- The EBA consults on guidelines on reporting of data to assist authorities in their supervisory duties and significance assessment under MiCAR / EBA
On 15 July, 2024, the European Banking Authority (EBA) launched a consultation on draft Guidelines on reporting requirements to assist competent authorities and the EBA in performing their duties under the Markets in Crypto-assets Regulation (MiCAR). These Guidelines should ensure that Competent Authorities have sufficient comparable information to supervise compliance of issuers with MiCAR requirements and provide the EBA with the information necessary to conduct the significance assessment under MiCAR. The consultation runs until 15 October 2024.
Issuers of asset-referenced tokens (ARTs) and certain e-money tokens (EMTs) are required to report specific information defined under Article 22 MiCAR. These data provisions by the issuers are not enough to allow competent authorities and the EBA to discharge their supervisory tasks and the significance assessment tasks under MiCAR.
The EBA has identified these data gaps and is consulting on draft Guidelines specifying common templates and instructions for issuers to provide the EBA and competent authorities with the necessary information to cover these gaps. In addition, these Guidelines include common templates and instructions that issuers should use to collect the data they need from the relevant Crypto-Asset Service Providers (CASPs).
For more Information: The EBA consults on guidelines on reporting of data to assist authorities in their supervisory duties and significance assessment under MiCAR | European Banking Authority (europa.eu) - The EBA issues ‘travel rule’ guidance to tackle money laundering and terrorist financing in transfers of funds and crypto assets / EBA
On 04 July 2024, the European Banking Authority (EBA) issued new Guidelines on the so-called ‘travel rule’, i.e. the information that should accompany transfers of funds and certain crypto assets. This rule will help tackle the abuse of such transfers for money laundering and terrorist financing purposes.
The Guidelines specify which information should accompany a transfer of funds or crypto assets and also list the steps that payment service providers (PSPs), intermediary PSPs (IPSPs), crypto-asset service providers (CASPs) and intermediary CASPs (ICASPs) should take to detect missing or incomplete information, and what they should do if a transfer of funds or a transfer of crypto-assets lacks the required information.
The objective is to establish a consistent and effective approach to implementing the travel rule across the EU that allows relevant authorities to fully trace such transfers where this is necessary to prevent, detect or investigate money laundering and terrorist financing.
For more Information: https://www.eba.europa.eu/publications-and-media/press-releases/eba-issues-travel-rule-guidance-tackle-money-laundering-and-terrorist-financing-transfers-funds-and - SEC Charges Nader Al-Naji with Fraud and Unregistered Offering of Crypto Asset Securities / SEC
On 30 July, 2024 the Securities and Exchange Commission (SEC) charged Nader Al-Naji with perpetrating a multi-million-dollar fraudulent crypto asset scheme involving a social media platform called BitClout and its native token of the same name (herein, “BTCLT”).
According to the SEC’s complaint, starting in November 2020, Al-Naji raised more than $257 million from unregistered offers and sales of BTCLT, while falsely telling investors that proceeds would not be used to compensate him or other BitClout employees. In reality, the complaint alleges, Al-Naji spent more than $7 million of investor funds on personal expenditures like rental payments for a Beverly Hills mansion and extravagant cash gifts to family members.
The SEC’s complaint further alleges that, to avoid regulatory scrutiny, Al-Naji portrayed BitClout as a decentralized project with “no company behind it … just coins and code,” and launched the project using the pseudonym “Diamondhands” to further create the illusion that the project was autonomous when he was actually behind the project. In addition, Al-Naji allegedly secured a letter from a prominent law firm opining, based on his mischaracterizations of the nature of his project, that BTCLT were not likely to be deemed securities under federal law. At the same time, Al-Naji allegedly secretly told certain investors that he was engaged in this subterfuge to avoid compliance with the law.
For more Information: https://www.sec.gov/newsroom/press-releases/2024-91 - CFPB Report Highlights Junk Fees Charged by School Lunch Payment Platforms / CFBP
On 25 July 2024, the Consumer Financial Protection Bureau (CFPB) released a report on payment processing companies that help school districts process children’s school lunch payments. These private companies process payments made by parents who may have limited or zero payment alternatives. With a captive customer base, these companies can have broad control over fees assessed for each transaction. These fees are widespread and often hit low-income families the hardest. Overall, parents and caregivers have no control over fee rates and lack opportunities to shop around for cheaper options.
The report highlights average costs and potential risks for families using electronic payment platforms to add money to their children’s school lunch accounts. More generally, the report also reviews the market size and landscape of school lunch payment processing companies, and it builds upon initial observations referenced in the Fall 2023 edition of Supervisory Highlights.
While more than 20 unique companies offer these services to school districts nationwide, the vast majority of enrolled students are served by just three market leaders. These processors typically charge fees to add money to a student’s school lunch account, which collectively can cost families upwards of $100 million each year. Among the companies it studied, the CFPB observed that the payment processors charge transaction fees of $2.37, or 4.4%, of the total transaction, on average, each time money is added into a payment account.
For more Information: https://www.consumerfinance.gov/about-us/newsroom/cfpb-report-highlights-junk-fees-charged-by-school-lunch-payment-platforms/ - Banks in Singapore to Strengthen Resilience Against Phishing Scams / MAS
On 9 July, 2024 the Monetary Authority of Singapore (MAS) and The Association of Banks in Singapore (ABS) announced that major retail banks in Singapore will progressively phase out the use of One-Time Passwords (OTPs) for bank account login by customers who are digital token users within the next three months. This will better protect them against phishing.
Customers who have activated their digital token on their mobile device will have to use their digital tokens for bank account logins via the browser or the mobile banking app. The digital token will authenticate customers’ login without the need for an OTP that scammers can steal, or trick customers into disclosing. Customers who have not activated their digital tokens are strongly encouraged to do so, to lower the risk of having their credentials phished.
The use of OTP was introduced in the 2000s as a multi-factor authentication option to strengthen online security. However, technological developments and more sophisticated social engineering tactics have since enabled scammers to more easily phish for customers’ OTP, for example through setting up fake bank websites that closely resemble the genuine websites. This latest measure will strengthen the authentication process, making it harder for scammers to fraudulently access a customer’s account and funds without the customer’s explicit authorisation using his mobile device.
For more Information: Banks in Singapore to Strengthen Resilience Against Phishing Scams (mas.gov.sg)
