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BNP Paribas faces legal action for funding fossil fuels – Industry roundup: 24 February

BNP Paribas faces legal action for funding fossil fuels

In a lawsuit filed against BNP Paribas, the eurozone’s largest bank and the first commercial bank to face such legal action, three environmental advocacy groups claim that the bank’s loans to significant oil and gas businesses violate their obligation under French law to ensure that their operations do not negatively affect the environment. Lawsuits are reportedly becoming a more common tool used by environmental activists to pressure large corporations to accelerate efforts to transition to a low-carbon economy.

Until now, the 2017 law requiring French corporations to develop environmental damage monitoring plans has not yet been used by a French court to compel a firm to alter its practices. The case against BNP Paribas, according to the three organizations (Oxfam, Friends of the Environment and Notre Affaire à Tous) is said to be an unprecedented attempt to force a commercial bank to discontinue financing fossil fuels.

The three organizations claim that eight European and American oil and gas businesses, which are reportedly participating in more than 200 new fossil fuel projects worldwide, were funded by BNP Paribas. The organizations contend that even though BNP Paribas does not directly finance these projects, the 2017 law still applies.

BNP Paribas commented that it is expediting funding for renewable energy sources as well as assisting its clients in moving away from fossil fuels. As of the end of September 2022, BNP Paribas stated that it has outstanding debts for fossil fuels totalling 23.7 billion euros, adding that it had stopped financing oil projects in 2016. Additionally, the bank aims to lower the amount of outstanding credit for oil extraction and production by 25% by 2025, said reports.

Ukraine imposes sanctions for 50 years against the Russian financial industry

The Ukrainian parliament enacted broad 50-year sanctions against all Russian financial institutions, including the central bank, all commercial banks, investment funds, insurance companies and other businesses. The sanctions are reportedly a component of Kyiv's efforts to continue to maintain pressure financially on Russia following its full-scale invasion of Ukraine one year ago today.

Andriy Pyshniy, Governor, National Bank of Ukraine, stated that the sanctions will completely prevent Russian financial organizations from accessing markets and assets in Ukraine, said reports. Additionally, thousands of financial organizations registered in Russia, including hundreds of banks, will reportedly be impacted by the sectoral sanctions, according to Economics Minister Yulia Svyrydenko.

Reports indicate that the restrictions include bans on business ties, on transactions with assets controlled by financial institutions in the Russian Federation and on investments in such institutions. Numerous Russian officials and businessmen have reportedly been subject to sanctions by Ukraine, which include prohibiting Russian-affiliated individuals from owning property or taking part in state privatizations, outlawing public purchases of Russian goods and services, and curtailing the transfer of technologies to those individuals. Furthermore, Ukraine has reportedly urged its Western allies to take additional sanctions against Moscow.

Amazon debuts a digital payments symposium for the MENA region

Amazon Payment Services, a digital payments provider, has introduced a forum called "re:Imagine Payments" in the Middle East and North Africa (MENA) to help businesses and individuals gain more knowledge about the landscape of digital payments.

The forum intends to include panel discussions, webinars and the publication of white papers, assisting users in staying current with the payments industry's constantly evolving trends. Additionally, the launch of re:Imagine Payments aims to foster innovative discussions and growth opportunities by bringing together important figures in the field of digital payments, including banks, merchants, regulators, government bodies and specialists.

“What's Next for Digital Payments in the Middle East and North Africa”, the forum's debut publication, offers information on the current trends of digital payments in Egypt, Saudi Arabia and the United Arab Emirates (UAE). Euromonitor International (EMI) and Sixth Factor Consulting served as the paper's primary researchers, with Amazon Payment Services as the paper's sponsor. The study examined several trends and forces that are driving the digital payments industry in the UAE, Saudi Arabia and Egypt.

The research discovered that 89% of consumers in Saudi Arabia had used one or more innovative payment methods in the previous twelve months, such as person-to-person transfers and BNPL. The study also found that mobile wallets and prepaid cards were rapidly being adopted, reaching up to 40% of the adult population in Egypt, boosting financial inclusion.

