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Insights and trends shaping the future of compiliance

Explore spektr, insights and trends shaping compliance's future.

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spektr – Blog

What's been occupying our compliance attention lately? Here's a rundown of notable updates in the world of payments from the past weeks.

EBA Clearing's SEPA-wide Verification of Payee

 (VOP) service, enabling payment service providers (PSPs) to meet the requirements of the Instant Payments Regulation (IPR) ahead of the October 2025 compliance deadline. The service supports IBAN/name matching for SEPA transactions, providing a crucial tool for fraud prevention and ensuring seamless payment processes across the Single Euro Payments Area (SEPA).

With integration into its RT1 and STEP2 platforms, EBA Clearing’s VOP service connects over 5,000 PSPs and offers flexible options for adapting to evolving compliance needs. This early rollout empowers PSPs to fine-tune their VOP approaches and achieve full pan-European reach while enhancing customer trust in instant payments.

The Payments Association Urges Action on the Environmental Impact of Digital Payments

The Payments Association is advocating for the development of a 

 to measure and reduce carbon emissions across the digital payments ecosystem. While emissions per transaction are relatively small, the sheer scale of the industry amplifies its environmental footprint, highlighting the need for a unified approach to sustainability.

A recent report by the association's ESG Working Group outlines challenges in establishing emissions data, citing complexities like the vast number of data points and inconsistent measurement practices. Tony Craddock, Director General of The Payments Association, emphasizes that a standardized measurement system could drive meaningful discussions, foster collaboration, and align sustainability goals with commercial objectives, ultimately benefiting both stakeholders and the planet.

UK Payment Systems Regulator Proposes Cap on Cross-Border Card Fees

The UK Payment Systems Regulator (PSR) is advancing plans to 

 on cross-border interchange fees charged by Visa and Mastercard for European shoppers' online purchases. Following post-Brexit fee increases of up to fivefold, these charges now cost UK businesses an additional £150–200 million annually.

In its final report, the PSR highlights a lack of competition enabling these hikes and is consulting on an interim cap to restore pre-increase levels. This short-term measure will be followed by further analysis to develop a sustainable long-term solution. While industry groups like the British Retail Consortium welcome the move, Mastercard warns against potential market distortions from artificial controls.

PSR Advocates Data Sharing to Combat APP Fraud Across Banks and Tech Platforms

The Payment Systems Regulator (PSR) is urging banks, technology firms, and social media platforms to collaborate in 

 (APP) fraud, which cost UK consumers £341 million in 2023. APP scams trick victims into transferring money to fraudsters posing as legitimate payees, eroding trust in both banks and major digital platforms.

The PSR’s report emphasizes the need for cross-industry data sharing to close vulnerabilities exploited by fraudsters. New reimbursement rules aim to incentivize banks to prevent fraud, but the PSR stresses that platforms must also take responsibility. By tackling APP scams at their roots, the regulator hopes to reduce harm and restore consumer confidence. Industry leaders agree that while current measures are a step forward, ongoing collaboration is crucial to address evolving fraud tactics.

Morgan Stanley Becomes First Investment Bank to Leverage Wise Platform for Cross-Border Settlements

 to adopt its technology platform for foreign exchange and international settlement services, becoming the first investment bank to utilize Wise’s high-speed cross-border payment infrastructure. This collaboration allows Morgan Stanley to streamline settlement processes for its corporate clients while reducing operational complexity.

Wise’s platform, with over 65 licenses and direct connections to six payment systems, completes 63% of cross-border transactions in under 20 seconds. According to Samer Oweida, Morgan Stanley’s Global Head of Foreign Exchange and Emerging Markets, this partnership underscores the bank’s commitment to leveraging cutting-edge technology to deliver fast, reliable, and cost-effective payment solutions for its clients.

CFPB Targets Privacy and Consumer Protections in Digital Payments and Cryptocurrencies

The Consumer Financial Protection Bureau (CFPB) is examining how existing privacy and consumer protection laws can be applied to digital payment systems offered by Big Tech, stablecoins, and other cryptocurrencies. It has issued a 

 on how companies collect, use, and safeguard personal financial data in digital payment ecosystems, often exceeding what is necessary for transactions.

