Category Archives: Legal Issues and Regulation

New Regulatory Framework for Canadian Retail Payments Coming in 2019

Gowling WLG | Jeffrey Roode, Partner | Aug 12, 2019

new retail payment regs coming to canada  - New Regulatory Framework for Canadian Retail Payments Coming in 2019In its budget released in March, the Canadian federal government confirmed that it plans to introduce legislation in 2019 to implement a new retail payments oversight framework.  It is proposed that the Bank of Canada will would oversee this regulatory framework. This is a significant development as it will mean that a number of payments industry participants that are currently unregulated, including many fintech companies, will now be regulated.

Background

While the recent federal budget provided few details about the proposed regulatory framework, we expect that it will be based on a 2017 discussion paper released by the Department of Finance.  The discussion paper noted a number of problems in the way retail payments are regulated, most notably that regulated financial institutions, such as banks, are subject to detailed regulation with respect to their retail payments businesses, while other payment service providers (referred to as PSPs) are not subject to a comprehensive regulatory oversight framework.

See:  JP Morgan is rolling out the first US bank-backed cryptocurrency to transform payments business

The Department of Finance is concerned that this will create risks and confusion for consumers who might expect similar levels of protection, regardless of who their PSP is. The new legislation (which has yet to be developed) will presumably attempt to shift the regulatory framework away from an “institution-based” approach, where an entity is regulated based on the type of institution it is, towards a “functional” approach, where entities are regulated based on the types of activities they engage in — regardless of what kind of institution they are.

According to the discussion paper, the goal of the new oversight framework is “to ensure the retail payments ecosystem evolves in such a way that payment services remain reliable and safe for end-users and the ecosystem is conducive to the development of faster, cheaper and more convenient methods of payment.”

Who will be Regulated?

The discussion paper suggests that PSPs that engage in one or more of the following activities in the context of an electronic fund transfer for an end-user will be subject to the new regulatory framework:

  • Providing and maintaining a payment account for the purpose of making electronic fund transfers
  • Enabling the initiation of a payment on behalf of an end-user
  • Providing services to approve a transaction and/or enabling the transmission of payment messages
  • Enabling an end-user to hold funds in an account with the PSP until the funds are withdrawn or transferred to a third party through an electronic fund transfer
  • Enabling the process of exchanging and reconciling the payments items (referred to as “clearing”) that result in the transfer of funds and/or adjustment of financial positions (referred to as “settlement”)

As a result, the discussion paper envisions that the new regulatory oversight framework would apply to a wide array of transactions, including credit and debit card transactions, online payments, pay deposits, pre-authorized payments and peer to peer money transfers. Certain exceptions would apply, including cash transactions and gift cards or shopping mall cards that allow the consumer to make purchases at only one merchant or a limited group or merchants.

See:  Capital One data breach shows why it shouldn’t be a tech company that does banking

Interestingly, the discussion paper proposes that the new regulatory framework would only apply to transactions in fiat currencies like the Canadian dollar, so bitcoin and other virtual currency transactions would be exempt. However, the government does plan to monitor the use of virtual currencies in retail payments, leaving open the possibility that the regulations could apply to virtual currencies in the future.

The New Regulatory Requirements

The discussion paper proposes the following measures:

  • Safeguarding requirements regarding the holding of end-user funds by PSPs
  • Operational standards for PSPs
  • Requirements for PSPs to disclose key characteristics of their products to end-users
  • Requirements for PSPs to maintain dispute resolution mechanisms
  • Liability rules shielding end-users for losses as result of unauthorized transactions
  • Requirements that PSPs register with the regulator

 

Conclusion

As with any new legislation, the devil will be in the details. However, assuming the new legislation adopts the principles set out in the discussion paper, we would expect that a large number of fintech companies and other previously unregulated PSPs will fall under the new regulatory regime and will, for the first time, need to develop a compliance strategy.

 

Jeffrey Roode - New Regulatory Framework for Canadian Retail Payments Coming in 2019About the Author

Jeffrey Roode is a partner at Gowling WLG, an international law firm. Gowling WLG’s dedicated tech group works with clients to navigate complex regulatory and operational challenges, enabling them to take advantage of the innumerable opportunities available in the burgeoning tech sector.

