fintech

Money laundering? There’s AI for that
Banks explore artificial intelligence to better detect fraud after go-ahead from federal regulators

Last December, federal regulators issued a joint statement encouraging bankers to consider “innovative approaches” to rooting out money laundering. Above, a man walks by the headquarters of the Federal Reserve System in D.C. (Tom Williams/CQ Roll Call file photo)

Encouraged by a recent green light from regulators, the financial services industry is exploring new ways of using artificial intelligence to help them comply with banking regulations and to better detect fraudulent transactions used by criminals and terrorists.

This move toward new approaches to banking compliance comes despite growing concern that more government scrutiny could force the United States to fall behind similar efforts already underway overseas.

In a volatile crypto market, stable coins find increasing appeal
Banks, regulators mull virtual currency with less risk

JPMorgan Chase & Co. has introduced a JPM Coin, a stable coin linked to the dollar. Such a form of virtual currency has the potential to speed up payments and cut money transfer costs for consumers, advocates say. (Spencer Platt/Getty Images file photo)

The cryptocurrency rollercoaster, with its price peaks and valleys, has financial technology proponents looking to a new type of virtual currency that promises the benefits of being virtual while limiting the risk.

Banks, regulators and industry leaders are studying, or have already started to implement, so-called stable coins. They tout the potential to speed up payments, cut money transfer costs for consumers, and help citizens of foreign countries whose currencies are under duress.

Banks seek Congress’ help to block fintech path to ‘industrial’ charters
Industry group expects efforts to have bipartisan support on Hill

A bank industry group accuses financial technology firms like payment processor Square Inc. of trying to exploit a banking law loophole. (Courtesy Shutterstock)

A bank industry group is lobbying Congress to block financial technology firms, such as online lender Social Finance Inc. and payment processor Square Inc., from obtaining an obscure form of a state bank charter that would let them operate nationally with little federal supervision.

The Independent Community Bankers of America last week distributed a policy paper around Washington calling for an immediate moratorium on providing federal deposit insurance to industrial loan companies, or ILCs, which are chartered by only a few states — most notably Utah.

Fintech industry pursues clarity on ‘token’ regulation
Advocates are finding a sympathetic ear in Congress

Rep. Warren Davidson, R-Ohio, is planning to reintroduce with Rep. Darren Soto, D-Fla., legislation that would further define the term “digital token.” (Bill Clark/CQ Roll Call file photo)

Financial technology advocates are seeking an answer from regulators on when things like digital tokens should be deemed to be securities, and they’re gaining a sympathetic ear in Congress.

Further clarity from regulators would encourage more U.S. growth in digital assets, the advocates say.

Data privacy bill faces long odds as states, EU move ahead
Most tech companies agree laws on how to collect and use consumer data are essential, but the specifics are still being debated

Sens. Roger Wicker, R-Miss., right, and Debbie Stabenow, D-Mich., are seen in the basement of the Capitol before the Senate policy luncheons on Sept. 25, 2018. (Tom Williams/CQ Roll Call file photo)

Lawmakers want to pass a federal data privacy bill before 2020 to put Washington on par with Europe and ahead of several U.S. states. But those efforts could be delayed because of differences between technology companies and Congress over how powerful the law should be and how it should be structured.

A delay in enacting a uniform federal law could leave technology giants and startup app makers trying to meet a latticework of standards set by multiple regulations passed by many states as well as a growing international set of rules being modeled after the European Union’s General Data Protection Regulation, or GDPR. Companies also could be liable for fines and face consumer lawsuits allowed by state laws.

Regulators warn Congress not to pre-empt state fintech rules
“Investor protections must not be diminished at the state or federal levels”

The North American Securities Administrators Association is calling on lawmakers to be cautious when implementing fintech laws. (Dan Kitwood/Getty Images file photo)

State securities regulators are concerned Congress could pre-empt state laws governing financial technology such as blockchain and cryptocurrency that are designed to protect consumers.

The North American Securities Administrators Association on Wednesday issued its legislative priorities for the 116th Congress, calling on lawmakers to be cautious when implementing fintech laws.

Frequent cryptocurrency theft gives rise to new area of insurance
But crypto-insurance is so new, many regulators aren’t sure how to treat it

The D Las Vegas advertises in January 2014 that it now accepts bitcoin. (Ethan Miller/Getty Images file photo)

Hackers stole $1.7 billion worth of cryptocurrency last year, a massive rate of theft and a big hit to the financial technology’s reputation.

A rising industry could mitigate the problem: crypto-insurance, which offers the promise that big financial firms will feel secure enough to take wider stakes in financial products based on bitcoin or other cryptocurrencies.

European regulatory chief wants new cryptocurrency rules
Aim is to prevent ‘substantial risk’ to consumers

The chairman of the European Securities and Markets Authority reportedly supports applying financial instrument regulation to cryptocurrencies. (Dan Kitwood/Getty Images file photo)

The chairman of the European Securities and Markets Authority has indicated he supports applying financial instrument regulation to assets such as bitcoin to help protect investors.

Without new rules, Steven Maijoor said, digital assets will likely fall outside of the regulation of Europe’s securities laws.

States, consumer groups blast CFPB’s fintech protections
But financial industry groups are rallying behind bureau’s plan

New York’s Letitia James led 22 other Democratic state attorneys general in a letter to the Consumer Financial Protection Bureau that slammed the agency for its plans to allow banks and technology firms to develop untested fintech products and services without fear of reprisals from regulators. (Gary Gershoff/Getty Images for Housing Works, Inc., file photo )

State attorneys general, consumer advocates, community activists, and banking regulators are criticizing proposed legal protections for banks and technology firms that develop “innovative” financial products.

The protections would come from the Consumer Financial Protection Bureau, which in December unveiled what it calls a “regulatory sandbox” that will allow firms to develop untested fintech products and services without fear of reprisals from regulators. While the criticism rolls in, financial industry groups are rallying behind the plan, even asking the CFPB to expand the legal safe havens.

House bills would revisit regulation of cryptocurrencies
The bill would clarify which virtual currencies qualify as commodities, provide optional regulatory structure

Rep. Darren Soto, D-Fla., participates in a press conference on Thursday, April 26, 2018. (Bill Clark/CQ Roll Call file photo)

House bills with bipartisan support would direct regulators to examine new ways to oversee digital assets and protect them from manipulation, as some lawmakers strive to make financial technologies more mainstream.

One bill would direct the Commodity Futures Trading Commission, consulting with the Securities and Exchange Commission and other agencies, to report to committees including Senate Banking and House Financial Services on how cryptocurrencies are regulated in the U.S. and other countries and detail the benefits of cryptocurrency and blockchain technology.