FinTech Global FS Regulatory Round-Up – W/e 29 September 2023

In this weekly post, we round-up FinTech-related financial services regulatory developments for the week ending 29 September 2023.

ICYMI

• AI in regulatory decision making – is it the end of the world?
• Australian Government endorses sweeping reforms to Australian privacy laws
• Cyber security: A month in retrospect (Australia) – September 2023
• China relaxes measures on cross-border data transfers from China
• The IP in AI: Can patents protect AI-generated inventions?

Global

BISIH: Final report on cross-border exchange of wholesale CBDCs using automated market-makers

The Bank for International Settlements Innovation Hub (BISIH) has published its final report on 'Project Mariana' (a collaboration between the central banks of France, Singapore and Switzerland to test the cross-border trading and settlement of wholesale CBDCs). Project Mariana saw successful trading and settlement of hypothetical euros, Singapore dollars and Swiss francs. Decentralised finance (DeFi) elements, specifically automated market makers, could form the basis for a new generation of financial market infrastructures. [28 Sep 2023]

#DeFI #CBDC #FMI

FSB report: Stocktake of international data standards relevant to cross-border payments

The Financial Stability Board (FSB) has published its stocktake of international data standards relevant to cross-border payments. The report provides a summary of the stocktake (Section 2), discusses identified areas for improvement drawn from the stocktake and other feedback from external stakeholders (Section 3), and sets out next steps for promoting alignment and interoperability across data frameworks applicable to cross-border payments (Section 4).

The FSB confirmed that it will build on this stocktake and develop, for consultation by early 2024, recommendations for promoting alignment and interoperability across data frameworks applicable to cross-border payments, including data privacy, operational resilience, anti-money laundering and countering the financing of terrorism (AML/CFT) compliance, and regulatory and supervisory access requirements. The FSB invites stakeholders to submit case studies on these issues by 20 October 2023. [25 Sep 2023]

#Payments #AML #CFT

IMF Fintech Note: The role of CBDCs in promoting financial inclusion

The International Monetary Fund (IMF) has published a note on the role of central bank digital currency (CBDC) in promoting financial inclusion.

Findings reported include:

• financial inclusion is a key policy objective that central banks, especially those in emerging and low-income countries, are considering for retail CBDC;
• most financially excluded households rely on cash for payments, which marginalises them from the formal economy;
• if properly designed to address the barriers to financial inclusion, CBDCs have the opportunity to gain acceptance by the financially excluded for digital payments;
• CBDC, once adopted by the financially excluded, can then serve as an entry point to the broader formal financial system;
• complementary policies can help maximise the potential of a well-designed CBDC to improve financial inclusion; and
• overall, CBDC is not a panacea to financial inclusion, and additional experience is needed to fully understand its potential impact.

Fintech Notes offer practical advice from IMF staff members to policymakers, however the views expressed are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management. [25 Sep 2023]

#CBDC

UK

FCA: GFIN Greenwashing TechSprint winners

The FCA has announced the first Global Financial Innovation Network (GFIN) Greenwashing TechSprint winners. Participating firms and regulators showcased their potential solutions to two problem statements relating to the risk of greenwashing in financial services to a panel of independent judges, made up of industry experts, professionals and innovators. [29 Sep 2023]

#GreenTech #TechSprint

FCA: Review of financial promotions for high-risk investments

The FCA has published the findings of its multi-firm review into how firms offering restricted mass market investments (RMMIs) have complied with new rules on the customer journey. 13 firms of different sizes from within the peer-to-peer and investment-based crowdfunding (IBCF) portfolios were selected for the review. The FCA reviewed firms' approach to each of the conditions set out in COBS 4.12A:

• incentives to invest;
• cooling off period;
• risk warnings;
• client categorisation; and
• appropriateness

The FCA expect all firms promoting RMMIs and non-mass market investments (NMMIs) to consider the findings of the review and make any necessary changes to their own practices. It also expects firms promoting relevant cryptoassets to UK based consumers to consider these findings due to the requirements set out in PS23/6.

The strengthened rules aim to raise the overall standard of high risk investment promotions and also support the approach of the Consumer Duty, by encouraging firms to consider for themselves whether they should go beyond this minimum standard, considering the needs of their customers, to deliver good outcomes. [27 Sep 2023]

#Crowdfunding #Crypto

FCA and City of London launch project to combat APP fraud

The FCA and the City of London Corporation have launched an Authorised Push Payment (APP) synthetic dataset to help with the development of products and services that can minimise fraud.