 


NCFA Jan 2018 resize - New Regulatory Framework for Canadian Retail Payments Coming in 2019 The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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UK Financial Conduct Authority Provides Final Guidance on Cryptoassets: Better Defines Utility Tokens

Crowdfund Insider | | July 31, 2019

UK final crypto guidance - New Regulatory Framework for Canadian Retail Payments Coming in 2019The UK Financial Conduct Authority (FCA) has published its much anticipated final guidance on cryptoassets following a feedback period on prior commentary. The FCA has now established which sector of crypto is regulated by the authority and which digital assets fall outside their remit. The FCA said the majority of respondents had supported their previous proposals on a regulatory approach. Additionally, the agency noted that few changes had been made since the prior document with the exception of “reframing” the taxonomy of cryptoassets to provide greater clarity for firms operating in the sector.

The FCA said that 92 different firms and individuals provided feedback ranging from big banks, to crypto exchanges, issuers, and individuals.

See:  FCA reveals findings from first cryptoassets consumer research

The FCA provided an important caveat stating the Guidance should act as a first step for market participants to understand whether authorization is required and should be read in conjunction with PERG [Perimeter Guidance Manual]. Where market participants are unsure and require regulatory feedback, Innovate support functions such as the Sandbox or Direct Support can provide this help for requests that meet the eligibility criteria for support. Market participants should also consider obtaining appropriate external advice.

E-Money and security tokens fall under FCA regulation but everything else, depending on the specific characteristics of the cryptoasset, do not fall under the watchful eye of the UK regulator Click to Tweet

The Guidance follows a report published last fall from a crypto task force which included HM Treasury, the FCA and the Bank of England.

In an accompanying release, FCA Executive Director of Strategy and Competition Christopher Woolard stated:

“This is a small, complex and evolving market covering a broad range of activities. Today’s guidance will help clarify which cryptoasset activities fall inside our regulatory perimeter.”

The FCA advised consumers to remain cautious on the emerging sector of Fintech due to intrinsic risk noting that unregulated cryptoassets fall outside the Financial Compensation Scheme and there is no recourse to the Financial Ombudsman Service.

See:  FCA confirms new rules for P2P platforms

Digital assets, as defined by the FCA, fall within four separate categories.

  • Specified investments under the Regulated Activities Order (securities)
  • e-money under the E-Money Regulations
  • captured under the Payment Services Regulations
  • outside of regulation

Regarding specific token types, the FCA updated the previous delineations as outlined below:

  • Security tokens: this category does not change materially from the Guidance that we consulted on and refers to those tokens that provide rights and obligations akin to specified investments as set out in the RAO, excluding e-money. We have now specifically removed e-money from the definition of a security token, to create a separate category. These remain within the regulatory perimeter.
  • E-money tokens: this category refers to any token that reaches the definition of e-money. These tokens are subject to the EMRs and firms must ensure they have the correct permissions and follow the relevant rules and regulations. This category formerly sat within the utility tokens category. These tokens fall within regulation.
  • Unregulated tokens: this category refers to any token that does not meet the definition of e-money, or provide the same rights as other specified investments under the RAO. This includes tokens referred to as utility tokens, and exchange tokens.
    • These tokens can, for example, be issued centrally or be decentralised, give access to a current or prospective good or service in one or multiple networks and ecosystems, or be used as a means of exchange. They can be fully transferable or have restricted transferability. These tokens fall outside the regulatory perimeter.

See:  Entrepreneurs who use Utility Tokens to reduce CAC (Customer Acquisition Cost) will create the most valuable Security Tokens

Bitcoin Unregulated?

While “exchange tokens” were deemed not to be regulated by the FCA, the report noted that “5AMLD” will bring in an anti money laundering (AML) regime for cryptoassets including exchange tokens. 5AMLD is the Fifth Anti-Money Laundering Directive by the European Union that is an enhancement of existing rules (4AMLD). 5AMLD has provisions for virtual currencies and EU member states must implement provides by January 2020. While exchange tokens like Bitcoin may not be directly regulated, firms using these tokens on either side would be subject to Payment Service Regulations (PSRs).

Regarding stablecoins, some of which are backed by fiat currency such as US dollars or British Pounds, the FCA had this to say:

“…not every ‘stablecoin’ will meet the definition of e-money, or a security token.”