JPMorgan restricts traders' usage of ChatGPT due to regulatory risks over financial data

JPMorgan has reportedly restricted its staff's access to ChatGPT due to concerns relating to the chatbot sharing confidential financial information and potentially provoking regulatory action, said reports. JPMorgan stated that the limitations on ChatGPT are part of standard limits on third-party software and not related to any specific incident.

The financial industry anticipates significant changes from AI, which is currently used in algorithmic trading, despite the scepticism regarding ChatGPT, added reports. A recent survey conducted by JPMorgan found that 53% of traders predict that artificial intelligence will be the technology with the most significant impact on trading in the future, more than twice as high as last year’s findings. Meanwhile, however, concerns have been rising regarding the possibility of extracting sensitive corporate information from ChatGPT.

Tudi chooses ThetaRay’s AI system to oversee Mexico’s local payments

ThetaRay, a data analytics technology fintech headquartered in Israel and New York, and Tudi, a digital financial firm, have collaborated to help monitor transactions for fraud in Mexico using ThetaRay’s cloud-based AML solution.

Tudi, a Stella Tech firm, aims to assist the payment market in Mexico in its transition to a cashless economy by offering a one-stop application that reportedly addresses all end-user transactional demands, such as bill payment, money transfers, government levies and more. ThetaRay plans to provide Tudi with access to its SONAR SaaS solution for AI-powered transaction monitoring, which reportedly identifies the first indications of financial crimes such as money laundering and financing of terrorism. As a result, Tudi intends to offer a service that complies with the new Mexican law governing fintechs, while expanding its business with a secure payment solution.

Reports indicate that officials in Mexico are mandating that comprehensive AML systems be used by non-bank payment providers. Andrés Adame Guajardo, Vice President of Product, Tudi, commented that ThetaRay's technology enables them to offer cost-effective digital financial services to Mexico's unbanked population, lessening the currency-based economy and boosting economic development by utilizing digital financial services. Approximately 37% of the Mexican population, per the World Bank, have accounts, and only 32% have made or received digital payments, much less than the percentages in other nations with comparable levels of development.

Crypto regulation advances globally, while the US remains rigid

A EU's new anti-money laundering law aims to avoid banning private Bitcoin wallets, making self-custody permissible in the EU. The EU Parliament is reportedly clarifying the self-hosted addresses, once referred to as “unhosted wallets”, to ensure that non-custodial services are not prohibited.

In the most recent revision of the European Parliament's examination of the anti-money laundering bill, the phrase "self-hosted addresses" was substituted for "self-hosted wallets" when referring to laws regarding transaction limitations. Additionally, regulators intend to prevent non-custodial wallets from existing unless they are connected to a specific account on a cryptocurrency service provider, such as an exchange. Furthermore, if the owner cannot be determined, a transaction limit of €1,000 ($1,070) will still apply to self-hosted wallets, which is reportedly in line with the transfer of fund requirements (TFR). The TFR states that the originator and beneficiary information must be provided for crypto transactions with the same cap.

The provisions are still subject to amendments since the European Parliament will have until 28 March to debate the anti-money laundering documents, said reports. The anti-money laundering legislative package, which was initially introduced by the European Commission in July 2021, reportedly has significant implications for cryptocurrencies in the 27-nation union. The TFR, which imposes regulations on cryptocurrency transactions, is expected to take effect after a final vote in April 2023. A spring school program for Bitcoin training is expected to commence in March 2023, according to the Mayor of Lugano in Switzerland.

Meanwhile, US officials have also reportedly presented a bill that would prohibit the Federal Reserve from issuing a CBDC. Voyager, a defunct digital asset platform, had previously claimed that NYDFS objections to Binance’s US $1.02 billion bid to buy Voyager’s assets are contradictory, as the authorities themselves are restricting the availability of cryptocurrency.

US regulators caution banks on liquidity risks associated with cryptocurrencies

Major US banking authorities have reportedly warned banks to be alert for any liquidity risks from cryptocurrency-related clients, as some of their deposits may be unstable. The Federal Reserve, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency have urged banks to implement effective procedures to oversee funds deposited by organizations connected to cryptocurrency assets, warning that deposits made with banks on behalf of cryptocurrency users as well as stablecoin funds could become susceptible to sudden outflows.