The CFPB highlights concerns about potential misuse of consumer data for practices like personalized pricing. It also proposes clarifications on how the Electronic Fund Transfer Act applies to digital payment mechanisms, ensuring protections against errors and fraud for emerging payment technologies. CFPB Director Rohit Chopra emphasized the need for robust protections to build consumer confidence in these evolving payment systems.

At spektr, we understand that keeping up with regulatory changes and maintaining compliance can feel overwhelming. 

about your compliance needs and how we can customize solutions to match your unique business requirements! 

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Stay updated on the latest in payments: explore new regulatory developments, industry partnerships, and fraud prevention initiatives shaping the payments landscape this month.

This Week in Compliance Vol. 11

Now that we’ve entered 2025, we wanted to take a moment to look ahead at what the payments industry will be facing when it comes to compliance challenges and opportunities. To help you stay ahead of the curve, we tapped into the collective wisdom of spektr’s compliance experts to identify the top five trends shaping payment compliance this year. Spoiler: you might need a 

1. Real-Time Monitoring: No Longer Optional

Periodic checks no longer suffice to keep regulators happy. In 2025, 

 will be evolving from a nice-to-have into a must-have for compliance programs. Why? Because fraudsters and other bad actors are moving fast, and regulators expect the same level of speed from compliance teams.

Real-time monitoring isn’t just about catching red flags in the moment, it’s also about building a malleable compliance framework that learns and adapts continuously. With regulators tightening their expectations around AML and CFT, companies still relying on manual reviews or outdated systems will find themselves playing an expensive game of catch-up. Platforms like spektr ensure that you can confidently shift from manual checks to 24/7 monitoring to keep risks in check.

2. Cross-Border Compliance Takes Center Stage

Cross-border payments are soaring, but so are the complexities of navigating international regulations. With jurisdictions like the EU ramping up enforcement of cross-border AML rules and new data privacy laws popping up everywhere, compliance teams will need to double down on their efforts.

This year, harmonizing compliance across borders will dominate strategic agendas. Companies processing payments internationally will need to juggle overlapping, and sometimes contradictory, regulatory requirements – taking into account regional peculiarities and, with it, different frameworks. The solution? Automating compliance workflows that can adapt to diverse regulatory environments. The firms that can confidently handle cross-border transactions will thrive in 2025; those that can’t risk fines, reputational damage, or even worse.

The European Commission’s proposed Third Payment Services Directive (PSD3), alongside the Payment Services Regulation (PSR), signifies a critical shift in payment compliance. These measures aim to modernize the payment services sector across the EU by introducing uniform regulations, enhancing strong customer authentication requirements, and implementing anti-fraud measures such as IBAN/name verification services.

Once finalized, their full implementation may still only take effect around 2026/27, following a pivotal transition period – but the preparation has to begin already now. For payment service providers, compliance solutions that help you adapt to these regulations will be essential to handling cross-border operations, whilst maintaining security and trust.

Linked to the above, many companies in the payments industry are investing in AI to help with the simplification of cross-border payments — especially factoring in the volumes of transactional data that has to be sifted through. AI can also be implemented to:

 company, spektr is leading the way in leveraging AI to enhance compliance processes — specifically designed to handle the complexities of modern payment systems. 

4. Reinventing KYC for High-Value, Multi-Layered Customers

Verifying a single individual? No problem. Verifying a multinational corporation with complex ownership structures, cross-border dealings, and PEPs sprinkled throughout? This is where a smarter way to do KYC is needed.

In 2025, compliance teams will need innovative approaches to tackle high-value and multi-layered customer profiles. Regulators are scrutinizing beneficial ownership and ultimate control more closely, and existing KYC tools often struggle to provide the granularity required.

Expect to see a surge in demand for tools that combine automation, advanced analytics, and open data sources to dig deeper into customer profiles without slowing down onboarding. The goal? Ensure thorough verification while keeping the customer experience frictionless – a tricky balance, but one that compliance teams can’t afford to ignore.

This is how we do it at spektr: our ownership trees help to easily visualize and validate intricate ownership structures – UBOs, layered entities, cross-border clients – without the hassle, instantly capturing the details, and adjusting as things change.

