Greg Kilminster
Head of Product - Content
Enforcement
May witnessed large fines for some key names in financial services. In Canada, Toronto-Dominion Bank was fined CA$9,185,000 for not complying with Part 1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, followed a few days later by JP Morgan Securities Australia Limited being fined AU$775,000 for permitting suspicious client orders to be placed on the Australian futures market.
Towards the end of the month, Citigroup Global Markets Limited was fined more than £60 million in a joint action by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority for a ‘fat finger’ incident which saw a brief but significant drop in European stock indices.
Just two days later, we reported that two more banking giants, HSBC and JP Morgan, had been fined £6.2 million (FCA) and $200 million (Commodity Futures Trading Commission) respectively for failure to treat customers fairly and for inadequate supervision offences.
Elsewhere, the US Securities and Exchange Commission (SEC) issued a $10 million fine to the Intercontinental Exchange, Inc (ICE) for failing to promptly report a cyber intrusion. The SEC also fined audit firm BF Borgers CPA PC $14 million for deliberate and systemic failures to comply with Public Company Accounting Oversight Board (PCAOB) standards in more than 1,500 SEC filings.
On the same day, we reported that the Monetary Authority of Singapore (MAS) had imposed a penalty of $2.5 million on wealth management company Swiss-Asia Financial Services Pte Ltd for violating MAS’ anti-money laundering and countering the financing of terrorism requirements. Another wealth management company, Hudson Valley Wealth Management Inc, and its founder were fined more than $850,000 by the SEC for failing to disclose conflicts of interest.
Consultations
In Europe, a number of consultations were issued including the European Banking Authority’s (EBA) consultation paper (CP) on the draft regulatory technical standards (RTS) on the equivalent mechanism for unfinished property under the Capital Requirements Regulation (CRR).
Later in the month, the European Securities and Markets Authority (ESMA) published a consultation paper on non-equity trade transparency, reasonable commercial basis (RCB) and reference data under the Markets in Financial Instruments Regulation (MiFIR) review. Other consultations issued by the European regulators included ESMA’s consultation on the amendments to certain technical standards for commodity derivatives and the MiFIR Review Consultation Package.
At the very start of May, the UK’s Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) released a joint consultation paper to present proposals that incorporate the modifications brought about by the Securitisation (Amendment) Regulations 2024 and the UK prudential requirements for credit institutions and investment firms.
Still in the UK, the Payment Systems Regulator (PSR) issued two consultations: CP 24/7 APP scams data cycle 2 publication guidance which discusses the changes the PSR has made to the guidance surrounding the publication of authorised push payment (APP) scams data, and CP 24/8 on the reimbursement of victims of authorised push payment (APP) scams in the CHAPS system.
Elsewhere, in the United States, the Commodity Futures Trading Commission (CFTC) issued a proposed amendment to CFTC regulation 40.11 to specify further the definitions of event contracts which could see a ban on a range of potential exchange-traded event contracts. Additionally, the Office of Foreign Assets Control (OFAC) issued an interim final rule and request for comments regarding the Reporting, Procedures and Penalties Regulations. In a separate development, the Financial Industry Regulatory Authority (FINRA) filed a proposed rule change with the SEC regarding FINRA Rule 12800 (Simplified Arbitration). Finally, several agencies issued a Notice of Proposed Rulemaking (NPR) to address incentive-based compensation arrangements.
Policies and Procedures
Starting in the APAC region, the Monetary Authority of Singapore (MAS) issued a notice regarding the submission requirements for fund data by managers of specified collective investment schemes on the same day we reported that the Hong Kong Monetary Authority (HKMA) had released its Taxonomy for Sustainable Finance to promote informed decision-making and facilitate relevant finance flows for green and sustainable finance.
MAS also issued notices regarding technology risk management and cyber hygiene which became applicable during the month and the HKMA issued an updated version of the Supervisory Policy Manual (SPM) SB-1.
Meanwhile, in the United States, the CFTC approved the adoption of final regulations aimed at enhancing large trader reporting requirements for futures and options.
A number of US agencies also issued guidance to help community banks manage risks associated with third-party relationships. In the middle of May, the SEC confirmed changes to Regulation S-P, which aim to update and improve the protection of consumer financial information.
The Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau (CFPB) also issued a final rule amending Regulation CC (part 229), which implements the Expedited Funds Availability Act (EFA Act).
In the UK, the FCA issued a Dear CEO letter to remind firms of the closed product deadline for consumer duty obligations. The PRA also issued a Dear CEO letter regarding the findings of the PRA’s non-systemic firms’ recovery planning thematic review, which provides recommendations on both areas and includes best practice examples in the appendix.
The FCA also updated the data on applications made under the Cryptoasset Anti-Money Laundering/Counter-Terrorist Financing (AML/CTF) regime.