E-money tokens are tokens that meet the definition of electronic money in the EMRs. That is:

  • electronically stored monetary value that represents a claim on the issuer
  • issued on receipt of funds for the purpose of making payment transactions
  • accepted by a person other than the issuer
  • not excluded by regulation 3 of the EMRs [E-Money Regulations]

Exchange tokens as they fall outside the FCA regulatory perimeter. This means that the transferring, buying and selling of these tokens, including the commercial operation of cryptoasset exchanges for exchange tokens, are activities not currently regulated by the FCA. If you are a crypto exchange that deals in Bitcoin, Ether, etc. you are not carrying out a regulated activity.

See:  What Trump’s Bitcoin Tweet Changes

A Security is a Security But it Still Depends…

To quote the FCA:

“For our taxonomy, we specifically refer to security tokens as only those that reach the definition of specified investments under the RAO. The category has been slightly amended to specifically exclude e-money from this definition.”

FCA: “any token that is not a security token, or an e-money token is an unregulated token.”

The RAO references the Regulated Activities Order as defined by the Financial Services and Market Act legislation. The FCA Guidance is the first step but “definitive judgments can only be made on a case-by-case basis.” This is indicative of ongoing ambiguity within the crypto sector.

Utility Token Clarity

Utility Tokens are unregulated tokens that do not provide rights or obligations akin to specified investments (like shares, debt securities and e-money). While Utility Tokens remain unregulated this may change but only by an act of legislation, according to the FCA. HM Treasury is said to be reviewing this issue.

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NCFA Jan 2018 resize - New Regulatory Framework for Canadian Retail Payments Coming in 2019 The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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A Global Review Of The Regulatory Considerations Relating To Crypto-Asset Trading Platforms

McCarthy Tetrault | Sonia Struthers, Laure Fouin and others | July 12, 2019

IOSCO - New Regulatory Framework for Canadian Retail Payments Coming in 2019In May 2019, the International Organization of Securities Commissions (IOSCO) published a consultation paper entitled Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms (the “Consultation Paper”) on the issues and regulatory considerations regarding crypto-asset trading platforms. The Consultation Paper follows a similar paper published by the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) in March 2019, covered in our earlier post.  IOSCO is the global international policy forum for securities regulators and is comprised of securities regulators from more than 115 jurisdictions, including Ontario, Quebec, British Columbia and Alberta. The purpose of the Consultation Paper is to identity the novel issues, risks and key considerations associated with crypto-asset trading platforms (“CTPs”). The Consultation Paper also provides frameworks to assist regulatory authorities when addressing the key issues and considerations. In preparing this report, IOSCO conducted a survey (the “Survey”) of various CTP operational models and the regulatory approaches currently applied or being considered in IOSCO member jurisdictions.

Scope

The Consultation Paper does not provide guidance to help determine if a crypto-asset is a security or whether it falls within a regulatory authority’s jurisdiction. When a regulatory authority determines that a crypto-asset is a security, the basic principles and objectives of securities regulation are meant to apply. The focus of the report is on the secondary market trading – as opposed to initial coin offerings – of crypto-assets on CTPs, assuming that the regulatory authority has the legal authority to regulate those assets.

What Are CTPs?

The Consultation Paper defines a crypto-asset trading platform as “a facility or system that brings together multiple buyers and sellers of crypto-assets for the purpose of completing transactions or trades.” CTPs perform a function comparable to traditional trading venues. Therefore, some of the issues and risks associated with trading on CTPs are similar to those with trading securities on regulated trading venues generally. Accordingly, most jurisdictions indicated that their existing regulatory frameworks may be applicable to CTPs and crypto-assets. However, the Consultation Paper notes that CTPs may perform many additional functions that are typically conducted by intermediaries, custodians, transfer agents and clearinghouses. The Survey indicated that only a small number of jurisdictions have proposed or introduced frameworks specific to crypto-assets and CTPs. However, the CSA Business Plan 2019-2022 published on June 13, 2019 mentions that the CSA is considering developing a regulatory regime for CTPs.

See:  NCFA Comments: CSA/IIROC Joint Consultation Paper 21-402: Proposed Framework for Crypto-Asset Trading Platforms

The Consultation Paper sets out the following seven key considerations for regulators to review when evaluating a CTP.