5. Legacy Systems Will Have to Be Replaced

If you’ve been hanging onto a 20+-year-old compliance system, this is your sign to shake things up. Legacy systems simply can’t keep up with 2025’s compliance demands. From real-time monitoring to cross-border workflows, compliance tools today need to be fast, adaptable, and scalable. Legacy systems, often cobbled together with patchwork integrations, simply weren’t designed for the speed or complexity of modern payments. Changing them up is about more than just avoiding technical debt (though that’s a big part of it); it’s about setting your compliance program up for long-term success.

Based on reflections from our in-house experts, 2025 is set to be a year of positive change for payment compliance. Real-time monitoring, cross-border complexity, advanced customer verification, and the changing up of legacy systems are just the tip of the iceberg. For those ready to embrace change, 

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Stay ahead in 2025 with insights into the top 5 payment compliance trends, including real-time monitoring, cross-border challenges, and PSD3 and PSR enforcement. 

2025 Payment Compliance Trends: Insights from Experts

Is perpetual KYC (pKYC) just a buzzword that’s taking the compliance scene by storm, or does it actually hold value that could change the game for you and your compliance team? At spektr, we firmly believe it’s the latter. pKYC shouldn’t be deemed just a “nice-to-have” anymore – it’s a game-changing necessity for compliance teams striving to stay ahead of risk and regulatory demands.

Why Perpetual KYC Isn’t Just a Buzzword

Risk isn’t static. Just because a customer was deemed low-risk during onboarding doesn’t mean they’ll stay that way. Transactions change, external conditions shift, and behaviors evolve. Unfortunately, relying on periodic KYC to catch these changes often means risks go unnoticed for months — or longer. 

pKYC helps to eliminate these blind spots. By enabling 

, it ensures that compliance teams can track critical shifts as they happen, which means no more waiting for the next scheduled KYC review to uncover an issue that should’ve been flagged months ago.

Considering changes happen all the time, why should KYC reviews be confined to intervals of months or even years? This proactive, real-time approach is what makes pKYC such a vital tool. Ultimately, pKYC flips the script, giving compliance teams the power to tackle changes head-on the moment they happen. 

During the intervals in periodic KYC reviews, key changes in a customer’s profile – such as shifts in ownership, significant transactions, or inclusion on a sanctions list – can go unnoticed. Such a delayed detection leaves organizations exposed to compliance risks, potential regulatory violations, and reputational damage.

This is where solutions like spektr step in with pKYC to bridge the gaps left by periodic reviews:

So, to answer the question we posed at the very beginning of this article: no, pKYC isn’t just a buzzword, even though it’s being used more and more amongst compliance professionals. Its tangible worth whittles down to gaining 24/7 oversight, being updated as and when critical changes take place, and making sure your teams aren’t faced with large amounts of data that have piled up over a concerning period of time. 

The compliance landscape is changing rapidly, and so are the risks. With the sheer volume and speed of financial data today, traditional periodic KYC isn’t enough to keep up. pKYC ensures that compliance teams are able to remain agile and prepared for whatever comes next.

Speaking of what comes next, are you curious how spektr can reshape your compliance processes? 

 and see firsthand how spektr can help you move from periodic reviews to continuous monitoring that doesn’t wait for the next scheduled update to catch potential risks. 

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Perpetual KYC is transforming compliance, enabling real-time monitoring and risk management. Discover its significance for compliance teams.

Perpetual KYC: Lessons for Compliance Teams

What's been occupying our compliance attention lately? Here's a rundown of notable updates and regulatory happenings from the past weeks.

Central Banks Pioneer Compliance-by-Design in Cross-Border Transactions

, in collaboration with central banks from Australia, Korea, Malaysia, and Singapore, has demonstrated the feasibility of embedding regulatory compliance directly into cross-border transactions through a proof-of-concept initiative called Project Mandala. By integrating compliance-by-design principles, the project seeks to streamline regulatory processes, reduce transaction times, and enhance transparency in cross-border financial activities.

Mandala leverages a decentralized system with components such as peer-to-peer messaging, a rules engine, and a proof engine to ensure compliance checks are completed before initiating payment instructions. With successful use cases like cross-border lending between Singapore and Malaysia and capital investment financing between South Korea and Australia, Mandala automates key compliance requirements, including sanctions screening and reporting. It is designed to support both emerging digital asset systems and traditional platforms like Swift, paving the way for seamless and efficient cross-border payments.