In Europe, ESMA released the final report containing Guidelines on the use of ESG or sustainability-related terms in funds’ names.
Key speeches
United States
- In a statement to the Technology Advisory Committee, CFTC Commissioner Kristin Johnson's spoke about the CFTC’s evolving approach to regulating artificial intelligence (AI) in financial markets.
- In a speech at the SIFMA AML Conference, Andrea Gacki, Financial Crimes Enforcement Network (FinCEN) Director outlined the agency's strategies to enhance transparency, combat money laundering, and counter terrorist financing within the US financial system.
- In a speech at the Texas Bankers Association 2024 Annual Meeting, Michelle Bowman, member of the Board of Governors of the Federal Reserve System, delivered a speech on financial stability and the crucial role of banking regulators in ensuring resiliency within the financial system.
- In a speech at the Securities and Exchange Commission’s 11th Annual Conference on Financial Market Regulation, SEC commissioner Mark Uyeda applied a philosophical approach to describing the SEC’s regulation of financial markets.
- In a speech at the Digital Chamber DC Blockchain Summit 2024, Michelle Bowman discussed the role of innovation in the financial system.
- In a speech at the International Organization for Standardization Technical Committee 68 Financial Services 44th Plenary Meeting, A Member of the Federal Reserve Board of Governors, Christopher J Waller, addressed the importance of technical standards in the evolving payments landscape and the Federal Reserve’s multiple roles in fostering a safe, efficient, and innovative payment system.
- In a speech at the 28th Annual Financial Markets Conference hosted by the Federal Reserve Bank of Atlanta, Michael S Barr, Vice Chair for Supervision at the Federal Reserve, spoke about the current stance of monetary policy and the conceptual framework of prudential bank regulations.
- In a speech at the City Bar White Collar Institute Ian McGinley, Director of Enforcement at the CFTC, discussed the evolving landscape of digital asset enforcement.
United Kingdom
- In a speech at City & Financial Global's City Week 2024, Sarah Pritchard, Executive Director, Markets and Executive Director, International at the FCA spoke about ensuring regulation supports the UK’s position in global wholesale markets, facilitates economic growth, and enhances international competitiveness.
- In a speech at the Bloomberg Buy-side Forum, Ashley Alder, Chair of the FCA, outlined the FCA's agenda for the asset management sector.
Europe
- In a blog published on the European Central Bank (ECB) website, Frank Elderson, a Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, wrote about the importance of materiality assessments in managing climate and environmental (C&E) risks within the banking sector.
- In a speech at the BaFin annual press conference Mark Branson, President of German regulator BaFin, spoke about the pressing need for simplifying financial regulation to enhance stability and efficiency within the European financial system.
- In a speech at the at the European Anti-Financial Crime Summit, Derville Rowland, Deputy Governor at the Central Bank of Ireland discussed the new European Anti-Money Laundering Framework and, specifically, the establishment of a central Anti-Money Laundering Authority (AMLA).
- In a speech at the BCBS-FSI high-level meeting for European Supervisors, Jose Manuel Campa, Chairperson of the European Banking Authority (EBA) discussed supervisory practices and priorities in Europe and how to ensure they remain fit for purpose.
APAC
- In a speech at the ACAMS APAC 2024 conference, Carmen Chu, Executive Director of Enforcement and AML at the Hong Kong Monetary Authority (HKMA), delivered a keynote address reflecting on the progress made in combating financial crime and the challenges ahead.
- In a speech at the All Actuaries Summit 2024, Suzanne Smith, Australian Prudential Regulation Authority (APRA) Executive Board Member spoke about the life insurance industry in Australia and shed light on the current state of the life insurance industry and outlining its achievements and the hurdles it faces.
- In a speech at the RIAA Conference Australia, Joe Longo, Chair of the Australian Securities & Investments Commission (ASIC), considered the pressing issue and concept of greenwashing in sustainable finance.
- In a speech at the Australian Finance Industry Association Risk Summit, Therese McCarthy Hockey, Executive Board Member of the Australian Prudential Regulation Authority (APRA), discussed the impact of generative artificial intelligence (AI) on the financial services sector and confirmed there are no plans for additional regulation to help counter any concerns.
- In a speech at the HFM Middle East Summit, Ian Johnston, Chief Executive of the Dubai Financial Services Authority (DFSA) shared insights on the evolution of the DFSA to meet the needs of the Dubai International Financial Centre (DIFC) and emphasised the importance of being a future-ready regulator.
- In a speech at the Australasian Investor Relations Association (AIRA) Annual Conference, ASIC Commissioner Simone Constant discussed three foundational principles to enhance compliance in the financial services industry: transparency, accountability, and consistency.