Jennifer Cutting

The evolving landscape of AI legislation is crucial to the future of technology and society. Yesterday's #KingsSpeech highlighted the UK government's intent to establish targeted legislation for high-risk AI models. While details remain sparse, this move signals a significant step towards addressing the regulatory gaps in AI governance. In addition to AI legislation, the #DigitalInformation and #SmartData Bill mentioned below aims to harness data for economic growth through secure and innovative uses, including Digital Verification Services and a National Underground Asset Register. These initiatives promise to transform how data is managed and utilized. Let's discuss it! #AI #ArtificialIntelligence #DigitalIdentity #SmartData #Innovation #AIRegulation #DataPolicy #UKLegislation #TechPolicy

1

There’s been a lot of chatter about the latest FCA figures showing that 87% of applications for cryptoasset firm registration resolved in the last 12 months have been unsuccessful. As I led the last successful application (approved way back in February!) I can’t resist adding my 2 sats: ▶ The FCA definitely applies a high bar for these applications. That’s not a bad thing, so long as its approach is proportionate and firms are given a fair crack of the whip. ▶ I’ve heard horror stories - from people who would know - about the FCA imposing unreasonable demands (eg 24 hour turnaround for a full policy rewrite). ▶ BUT that wasn’t our experience at all. Our case team was professional and reasonable  throughout. While I didn’t always agree 100% with their feedback, it was clear what they needed us to do and they gave us enough time to do it. ▶ There’s no secret sauce to getting an application approved and the pain points will be different for each firm, but here are my top tips: 👨‍🔧 👩‍🔧 Appoint credible people with relevant experience as your MLRO and Deputy MLRO. Staff without compliance experience winging it is a non-starter. 📜 Get good external advice, from both a law firm and (unless you have an extensive Compliance setup already) a compliance consultancy. Don’t skimp on this. 🤝 Make key internal stakeholders understand that they are going to need to invest their time - it isn’t just a Legal & Compliance project. 📅 Spend the time and effort to make the initial application as strong as possible. Focus on clearly explaining your business and compliance model in the Regulatory Business Plan, and on getting the AML policies and procedures as good as they can be. 🤔 When the inevitable FCA feedback comes, listen carefully to what they are saying, ask questions until you’re sure you understand what they need, then make those changes. Save any challenges for absolutely critical points.

109

8 Comments

Britain's finance watchdog sets out plan to implement crypto regulation regime by 2026 https://buff.ly/3Z1ZAMY Britain's financial regulatory authority has unveiled a strategic plan to establish a comprehensive cryptocurrency regulation framework by 2026. This initiative aims to provide clarity and security for digital asset transactions, ensuring consumer protection and market integrity. The move aligns with global trends as nations seek to regulate the burgeoning crypto sector to prevent fraud and enhance transparency. Stakeholders anticipate that this regulatory regime will include guidelines on the legal status of cryptocurrencies, compliance obligations, and enforcement measures. #CryptoRegulation #FinancialSecurity

10

The dust up in BaaS land from consent orders to the debate over use of FBOs is creating lot’s of armchair quarterbacking and second guessing. For the record, I’m on team Alex Johnson that FBOs are not the right tool; Adam Shapiro I see your point, I just don’t think those conditions are easily met. ZIRP fueled a “growth at all costs” bender. Mix with the laissez faire regulatory stance and some risk management muscles atrophied. Worse, there is finger pointing between banks, programs, and middleware providers about who is responsible for what activities. I don’t really care what the contract says, all partners need a shared view of risk. Good risk management needn’t constrain innovation. We often write about our FIRE™ process (Fast, Iterative, Responsive, Experiments). We also have a simplified risk management process called the  FIRE™ Break. It does not seek to be exhaustive but is a streamlined way for parties to collaborate to promote responsible innovation without hampering the process. Here is our rubric for risk management:   What could possibly go wrong? The list doesn’t need to be exhaustive. You can’t possibly capture all the black swans but start. We’ll prioritize the list in the next two steps. Not everything on the list needs a contingency plan but good to keep the complete list. Knowing how much money is in each of my customers’ accounts would be high on my list whether I’m the program, the bank, or the intermediary between them. Better yet, I think everyone should have been in on this conversation How likely is it? It seems obvious to start with the greatest likelihood risks. I have to ask myself how in the trifecta of neobanks, Synapse and Evolve, no one brought up that reconciliation is hard and when transactions are scaling quickly, it is more probable than not that some of those pennies end up in the wrong place.   How bad is it? Losing money is bad. The FDIC was literally created for this reason. How do I minimize it? Minimization isn’t about eliminating a risk. That is often impossible. Blunting the impact, however, is achievable and How will I know it is happening? A key to minimization is early intervention. Preferably before the smoke turns into an inferno. How could Evolve not been all over the reconciliation of balances? This is a requirement for FBO accounts to have passthrough coverage of FDIC insurance.   Last, how do I repair it? Fully baked plans are rarely useful. If the circumstance surrounding a risk can be fully understood in advance, take the time to build it right the first time rather than remediate. There still should be an idea of what steps that can be taken. Say, quit processing transactions until you figure out why thinks aren’t reconciling!.    Many banks are about to find out the hard way contracts don’t protect them from regulatory wrath when customers are impacted.  