SEC Charges JP Morgan Affiliates $151 Million for Regulatory Failures

The US Securities and Exchange Commission (SEC) has charged JP Morgan Securities and JP Morgan Investment Management Inc. (JPMIM) in five separate enforcement actions, 

. The charges stem from misleading disclosures to brokerage customers regarding private fund products, undisclosed financial incentives for recommending specific investment programs, and engaging in prohibited transactions.

Among the violations, JPMIM conducted $4.3 billion in prohibited joint transactions and executed 65 illegal principal trades worth $8.2 billion. Sanjay Wadhwa, acting director of the SEC’s Division of Enforcement, emphasized the firm’s violations across multiple business lines and its breach of investor protection laws. While JP Morgan did not admit to or deny the charges, the settlement includes voluntary payments to affected investors, reflecting an effort to address regulatory failures and conflicts of interest.

Hong Kong Monetary Authority Fines Fubon Bank HK$4 Million for AML Failures

The Hong Kong Monetary Authority (HKMA) has imposed a HK$4 million fine on 

 (AMLO). The fine follows a self-reported failure in the bank’s transaction monitoring systems and an HKMA investigation into its compliance controls between April 2019 and July 2022.

The HKMA found significant deficiencies, including the lack of effective procedures for monitoring business relationships, inadequate follow-up on a decline in transaction alerts, and failures to update customer due diligence after trigger events. Raymond Chan, HKMA's executive director for enforcement and AML, emphasized the critical importance of continuous and comprehensive monitoring to detect potential money laundering and terrorist financing activities promptly.

FinCEN Alerts Banks to Emerging Deepfake Threats in Financial Fraud

The US Treasury Department's Financial Crimes Enforcement Network (FinCEN) 

 about the rising use of generative AI-powered deepfakes in financial fraud. The alert highlights a growing trend of criminals deploying deepfake media, particularly fraudulent identity documents, to bypass ID verification and authentication processes.

To combat this, FinCEN has provided red flag indicators and typologies to assist financial institutions in detecting and reporting suspicious activity, in accordance with the Bank Secrecy Act. Director Andrea Gacki emphasized the importance of vigilance in safeguarding the financial system and protecting individuals from abuse by these advanced tools. The alert follows increasing reports of deepfakes being used not only for identity fraud but also in scams such as AI-generated cryptocurrency investment schemes on social media platforms.

Basel Committee Advances Basel III Implementation and Strengthens Risk Management Frameworks

The Basel Committee on Banking Supervision reaffirmed its commitment to fully 

, supported by the G20, as a cornerstone of global financial stability. Key updates include finalizing guidelines to enhance counterparty credit risk management, addressing vulnerabilities highlighted by recent non-bank financial intermediation (NBFI) distress. 

The Committee emphasized strengthening macroprudential policies, including guidance on positive cycle-neutral capital buffers, and continued work on climate-related financial risk disclosures under Pillar 3, slated for completion in 2025. These efforts reflect a unified push to fortify banking systems against emerging risks and ensure consistent global regulatory standards.

Australian Banks Collaborate on Real-Time Fraud Intelligence Sharing Network

Australia’s top banks—ANZ, CBA, NAB, Suncorp, and Westpac—are piloting a real-time fraud intelligence-sharing network powered by 

. The system analyzes behavioural and device data to flag risks in receiving accounts before payments are processed, enabling banks to block potential scams.

CBA’s James Roberts calls it a "world-first" for protecting Australians from financial fraud. However, NAB’s Chris Sheehan stresses the need for tech platforms and telcos to do more to prevent scams at their source, such as on social media and messaging apps.

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Stay updated on the latest in compliance: explore regulatory breakthroughs, enforcement actions, and innovative fraud prevention strategies reshaping the financial landscape this month.

This Week in Compliance Vol. 10

Just a couple of weeks ago, we proudly announced spektr’s new ISO 42001 certification for responsible AI management, awarded by 

 – the world’s first certification body accredited to issue ISO 42001 certifications! 

Given this achievement, we wanted to take a moment to dive into what this certification means for spektr’s operations, as well as our clients. To highlight the significance of this milestone, we spoke with one of the driving forces behind spektr’s certification: 

, our Head of Business Analysis, who played an instrumental role in achieving this success.

