Greg Kilminster
Head of Product - Content
Enforcement
September saw a huge number of enforcements in the United States, with total fines well in excess of $700 million and with more individual fines issued from the main regulators than in the previous three months combined.
Off-channel communications breaches continue to be an issue on which regulators are focusing and we reported on the Commodity Futures Trading Commission (CFTC) $42 million fine against Canadian Imperial Bank of Commerce and the fine issued against Piper Sandler Hedging Services LLC for similar breaches.
Earlier in the month the Securities and Exchange Commission (SEC) joined in the act with another enforcement sweep involving off-channel communications, with penalties totalling more than $49 million.
Other ‘bulk’ enforcements in the month included the SEC fining 23 entities and individuals for their failure to timely report information about their holdings and transactions in public company stock and fines imposed on nine registered investment advisers for breaching the SEC's Marketing Rule by disseminating misleading advertisements.
Significant US fines elsewhere included the CFTC’s fine of $209,614,892 for Sam Ikkurty and several entities for operating a commodity pool Ponzi scheme, and a $28 million fine for TD Bank following the discovery of widespread errors in the bank’s reporting of customer information to consumer credit agencies.
Still on Ponzi schemes, in Australia a former director was sentenced to 11 years in prison by the Supreme Court of New South Wales for his role in orchestrating one that defrauded investors of millions, and Macquarie Bank Limited was hit with a fine of almost AU$5 million for failing to prevent suspicious orders from being placed on the electricity futures market, and Vanguard Investments Australia was ordered to pay a record penalty of AU$12.9 million for greenwashing.
Finally, in the UK, the Financial Conduct Authority (FCA) published its decision to impose a total fine of £590,544 and ban two financial advisers and two partners for "a reckless disregard for customers’ financial situation”.
Consultations
In the UK, the Payment Systems Regulator (PSR) released consultation paper (CP) 24/11, proposing a change to the maximum reimbursement level for authorised push payment (APP) scams. The changes were confirmed just a few weeks later. The PSR also published CP 24/12 to gather input on the draft statement of policy outlining the PSR's approach to its cost-benefit analysis methodology.
Later in the month the Prudential Regulation Authority (PRA) published a package of banking capital consultation papers including proposals that would significantly simplify the capital regime for Small Domestic Deposit Takers (SDDTs); streamline the Pillar 2A capital framework and capital communications process; introduce plans to restate Capital Requirements Regulation (CRR) provisions on the definition of capital into the PRA Rulebook and introduce plans to update and streamline the UK’s policy framework for capital buffers.
The FCA published consultation paper (CP) 24/19, which includes proposals for a new regulatory reporting return for specific consumer credit firms. Later in the month came CP 24/20 which proposes changes to the safeguarding regime for payments and e-money firms. The UK Government and FCA also announced plans to reform UK retail disclosure rules and an immediate temporary exemption for investment trusts from EU law retail disclosure requirements.
In the APAC region, the Monetary Authority of Singapore (MAS) issued a consultation paper proposing amendments to the Financial Services and Markets (Resolution of Financial Institutions) Regulations 2024 (FSM RFI Regulations) to enhance resolution powers for the insurance sector, and a further consultation paper on new guidelines for MAS Notice 134 on recovery and resolution planning. The Australian Prudential Regulation Authority (APRA) released a discussion paper on changes to the prudential framework mainly to replace Additional Tier 1 (AT1) capital with more reliable and effective forms of capital.
The Australian Treasury meanwhile released a consultation paper seeking input on the establishment of a new 'Front Door' for major transformational investments, and the Australian Financial Complaints Authority (AFCA) consulted on a new approach document related to complaints involving non-disclosure and misrepresentation under the Insurance Contracts Act and minor amendments to the delayed insurance claims in superannuation approach document. This consultation closed at the end of September.
Policies and Procedures
Staying in the APAC region, the Hong Kong Monetary Authority (HKMA) announced the finalisation of the revised banking returns – Capital Adequacy Ratio (CAR Return), Leverage Ratio (LR Return), Liquidity Position (Liquidity Position Return), and Stable Funding Position (Stable Funding Position Return). The Australian Securities and Investments Commission (ASIC) meanwhile welcomed the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024.
In the UK, the PRA published its near-final policy statement, PS9/24, on the implementation of the Basel 3.1 standards and also published two supervisory statements: 3/24 Credit risk definition of default and 4/24 Credit risk: Internal ratings based approach.
Both the PSR and FCA issued their annual reports during the month and the PSR also issued PS 24/5 directing banks and other payment firms participating in CHAPS to reimburse their customers who have been victims of authorised push payment (APP) scams, and the FCA announced that the publication of the final policy statement on extending the Sustainability Disclosure Requirements (SDR) regime to portfolio management was delayed.
In the US, the SEC approved the Public Company Accounting Oversight Board’s (PCAOB) new quality control (QC) standard, QC 1000, A Firm’s System of Quality Control, along with related amendments to PCAOB rules, standards and forms; the Office of the Comptroller of the Currency (OCC) issued a final rule amending its application review procedures under the Bank Merger Act (BMA). Finally, we reported on the same day that both the SEC and CFTC had approved amendments to MSRB Rule G-14 and listing of voluntary carbon credit (VCC) derivative contracts for trading respectively.