Key Consideration #1: How Access is Provided to CTPs

Typically, intermediaries that are approved participants of the trading venue access such venue on behalf of their clients. These intermediaries are responsible for the on-boarding process, which includes complying with suitability and know-your-client (KYC) requirements. The Survey revealed that most CTPs tend to provide non-intermediated and direct access to retail investors, meaning that the CTP is responsible for the on-boarding process. Most jurisdictions indicated that current on-boarding processes used by CTPs are limited compared to the requirements imposed on intermediaries that traditionally perform this function. This raises further concerns regarding anonymous trading of crypto-assets and investors accessing a CTP from prohibited jurisdictions, as the on-boarding process is crucial in preventing prohibited trading activity on CTPs and limiting participation to eligible investors. The Survey responses indicated that most jurisdictions believe it might be necessary to impose requirements typically applicable to intermediaries on CTPs, especially if the CTP allows for direct access to retail investors.

Recommended IOSCO Framework

A regulatory authority may want to consider an assessment of the access criteria and on-boarding process used by CTPs by:

  • Reviewing the CTP’s policies and procedures regarding access criteria and the on-boarding process to ensure KYC, anti-money laundering, anti-terrorism and product suitability requirements are met;
  • Allowing only intermediated access to CTPs; and
  • Considering whether CTPs should provide risk disclosure.

Key Consideration #2: Custody and Safeguarding of Participant Assets

Custody functions of participant assets are typically performed by parties other than trading venues, such as by intermediaries, custodians, transfer agents and clearing houses. The Survey revealed that many CTPs tend to provide the custody of participant assets by providing the service themselves. Some CTPs may outsource custody services to a third-party or allow participants to self-custody their crypto-assets in their own wallets using private keys.

See:  Crypto Custody: Our Shared Journey Towards Mass Adoption

Risks associated with a CTP providing custody services include:

  • Operational failure (e.g. a cyber-attack) and insufficient technology governance arrangements, causing assets to be lost or inaccessible;
  • Theft, loss or inaccessibility of private keys;
  • Assets of the CTP may be co-mingled with participant assets which may cause participant assets to not be fully protected in the event of a default;
  • The CTP may have inaccurate record-keeping; and
  • The CTP may not have sufficient financial assets to cover participants’ claims in the event of financial difficulties or assets being lost due to technological failures.

Recommended IOSCO Framework

A regulatory authority may want to assess the process used by a CTP to safeguard and maintain accurate records of participant assets by requiring the following:

  • Disclosure of participant ownership rights and claims;
  • Arrangements by the CTP to secure participant assets in the event of theft or loss;
  • Segregation of participant assets from the CTP and/or other participant assets;
  • Accurate and reliable records of participant assets and positions;
  • An audit trail of the movement of crypto assets between the participant, the CTP, and any third parties.
  • Determining who has access to the private keys for all CTP wallets and whether there are any backup arrangements to prevent a single point of access;
  • If the CTP uses a third party for its custody services, ensuring the adequacy of measures taken by the CTP relating to the security of the assets held by the third party;
  • Financial arrangements to compensate investors in the event of a loss of assets (e.g. insurance policies, compensation funds); and
  • Capital requirements on CTPs to protect against bankruptcy or insolvency, especially if the CTP is performing intermediary functions such as custody of assets.

See: 

Key Consideration #3: Conflicts Of Interest

The full-service function provided by CTPs may result in additional conflicts unique to CTPs over and above those applicable to traditional trading venues, such as:

  • Trading on the CTP by the CTP itself can result in conflicts related to information asymmetry, market abuse and unfair pricing to participants.
  • CTPs may provide advisory services resulting in potential conflicts when the CTP has a direct or indirect interest in a crypto-asset traded on the CTP.
  • Conflicts can arise when the system design of a CTP gives preferential treatment to a subset of participants or to the operators of the CTP.

Recommended IOSCO Framework

A regulatory authority may want to assess any potential conflicts of interest in a CTP by considering the following:

  • An evaluation of any policies and procedures established by the CTP to manage conflicts of interest;
  • Procedures regarding access to confidential information about participants on the CTP;
  • If a CTP allows its employees, operators or directors to engage in trading on the platform, a review of their trading activities and financial interest in the crypto-assets;
  • Transparency of policies and procedures that address fair pricing and execution of trades with participants; and
  • Disclosure of whether an issuer of a crypto-asset is a participant on the CTP.