Meeting the Highest Ethical and Operational Standards

AI adoption is exponentially increasing, with 72% of organizations reporting regular use of AI in 2024 alone, according to a 

. However, whilst AI can, and does, bring tremendous value, it does not come without risks. That’s where standards like ISO 42001 become pivotal for showcasing strong AI governance; it was created to provide a standardized foundation for organizations handling AI-related risks and controlling opportunities associated with these quickly developing technologies. This is what Grace had to say about achieving this latest ISO certification: 

Achieving ISO 42001 certification underscores spektr's dedication to responsible AI management. This certification ensures that our AI-driven solutions are developed, deployed, and monitored with the highest standards of accuracy and quality. This certification serves as a cornerstone of our commitment to transparency, quality, and ethical AI practices that align with our clients' and regulatory expectations.

So, what does ISO 42001 certification actually entail? Here are the key facets – which, in total, include 

 covering the AI system life cycle management, data management, and responsible use of AI systems:

For us, this means that our spektrAI setup (which we launched just a couple months ago) is now fully conforming to this benchmark International Standard – which should ultimately be a non-negotiable for any compliance tool within the marketplace. 

ISO 42001 certification is less about spektr, and more about instilling confidence in our clients as the primary audience of this third-party report. Being able to continuously prove that spektrAI can be leveraged to its fullest potential, whilst still complying with stringent security requirements, is the best outcome of this certification. As Grace rightly mentions: 

For our clients, ISO 42001 is more than a certification; it’s a promise. It assures that every AI-driven solution on our risk platform is crafted with precision, monitored with diligence, and improved continuously. This commitment empowers our clients to trust in the reliability and integrity of our products as they make critical decisions.

, Chief Executive Officer at Mastermind, the accredited certification body partner selected by spektr, emphasized the achievement:

Since our accreditation in July, we have had the privilege of working with some of the first organizations to adopt ISO 42001. Although this International Standard has been published for less than a year, we are already seeing a clear trend: organizations like spektr are elevating their existing management systems, originally built for ISO 27001, to also meet ISO 42001 requirements. 

The team at spektr embedded secure engineering and responsible AI principles into their products from the beginning, which made expanding their governance activities a natural progression.

 is not the end goal for spektr! We plan to continuously improve our product, ensuring that we are consistently able to meet the highest of expectations maintained by our clients– something they deserve when using our solution. As Grace remarks: 

Looking ahead, ISO 42001 certification is only the beginning of our journey towards responsible AI. With this management system in place, spektr is well-positioned to navigate the dynamic AI landscape confidently and responsibly. Our clients can expect ongoing advancements in risk management, driven by AI solutions that are not only innovative but also governed by stringent ethical and quality standards.

 for collaborating in order to make this achievement a reality! 

If you read this and thought, ‘Hey, I’d like to learn more about a platform that offers all of this’, feel free to 

 with one of our in-house pros! We’d love to get you up to speed with spektr’s industry-leading solution.

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We explore what spektr's ISO 42001 certification means for spektrAI & our clients, including responsible AI management and meeting the highest ethical standards

spektr’s ISO 42001 Certification: Responsible AI Management 

What are the biggest and most persistent challenges that compliance professionals in the fintech market are facing today? We got the opportunity to interview someone who knows the industry inside and out: 

. Lauren is a Senior Recruitment Consultant, exclusively working with risk and compliance, at QED Legal. Her years of experience have amounted to an intricate understanding of the relationship between financial institutions and compliance – which is why we teamed up with her to talk about compliance, fintech, and solutions such as spektr. 

Lauren has firsthand witnessed the struggles, trends, and opportunities that define the industry. In such a fast-paced and highly regulated environment, compliance professionals are under immense pressure to meet a host of regulatory requirements, maintain data security, all whilst attempting to be as cost-effective as possible. 

How have the demands on compliance professionals changed in the last few years?

The last few years have seen such a gigantic increase in compliance regulations, from the 2018 Data Protection Act to the EU Anti Money Laundering Authority (AMLA) being enforced last year. Compliance leaders and professionals are having to continuously adapt to a vast, varied and intricate global regulatory environment. 

This means compliance roles have expanded beyond the traditional regulatory alignment; professionals must now be experts in data privacy, money laundering, whistle-blowing, fraud, cyber security and more. Compliance functions can no longer be one person, they must be a team of experts who know their niche inside out. 

