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Calls for more crypto regulation at WEF in Davos

The WEF panel calls for crypto standardisation; the U.S. OCC warns large banks may face being broken up; Hong Kong Customs busts the city’s largest AML case

Napier AI
January 20, 2023

Panellists at the World Economic Forum’s annual meeting in Davos, Switzerland call for more regulation in the crypto currency space as the Fed arrests a Russian crypto currency executive in a bid to crack down on non-compliant digital currency exchanges. Big banks may need to be broken into smaller pieces if they are unable to fix significant regulatory lapses due to size and complexity says top federal banking regulator. And in other news, customs to “strengthen the communications with banks and regulatory bodies to combat illegal activities, including money laundering”, following a bust worth HK$6 billion in Hong Kong.

Crypto currency regulation under the spotlight in Davos and Miami  

The panel of regulators and bank CEOs at the World Economic Forum’s annual meeting in Davos, Switzerland calls for crypto currency regulation to be brought in line with banking industry standards.  Meanwhile, US authorities arrest a crypto currency executive for allegedly overseeing money laundering exchanges of hundreds of millions of dollars on behalf of drug traffickers and cyber criminals.

In Davos, UBS chairman Colm Kelleher said that more regulations on “know your customer” and anti-money-laundering rules need to be put in place, while in the US, the crypto bust  marked the latest effort by President Biden to crack down on non-compliant digital currency exchanges.

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Acting Comptroller of the Currency warns top banks might face breakup

Big banks failing to resolve long standing compliance deficiencies may need to be broken into smaller pieces, says Michael Hsu, acting Comptroller of the Currency. Banks scaling up can face control failures, risk management breakdowns and negative surprises, he adds. Effective management is not infinitely scalable as the size and complexity of banks increases.  

The Office of the Comptroller of the Currency, an independent bureau of the Treasury Department, already uses a framework to escalate problems at large banks, including raising penalties and proposing more transparency. Mr. Hsu warns that the recent wave of regional bank mergers is an issue to be addressed through divesting businesses, curtailing operations, and reducing complexity.  

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Hong Kong Customs busts the city’s largest money laundering case, worth HK$6 billion

Customs officers arrested nine people on suspicion of their involvement in 7,600 illicit deals through multiple bank accounts between January 2020 and December 2022.  

Rita Li Yim-ping, head of the Syndicate Crimes Investigation Bureau of the Customs and Excise Department, said that suspicions were aroused by the group’s multiple bank accounts and the high volume of transactions through these over a short time period. A total of HK$6 billion was confirmed to have been laundered, including a single transaction of HK$31 million.  

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