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BIS Insights on Regulating AI in the financial sector: Challenges and Opportunities
On 12 December 2024, the Bank for International Settlements (BIS) released a FSI Insights on policy implementation No 63 titled "Regulating AI in the Financial Sector: Recent Developments and Main Challenges." This information paper, authored by the Financial Stability Institute (FSI), provides an in-depth exploration of the increasing use of artificial intelligence (AI) in the financial sector. With AI’s transformative potential to revolutionise banking and insurance practices, the report examines the challenges posed by AI adoption and outlines a regulatory framework to mitigate associated risks while fostering innovation. The paper draws attention to the rapid expansion of AI technologies, particularly in areas such as customer support, fraud detection, and credit and insurance underwriting. These applications have enhanced operational efficiency, improved customer experience, and optimised decision-making processes. However, the exponential growth of AI adoption, particularly...
US SEC Chair: Registered PCAOB Inactive Firms under Scrutiny with New Registration Withdrawal Rule
On 2 January 2025, Gary Gensler, Chair of the United States Securities and Exchange Commission (US SEC), gave an official statement announcing a rule change approved by the US SEC. The new regulation, proposed by the Public Company Accounting Oversight Board (PCAOB), mandates the withdrawal of registration for accounting firms that fail to meet basic compliance requirements for two consecutive years. This move aims to maintain the integrity of the PCAOB’s registry and ensure public confidence in the oversight of accounting firms. The new rule targets firms that have not filed annual reports on Form 2 or paid annual fees for two years in succession. Under the new rule, such firms will automatically enter a formal withdrawal process, effectively curbing their ability to present themselves as registered entities with the PCAOB. Gary Gensler discussed the importance of this measure, noting that it ensures inactive or non-operational firms do not mislead stakeholders or diminish the...
MAS Encourages Use of Fit Notes and E-Hong Baos for a Greener Lunar New Year
On 2 January 2025, the Monetary Authority of Singapore (MAS) announced initiatives to promote the use of Fit notes and digital gifting during the upcoming Lunar New Year festivities. By encouraging the public to opt for these environmentally friendly alternatives over new currency notes, MAS aims to reduce carbon emissions and support sustainable practices. In collaboration with major banks like DBS, OCBC, and UOB, the MAS will facilitate online pre-booking of Fit notes starting from 7 January 2025. These banks are also increasing the number of pop-up and branch ATMs dispensing Fit notes across Singapore, making it more convenient for the public to access them. Customers of these banks who wish to exchange Fit or new notes at branches must make an online pre-booking through the banks' official websites or mobile banking applications. Walk-in exchanges will be available for those aged 60 and above or persons with disabilities. In 2024, nearly two-thirds of hong bao givers surveyed...
Hong Kong Monetary Authority announced Schedule for Financial Announcements
The Hong Kong Monetary Authority (HKMA), on 31 December 2024, released its schedule for important financial announcements and updates in January 2025. Renowned for its role in maintaining monetary and banking stability, the HKMA oversees the Hong Kong dollar’s linked exchange rate system, manages the Exchange Fund, promotes the stability of the banking sector, and enhances the efficiency of Hong Kong's financial infrastructure. Its announcements provide key insights into the financial health and policy direction of the region. On 7 January 2025, the HKMA will release the latest figures on Hong Kong’s foreign currency reserve assets, of the region’s economic resilience and ability to support the local currency. The same day, the results of the tender for Exchange Fund Bills (Issue Nos. Q2502 and H2531) will be published, providing updates on short-term debt instruments essential for liquidity management and monetary operations. On 14 January 2025, the Hong Kong Analytical Accounts of...
Hong Kong Solicitor Held Guilty of Breaching Hong Kong Securities & Futures Commission’s Secrecy Rules
On 2 January 2025, the Hong Kong's Securities and Futures Commission (HK SFC), announced the conviction against a practicing solicitor for breaching the secrecy provisions under the Hong Kong Securities and Futures Ordinance (HK SFO). The Eastern Magistrates’ Courts found Mr. Tse Yin Fung, principal of the law firm O Tse & Co., guilty of disclosing confidential information in violation of the HK SFO. Tse pleaded guilty to the charge and was fined HK$ 25,000 while being ordered to pay the HK SFC’s investigation costs. On 9 February 2021 when Mr. Tse Yin Fung, acting as the legal representative for an individual under HK SFC investigation, disclosed confidential information to two other individuals. This information concerned a restriction notice issued by the HK SFC to the client, prohibiting their brokerage firm from dealing with certain assets in their trading account. Such notices are a key tool in the HK SFC's investigations into suspected market misconduct, including...
RBI Launches Framework for Responsible AI in Finance, Constitutes FREE-AI Committee
On 26 December 2024, the Reserve Bank of India (RBI) announced the formation of the Committee for the Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the financial sector. This initiative, introduced in the Developmental and Regulatory Policies Statement on 6 December 2024, aims to create a robust governance framework for the responsible and ethical adoption of artificial intelligence (AI) in India's financial ecosystem. By combining innovative technologies with stringent oversight, the RBI intends to address the challenges posed by AI while ensuring customer protection and operational resilience. The FREE-AI Committee will be chaired by Dr. Pushpak Bhattacharyya, Professor at IIT Bombay, and comprises distinguished experts from various fields including academia, government, technology, and finance. Notable members include Ms. Debjani Ghosh, a former president of NASSCOM and a Distinguished Fellow at NITI Aayog; Dr. Balaraman Ravindran, Head...