On top of this, pressures aren't merely best practice anymore, but preventing extremely high fines and reputational risk, having to pre-emptively address compliance issues before they even arise.

How do you specifically think that expectations of compliance professionals in the fintech market have changed?

I think the countless global scandals across multiple FinTech's have really helped highlight just how important compliance is in the FinTech space. The Wirecard scandal going to court and the FTX collapse in 2022 - makes you see just how much compliance functions need to change.

All the regulatory changes and increased global scandals has really increased expectations of compliance professionals, having to evolve drastically, keeping up with FinTechs rapid growth and complexity of their offerings. They're expected to act as strategic partners, whilst fostering innovation and keeping regulatory risks in check. 

Often operating in gray regulatory areas, they need compliance professionals who can implement agile compliance frameworks and scalable solutions to grow and keep pace with innovation. FinTechs need incredible investment, not only in finance, but knowledge and technologies to automate compliance functions.

Fintech’s Toughest Compliance Challenges

Who better to ask about challenges in the industry than someone who knows it like the back of her hand? 

Are there any particular challenges that you have seen compliance professionals persistently struggling with?

I think the biggest element is balancing regulations and effective compliance with the pace of growth that a lot of fintechs face. They're constantly evolving, having to offer new innovative products to stay ahead of the competition, can really cause issues in compliance. Compliance teams often find themselves limited by a lack of resources and legacy systems, having to push senior leaders to understand why they need to be investing in compliance.

An overarching theme that covers all compliance challenges, is the need to really embed a culture of compliance across the business, ensuring that all teams, not just compliance, are aligned with the regulatory goals of the business. It's a never-ending task, and honestly the number 1 reason people leave their roles.

The Two Cs: Compliance and Configurability

When relying on any kind of tech to help with compliance-related activities, flexibility is paramount. Each compliance process has its own unique complexities, and solutions should be adaptable to these specific needs, rather than forcing organizations into rigid, one-size-fits-all frameworks. That’s why compliance depends on configurable solutions, and spektr goes so far as to offer 

What do you realistically think can help alleviate some of these key challenges you mention? 

I think the biggest thing that needs to be looked at is solutions that are adaptable and can grow with your business as you continue to evolve and scale. One of the biggest issues compliance functions face is old outdated tools, or tools that just don't suit their business or their team.

What do you think the future of compliance in fintech will look like? 

With the rise of AI and smart technology that works around you and your needs, I think a seamless integration of technology automation and human expertise will be the key to the future of compliance. Automation will handle repetitive tasks and real-time monitoring, whilst specialised technology can provide deep insights and adaptable frameworks. 

However, the technology needs to work fluidly with compliance teams; AI and new smart tech can't work on it's own without ethical flaws, the symbiosis between tech and humans will be essential.

 for taking the time to give her valuable observations in this exclusive interview! Her insights have highlighted both the ongoing challenges, as well as the promising role of configurable compliance tech that is highly adaptable to distinct organizational requirements (such as spektr).

Curious how spektr can reshape your compliance processes? 

 today and see firsthand how hyper-configurability can save you time, reduce risk, and automate your compliance process.

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What are the biggest hurdles in modern compliance, and what is the best solution? We interview industry expert, Lauren Eager, to get the answers to these questions, talking specifically about effective compliance in the fintech space. 

The Biggest Hurdles in Modern Compliance: Interview with an Industry Expert

Starling Bank Fined £29M for "Shockingly Lax" AML Screening Failures

The Financial Conduct Authority (FCA) has 

 for serious lapses in its anti-money laundering (AML) and financial sanctions screening processes. Despite prior warnings from a 2021 review, the bank continued to open over 54,000 accounts for high-risk customers while using an automated screening system that failed to properly monitor those subject to financial sanctions. The FCA stated that Starling’s failures left the financial system vulnerable to criminal exploitation. The bank has since taken steps to address the issues and improve its financial crime controls, earning a reduced penalty. Starling has expressed regret and issued an apology for the oversight.

Axiom Bank Faces Enforcement Action from OCC for BSA/AML Failures

The Office of the Comptroller of the Currency (OCC) has taken 

 in Florida for its failure to adequately comply with the Bank Secrecy Act (BSA), anti-money laundering (AML) regulations, and poor risk management practices. The enforcement order requires Axiom to update its BSA/AML action plan, strengthen internal controls, and enhance its risk management strategies. This comes in the wake of TD Bank's recent $3 billion fine for similar failures, signaling increased regulatory scrutiny on financial institutions’ compliance with AML laws.

