This Week in Compliance Vol. 6

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

Basel Committee Finalizes Crypto Asset Disclosure and Standards

The Basel Committee on Banking Supervision has released its final disclosure framework for banks' crypto asset exposures and amendments to the prudential standard, both effective January 1, 2026. The framework includes standardized templates for banks to disclose qualitative and quantitative information on their crypto asset activities, enhancing transparency and market discipline. The amendments clarify criteria for stablecoins to receive "Group 1b" regulatory treatment and address other technical aspects. The Committee will continue to monitor crypto asset markets to manage emerging risks.

EBA Issues New Guidelines on 'Travel Rule' for Crypto Asset and Fund Transfers

The European Banking Authority (EBA) has released new Guidelines on the 'travel rule' for transfers of funds and crypto assets, aiming to combat money laundering and terrorist financing. These Guidelines specify the information required for such transfers and outline steps for payment service providers (PSPs) and crypto-asset service providers (CASPs) to detect and address missing or incomplete information.

Effective from December 30, 2024, these Guidelines ensure consistent implementation across the EU, supporting authorities in tracing transfers to prevent and investigate illicit activities. The EBA also issued additional Guidelines on AML/CFT measures for CASPs, focusing on managing ML/TF risks and regulatory compliance.

NYDFS adopts guidance on AI use by insurance firms

The Department of Financial Services (DFS) Superintendent Adrienne A. Harris has issued new guidance to prevent unfair or unlawful discrimination by insurers using artificial intelligence (AI). The guidelines ensure AI does not perpetuate systemic biases and maintains market stability.

Insurers in New York State must analyze their AI systems for discrimination, demonstrate their actuarial validity, and uphold strong governance and transparency. This includes oversight of third-party vendors and clear consumer disclosures. This guidance supports Governor Hochul’s AI policy, promoting responsible innovation and consumer protection in the financial sector.

MAS Commits S$100 Million to Boost Quantum and AI Capabilities in Financial Sector

The Monetary Authority of Singapore (MAS) has committed an additional S$100 million under the Financial Sector Technology and Innovation Grant Scheme (FSTI 3.0) to enhance quantum and artificial intelligence (AI) capabilities in the financial sector.

The Quantum track includes grants for establishing quantum computing and security functions, supporting quantum technology adoption, and enhancing cybersecurity. MAS will also collaborate with educational institutions to develop quantum technology talent.

For AI, MAS will expand the existing AI and data grant scheme to support the development and deployment of AI technologies. This includes establishing AI innovation centers and creating AI platforms for industry-wide use cases, such as scam and fraud detection, positioning Singapore as a leader in AI for the financial sector.

BaFin Threatens Fines for Solaris Over AML Control Deficiencies

BaFin, the German bank regulator, has threatened to fine embedded finance platform Solaris if it fails to improve its anti-money laundering (AML) controls by set deadlines. A special monitor, in place since 2022, will continue to oversee Solaris's compliance efforts. Solaris states it is making significant progress and that the monitor's extension is a formality that won't affect operations.

This follows BaFin's recent fines on N26 and Commerzbank for AML deficiencies, and Crypto Finance securing licenses for regulated digital asset services in Germany.

Nordea Charged by Danish Authorities for AML Violations

Nordea has been charged by Denmark’s Special Crime Unit (NSK) for breaching the Anti-Money Laundering (AML) act between 2012 and 2015. The charges allege inadequate investigations of Russian transactions and ignoring warnings about currency exchange offices. Nordea disputes the charges and states it is well-provisioned for fines. The bank emphasizes its cooperation with Danish authorities and ongoing investments in anti-money laundering measures.

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