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Senior payment experts from the European Central Bank have characterized the SEC's recent approval of spot exchange-traded funds (ETFs) for bitcoin as a stark illustration of the "Emperor's New Clothes" phenomenon. They argue that this move legitimizes a currency whose intrinsic value as an asset is essentially negligible.

The Monetary Authority of Singapore (MAS) has issued a directive to the country's financial institutions, urging them to ready themselves for the increasing cybersecurity threats posed by quantum computing.

The European Central Bank (ECB) is cautioning banks about the need to enhance their management of outsourcing risks, particularly concerning the processing of personal data.

In its supervisory agenda for 2024, the ECB emphasizes the necessity for institutions to address vulnerabilities arising from their growing dependence on third-party providers. This includes considering the escalating complexity of supply chains and potential concentration risks.

To bolster this initiative, the central bank has disclosed insights from a data collection exercise conducted in 2023 across all supervised banks. The findings reveal a significant surge in the number of outsourcing contracts in recent years, along with an increase in banks' budget allocations for outsourcing strategies, especially concerning critical functions.

Despite the proliferation of external providers operating within the EU, more than 30% of significant banks' total outsourcing budget is directed towards ten providers, many of which are based outside the EU.

While IT-related outsourcing is prevalent, over 80 significant banks outsource critical payment and administrative services, with more than half also outsourcing some lending and investment services.

Approximately half of all contracts with external providers covering critical functions involve time-critical activities. Around 20% of these contracts cannot be reintegrated within banks in case of issues, and roughly 5% cannot be substituted, highlighting potential vulnerabilities.

The ECB underscores that the location of third-party service providers' headquarters and the countries from which services are provided can pose additional risks for banks. A considerable number of significant institutions rely on critical services from non-EU countries, primarily the United Kingdom, the United States, Switzerland, and India.

The ECB also notes a growing interest among banks in cloud services, with almost all significant institutions utilizing such services, predominantly sourced from providers outside the EU. Cloud services represent approximately 15% of all outsourcing contracts.

Given the EU's stringent data protection regulations, the ECB highlights that 70% of outsourcing contracts involve the processing of personal data, with over 70 significant banks outsourcing critical functions to providers located outside the EU.

In light of these developments, the ECB stresses the importance of banks adequately assessing and managing their outsourcing risks to maintain overall system resilience.

Furthermore, the ECB's investigation into banks' risk controls reveals that more than 10% of contracts covering critical functions are non-compliant with relevant regulations. Moreover, over the past three years, 20% of these non-compliant contracts have not undergone proper risk assessment, and 60% have not been audited.

This indicates a lack of sufficient consideration for outsourcing risks among the concerned banks, according to the regulator, which pledges to follow up to ensure compliance with regulations through ECB Banking Supervision.

The United States has placed sanctions on multiple companies and individuals involved in smuggling technology to the Central Bank of Iran (CBI), which has been designated by the US for its role in providing financial support to the Islamic Revolutionary Guard Corps-Qods Force and Hizballah.

Source: iDenfy

iDenfy, a Lithuania-based RegTech company best known for its identity verification solutions, has announced a new partnership with BlueMonks, a Dutch anti-financial crime boutique specializing in end-to-end compliance solutions.

Bank of America is alerting its customers about a data breach that occurred due to a security lapse at Infosys McCamish Systems, a company that provides services for deferred compensation plans at the bank.

In 2023, Americans Fell Victim to $10 Billion in Fraud, with Investment Schemes Leading the Losses. Federal Trade Commission data reveals that fraud costs Americans over $10 billion in 2023, with investment scams responsible for nearly half of these losses.

According to a survey conducted by NTT Data, Generative AI is playing a crucial role in driving the transition of banking applications to the cloud, as reported by nearly two-thirds of industry professionals.

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