The dataset, created by Smart Data Foundry, will be available for firms to access on the FCA's permanent Digital Sandbox and is composed of:

• 30 million rows of synthetic data;
• 20,000 synthetic individuals with full details;
• 20,000 synthetic accounts with 30,000 fraud events;
• over 70 million rows of synthetic text and call metadata; and
• two years of data

The dataset aims to provide a foundation to better understand how useful data could be shared to reduce barriers to tackling fraud. [27 Sep 2023]

#APPfraud #DigitalSandbox

Europe

ESAs: DORA – criteria for CTPPs and determining oversight fees

The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) have published their joint Technical Advice in response to the European Commission's (EC's) Call for Advice on two delegated acts under the Digital Operational Resilience Act (DORA) specifying further criteria for critical ICT third-party service providers (CTPPs) and determining oversight fees levied on such providers.

In relation to the criticality criteria, the ESAs propose 11 quantitative and qualitative indicators along with the necessary information to build up and interpret such indicators following a two-step approach. The ESAs also put forward minimum relevance thresholds for quantitative indicators, where possible and applicable. The response does cover the designation procedure as this is out of the scope of this Call for Advice. However, the ESAs plan to define these details no later than six months after the adoption of the delegated act.

Regarding the oversight fees, the ESAs make proposals for determining the amount of the fees to be levied on CTPPs and the way in which they are to be paid. [29 Sep 2023]

#DORA #CriticalThirdParties

EBA: MiCAR Technical Advice

The EBA has published Technical Advice in response to the EC's December 2022 Call for Advice on two delegated acts under the Markets in Crypto-assets Regulation (MiCAR) concerning certain criteria for the classification of significant asset-referenced tokens (ARTs) and electronic money tokens (EMTs as significant and the fees that are to be charged by EBA to issuers of ARTs and EMTs).

The advice proposes a set of core and ancillary indicators for each significance criterion within the scope of the Call for Advice: financial sector interconnectedness and activities on an international scale. These indicators cover diverse elements of interconnectedness (eg direct and indirect between the issuer and the financial system, direct between the token and the financial system, or direct between the issuer and other ART/EMT issuers) and international scale (eg all types of transactions, or transactions where the token is used as means of exchange) and take account of data availabilities.

Regarding the supervisory fees, the EBA proposes criteria for allocating costs between issuers, as defined in MiCAR, and ensures that all costs that it will incur in the performance of its supervisory tasks can be charged to issuers of significant ARTs and significant EMTs. [29 Sep 2023]

#MiCAR #Crypto #EMT #ART

EC: Crowdfunding RTS

The Commission Delegated Regulation supplementing the European crowdfunding service providers Regulation (CSPR) with regard to regulatory technical standards (RTS) specifying requirements on credit scoring of crowdfunding projects, pricing of crowdfunding offers, and risk management policies and procedures, has been added to the register of Commission documents. [29 Sep 2023]

#Crowdfunding #ECSPs

ESMA: 2024 Annual Work Programme

The European Securities and Markets Authority (ESMA) has published its 2024 Annual Work Programme. Highlights of the programme include:

• delivery to mandates under the Markets in Cryptoassets (MiCA legislation;
• continued adaptation of ESMA's supervisory efforts in readiness for the entry into application of the Digital Operational Resilience Act (DORA) in 2025; and
• work to further improve data quality outputs for all supervisory data, including sharing and analysis of the data, in close cooperation with national competent authorities (NCAs) and other EU authorities. [28 Sep 2023]

#MiCA #DORA

ECB: Blog on potential uses of AI within the ECB

The European Central Bank has published a blog entitled Careful embrace: AI and the ECB. The blog discusses the rapid rise in artificial intelligence (AI) and how the ECB uses of AI, including new ways for it to new ways for us to collect, clean, analyse and interpret its data. The ECB is also exploring the use of large language models. Potential specific applications of this include the preparation of summaries and draft briefings to assist in policy and decision-making, and improving texts written by staff members to make the ECB's communication more comprehensible for the public. [28 Sep 2023]

#AI

ECB: Podcast on how tech is shaping banking supervision

The ECB has released a podcast featuring Supervisory Board member Elizabeth McCaul exploring the role of technology in banking supervision. In the podcast, Ms McCaul discusses the importance of harnessing technology to give supervisory bodies a line of sight into risks, to help connect pieces of information to paint a complete picture of the risk environment, whilst at the same time ensuring that technology does not control key decisions. [28 Sep 2023]