Swift Launches AI-Powered Real-Time Fraud Detection for Banks

, designed to help banks detect and prevent financial crime in real-time. The service, set to be available in January 2025, builds on Swift’s existing Payment Controls Service and leverages anonymized transaction data from its vast network to identify suspicious activities. The rollout follows a successful pilot with financial institutions across multiple regions. Swift has also been collaborating with member banks to explore privacy-preserving technologies, aiming to enhance fraud detection while maintaining data confidentiality. This initiative represents a significant step in bolstering the global banking sector’s defenses against increasingly sophisticated fraud tactics.

UK Treasury Proposes 72-Hour Payment Delay to Combat Fraud

The UK Treasury has introduced a new draft regulation allowing banks to 

 to investigate suspected fraud. The amendment to the 2017 Payment Services Regulations gives payment service providers the power to temporarily halt transactions when fraud is suspected, provided they promptly inform the payer and outline the next steps. This move comes in response to the UK’s escalating fraud crisis, with bank fraud losses surpassing £1 billion last year. The regulation aims to reduce the impact of scams, particularly Authorised Push Payment (APP) fraud, which has caused significant financial harm to UK consumers.

EBA Clarifies Procedures for Classifying Asset-Referenced Tokens and E-Money Tokens as Significant

The European Banking Authority (EBA) has 

 on the procedural aspects of assessing asset-referenced tokens (ARTs) and e-money tokens (EMTs) for significance, as outlined in the Markets in Crypto Assets Regulation (MiCAR). This framework includes the transfer of supervisory responsibilities from national competent authorities to the EBA, the establishment of supervisory colleges, and the harmonization of reporting obligations and timelines. The Decision provides a clear roadmap for managing the significance classification process and smooth transition of oversight duties, ensuring effective supervision of significant ARTs (s-ARTs) and significant EMTs (s-EMTs). The EBA will supervise s-ART issuers directly and exercise dual supervision for s-EMTs in coordination with national authorities.

Germany to Develop European Digital Identity Wallet for Secure and Convenient ID Management

The German Government has announced plans to 

 that will allow citizens to securely store their national ID cards and other official documents on a smartphone app. This move aligns with the European Union’s mandate requiring all member states to implement a standardized European Digital Identity Wallet (EUDI) by 2027. The EUDI wallet will enable users to verify their identity, prove their age, and sign documents electronically across the EU’s 27 countries. By offering a secure and convenient alternative to physical ID cards, the EUDI wallet aims to simplify processes like job applications and online banking, while safeguarding privacy and promoting digital inclusion. The initiative is being developed in collaboration with the Federal Agency for Disruptive Innovation and the Federal Office of Information Security.

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Keep up with the latest in financial compliance. Here's a brief look at key updates, from major AML lapses to AI-powered fraud detection. 

This Week in Compliance Vol. 9

Europe is on the brink of a new era of digital identification with the rollout of eIDAS 2.0 pending. This will inevitably have significant effects on the ways that citizens, businesses, and governments digitally interact. The eIDAS 2.O framework aims to introduce interoperable and secure digital identities across the EU, providing users with more control over their personal data. 

As such, this guide has been built to break down the components of eIDAS 2.0, offering a comprehensive overview of what this regulatory framework will mean for citizens, public administrations, and private companies. The guide will also unpack the regulatory and social significance of eIDAS 2.0, looking into its potential impacts in the coming years. 

 was published on the 30th of April 2024, entering into force on the 20th of May. This means that EU member states will be required to provide 

 to citizens shortly after the Implementing Acts have been adopted, with execution expected by 2026. The Implementing Acts will offer specifications, procedures, and standards for ensuring uniform implementation of the European Digital Identity Wallet. eIDAS 2.0 is an acronym for Electronic Identification, Authentication, and Trust Services 2.0. This update aims to offer a standardized framework for digital identities and trust services in order to lay the foundation for more streamlines and secure cross-border transactions. 

