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On 2 October 2024, the UK Financial Conduct Authority (UK FCA) issued a final notice for a fine of £28,959,426 imposed on Starling Bank Limited for failings in its financial crime controls, particularly relating to anti-money laundering (AML) and financial sanctions screening. The FCA’s investigation revealed deficiencies in Starling's financial sanctions screening processes and its breach of an agreement to restrict account openings for high-risk customers. Starling Bank, a digital challenger bank, saw rapid growth, expanding from 43,000 customers in 2017 to over 3.6 million in 2023. However, as its customer base expanded, the bank's financial crime controls failed to keep up. In 2021, the UK FCA conducted a review of financial crime controls across challenger banks and found concerns with Starling’s anti-money laundering and sanctions screening framework. As a result of these findings, Starling agreed to a requirement from the UK FCA not to open accounts for high-risk customers...

On 2 October 2024, U.S. District Judge John A. Mendez by its order issued a preliminary injunction against California’s newly enacted law, Assembly Bill 2839 (AB 2839), which sought to regulate the use of AI-generated deepfakes in elections. The law, signed by Governor Gavin Newsom on 17 September 2024, allowed individuals to sue for damages if AI-generated content resembling a political candidate was posted within 120 days before and 60 days after an election. This law targeted media that was deemed "materially deceptive" and harmful to the integrity of electoral processes. The case that led to this ruling began in July 2024, when Christopher Kohls, a content creator known for his political satire under the alias "Mr. Reagan," released an AI-manipulated video mocking Vice President Kamala Harris. The video, widely circulated and shared by notable figures, including Elon Musk, generated widespread attention across social media platforms. Following this, concerns arose about the...

On 2 October 2024, the U.S. Securities and Exchange Commission (US SEC) announced the resignation of Gurbir S. Grewal, Director of the Division of Enforcement, effective 11 October 2024. Following Mr. Grewal’s departure, Sanjay Wadhwa, the current Deputy Director of Enforcement, will assume the role of Acting Director, while Sam Waldon, Chief Counsel of the Division, will become Acting Deputy Director. Mr. Grewal joined the U.S. SEC in July 2021 and oversaw the Division of Enforcement through a period of active regulatory enforcement. During his tenure, he emphasised the importance of ensuring that remedies, penalties, and enforcement actions provided a deterrent effect for non-compliance. Under his leadership, the Division focused on matters such as compliance with registration provisions, whistleblower protections, and addressing deficiencies in recordkeeping across various sectors. Mr. Grewal, before joining the U.S. SEC, served as Attorney General for the State of New Jersey and...

On 30 September 2024, the United States’ Commodity Futures Trading Commission (US CFTC) announced that Barclays Bank PLC had reached a settlement in response to charges of violating several key reporting regulations under the United States Commodity Exchange Act. These violations occurred between 2018 and 2023 and involved Barclays' failure to accurately and timely report over five million swap transactions. These errors, which resulted from systemic deficiencies in Barclays' reporting systems, impacted the US CFTC's ability to assess market exposure, monitor compliance, and maintain market integrity. The CFTC initiated proceedings under Sections 6(c) and 6(d) of the US Commodity Exchange Act, based on the bank’s violations of Sections 2(a)(13) and 4r(a)(3), as well as Regulations 43.3 and 45.3-4. Barclays admitted to the findings and acknowledged that it had failed to meet the reporting standards required by the CFTC during the Relevant Period. The errors were widespread, with...

On 27 September 2024, the High Court of the Republic of Singapore issued an order in the ongoing case of Zettai Pte. Ltd., a company undergoing restructuring amidst significant financial and operational challenges. This order, granted under Section 64 of the Singapore’s Insolvency, Restructuring and Dissolution Act 2018 (SG IRDA), offers a four-month moratorium to Zettai Pte. Ltd., which effectively protects the company from any legal actions, including winding-up resolutions and other judicial proceedings initiated by creditors or stakeholders. The Honourable Judicial Commissioner Kristy Tan presided over the case, issuing a comprehensive ruling aimed at stabilizing the company while restructuring efforts are underway. Zettai Pte. Ltd., a Singapore-based entity, found itself in a difficult position due to operational difficulties that arose when several of its cryptocurrency wallets were compromised by hackers, leading to asset losses amounting in hundreds of millions. In response...

