Greg Kilminster
Head of Product - Content
FCA sets out travel rule expectations
The Financial Conduct Authority (FCA) has announced that cryptoasset businesses in the UK will be required to comply with the Travel Rule from 1 September 2023. The Travel Rule is an international standard that requires cryptoasset businesses to collect, verify, and share information about cryptoasset transfers.
The FCA has said that it expects cryptoasset businesses to take all reasonable steps to comply with the Travel Rule, even when using third-party suppliers. Businesses will also be required to regularly review the implementation status of the Travel Rule in other jurisdictions and adapt their business processes as appropriate.
The Travel Rule is designed to help prevent money laundering and terrorist financing. By requiring cryptoasset businesses to share information about transfers, it will be more difficult for criminals to use cryptocurrencies to move money anonymously.
The FCA has said that it is working closely with industry to provide guidance on how to comply with the Travel Rule. The authority has also said that it will be monitoring compliance with the rule and will take action against businesses that fail to comply.
The Travel Rule is a significant development in the regulation of cryptoassets. It is the first time that an international standard has been adopted for cryptoasset transfers. The rule is expected to have a significant impact on the way that cryptoasset businesses operate.
The Travel Rule requires cryptoasset businesses to collect the following information about each transfer:
- The name and address of the sender and receiver
- The date and time of the transfer
- The amount of the transfer
- The type of cryptoasset being transferred.
In addition:
- Cryptoasset businesses must verify the information they collect. This can be done by requiring the sender and receiver to provide identification documents.
- Cryptoasset businesses must share the information they collect with each other. This can be done through a centralised database or a distributed ledger.
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Federal agencies tweak compliance requirements for Hawaii firms
Leading federal financial regulators have joined forces to provide crucial assistance to financial institutions grappling with the aftermath of the Hawaii wildfires. Collaborating agencies including the Federal Reserve System, the Federal Deposit Insurance Corporation, the Hawaii Department of Commerce and Consumer Affairs’ Division of Financial Institutions, the National Credit Union Administration, and the Office of the Comptroller of the Currency are stepping in to ensure operational continuity and support for affected institutions.
Acknowledging the far-reaching impact of the wildfires, the agencies have committed to offer tailored regulatory aid to supervised institutions, enabling them to navigate the challenges posed by the disaster.
Support for borrowers and communities
In a bid to alleviate the hardships faced by borrowers in wildfire-hit regions, the agencies endorse responsible loan term adjustments. Any modifications, made in good faith, will be met with regulatory support and shielded from examiner criticism. Institutions are empowered to assess loan modifications individually, considering unique borrower circumstances, without penalties for prudent efforts to ease financial burdens.
Facilitating temporary operations
Recognising operational impediments, regulators are expediting approvals for temporary facilities, aimed at ensuring swift service restoration for affected communities.
Navigating regulatory landscape
For institutions grappling with compliance issues due to wildfire disruption, direct communication with primary regulators is encouraged. Mindful of the potential hurdles in meeting publishing and other requirements, regulators are emphasising a cooperative approach to find tailored solutions.
Flexible reporting
Institutions anticipating challenges in meeting reporting obligations due to wildfire-related constraints are assured of understanding and flexibility. Reasonable steps toward compliance will not invite penalties or supervisory actions.
Community reinvestment incentives
Financial institutions aiding recovery in federally designated disaster zones may be eligible for Community Reinvestment Act (CRA) considerations. Community development efforts, including loans, investments, or services, can earn CRA credits for contributing to disaster-stricken areas.
Smart investments
Agencies advise vigilant monitoring of municipal securities and loans affected by the wildfires. Institutions are encouraged to take prudent steps to stabiise investments in light of local government setbacks.
As financial institutions navigate the aftermath of the Hawaii wildfires, the regulatory bodies stress their united stance in their commitment to fostering stability, resilience, and collaboration.
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ASIC announces executive changes
The Australian Securities and Investments Commission (ASIC) has announced several executive changes, as part of its ongoing transformation program.
In the Markets Group, Calissa Aldridge was appointed Executive Director, Markets Group. In her new role, Ms Aldridge will assume responsibility for end-to-end regulation of markets, including supervision, compliance and enforcement of market infrastructure, market intermediaries, corporate finance activities and market surveillance.
Rhys Bollen was appointed Senior Executive Leader for Markets Supervision. In his new role, Mr Bollen will assume responsibility for supervision of market intermediaries and market surveillance.
Ben Cohn-Urbach will step into the role of acting Senior Executive Leader, Markets Infrastructure. In this role, Mr Cohn-Urbach will oversee market infrastructure.
In addition to the changes in the Markets Group, ASIC also confirmed the appointment of the following senior executive leaders:
- Nathan Bourne, Senior Executive Leader, Credit, Banking and General Insurance
- Chris Rowe, Senior Executive Leader Investigation and Enforcement Action
- Brett Crawford, Chief Investigator and Senior Executive Leader, Small Business Enforcement
- Tom O’Shea, Senior Executive Leader, Enforcement Inquiries and Compliance
ASIC CEO Warren Day said he was pleased with the new appointments, which he said reflected the strong talent at ASIC and the need for renewal.
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New Memorandum of Understanding to strengthen collaboration between the HKMA and the AFRC
The Hong Kong Monetary Authority (HKMA) and the Accounting and Financial Reporting Council (AFRC) have agreed a new Memorandum of Understanding (MoU), superseding the one signed on 19 November 2007.
Under the new MoU, the HKMA and the AFRC agree to strengthen collaboration through case referrals, mutual assistance, capacity building and exchange of information. The enhanced cooperation will facilitate the AFRC’s regulatory efforts in upholding the quality of financial reporting, auditing and the accounting profession’s work in relation to the banking sector, which is vital to the HKMA in assessing the financial resilience of banks and ensuring their safety and soundness.
Key objectives of the MoU include:
- Replacement of previous agreement: The new MoU replaces the previous agreement to align with the updated regulatory regime implemented under the Accounting and Financial Reporting Council Ordinance (AFRCO).
- Information exchange and notification: The MoU aims to establish effective arrangements for the exchange of information, referral of relevant matters, and timely notification between the parties involved.
- Strengthened cooperation: Cooperation between the Monetary Authority and the Accounting and Financial Reporting Council is reinforced through the MoU.
Click here to read the full RegInsight on CUBE’s RegPlatform