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Basel Committee Adopts Fintech Guidance that Includes WOCCU Input

The Basel Committee on Banking Supervision (Committee) published its paper titled Sound Practices on the implications of fintech developments for banks and bank supervisors which assesses how technology-driven innovation may affect the banking industry and banding prudential supervisors. 

The Committee’s final fintech paper reflects WOCCU’s comments on the Committee's August 2017 consultative document including that fintech companies be subject to comprehensive prudential, consumer protection, data security and anti-money laundering/countering the financing of terrorism (AML/CFT) regulation and urging the Committee to promote a regulatory level playing field by ensuring that fintech companies are subject to the same regulatory requirements that apply to authorized deposit-taking institutions such as banks, credit unions, and building societies

In particular the paper contains the following standards for fintech companies advocated by WOCCU:

  • Safety and soundness and financial stability can be enhanced by implementation of supervisory programmes to ensure that banks have effective governance structures and risk management processes that appropriately identify, manage and monitor risks arising from the use of fintech including associated new business models applications, processes or products; 
  • Safety and soundness and financial stability can be enhanced by implementation of supervisory programmes to ensure that banks have appropriate risk management practices and processes over any operation outsourced to or supported by a third party, including fintech firms, and that controls over outsourced services are maintained to the same standard as those applied to operations that the bank itself conducts; and 
  • Where appropriate, safety and soundness and financial stability can be enhanced by bank supervisors communicating and coordinating with relevant regulators and public authorities, such as those charged with data protection, consumer protection, fair competition and national security, to ensure that banks using innovative technologies are complying with the relevant laws and regulations.
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