FinTech Reg Sandbox Takes Shape Via CFPB

3. June 2018.








The sandbox is getting a bit bigger — the regulatory kind, that is.

The Consumer Financial Protection Bureau (CFPB) said this past week that it is linking up with the Commodity Futures Trading Commission, eyeing a regulatory sandbox for FinTech firms.

In a speech to the Women in Housing and Finance organization, the CFPB’s acting director, Mick Mulvaney, said, “We recognize that — so often the case is with new technology — there is a needle you have to thread,” noting that, “if you don’t give any regulation at all, it has the chance to go off the rails and completely burn itself out, which is where I was fearing bitcoin was going to a couple months ago if [it hasn’t] already. And, at the same time, if you overregulate, you sort of tamp down that creativity and you discourage the innovation.”

As noted at the time, the U.S. has lagged behind other regions (notably Europe, and, for example, the U.K.) in sandbox development.

In news separate from the sandbox announcement, yet germane to the financial industry in general, loan terms are sweetening, with some regulators starting to worry about looser lending standards, leading to annual lending growth of 3 percent. The eased terms, as reported by The Wall Street Journal, include lower interest rates and increased loan access, even in verticals where firms are struggling. The Office of the Comptroller of the Currency (OCC) says that it has warned some financial companies that they should modify lending terms. That movement comes as matters requiring attention — citations put forth by the OCC to modify lending practices — are up 24 percent year over year, as measured in the first quarter.

Separately, and on the international stage, Meridian Trade Bank was fined more than €450,000 for breaching anti-money laundering rules. The bank operates primarily in Latvia and Lithuania. In Latvia, at least, the news follows a few other incidents of regulatory lapses. Last year, for example, two banks in that country were fined roughly $3 million after they allowed clients to violate sanctions that had been imposed on North Korea by the European Union and the United Nations. In a similar vein, the country’s third biggest bank, ABLV, shuttered amid accusations of money laundering and violating sanctions on North Korea.

Meridian, Latvia’s 13th biggest bank, said in a statement in tandem with the fine that it had agreed to invest as many as €1 million to improve its anti-money laundering controls this year.

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