA data underlying FinCEN’s October 2021 report. Among the most notable findings in the report: Reported ransomware-related incidents have substantially increased from 2020; Ransomware-related BSA filings in 2021 approached $1.2 billion; Roughly 75 percent of the ransomware-related incidents reported to FinCEN during the second half of 2021 pertained to Russia-related ransomware variants.”

October 28, 2022

On the web

Britain Proposes Regulation of All Cryptoassets


“Britain would have the power to regulate all cryptoassets under a proposal the UK financial services minister has added to a draft law before parliament that will almost certainly pass. Andrew Griffith, re-appointed as City Minister on Thursday by Britain’s new Prime Minister Rishi Sunak, put forth the amendment to the financial services and markets bill, which parliament has begun approving. The bill, as originally drafted, gives the Financial Conduct Authority powers to regulate stablecoins only, but the amendment broadens the remit to cover promotions for all cryptoassets.”

October 26, 2022

On the web

Despite COVID-19 Pandemic, Record 96% of U.S. Households Were Banked in 2021


“Despite unprecedented economic challenges posed by the COVID-19 pandemic, nearly 96 percent of U.S. households were banked in 2021, according to the latest national survey released today by the Federal Deposit Insurance Corporation (FDIC). The FDIC’s 2021 National Survey of Unbanked and Underbanked Households also found an estimated 4.5 percent of U.S. households (representing 5.9 million households), lacked a bank or credit union account, the lowest national unbanked rate since the FDIC survey began in 2009. According to FDIC’s latest biennial survey, approximately 1.2 million more households were banked since 2019. Nearly half of newly banked households that received government payments said these payments contributed to their decision to open an insured bank or credit union account. Meanwhile, 14.1 percent of households (representing 18.7 million households), were underbanked in 2021, meaning they had a bank or credit union account and used nonbank financial products and services.”

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