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NCFA Jan 2018 resize - New Regulatory Framework for Canadian Retail Payments Coming in 2019 The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Innovative new law opens Guernsey up to Artificial Intelligence

Ogier | Andrew Munro | July 18, 2019

intelligent contracts - New Regulatory Framework for Canadian Retail Payments Coming in 2019The newly enacted Electronic Transactions (Electronic Agents) (Guernsey) Ordinance, 2019, which came into force on 1st March this year, signals a turning point in law for companies using Artificial Intelligence which itself represents an area of exponential growth and critical importance for future development in many areas and sectors worldwide.

This exciting and innovative new legislation builds on the existing Electronic Transactions (Guernsey) Law, 2000, and contains a pioneering definition of the legal effect of using AI in contract formation procedures. Essentially, it gives electronic agents the authority to form, create, execute and terminate contracts without the input of humans, and makes it clear that the validity of any such contractual exchange will not be denied due to the use of an electronic agent.

Without realising it or being cognisant of the fact, we already make contracts with machines all the time. A great practical example is scanning a contactless card when using the Tube: humans have set the parameters of peak and off-peak fares, and the machine applies those parameters automatically at the times the humans have pre-set. If we scan our card at peak time, we form a contract with the machine to pay the set peak fare.

See:  Blockchain’s potential will continue to spur public and private investment

However, the new legislation would, for example, enable those machines to independently assess the number of people on the platform during peak time and be given the discretion to adjust the fare accordingly for each card swipe. In this new Guernsey legislation, the humans still set the ultimate parameters, but the machine is the agent in the eyes of the law.

If you start to think about it, your interactions with machines where you are effectively concluding contracts with computer programmes are increasing day by day and the sophistication of the machines is developing rapidly. Consider algorithms in computer programmes empowered to make decisions changing the price of airline tickets second by second depending on imminence and demand, vending machines reducing the price of stock approaching its sell by date.

The legal authority given for this level of discretion by machines in the contract formation process is as far as we know a world first, and there is no relative clarity for such concepts at present in competing jurisdictions. This gives existing Guernsey-resident companies and companies operating under the auspices of Guernsey law the reassurance they need to continue adapting and innovating with technology, and prospective companies looking to become resident in Guernsey an advantage that other offshore jurisdictions do not have.

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NCFA Jan 2018 resize - New Regulatory Framework for Canadian Retail Payments Coming in 2019 The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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A Digitized Staff Compliance Platform is a Must-Have

VigilantCS | Robert Kirwin | July 24, 2019

VigilantCS overview - New Regulatory Framework for Canadian Retail Payments Coming in 2019Meeting regulatory obligations, respecting compliance policies and upholding ethical standards are mission-critical for financial firms—and their staff members.

In our experience, these requirements can only be achieved by deploying a digitized solution that increases transparency and promotes individual accountability. Through digitization, firms can automate and reinforce regulatory requirements, while reducing the cost of compliance programs.

This article will examine why we believe a digitized solution is a must-have for achieving compliance, why that must occur at a staff level, and how it can deliver a competitive advantage.

Canadians generally trust their financial services providers; however, uncertainty and even mistrust resurface. Concerns about aggressive upselling by major Canadian banks reported in 2018 has caused FCAC to implement new regulations around sales practices (C-86). Meanwhile, misconduct cases in the investment sector have spurred regulatory activism: Canadian securities regulators are determined “to put clients’ interests first.”

Increasingly focused on individual conduct, our securities regulators are pursuing many sources of data: registration forms, continuing education (CE) completion, complaints and transactional data. A digitized solution is not only more responsive, it can also pinpoint emerging issues and identify mitigations and interventions.

See:  SEC wants big data tools for monitoring and enforcing cryptocurrency market compliance

Some registered firms have begun using regulatory data meaningfully to assess staff conduct risk. However, these initiatives have exclusively targeted rogue trading in which primarily trade and communication surveillance is assessed. The potential is much greater if more strategically valuable data sets are examined to improve transparency, diagnose individual conduct risk—and to support further investigation.