#FinTech

EC: First report on the State of the Digital Decade

The European Commission (EC) has published its first annual report on the State of the Digital Decade. The report provides a comprehensive look at progress towards achieving the digital transformation in the EU. The report also assesses progress towards towards Europe's 2030 objectives and targets, focusing on four main pillars: digital skills, digital infrastructure, digitalisation of businesses, including the use of AI, and digitalisation of public services. It also includes the monitoring of the European Declaration on Digital Rights and Principles, which reflects the EU's commitment to a secure, safe and sustainable digital transformation. [28 Sep 2023]

#Digitalisation #AI

ESAs report on the landscape of ICT third-party providers in the EU

The three European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) have published an indicative overview of information and communication technology (ICT) third-party providers (TPPs) as part of their preparations for the Digital Operational Resilience Act (DORA). The analysis aims to map the provision of ICT services by TPPs to financial entities in the EU and to support the ESAs' policy making process in light of the European Commission's (EC's) call for advice to further specify the criteria for critical ICT TPPs and to determine oversight fees.

The data collection exercise was the first of its kind, covering ICT-related contractual arrangements for entities across the financial sector. Overall, the exercise has identified around 15,000 ICT TPPs directly serving financial sector entities across the EU. It has found that the most frequently used ICT TPPs support critical or important functions for their clients in a wide range of services. In addition, most critical services were classified as non-substitutable by financial institutions.

The ESAs note that the data collection exercise has also underlined the importance of ensuring that financial entities provide unique identifiers in the data submitted and the need to develop an appropriate ICT services taxonomy. [27 Sep 2023]

#CriticalThirdParties #DORA

Australia

ASIC: Fintech company pays penalties for crypto product representations

Following Australian Securities and Investment Commission (ASIC) action, fintech company Bobbob Pty Ltd has paid $53,280 to comply with infringement notices regarding representations it made about a crypto-asset linked investment product.

ASIC was concerned that Bobbob made the following representations that had the potential to mislead consumers that the crypto-asset linked investment product:

• was approved or licensed by ASIC;
• was similar to, and therefore shared some attributes of, a bank account including the risk profile;
• was a safe and stable investment with minimal risk of customers incurring capital losses; and
• earned all customers an interest rate of 7.6% per annum from the time they invested. [27 Sep 2023]

#Crypto

ASIC sues Bit Trade Pty Ltd regarding design and distribution failures of a margin trading product

ASIC has commenced civil penalty proceedings in the Federal Court against Bit Trade Pty Ltd, provider of the Kraken crypto exchange to Australian customers. ASIC alleges that Bit Trade failed to comply with the design and distribution obligations for the margin trading product it offers Australian customers on the Kraken exchange and will focus its case on Bit Trade's failure to make a target market determination for the product before offering it to Australian customers, as required by law.

Alongside the announcement, ASIC has also published the originating process and concise statement. [21 Sep 2023]

#CryptoExchange

Hong Kong

SFC publishes list of virtual asset trading platforms

As part of the SFC's efforts to disseminate information on virtual asset trading platforms (VATPs) in a clear, transparent, and timely manner, the SFC has published several lists of VATPs. The lists include:

• 'List of licensed virtual asset trading platforms', which sets out VATP operators formally licensed by the SFC;
• 'List of virtual asset trading platform applicants', which sets out VATP operator applicants whose licence applications have not yet been approved by the SFC, accompanied by a 'List of applicants whose licence applications have been returned, refused or withdrawn', which sets out VATP operator applicants removed from the List of virtual asset trading platform applicants as their licence applications have been returned, refused and withdrawn;
• 'List of closing-down virtual asset trading platforms', which sets out VATP operators required by law to close down within a specified period; and
• 'List of virtual asset trading platforms which are deemed to be licensed', which sets out VATP operators deemed to be licensed as of 1 June 2024.

The above lists will be updated regularly, although they may not contain the most updated information as changes may take place between updates.

The SFC has also issued a dedicated list of suspicious VATPS to assist investors more easily identify suspicious VATPs who may have misrepresented their licence application status. The SFC reminds investors of the risks of trading virtual assets on unregulated VATPs, including the risk of losing their entire investment in the event the VATP ceases operations, is hacked, or suffers from any misappropriation of assets. [29 Sep 2023]

#Crypto #VirtualAssets #VATP

SFC Executive Director of Enforcement discusses SFC's view on corporate fraud and misfeasance in listed companies at The Hong Kong Institute of Directors Directors' Symposium 2023

Executive Director of SFC's Enforcement Division, Mr Christopher Wilson, gave a speech at the Hong Kong Institute of Directors Directors' Symposium 2023 on 28 September 2023.