51

13 Comments

The FCA is getting too authoritarian. If the FCA believes in transparency then why don’t Financial Conduct Authority executives publish all of their investments and historic investigations into FCA staff? The Met Police policed itself and look how many scandals there are. Can we trust the FCA to police itself? I don’t think we can. How do we know FCA staff aren’t front running investigations? Shorting companies they are about to punish or fine. Maybe these questions need to be asked. https://lnkd.in/eqibJvZC.

1

“We will be pragmatic, not ideological. We won’t press on regardless, but we are not going to abandon this completely” (HM Treasury official). Yet more press speculation of a major watering down of Labour’s tougher non dom plans. From what I can tell from the FT article, Reeves will abandon plans to charge IHT on all trusts from April 2025 and will look at some kind of taper for income tax and CGT (like the 50% first year deduction proposed by the last chancellor). It also seems that the 10 year IHT tail may be chopped down a bit, perhaps to 3 years.

121

28 Comments

So traders are betting against sterling in belief Bank of England will cut rates by summer https://on.ft.com/3yaAu4U whilst at same time the strong #USD is creating headwinds for a recovery in global trade https://lnkd.in/gbiJrqcV? So need to consider currency fluctuations in supply and distributorship agreements. Failure to do so can result in breach of agreements or, worse, insolvency of parties to such agreements - https://lnkd.in/djdHAUX

2

MONEY ISN’T ALWAYS THE MAIN REASON CANDIDATES TAKE JOBS.   Alexander Barnes placed an exceptional candidate last week who had three offers on the table. All three positions were very similar, they were all Heads of Financial Crime. They were all very similar – these were in the banking space, investment banking to be precise. Some of the salaries offered were quite different and the bracket was wide, there was an 18% difference from the highest to the lowest. HOWEVER, IT CAN BE!   One of the banks that offered the lowest salary was also the one that had the most flexible working pattern. Their offering is simple, you decide how you want to operate, you can do five days a week if you please, but you can also work fully remote. They also have a work-from-anywhere-in-the-world policy, which is rare, along with 30 days holiday + bank holidays.     The lady we placed works remotely full-time at the moment, she has two young children and their current arrangement Is once a month in London, where they stay overnight and do two full days, their team is scattered around the UK. All three banks knew this going into their given processes. Yes, they are very career-driven, they operate at a very senior level, and they are bloody good at what they do! But their family is their main driver, so while the other companies thought going in higher would secure them, in the end having a balanced life was the DEAL BREAKER There's more to an offer than the salary. Money still talks, but perhaps not quite as loudly as it did previously.   I would say since COVID-19 the mindset of candidates and the market has changed, when discussing opportunities with candidates the main question they wanted to know was typically on salary, but this is no longer the case, In my opinion, working arrangements now take the top spot. Now this isn’t for everyone and just my opinion, but I’ve seen a huge shift in mindset for what people consider good to look like when joining a new business.   Summary – Offering a higher salary than your competition doesn’t always land you the best talent. Consider your working patterns as it might just give you an advantage next time. MONEY ISN’T ALWAYS THE MAIN REASON CANDIDATES TAKE JOBS. #COMPLIANCE #HEADOFINCRIME #FINANCIALSERVICES #FLEXIBILITY

54

3 Comments

A flurry of UK regtechs being acquired in M&A raises questions for legal + property firms; - Service quality: better / worse? - Rate of innovation: accelerate / slow? - Product cost to value prop: ‘good value’ / ‘expensive’? - Lift and shift of platforms over coming years; focus / distract from serving you? How do the answers to these questions impact your business? Expect us to remain fiercely independent. #M&A #Independent #Build