Specific, known behaviours are sound predictors of the propensity for compliant/non-compliant conduct. These can be assessed and interpreted but the key is to do so efficiently through a digitized system. Through our academic review of behavioural economic factors, we have observed specific markers of compliant behaviour at an individual level, including:

Registered Status Reporting: Registered individuals must make ongoing disclosure of personal status and competency. Behavioural factors reflected in these filings are potential red flags not yet fully recognized by the risk owner, i.e., the registered firm and its staff.

Professional Involvement: Can be measured through three key components: vigor, dedication and absorption. A willingness to invest in one’s work and career is telling. Committed professionals will not risk infractions that diminish their prospects. PD, CE filings, as well as responsiveness to compliance department inquiries, supply evidence of involvement.

Complaint And Incident History: Firm’s will conduct investigations on client complaints and regulatory breaches (breach of policy or regulatory requirements). This information about past behavioural lapses—if analysed using well-attuned tools—can predict the propensity to engage in future misconduct.

Turnover Behaviour: Employment duration indicates a willingness to adhere to regulatory protocols. Unethical or noncompliant behaviour may cause advisors to be dismissed and/or to leave firms or the industry. Alternatively, long tenure reflects stability and occupational commitment.

See:  Canada Seeks to Widen AML Compliance Net

Corporate Environment: Firms operate with a set of shared values and/or unspoken assumptions they associate with success and which can affect ethical reasoning. Understanding behaviour favoured by the prevailing corporate environment makes it possible to better manage conduct risk.

Colleagues’ Behaviour: It is important to understand how social influence affects a firm’s atmosphere, as well as how authority figures shape its organizational values and ethical norms. Conduct risk is elevated in environments where it has previously occurred and/or is tolerated.

It cannot be overstated: An effective compliance program is much more than a “checkbox” exercise.

Conventional paper-based record-keeping systems typically produce a fragmented, dated and potentially disjointed view of individual professional conduct: they cannot deliver the transparency or accountability firms must have today. Employing an efficient compliance resource that responds to these factors can empower firms to gain, retain and reward staff whose individual conduct creates compliant operations.

The link between compliance, transparency, digitization and individual accountability is direct and unbreakable.

To be effective, a firm’s compliance platform must incorporate user controls over the data and generate a cohesive, real-time view of staff behaviour by leveraging regulatory filings, training records, and conflict-of-interest, complaints and incident reporting, as well as transaction history. In VCSOpen, firms get a pragmatic solution to address their core compliance program needs today and help them avoid the costly consequences of a regulatory breach, while also providing an enhanced experience for staff. (Not far in the future, we will offer an AI-driven resource that will make it possible to go even deeper.)

See:  5 Digital Policies Small Biz MUST Have

Compliance programs are a necessary function that have the potential to be a strategic advantage. VigilantCS has designed cost-saving, central-portal solutions that ensure a firm’s core asset—its people—are up to snuff when fulfilling their individual compliance obligations. Firms that do not adapt to new regulatory realities are at a competitive disadvantage.

Robert Kirwin - New Regulatory Framework for Canadian Retail Payments Coming in 2019Robert Kirwin, LLB, MBA

Chief Executive Officer, Co-founder, VigilantCS

Founded by compliance professionals, VigilantCS is an innovative producer of intelligent cloud-based platforms for cost-effectively managing and monitoring conduct risk and staff-level compliance. In 2018, VigilantCS was one of only three Canadian companies to be named to the RegTech 100 list by FinTech Global. For more: vigilantcs.com, linkedin.com/company/vigilantcs/ and @vigilant_cs.

 


NCFA Jan 2018 resize - New Regulatory Framework for Canadian Retail Payments Coming in 2019 The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Facebook gets more official pushback on Libra

CNN Business

libra - New Regulatory Framework for Canadian Retail Payments Coming in 2019New York (CNN Business)American lawmakers are concerned that Facebook's Libra cryptocurrency may try to challenge the dollar and are demanding the company stand down.

They want Facebook to immediately halt development of Libra until regulators have time to examine the plans and "take action," according to a letter sent Tuesday to the company by a group of lawmakers from the House Financial Services Committee.

