On 30 July 2018, the U.S. Department of the Treasury (‘the Treasury’) and the Office of the Comptroller of the Currency (‘OCC’) issued guidance on certain issues confronting the FinTech industry. Specifically, the Treasury released a long-awaited report, entitled ‘A Financial System That Creates Economic Opportunities: Nonbank Financials, Fintech, and Innovation’ (‘the Treasury Report’). Following a specific recommendation in the Treasury Report, the OCC formally announced that it would begin to accept applications for special-purpose national bank (‘SPNB’) charters, and it provided guidance on the procedures and standards that would govern such applications through the issuance of a Licensing Manual Supplement for Special Purpose National Banks (‘the Manual Supplement’). Taken together, the Treasury Report and the OCC announcement reinforce the commitment of the federal government to promote the growth of the US FinTech industry, as Barrie VanBrackle, Partner at Orrick, Herrington & Sutcliffe LLP, explains. / read more

Few would deny the capacity for FinTech to deliver significant benefits to customers across financial services, from banking and payments to digital currencies, wealth management and insurance. A recent study published by the European Parliament - ‘Competition issues in the Area of Financial Technology’ - notes FinTech’s ‘enormous potential in improving financial inclusion … [and] providing more easily accessible and affordable financial services to large masses of the population and small and medium-sized enterprises¹.’ Miles Trower, Partner at TLT LLP, discusses the application of competition law to FinTech and the unique challenges for authorities raised in the study, as well as the challenges for those advising the dynamic businesses that inhabit this space. / read more

In July 2018, the Financial Conduct Authority (‘FCA’) clarified through its publication of the finalised version of its ‘FG 16/5 Guidance for firms outsourcing to the ‘cloud’ and other third-party IT services,’ that its guidance no longer applies to banks. Luke Scanlon, Head of Fintech Propositions and Legal Director at Pinsent Masons, discusses the impact of this change and the background to the FCA’s regulatory framework. / read more

On 18 July 2018, the European Banking Authority (‘EBA’) published its Guidelines on fraud reporting under the Revised Payment Services Directive (Directive (EU) 2015/2366) (‘PSD2’) (EBA/GL/2017/17) (‘Guidelines’). These Guidelines define how payment service providers (‘PSPs’) should report cases of fraud to their regulator. Here Dr Nils Rauer and Andreas Doser, of Hogan Lovells, discuss how the Guidelines sit with the rest of PSD2, and how data protection rules under PSD2 and the General Data Protection Regulation (Regulation (EU) 2016/679) (‘GDPR’) apply to fraud prevention by PSPs. / read more

In June 2018, the Canadian Department of Finance published wide-ranging draft amendments to regulations made under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act 2018 (‘PCMLTFA’), which will affect financial and non-financial entities that provide access to Canada’s financial system, including dealers in virtual currency and foreign money services businesses (‘MSBs’). The proposed amendments are subject to a 90-day review period. The final version of the amendments is expected to be published in the autumn of 2018, with implementation 12 months later in the autumn of 2019. Kashif Zaman, Partner at Osler, Horskin & Harcourt LLP, provides insight into the PCMLTFA and what the implications could be for Canadian FinTechs. The proposed amendments to the regulations were preceded by a consultation paper that was released in February 2018 and touched on a much broader set of potential changes. The fact that not all the potential changes discussed in the consultation paper have made their way into the proposed regulations does not mean that the Canadian Government has dropped those ideas. Instead, it is believed that a number of concepts covered in the paper may find their way into further regulations in the coming months. Kashif Zaman, Partner at Osler, Hoskin & Harcourt LLP, summarises some of the topics covered in the February consultation paper, as they relate to the FinTech sector, and some of the relevant changes in the proposed amendments to the PCMLTFA. / read more

On 15 June 2018, the Swiss Parliament adopted an amendment to the Banking Act that creates a new category of licence allowing companies that are principally active in the financial sector to accept or solicit from the public funds of up to CHF 100 million. This legislative amendment is expected to come into force on 1 January 2019. This new category of licence is commonly referred to as a ‘FinTech licence,’ because it will be most useful for companies that are active in the FinTech sector. However, it will also be open to companies that are not active in that sector, provided, however, that they are mainly active in the field of finance. The creation of this new licence follows other measures recently adopted by the Federal Council and the Swiss Financial Market Supervisory Authority (‘FINMA’) to improve the regulatory framework and remove barriers to market entry for FinTech companies in Switzerland. Caroline Clemetson and Grégoire Tribolet, of Schellenberg Wittmer Ltd, provide an overview of the current regulatory framework in Switzerland, and the conditions applicable to this new licence. / read more