The current announcement is the latest in a series of actions from bank regulators urging caution in any cryptocurrency transactions, pointing out that the statement does not include new requirements and that banks are not banned from providing services to specific sectors. However, the statement is reportedly the first time the bank regulators have called attention to deposits connected to stablecoins, a category of cryptocurrency usually pegged to the dollar and subject to volatility during times of market stress. Regulators are reportedly prompting banks to closely examine their collaboration with stablecoin companies. Additionally, the statement warned that large and sudden withdrawals from stablecoin deposits could occur, for instance, in the event of unexpected stablecoin redemptions and market volatility.

Alibaba Cloud and Shell China collaborate to support businesses in adopting sustainable, low-carbon digital solutions

Alibaba Cloud, a digital tech firm that reportedly powers Alibaba Group Holding's digital technology division, has partnered with the China-based subsidiary of energy giant Shell on environmentally friendly, low-carbon digital solutions. The two entities plan to create a long-term strategic alliance leveraging Alibaba Cloud's solutions in cloud computing, big data and AI and the energy transformation infrastructure developed by Shell.

At Alibaba's data centre, Shell's coolant liquid will reportedly be utilized specifically for testing and researching commercialization possibilities, while aiming to increase the digitalization of Shell's China operations via Alibaba Cloud. Additionally, the companies plan to work with businesses in developing green, low-carbon digitalization solutions as they investigate trading in electricity, green certificate and carbon credit.

The ECB reports a loss as a result of its own rate increases, eliminating its dividends

The European Central Bank reportedly suffered a loss in 2022 annual financial reports due to its own interest rate increases prompting it to lower the worth of certain bond investments. While the 1.6-billion-euro (US $1.7 billion) loss was reportedly covered by provisions, analysts question whether the ECB will run low on safety nets, specifically during this inflationary period with increased rates.

The ECB's small own-funds and US dollar portfolio, as well as the interest it allegedly paid to central banks of the eurozone member countries, accounted for the majority of the loss, said reports. However, the valuation of the hundreds of billions of euros worth of bonds purchased during the ECB's stimulus programme has not been addressed, said reports. As the ECB began increasing borrowing costs and reducing asset purchases in 2022 to combat the unexpected rise in inflation, analysts report that the values have fallen. Additionally, the value of those bonds is reportedly recorded at the amortized cost subject to impairment on the ECB's balance sheet, which offers policymakers the option to overlook some market movements.

As of the end of December 2022, the ECB reportedly valued the bonds it had acquired through its stimulus programmes and held onto its balance sheet at 457.3 billion euros, comparable to under 10% of the total amount of bonds the Eurosystem's member central banks possessed.

Reports indicate that there are currently 6.6 billion euros in provisions, 8.9 billion euros in capital, and 36.1 billion euros in a "revaluation account" aimed at offsetting market losses at the eurozone's central bank, which now has twenty member countries. However, in the event that these reserves were to run low, it may reportedly look to its shareholders for a capital increase or roll the losses over to subsequent years.

Ingenico and Binance collaborate to pilot in-store crypto payments

Ingenico, a French-based global payments provider with forty million terminals in 37 nations, has reportedly joined forces with Binance to integrate a platform for digital assets and facilitate in-store cryptocurrency payments through Binance Pay in France. More businesses are reportedly connecting traditional financial (TradFi) solutions with decentralized financial (DeFi) solutions as the use of cryptocurrencies and cryptocurrency-based services continues to grow.

Customers utilizing Ingenico's AXIUM terminals will reportedly be able to make payments using more than fifty cryptocurrencies. Although payments to merchants will initially be made in cryptocurrencies, a crypto-to-fiat solution that will enable them to accept fiat payments is scheduled to pilot in Q2 of 2023, said reports. To test the terminals, the collaboration plans to pilot them at two Parisian merchants in the hospitality and retail sectors, Le Carlie and Miss Opéra.

Ingenico intends to roll out its brand-new cryptocurrency payments option in additional European nations where Binance is an authorized crypto operator, such as in Italy, Lithuania, Spain, Cyprus, Poland and Sweden. In-store technology typically requires prior integration in order to start using cryptocurrencies, but the new solution aims to become an "all-in-one" technology that facilitates merchant and customer onboarding.

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