Chairwoman Maxine Waters, a Democrat from California, first suggested a moratorium on development the day Libra was announced. The new letter represents an escalation of pressure on Facebook's digital currency plans, which have also been scrutinized by regulators around the world.
Other interest groups have weighed in, too: More than 30 organizations sent a similar request to Facebook on Tuesday, saying US and foreign regulatory systems are not prepared to address questions about "national sovereignty, corporate power, consumer protection" and other issues raised by the project.

The lawmakers said they want to hold public hearings on the "risks and benefits of cryptocurrency-based activities and explore legislative solutions."

"Failure to cease implementation before we can do so risks a new Swiss-based financial system that is too big to fail," they added. While Facebook is developing Libra, the currency will be managed by an independent coalition of other companies and nonprofit organizations based in Geneva.

See:  Facebook’s Libra Cryptocurrency: Everything We Know

The company announced in June plans to develop Libra, which it hopes will become a universally accepted, stable digital currency that can increase access to financial services around the world and make it easier and cheaper to send money online. Facebook and others will be able to build applications and plug-ins to existing platforms for users to obtain and manage Libra.
But Facebook's size and influence has given officials pause. Facebook has 2.4 billion users worldwide. That's a massive audience that could soon adopt a type of currency that remains largely unregulated. Lawmakers also worry about Facebook's troubled reputation on issues like user privacy and data security.
Though Facebook published a white paper detailing its plans for Libra, lawmakers said it provided "scant information" about the "intent, roles, potential use and security" of the currency.

"If products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks that endanger the US and global financial stability," the letter reads.

The Senate banking and House financial services committees have scheduled hearings later this month to examine Libra's implications for financial systems and user privacy. David Marcus, who heads up the Libra project for Facebook, will testify at the hearings.
In a Facebook post Wednesday, Marcus said Facebook intentionally announced plans for Libra early, to allow for better communication with lawmakers, regulators and other companies.
"Our rationale was simple: We wanted to encourage open discussion by design," Marcus wrote in the post. "Launching a high-quality medium of exchange in the form of a cryptocurrency, and its supporting infrastructure, cannot happen in darkness. If we truly want to have a chance to better serve the billions of people, and businesses, who deserve to be served by modern, open, financial services, this is the only way."

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Marcus said he thinks Libra could actually help counter money laundering and terrorism financing. Regulators have previously mentioned concerns about whether Libra could be used to finance illegal activities — a common concern with cryptocurrencies, since the underlying technology can provide a layer of anonymity for users. Facebook has said it developed a process to verify the identity of Libra users on its own platforms in order to mitigate those risks.
Federal Reserve Chairman Jerome Powell said at a press conference last week that Facebook has been communicating with the Fed about its plans.
Lawmakers who want to address Libra now face an uphill battle, said Columbia Business School professor and cryptocurrency expert R.A. Farrokhnia. He said they've been slow to react to the proliferation of cryptocurrencies, which have been around for about a decade.
"The timelines for regulation have not kept in pace with the advancements in technology," Farrokhnia said.

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NCFA Jan 2018 resize - New Regulatory Framework for Canadian Retail Payments Coming in 2019 The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - New Regulatory Framework for Canadian Retail Payments Coming in 2019FF Logo 400 v3 - New Regulatory Framework for Canadian Retail Payments Coming in 2019community social impact - New Regulatory Framework for Canadian Retail Payments Coming in 2019
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The future of finance report

Bank of England Review of UK’s financial system | By Huw van Steenis | June 20, 2019

review of UK financial system report June 2016 - New Regulatory Framework for Canadian Retail Payments Coming in 2019Overview

My report, The Future of Finance , looks at how the economy is changing; how finance can serve and support these changes; and what it could mean for the Bank of England.

We have looked beyond the immediate challenges posed by the UK’s withdrawal from the EU to identify longer-term trends shaping the economy and finance — and how the Bank can support this evolution for the good of the people of the United Kingdom.

 

 


NCFA Jan 2018 resize - New Regulatory Framework for Canadian Retail Payments Coming in 2019 The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - New Regulatory Framework for Canadian Retail Payments Coming in 2019FF Logo 400 v3 - New Regulatory Framework for Canadian Retail Payments Coming in 2019community social impact - New Regulatory Framework for Canadian Retail Payments Coming in 2019
NCFA Fintech Confidential Issue 2 FINAL COVER - New Regulatory Framework for Canadian Retail Payments Coming in 2019