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Industry roundup: 22 October

RMB retains 5th place globally

In September 2021, the RMB has retained its position as the fifth most active currency for global payments by value, with a share of 2.19%. Overall, RMB payments value increased by 6.67% compared to August 2021, whilst in general, all payments currencies increased by 4.41%.

Source & Copyright©2021 - Watch/SWIFT BI

In terms of international payments excluding payments within the Eurozone, the RMB ranked 6th with a share of 1.39% in September 2021. In terms of international payments excluding payments within the Eurozone, the RMB ranked 6th with a share of 1.39% in September 2021.

Sign of things to come: New Zealand becomes the first country to force finance companies to act on climate risks

The Guardian reports that: “New Zealand has become the first country in the world to pass a law forcing financial institutions to disclose and, the government says, act on climate-related risks and opportunities.”

“The new rules will apply to large insurers, banks, publicly listed companies, listed issuers and investment managers. At present, most of these large New Zealand entities provide little information on what the climate crisis and global heating might mean for their future operations. By forcing them to disclose that, the law hopes to ensure the effects of the climate crisis are constantly considered in business, investment, lending and insurance underwriting decisions.”

The Climate Change Minister, James Shaw, said, “Climate-related disclosures will bring climate risks and resilience into the heart of financial and business decision making,” Shaw said. “It will encourage entities to become more sustainable by factoring the short, medium, and long-term effects of climate change into their business decisions.”

US Guidance for the Virtual Currency Industry

The U.S. Treasury’s OFAC (Office of Foreign Assets Control) has just issued guidance on virtual currencies. Fenwick list the key points from this guidance:

  • OFAC has high expectations of the technological compliance capabilities of companies in the virtual currency sector. OFAC’s approach here has mirrored the one it has taken with respect to payment technologies, SaaS, other web and cloud-based services, and mobile apps.
  • While OFAC does not require the use of any particular compliance software, automated sanctions screening tools are typically an effective way to manage risk in this strict liability regime. For instance, automated screening tools benefit from utilizing fuzzy logic capabilities to account for variations in spelling, capitalization, spacing or punctuation.
  • OFAC’s guidance describes certain best practices that can help strengthen internal controls as part of a risk-based compliance program, including geolocation tools, KYC (Know Your Customer) procedures, transaction monitoring and investigation, control weakness remediations, sanctions screening and red flag monitoring. OFAC noted that IP address filtering can help prevent prohibited transactions involving sanctioned countries or territories and points to analytic tools that can identify IP address misattribution or improbable logins (e.g., screening IP addresses against known virtual private network IP addresses or flagging users logging in from different IP addresses). 
    The use of these tools and availability of this data vary among business types, and such measures should be considered carefully to appropriately reflect the risks and practices associated with the products, business models, customers, technologies and geographic scope of the business.
  • OFAC expects companies to screen all available transactions and identify data collected on counterparties to prevent transactions with sanctioned parties and regions. To the extent that companies collect such information, they should screen physical addresses, wallet addresses, IP addresses associated with transactions and logins, email addresses, bank information, other KYC due diligence (e.g., ownership information) and information collected for anti-money laundering (AML) programs.
    Note: the collection and processing of personal data can create some tension with data privacy and financial regulatory obligations. Companies should consult with sanctions, financial regulatory and privacy experts to ensure this is carried out in compliance with all applicable laws.
  • The Specially Designated Nationals and Blocked Persons (SDN) List includes known virtual currency wallet addresses for SDNs. This information field can assist companies in identifying potential sanctions risks.
  • Once a U.S. person determines that they hold a virtual currency that is required to be blocked pursuant to OFAC’s regulations, that person must deny all parties access to the virtual currency. Any blocked property must be reported to OFAC within 10 business days, and thereafter on an annual basis if the virtual currency remains blocked.
  • It is never too soon to evaluate potential sanctions risks. Virtual currency companies should exercise caution during early-stage development prior to launching their products and services to reflect OFAC’s regulatory obligations.

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