Key speeches
North America
- In a speech at the American Institute of CPAs and the Chartered Institute of Management Accountants conference on banks and savings institutions, Paul Munter, Chief Accountant of the SEC covered the application of the staff of the Division of Corporation Finance and the Office of the Chief Accountant (staff) Accounting Bulletin 121 (SAB 121).
- In a speech at the at the National Housing Conference, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra spoke about the impact of falling interest rates on existing homeowners.
- In a speech at the Executive Council of the Banking Law Section of the Federal Bar Association, Federal Reserve Governor Michelle W Bowman outlined her concerns regarding the current stress testing regime for large banks.
- In a speech at the Brookings Institution in Washington, DC, Michael S Barr, Vice Chair for Supervision of the Federal Reserve, presented proposed changes to the capital reforms as a result of Basel III endgame and capital surcharge for global systemically important banks (G-SIB).
- In a speech at the Geneva Association’s Programme on Regulation and Supervision (PROGRES) seminar, the Acting Assistant Secretary for Financial Institutions at the US Treasury, Laurie Schaffer discussed several Treasury initiatives including the work of the Federal Insurance Office (FIO) at the US Department of the Treasury in the areas of climate and cyber risk.
- In a speech at the Joint European Banking Authority and European Central Bank International Conference, Michael Hsu, the Acting Comptroller of the Currency, delivered a detailed examination of how bank supervision has evolved over the past decades.
- In a speech at the Aspen Institute, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra discussed the abuse and misuse of personal data.
- In a speech at the Electronic Transaction Association (ETA) Annual Fintech Policy Forum, Laurie Schaffer discussed the Treasury’s perspective on artificial intelligence (AI), both broadly and specifically in relation to consumer finance and the insurance sector.
United Kingdom
- In a speech at the Cambridge International Symposium on Economic Crime, Freya Grimwood, the Interim Chief Capability Officer at the Serious Fraud Office (SFO), discussed the agency’s strategic priorities and recent achievements.
- In a speech at the Financial Crime Summit in London, Sarah Pritchard, the FCA’s executive director of markets and executive director of international, set out the regulator’s vision for tackling financial crime.
- In a speech at the Capital Markets Industry Taskforce conference, Sarah Pritchard outlined a bold programme of reforms aimed at strengthening the UK’s capital markets and enhancing their global competitiveness.
- In a speech at the Association for Financial Markets in Europe (AFME) annual European Compliance and Legal Conference, Therese Chambers, Joint Executive Director of Enforcement and Market Oversight at the FCA, discussed the FCA’s evolving approach to enforcement and addressed the feedback on proposals in consultation paper (CP) 24/2 on the publication of enforcement investigations.
Europe
- In a speech to the joint European Banking Authority and European Central Bank international conference, Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the European Central Bank (ECB), spoke about the critical issue of operational resilience, and stressed the necessity for banks to fortify themselves against a rapidly evolving risk landscape increasingly shaped by cyber threats, technological disruptions, and the growing complexities of global financial systems.
- In a speech at the Irish Business and Employers Confederation (IBEC) digital euro roundtable event, Anne Marie McKiernan, Director of Financial Operations at the Central Bank of Ireland (CBI), discussed progress made on the development of a digital euro, the Central Bank Digital Currency (CBDC) for the eurozone.
- In a speech at the Supervision Innovators Conference 2024, Elizabeth McCaul, Member of the Supervisory Board of the European Central Bank (ECB), outlined the ECB’s strategy to integrate digital tools and artificial intelligence (AI) to ensure European banking supervision remains resilient in an evolving landscape.
- In a speech at the at the Association for Financial Markets in Europe (AFME)’s 8th Annual European Compliance and Legal Conference, Verena Ross, Chair of the European Securities and Markets Authority (ESMA) discussed initiatives to build more effective, attractive, and resilient capital markets in the EU, focusing on the securitisation framework and financial sector operational resilience.
- In a speech at the Future of Financial Intelligence Sharing Event, Derville Rowland, Deputy Governor of the Central Bank of Ireland (CBI), discussed the new anti-money laundering (AML) Regulation under the EU’s AML Package.
- In a recent speech at the recent Health Insurance Authority (HIA) Conference, Deputy Governor of the Central Bank of Ireland (CBI), Sharon Donnery, discussed the regulator’s efforts to support consumers in an increasingly complex financial landscape.
APAC
- In a speech at the GIR Live Asia-Pacific Investigations Summit in Singapore, Christopher Wilson, Executive Director of Enforcement at Hong Kong's Securities and Futures Commission (SFC), reflected on the complexities of modern financial crime and outlined the SFC's strategies for upholding market integrity in an increasingly interconnected world.
- In a speech to the Financial Services Council (FSC) 2024 Conference, Samantha Barrass, Chief Executive of New Zealand’s Financial Markets Authority (FMA) highlighted the challenge facing New Zealand’s financial services sector: that of maintaining consumer resilience while fostering long-term prosperity.
- In a speech at the 2024 INCLUSION Conference on the Bund, Raymond Chan, Executive Director of Enforcement and Anti-Money Laundering (AML) at the Hong Kong Monetary Authority (HKMA), emphasised the critical need to safeguard the integrity of Hong Kong’s financial system amid growing threats from fraud, digitalisation, and geopolitical tensions.
- In a speech at the Australian Compliance Institute Annual Conference, Australian Securities and Investments Commission (ASIC) Chair Joe Longo highlighted the evolving and expanding role of compliance professionals, calling for a culture of ethics, integrity, and continual learning.