41

2 Comments

ICYMI: Last month, the ECB urged Revolut to tighten its financial crime controls, highlighting ongoing compliance concerns. Revolut then went on to secure its UK banking license from the PRA after a 3 year wait. While this is a triumph of regulatory independence and local support for fintech, the ECB’s increased scrutiny highlights the ongoing challenges of navigating regulatory environments. Interested to read more? Click here to read Rory Doyle CAMS thoughts in Financial Times: https://okt.to/pkPlJg #Regulations #Compliance #FinCrime #Fenergo

7

#Fintech #VCNews: 🎉Gideon Valkin, former Monzo Bank and ClearScore leader, investor, and entrepreneur, has just launched Andrena Ventures! 🌟 📈 It is a $12 million solo GP fund, supported by tech’s top founders and #VC leaders. 💼💰 👍 The fund has already reached its first close, with plans for a final close later this year. 📆 💡 This fresh fund aims to back Europe’s most promising #fintech founders, empowering the next wave of tech giants at pre-seed and seed stages. 🌐 Also, Gideon has also announced the fund’s inaugural #investment in Nustom, an #AI-powered software-building startup. 🚀 More details on Andrena Ventures and its mission: https://lnkd.in/g-DsJvdY #venturecapital #vcfunding #news #technews #uktech #investment #fundingnews #technology #investment Sayula Kirby Taavet Hinrikus Sten Tamkivi Filip Felician Dames Christian Meermann Sophia Bendz David Haber Firat Ileri

76

10 Comments

Medium-sized financial services firms are the ‘forgotten sector’ within UK FinTech. They employ between 50 and 250 people, and make up 48% of the total number of firms in the industry (if you exclude those employing less than 5 people). They are progressive businesses, with an average age of 15 years, and more female employees than the industry average. And they represent a huge, potential source of innovation, particularly for start ups looking to collaborate with established firms. These firms are the lifeblood of the industry, but they are chronically under-served, relative to the rest. A platform needs to be developed to represent the innovation agenda of these firms, and create opportunities for early stage founders to access them in an effective manner. #fintech #ukfintech #financial-services #innovation

25

9 Comments

Rachel Reeves and the Treasury have pledged to "embrace" the fintech sector, which could contribute an astonishing £330bn to the government’s coffers over the next five years! According to a policy plan by Innovate Finance, shared with City A.M., the fintech industry is poised to deliver £328bn in tax revenues by 2029. This growth hinges on unlocking institutional investment and streamlining data policies. “Fintech is one of the most obvious drivers for growth in the UK,” said Janine Hirt, Innovate Finance CEO. She emphasized the need for government support through smart data legislation, reviewing payment reimbursement schemes, and focusing on innovation. Despite recent funding slowdowns, the UK remains a global leader in fintech, second only to the US. With strategic support and investment, we can maintain our edge and continue to drive innovation, inclusion, and economic growth. The future of UK fintech looks bright, and with the right support, it will undoubtedly be a powerhouse for our economy. Let’s embrace this opportunity and drive forward! #Fintech #SearchChainPartners #Innovation #EconomicGrowth #UKLeadership

17

As of Today (26 April 2024), the National Crime Agency (NCA)'s powers to seize, freeze and destroy cryptoassets used by criminals have increased. These new powers make it easier for UK law enforcement to effectively investigate, seize and recover illicit cryptoassets and include: - Police ability to seize cryptoassets before an arrest; - Police seizure of information such as written passwords or memory sticks; - Law enforcement transfer of illicit cryptoassets to wallets controlled by them, preventing criminal access; - Destroying cryptoassets that may be of detriment to the public if returned to circulation (e.g., Privacy Coins); and - Victim reclaim of cryptoassets belonging to them. An important step forward for UK law enforcement's fight against the illicit use of cryptoassets. As cryptoasset technology continues to develop, and with it, an increased widespread global adoption (in particular as regulatory regimes are further established in the coming years (see Financial Conduct Authority's DP23/4)), the fight against illicit use will continue to increase in importance. https://lnkd.in/eBMyYG5D