Mr Wilson discussed, among other things, the use of technology in regulation compliance, the regulation of virtual asset trading platforms (VATPs) and the risk of greenwashing. On the regulation of VATPs, he notes that the new regulatory regime became effective in Hong Kong in June 2023, which provides the SFC with new powers to regulate these platforms (see our previous post). [28 Sep 2023]

#VATP #RegTech

HKEX announces launch of FINI on 22 November 2023

The HKEX has announced that its new digitalised IPO settlement platform, Fast Interface for New Issuance (FINI) will be launched on 22 November 2023 (see our previous update). The existing IPO settlement platform, CCASS, will no longer be used following market close on 21 November 2023.

FINI is intended to drive efficiency and support the long-term development of Hong Kong as a capital raising centre by significantly shortening the time between pricing of an IPO and trading of shares from five business days (T+5) to two business days (T+2).

FINI is a cloud-based platform, enabling different stakeholders such as IPO sponsors, underwriters, legal advisers, banks, Clearing Participants, share registrars and regulators to collaborate and perform their respective roles in an IPO, digitally. FINI also introduces a new public offer pre-funding model, which reduces the scale of locked-up funds that have historically been tied-up during the IPO subscription period in over-subscribed IPOs.

Further details are set out in the HKEX's circular. The HKEX has also published an updated transition arrangements guide for issuers and their advisers, which includes (among others) the timetable for new listings during the FINI transition. Market participants are encouraged to complete the necessary registration ahead of launch of the FINI platform. [27 Sep 2023]

#FINI

SFC's Executive Director discusses about tokenisation of retail investment products at Bloomberg Buy-Side Forum Hong Kong 2023

The SFC's Executive Director (Investment Products), Ms Christina Choi, gave a keynote speech at the Bloomberg Buy-Side Forum Hong Kong 2023 on 26 September 2023.

In her speech, Ms Choi discussed how the SFC, as Hong Kong's securities regulator, supports innovation and the many potential 'tiny changes' in the buy-side that may bring a leap forward in market development. She also shared the SFC's approach to enabling innovations, in particular on the tokenisation of retail investment products:

• Following the amendments to Hong Kong's Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) which came into force in June 2023, the Hong Kong public was allowed, for the first time, to trade a limited number of eligible crypto assets on SFC-licensed virtual asset trading platforms (VATPs).
• It has been publicly reported that an SFC-licensed asset manager has recently launched a tokenised close-ended fund investing in some real properties in Hong Kong. The fund, which is a private one for professional investors, comes with a minimum investment amount of HK$1,000 and the prospect of being available for secondary trading 24/7.
• The SFC welcomes the idea of a retail tokenised product as tokenisation may help the asset management industry reduce market frictions and explore new distribution channels, where the SFC's existing product rules already offer ample flexibility for the industry to innovate.
• The SFC is currently working on more detailed guidance on tokenisation of SFC-authorised investment products and will issue it in the near term. The SFC is of the view that in principle, primary dealing of tokenised SFC-authorised products would be more appropriate to be allowed first at this stage in view of the nascent state of development of the VATP regime in Hong Kong.
• The SFC notes that the secondary trading of tokenised SFC-authorised products on VATPs would warrant more caution and careful consideration, such as magnifying some of the risks that might be much more manageable in primary dealing and effectively making a tokenised product an 'exchange traded product'. [26 Sep 2023]

#VATPs #Tokenisation #AML #CFT #Crypto

HKMA's Deputy Chief Executive delivers keynote speech at HKIB Annual Banking Conference 2023 covering strengthening anti-fraud efforts and consumer protection

Mr Arthur Yuen, the Deputy Chief Executive of the HKMA, delivered a keynote speech at the HKIB Annual Banking Conference 2023 on 26 September 2023.