 "on electronic identification and trust services for electronic transactions in the internal market" (the “eIDAS Regulation”). The amendment pertains to expanding the scope of the original eIDAS Regulation to include a framework for the European Digital Identity Wallet, focusing on two key aspects: trust and interoperability. This amendment aims to introduce a secure, user-controlled digital identity wallet that citizens, residents, and businesses can use to access both public and private digital services across the EU by 2026. We will break down the some of the key facets of eIDAS 2.0 in subsequent sections:

eIDAS 2.0 is expected to bring a plethora of benefits for citizens, listed below. 

Opening a new bank account or submitting a job application can involve lengthy and complex processes. The EU Digital Identity Wallet aims to simplify access to public and private services, reducing the time and administrative effort needed. With a single click, users will be able to securely verify their identity or share important documents, such as a university diploma, making interactions more efficient and straightforward.

You remain in control of your data, with the ability to decide what to share and limit it to only what is necessary. For instance, you can share your age without disclosing your full date of birth, or confirm your driver’s license validity without revealing your address. 

This approach, known as selective disclosure of attributes, helps minimize the risk of your data being used for profiling. In certain cases, you will have the option to verify your identity completely anonymously, providing an additional layer of privacy and security.

eIDAS 2.0 aims to bring several benefits for public administrations, broken down subsequently. 

EU Digital Identity Wallets will offer public authorities cybersecurity-certified solutions, rigorously tested across Europe, to ensure safety and privacy in all transactions. These wallets are supported by robust technical standards, providing a high level of trust and security in every exchange.

The EU Digital Identity Wallets will expand the availability of digital public services, as all citizens will have access to electronic identification upon their launch and adoption. Their broad range of private sector applications will further encourage widespread use, creating a large user base that may drive greater engagement with digital public service offerings.

The adoption of EU Digital Identity Wallets will strengthen fraud prevention efforts. With every citizen and resident having access to a secure and private form of digital identification, identity fraud and impersonation will become significantly more challenging.

Lastly, eIDAS 2.0 will bring advantages to private companies in a myriad of ways. Here’s how:

Verifying customer identities can be expensive, but EU Digital Identity Wallets will offer a secure and reliable way to authenticate users across the entire EU. This will enable businesses to conduct a wider range of online transactions more efficiently, potentially increasing sales whilst lowering the cost of each verification.

With EU Digital Identity Wallets being secure and compliant with cybersecurity standards, businesses will be able to handle more sensitive customer transactions entirely online. This opens up new opportunities for digital services and expands the scope of secure business operations.

EU Digital Identity Wallets will serve as a neutral public sector authentication solution, removing the need to rely on private third-party providers. This reduces the risk of user data being used for profiling or other commercial purposes by external entities.

At the core of eIDAS 2.0 is interoperability, enabling qualified trust service providers (QTSP) and digital identities to be recognized and used across EU member states. Interoperability involves several components in the context of eIDAS 2.0.

Arguably, the cornerstone of eDIAS 2.0 is ensuring that eID systems from each EU member state are recognized and trusted by other member states. This also applies to accessing both public and private services across borders, meaning you can use your national eID anywhere in the EU. 

Interoperability isn’t limited to eIDs functioning across borders, it also includes guaranteeing that all national systems, platforms, and interfaces can effectively communicate with each other and exchange information through trustworthy means. This inevitably includes setting common technical standards, procedures, and formats (which will be outlined in the Implementing Acts). 

Tying together cross-border and technical interoperability, legal interoperability refers to the building of a framework that legally recognizes digital identities and trust services across borders – entailing that once a digital identity or trust service is accepted in one member state, it must be recognized and accepted in all other without the need for further validation. 

The list goes on, but these three points were mentioned simply to elucidate the significant changes made to eIDAS 2.0. 

eIDAS 2.0, particularly through the European Digital Identity Wallet, will significantly streamline processes in the banking and payments sector – two use cases are elaborated on below to give an idea of what this might practically entail. 

eIDAS 2.0 will simplify online transactions by empowering users to authenticate their identity and authorize payments directly within the wallet. This will hopefully not only simplify online transactions, but also make them more secure, as users are able to control which personal details are shared. 

Online identity verification when opening a new bank account 

When opening a new bank account, users will be able to verify their identity via the European Digital Identity (EUDI) Wallet. This removes the need to physically visit a bank or handle multiple documents simultaneously, as the wallet is able to store verified personal identity information and electronic attestations of attributes.

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