Proposals for a central fund to reimburse ‘no-blame’ victims of authorised push payment (APP) scams have stalled, with stakeholders in the UK Faster Payments Service (FPS) unable to reach consensus on the concept. In July, seven leading financial institutions asked operator Pay.UK for a change to the rules framework behind the FPS, under which each and every participant would have been required in the long term to pay into a pot that would be used to compensate no-blame APP victims. Those institutions – Barclays, HSBC, Lloyds, Metro Bank, Nationwide, RBS and Santander – had already been paying into an interim pot designed for that purpose, but had wanted the pool of contributors to expand.
After receiving the institutions’ change request via trade body UK Finance, Pay.UK launched a call for information (CfI) among its participants, seeking their views on the proposed revision. Out of 41 responses, 12 supported the rule change, 24 opposed it and five were undecided. While some felt that the proposed scheme would incentivise fraud-reduction efforts, the majority felt that its impacts would be negative.
Pay.UK CEO Paul Horlock said: “The evidence we’ve gathered suggests that giving payment providers more flexibility and control – for example, through a self-funding model – in the way they fund reimbursement is more likely to lead to better and consistent outcomes for consumers. It is critical that the whole industry plays its part. We’ve already seen examples of payment providers taking significant steps to protect their customers independently, and we believe a flexible alternative will create the conditions for all parties to tailor their approach to funding and offer consumers a consistent experience.”
However, UK Finance CEO Stephen Jones signalled his members’ frustration. “Ensuring victims of APP scams receive compensation when their money is stolen by criminals is an absolute priority for the payments industry,” he said. “There is strong agreement across the sector that we must all work together to create a central, long-term, sustainable funding system to compensate the victims of scams in ‘no blame’ situations under the voluntary industry Code introduced in May. UK Finance and the industry have been working closely with consumer groups to find a solution to this issue and to ensure that the cost of payment frauds is met by all those responsible, both within and outside the payments industry. We are therefore disappointed a way forward has not yet been agreed.”
Uncertainty around the legal status of blockchain-based assets under English and Welsh law has evaporated, with the publication of a formal statement from scrutineering body the Lawtech Delivery Panel. In a landmark statement of 18 November, the Panel’s UK Jurisdiction Taskforce (UKJT) recognised cryptoassets as tradable property, and smart contracts as enforceable agreements, within the borders of England and Wales.
In a press release, the Panel noted that, while the smart-contract and cryptoasset markets are enjoying significant growth, legal uncertainty in the field is frequently cited as the greatest barrier to further adoption, investment and development. “This legal statement takes significant steps to address this uncertainty,” the Panel said. It added: “By providing investors with increased confidence of their rights, the statement helps to provide a dependable foundation for mainstream utilisation of cryptoassets and smart contracts.”
Panel director Jenifer Swallow said: “The worldwide smart-contract market is expected to reach $300m by 2023 and the World Economic Forum predicts 10% of global GDP will be stored on the blockchain by 2027. It is great to see the adaptability of our common law system to fast-changing technology, demonstrated in this landmark legal statement.”
Todd McDonald – co-founder of influential blockchain firm R3 – welcomed the development, saying: “The report vindicates what we have long said: that blockchain and tokenisation of assets represent the future and can fit comfortably with existing regulatory frameworks, provided the architecture and designs are properly thought through… The creation of a new global capital market powered by digital tokens is one of the most exciting – and ambitious – promises of blockchain technology. Tokens hold the potential to create new opportunities for capital formation, liquidity and more efficient asset management in a huge range of markets.”
Download the full statement from here.
Ahead of a pivotal US election year, new research indicates that cyberattacks are set to ratchet up geopolitical tension, thanks to data lurking on the dark web. In its latest Global Incident Response Threat Report, leading cybersecurity firm Carbon Black notes that almost two-thirds of incident response (IR) professionals believe that the 2020 elections will be influenced by a cyberattack from an outside entity; Russia, Iran and China are viewed as the likeliest sources. Indeed, 59% of the IR professionals polled say that the threat level of cyberattacks against the electoral process has increased to “a significant extent” since 2016.
Worryingly, the report points out, up-to-date listings for state voter database dumps are available for sale on the dark web. “One vendor even offers bundles that include combined voter databases from 27 states, rather than offering each state individually,” the report says. “One such bundle has been sold for roughly $95 at least 47 times as of last October… In total, from a single listing, information on more than 81 million voters is available. For context, approximately 250 million people voted in the 2016 presidential election in the US.”
Turning to threats against corporate systems, the report stresses that cybercriminals are expanding their use of ‘island hopping’ – ie, creeping into networks at their most vulnerable points, then hopping up to higher-security areas of those systems. In Q3, more than 40% of attacks targeted victims via island hopping – up 5% on Q1, and continuing a growth trend that Carbon Black has observed over the past two years. The firm also found that attackers are selling island-hopping access to compromised systems. “The creation of an island-hopping marketplace is a game-changer,” the report says, “providing attackers with increased incentives to infiltrate systems and a greater ability to embarrass brands, and giving relative amateurs an easy path to inflict serious damage.”
Overall deal activity in the European payments sector within the third quarter of 2019 was 32.3% higher than the four-quarter average, according to market analyst GlobalData. New figures from the firm’s deals database show that 41 deals worth a total $5.93bn were announced for the region during Q3, beating the average of 31 deals recorded across each of the previous four quarters.
Broken down by deal types, venture financing experienced the greatest activity in the period, at 26 transactions: a 63.4% share. That was followed by M&A, at 11 deals and a 26.8% share, with private equity rounding out the top three at four transactions and a 9.8% share. However, when assessed by deal value, the chart switches around dramatically: M&A leads the field with a $4.36bn haul, with private equity and venture financing reaching totals of $1.18bn and $390.9m respectively.
Remarkably, the top five individual transactions accounted for 95.2% of the period’s overall deal value, totalling $5.65bn. Those deals were:
The pace of digital transformation in trade finance is poised to pick up, with distributed-ledger platform eTradeConnect unveiling two, bold proofs-of-concept for the field. In the first, the firm has partnered with supply-chain software provider CargoSmart on an initiative to enable ocean carriers and terminals to share bill-of-lading shipping data on a real-time basis. In the second, the company has successfully interlinked its systems with ERP.Connect: a service designed by PwC to enable seamless exchange of trade finance documents between key business functions, such as procurement, order management and treasury.
During their work on the first initiative, eTradeConnect and CargoSmart also collaborated with a range of shipping industry participants that are looking to form a Global Shipping Business Network (GSBN). The joint efforts explored how the banking and shipping industries could harness technology to work together more closely, with a view to creating value for their mutual customers. PwC served as project manager on each venture.
PwC global advisory leader Mohamed Kande said: “We are excited to have facilitated the collaboration between the banking and shipping/logistics industries to digitalise international trade and to build an integrated trade ecosystem. This aligns with PwC’s corporate purpose to build trust in society, and demonstrated our commitment to Asia and emerging technologies. For instance, the ERP.Connect proof-of-concept is an execution of our digital strategy to co-create value through innovations and technology. We are thrilled to be part of this digital transformation journey.”