In his speech, he discussed (among others):

• Strengthening anti-fraud effort and customer protection – The HKMA notes that digital fraud continued to increase globally and recommends an enhanced information flow (i.e. Fraud and Money Laundering Intelligence Taskforce), enhanced monitoring of suspicious transactions (i.e. real time fraud monitoring, 24/7 stop payment mechanism, prompt consumer alerts), and enhanced interface with customers (e.g. suspicious proxy alert model, enhance customer support).
• Tapping opportunities of Web3 and digital assets – Implementing a regulatory framework balanced between opportunities and risks, covering intermediary activities, digital asset custody and tokenisation activities.
• Lesson learnt from the US banking turmoil – The Hong Kong banking sector remained strong and resilient, with swift supervisory actions taken to manage financial contagion and potential fallout. Following an internal review, the areas meriting more attention include liquidity risk, Interest Rate Risk in the Banking Book (IRRBB), held-to-maturity (HTM) securities, and contingency planning including resolution.
• Sharpening competitiveness as wealth management centre – By looking into enhancing the cross-boundary wealth management connect scheme and a streamlined approach for sophisticated professional investors. [26 Sep 2023]

#Web3 #DigitalFraud #AML #DigitalAssets

HKMA report: AML/CFT Regtech: Case Studies and Insights

As part of its ongoing initiatives to promote Regtech adoption in Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT), the HKMA has published a report titled 'AML/CFT Regtech: Case Studies and Insights Volume 2' (for SVF licensees and authorised institutions (AIs)).

The report shares real-life use cases from banks in their Regtech adoption to increase the effectiveness of efforts to combat digital fraud and financial crime in the banking sector. Building on the first volume of the report which was published in January 2021, the latest report was developed with industry collaboration and in cooperation with an international consulting firm, sharing comprehensive, end-to-end experience and success stories from AIs of different sizes and at stages in their AML Regtech adoption journeys.

The four broad areas of Regtech implementation and real-life use cases featured in the report include real-time fraud monitoring, machine learning for transaction monitoring alerts handling, natural language processing for media monitoring and analytics providing a 'single view of the customer'.

Under its 'Fintech 2025' strategy, the HKMA remains committed to the promotion of AML Regtech adoption to tackle the harm caused by digital fraud and other financial crimes, as well as delivering sustainable and effective AML/CFT systems. AIs and SVF licensees should study the report and have regard to the shared experience and insight to help staying effective and efficient in the light of evolving risks.

The HKMA will continue to engage AIs individually and collectively on various follow up activities related to the themes in the report and as part of our ongoing supervisory engagement. [25 Sep 2023]

#RegTech #AML

SFC steps up measures to reinforce information dissemination and investor education on VATPs

The SFC has introduced a series of measures to reinforce information dissemination and investor education, in light of recent public concerns about unregulated virtual asset trading platforms (VATPs).

Against the backdrop of the recent JPEX incident (see our previous update) which highlights the risks of dealing with unregulated VATPs and the need for proper regulation to maintain market confidence, the SFC is putting in place the following measures:

• Publication of 'List of licensed VATPs', 'List of closing down VATPs', 'List of deemed licensed VATPs' and a list of VATP applicants (in light of public demand), to ensure that information is disseminated in a clear, transparent and timely manner.
• Enhance and issue a dedicated list of suspicious VATPs which is easily accessible on the SFC's website, and providing more information about these VATPs to alert investors at an earlier stage.
• The SFC and the Investor and Financial Education Council will soon launch a public campaign to raise awareness in guarding against fraud, and will further enhance investor education through mass media, social media and education talks, facilitating the public's understanding of the risks associated with virtual assets (VAs) and potential fraud.
• The SFC will continue to strengthen its intelligence gathering process towards different businesses related to VAs, and will continue to take follow-up and enforcement actions against suspicious VATPs that may have violated the law, and refer cases to the police when necessary.
• The SFC encourages members of the public to come forward and file complaints via its online complaint form regarding any suspicious activities they may encounter.
• The SFC will work with the police to set up a dedicated channel to share information on suspicious activities of and breaches by VATPs and to investigate the JPEX incident to bring the wrongdoers to justice.
• The SFC will also work with the HKSAR Government to regularly review the regulatory regime in Hong Kong and consider timely measures in light of new market developments, which may include regulation of VA-related businesses other than the VATPs. [25 Sep 2023]

#VATPs #Crypto

Insurance Authority's Associate Director discusses role in promoting Insurtech and mitigating risks in keynote speech at ASHK Actuarial Innovation Conference

The Insurance Authority's Associate Director (Group-wide Supervision, Long Term Business), Ms Wynnie Yeung, gave a keynote speech at the ASHK Actuarial Innovation Conference on 21 September 2023.