30

Ex-Formula 1 CEO & billionaire Bernie Ecclestone ex-son-in-law James Stunt has been charged in UK court for $271 million money laundering operation between 2014 to 2016 via his Mayfair company and taking 70% of profits from the money laundering service. Read - https://lnkd.in/gEzddYYg follow Caproasia | Driving the future of Asia Ex-Formula 1 CEO & billionaire Bernie Ecclestone ex-son-in-law James Stunthas been charged in UK court for $271 million money laundering operationbetween 2014 to 2016 via his Mayfair company and taking 70% of profits from the money laundering service.  James Stunt is ex-husband of Petra Ecclestone (Daughter of Bernie Ecclestone).  In 2024 May, the former Formula 1 CEO Bernie Ecclestone (Age 93) ex-wife Slavica Malic (Age 65, ex-Model) newly setup family office Elm Cove (K2 AM) in 2023 has hired ex-HSBC Global Head of Asset Allocation Fredrik Nerbrand as Chief Investment Officer (CIO).  Slavica Malic had received $886 million (GBP 700 million) in divorce payout in 2009 for unreasonable behaviour after 20 years of marriage.  Philanthropic trust Slavica Malic Foundation was also setup in 2023.  Slavica Malic ex-husband Bernie Ecclestone had bought rights to Formula One in the 1970s, with the company sold to Liberty Media for $8 billion in 2017 (Bernie Ecclestone had sold majority of his shares in the 1990s).  Bernie Ecclestone has a personal fortune of around $2.5 billion.  In October 2023, Bernie Ecclestone pleaded guilty in a UK court for failing to declare S$650 million trust (£400 million) in 2015 in Singapore bank account, receiving 17 months in suspended jail sentence and agreeing to pay $796 million settlement (£652 million).  Bernie Ecclestone had previously paid $100 million in 2014 to Germany authorities as settlement to end bribery trial for Formula One rights.  In August 2023, Singapore central bank Monetary Authority of Singapore (MAS)Lawrence Wong (Chairman, Singapore Deputy Prime Minister, Minister for Finance) reply on former Formula 1 CEO Bernie Ecclestone S$650 million trust in Singapore bank account – Singapore cooperating with UK authorities on investigation & prosecution of Bernie Ecclestone, bank account subjected to enhanced monitoring with all transactions flagged for scrutiny & approval since 2013.  In 2022 August, Bernie Ecclestone was been charged in court (pleaded not guilty) for failing to declare a S$650 million (£400 million) trust fund in Singapore between 2013 to 2016.  The charge was filed by United Kingdom (UK) HM Revenue & Customs.  According to the charge in court, Bernie Ecclestone had disclosed only 1 trust to tax authorities and is not the beneficiary of the trust, or any other trust ... ...

1

Digital bank Monzo has swung to profit for the first time, writes Frances Coppola. But its new-found profitability could prove short-lived as the end may be nigh for “narrow banks”. Full-year results just released show pre-tax profits of £15.4mn, generated largely from higher net-interest margins. Monzo, like most banks, has benefited from the Bank of England’s high interest rates. But like many of the challenger banks that grew from the ashes of the 2008 financial crisis, Monzo should be classed as a “narrow bank”. Its business model is focused largely on depository services and payments, and what little lending it does is also payments-related (credit cards and “buy-now-pay-later”). Its balance sheet is more like that of a payments processor than a traditional bank: against some £11bn of deposits, it holds £7bn of cash reserves at the BoE and £3bn of government and supranational debt. Loans make up only 15 per cent of its balance sheet. This business model amounts to an unhedged bet on BoE interest rate policy, Frances writes. Read more here https://lnkd.in/e79pQGWH #Monzo #bankingindustry #narrowbanks

17

There are still many companies and organisations in the UK which refuse to accept the risks associated with Crypto. I am a big advocate of Crypto and specifically Bitcoin but one has to have a balanced view and accept that the UK may have young people and in this case children who don't understand investing/trading and therefore they are gambling. Equally the potential is there for them to use Crypto to acquire goods/services which are illegal. This has to be risk managed but the UK needs to accept there is a risk worth managing in the first place. I think this article is actually very wishy/washy. The likes of Coinbase, PayPal and other large operators in this space will require the individual to be 18 years of age and proof/identity evidence will need to be provided/submitted. So my question is who are these companies (must be obscure and high risk) that allow UK children to buy Crypto? This is where the focus needs to be by the Financial Conduct Authority. If a child has never invested in shares of funds or never traded any asset class then how they should be allowed to buy Crypto and especially those names of Cryptos that many will not have heard of or are very high risk and obscure is beyond me. Currently a parent has to buy their child Premium Bonds which are 100% backed by the HM Treasury. So a child cannot buy or invest in Premium Bonds for themselves yet they can acquire high risk Crypto just shows the insanity of the situation. A parent has control of a Junior ISA for their child until they turn 18 yet the child themselves can acquire high risk Crypto. Something is seriously wrong here in my view. HM Revenue & Customs National Crime Agency (NCA) Serious Fraud Office (UK) and other Government departments need to make sure they have staff who understand Crypto and understand Financial Risks and how Crypto can be used for activities which are high risk.

1