Swiss FINMA Introduces Circular on Nature-Related Financial Risks for Banks and Insurers
On 17 December 2024, the Swiss Financial Market Supervisory Authority (FINMA) issued its groundbreaking circular titled “Nature-related Financial Risks”. This directive establishes comprehensive guidelines for banks and insurers to identify, manage, and mitigate financial risks associated with climate and other nature-related factors. Aimed at bolstering the resilience of Switzerland’s financial sector, the circular aligns with international frameworks and introduces a proportional approach tailored to institutions of varying complexity and size. Following extensive consultations with stakeholders, the directive responds to industry and civil society feedback, balancing practical implementation with ambitious regulatory standards. FINMA’s circular defines nature-related financial risks as those resulting from exposure to climate change and ecological degradation. These include physical risks such as floods, storms, and droughts, as well as transition risks associated with policy...
Swiss FINMA Issues Guidance on Governance and Risk Management in Artificial Intelligence Applications
On 18 December 2024, the Swiss Financial Market Supervisory Authority (FINMA) issued FINMA Guidance 08/2024 ‘Governance and risk management when using artificial intelligence’ for supervised financial institutions using artificial intelligence (AI). This move highlights FINMA's focus on addressing the operational, legal, and reputational risks associated with AI while promoting robust oversight practices in Switzerland's financial sector. The rapid adoption of AI has transformed financial markets, presenting significant opportunities but also risks that are often difficult to evaluate. FINMA’s guidance aims to ensure that supervised institutions adopt a proactive approach to identifying, assessing, and managing risks associated with AI. This effort reflects FINMA’s commitment to maintaining the reputation of Switzerland’s financial centre while helping institutions safeguard their business models in an evolving technological landscape. FINMA has observed that most institutions remain...
Swiss Federal Council Appoints Aline Darbellay to FINMA’s Board of Directors
On 20 December 2024, the Swiss Federal Council announced the appointment of Aline Darbellay as a member of the Board of Directors of the Swiss Financial Market Supervisory Authority (FINMA). Aline Darbellay is an expert in financial market law and will succeed Susan Emmenegger, who is stepping down at the end of the year. Aline Darbellay’s term will commence on 1 January 2025 and run through to the end of 2027. Susan Emmenegger, the outgoing member, has been appointed Dean of the Faculty of Law at the University of Bern, after her resignation from FINMA effective 31 December 2024. Marlene Amstad, Chair of FINMA’s Board, expressed her gratitude stating: “I am delighted that in Aline Darbellay we are gaining a recognised expert in financial market law with an understanding of economic interrelationships and strategic issues for our Board of Directors. I would like to thank Susan Emmenegger for her great commitment to FINMA’s Board of Directors, which she has enriched with her proven...
US SEC Bars Richard Brown for Securities Fraud and Undisclosed Kickbacks
On 23 December 2024, the United States Securities and Exchange Commission (US SEC) issued an order under Section 15(b) of the United States Securities Exchange Act of 1934, permanently barring Richard Brown from associating with any broker-dealer, investment adviser, or other regulated entities. Brown's involvement in a fraudulent kickback scheme tied to Forcefield Energy, Inc. stock sales and follows a final judgment entered against him by the United States District Court for the Eastern District of New York. The US SEC's administrative order formalised its sanctions against Richard Brown, a former registered representative of a broker-dealer. The order permanently bars him from the securities industry and prohibits his participation in any penny stock offerings. The judgment permanently enjoined him from violating antifraud provisions under the United States Securities Act of 1933 and the United States Securities Exchange Act of 1934. Richard Brown, a 45-year-old resident of...
Māris Kālis Appointed Acting Governor of Latvijas Banka Amid Leadership Transition
On 19 December 2024, the Saeima of Latvia appointed Māris Kālis as the Acting Governor of Latvijas Banka to ensure the seamless continuity of the central bank's operations. This decision follows the Saeima’s failure to elect a new Governor, leaving Kālis, currently serving as Deputy Governor, to assume the Governor’s responsibilities starting 21 December 2024. The interim arrangement will remain in effect until a new Governor is officially elected and begins their term. Mārtiņš Kazāks, the outgoing Governor, concluded his tenure on 20 December 2024. Under Latvian law, the Governor of Latvijas Banka serves a five-year term, with the possibility of holding the position for a maximum of two consecutive terms. The Latvian Saeima has indicated that the appointment of a permanent Governor will be addressed in early 2025. During this interim phase, Latvia will be temporarily without voting rights in the Governing Council of the European Central Bank. The role of Latvijas Banka’s Governor is...
Sanjay Malhotra Appointed as 26th Governor of Reserve Bank of India
On 11 December 2024, Mr. Sanjay Malhotra was appointed as the Governor of Reserve Bank of India. Mr. Sanjay Malhotra, who has considerable administrative and financial experience, assumed charge as the 26th Governor for a three-year term. An Indian Administrative Service officer from the 1990 Rajasthan cadre, Mr. Sanjay Malhotra brings experience spanning finance, taxation, information technology, and power sectors. Prior to his appointment as RBI Governor, Mr. Sanjay Malhotra served as Secretary in the Department of Revenue under the Ministry of Finance. Before that, he held the position of Secretary in the Department of Financial Services. His tenure as a bureaucrat in government service also includes being the Chairman and Managing Director of Rural Electrification Corporation Limited. Mr. Sanjay Malhotra has previously been associated with the Reserve Bank of India, serving as a Government Nominee Director on its Central Board from February 2022 to November 2022. An alumnus of...
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