In her speech, Ms Yeung discussed about the role of the Insurance Authority in promoting Insurtech and the regulatory measures to manage and mitigate the associated risks to safeguard policy, which include (among others):

• the Insurance Authority has been facilitating the development of Insurtech to bring positive disruption to the industry, narrow protection gaps, promote financial inclusion, and enhance financial connectivity. This includes the Fast Track launched in 2017 which has 4 virtual insurers owning and operating solely digital distribution channels, and the Insurtech Sandbox which provides a platform to test innovative Insurtech initiatives in a controlled environment and demonstrate broad compliance, expediting the launch of new technology products, reducing the development cost, and enhancing customers' experience;
• the Insurance Authority has published the Open API framework and Central Register (in collaboration with the Hong Kong Science and Technology Parks Corporation) for the insurance sector in Hong Kong, to foster partnerships and enable greater collaboration among stakeholders to bring innovation and improve services (see our previous update);
• in response to the escalating digital threats, the Insurance Authority is in the process of enhancing an existing guideline on cybersecurity (GL20); and
• the Insurance Authority will continue to closely monitor the development and application of technology in the insurance industry and proactively assist market participants to tackle Insurtech related regulatory issues. [21 Sep 2023]

#OpenAPI #InsurTech #Sandbox #Cybersecurity

Singapore

MAS: BISIH and central banks successfully test cross-border wholesale CBDCs

The Monetary Authority of Singapore (MAS) has reported that the Bank for International Settlements Innovation Hub (BISIH) and the central banks of France, Singapore and Switzerland have successfully concluded Project Mariana. The project tested the cross-border trading and settlement of wholesale central bank digital currencies (wCBDCs) between financial institutions, using new decentralised finance (DeFi) technology concepts on a public blockchain.

The project's proof of concept successfully tested the cross-border trading and settlement of hypothetical euro, Singapore dollar and Swiss franc wCBDCs between simulated financial institutions (FIs).

MAS confirmed that Project Mariana is purely experimental and does not indicate that any of the partner central banks intend to issue wCBDC or endorse DeFi or a particular technological solution. [28 Sep 2023]

#CBDC #DeFi

United States

OCC releases bank supervision operating plan for fiscal year 2024

The Office of the Comptroller of the Currency (OCC) has released its bank supervision operating plan for fiscal year (FY) 2024. The plan outlines the OCC's supervision priorities and objectives for the year. Among the key areas of heightened focus for supervisory strategies in FY 2024 are: cybersecurity; digital ledger technology (DLT) activities; change management; payments; and Bank Secrecy Act/anti-money laundering/countering the financing of terrorism (AML/CFT) and Office Of Foreign Assets Control (OFAC). [28 Sep 2023]

#DLT #Cybersecurity #AML #CFT

CFTC charges company and CEO with a fraudulent solicitation and digital asset commodities trading scheme

The CFTC has announced that it has filed a civil enforcement action in the U.S. District Court for the Southern District of Florida against a Pennsylvania limited liability company and its owner and CEO for running a fraudulent digital asset commodity scheme. The complaint alleges the defendants fraudulently solicited and induced at least 17 people in the U.S. and other countries to give them hundreds of thousands of dollars' worth of bitcoin or other funds for the defendants to trade bitcoin and other digital asset commodities on the customers' behalves, and misappropriated customer funds.

In its continuing litigation, the CFTC seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged. [27 Sep 2023]

#DigitalAssets

CFTC announces technology and fraud virtual event to explore social media investment fraud and AI

The CFTC's Office of Customer Education and Outreach (OCEO) and Office of Technology Innovation (OTI) have announced a virtual event on Wednesday, October 4, as part of World Investor Week. The event, Technology and Fraud: Stopping Scams in a Digital World, will bring together experts on two panels discussing social media-driven investment fraud and the role artificial intelligence (AI) may play in accelerating online fraud. Registration is free and open to the public. The panels begin at noon EDT, Wednesday, October 4.

Commenting on the social media panel, OCEO Associate Director Dan Rutherford said: "Social media enabled fraud is nothing new, but many may not be aware how fraudsters can leverage these platforms and other methods to draw smart, rational people into bad decisions. The social media panel will shed light on the scale of social media investment fraud, discuss the latest scams and the psychology behind them, and provide insights on effective interventions for educators, policymakers, and industry."

OTI Director and panellist Jorge Herrada commented: "As AI technology emerges, experts and investors agree there is both promise and pitfalls. Like any fast-moving technology, education is critical to understand the capabilities of AI, when it is appropriate to use, and how to avoid being scammed." [25 Sep 2023]

#SocialMedia #AI