On 30 September 2024, the UK Financial Conduct Authority (UK FCA) made a landmark announcement regarding the conviction of Olumide Osunkoya, who pleaded guilty to five significant offences at Westminster Magistrates' Court. This case marks the UK's first-ever conviction for operating an illegal network of crypto ATMs, a groundbreaking moment in the enforcement of crypto regulations. Osunkoya's network of at least 11 crypto ATMs, which processed over £2.6 million in transactions between December 2021 and September 2023, operated without FCA registration, circumventing vital anti-money laundering safeguards. The court heard how Osunkoya, undeterred by the FCA’s refusal to register his business in 2021, expanded his operations in convenience stores across the UK, facilitating illegal transactions without performing due diligence or verifying the sources of funds. In addition to these regulatory breaches, he was charged with creating false documents, using a fake alias to evade...

On 30 September 2024, the Bank of England and the UK Financial Conduct Authority (UK FCA) launched the Digital Securities Sandbox (DSS) and published the policy statement and guidance note on Digital Securities Sandbox operation under the UK Financial Services and Markets Act 2023 (FSMA). This initiative allows firms to test new financial market technologies, such as distributed ledger technology (DLT), in a real-world environment. The DSS provides a modified regulatory framework that supports innovation while maintaining financial stability and market integrity. The DSS operates through a phased structure, guiding firms through four stages known as gates. Firms begin by applying for sandbox entry at Gate 1, where they start testing under regulatory supervision. In Gate 2, firms can conduct live business under set limits, such as £600 million for gilts and £900 million for corporate bonds. Gate 3 allows firms to scale their activities, increasing their limits as they meet higher...

On 27 September 2024, the United States’ Commodity Futures Trading Commission (US CFTC) filed a civil enforcement action in the U.S. District Court for the Western District of Washington against Aipu Limited, Fidefx Investments Limited, Qian Bai, Lan Bai, and Chao Li. The CFTC’s complaint alleges that, beginning on or around 6 February 2023, the defendants fraudulently solicited and misappropriated at least US $3.6 million from 32 customers through a fraudulent investment scheme. The defendants are accused of falsely offering trading in leveraged commodity and forex contracts, misappropriating customer funds, and presenting fabricated account statements through a network of fake platforms, websites, and solicitors. The fraudulent activity primarily targeted Asian American customers in the U.S., with the defendants claiming to provide high-yield returns from trading commodities and foreign currencies. The facts of the case reveal that the defendants operated through their companies,...

On 27 September 2024, the United States’ Commodity Futures Trading Commission (US CFTC)'s Division of Clearing and Risk announced a public roundtable discussion to explore new and emerging issues in the clearing industry which will convene on 16 October 2024. This event will run from 9:00 a.m. to 1:00 p.m. at the US CFTC's headquarters in Washington, D.C., and will bring together a broad spectrum of participants, including representatives from derivatives clearing organizations, futures commission merchants (FCMs), FCM customers, end-users, custodians, proprietary traders, public interest groups, and state regulators. The goal of this roundtable is to gather expert insights and perspectives on the evolving landscape of clearing, with a particular focus on digital assets, margin requirements, and new models for clearing. Among the key topics to be addressed are the custody and delivery of digital assets, full collateralization, the challenges of 24/7 trading, non-intermediated...

On 26 September 2024, the United States’ Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Department of the Treasury, passed an order whereby PM2BTC, a convertible virtual currency (CVC) exchanger, was officially designated as a financial institution of "primary money laundering concern" due to its involvement in illicit activities related to Russian finance. The order, issued under Section 9714(a) of the Combating Russian Money Laundering Act, prohibits all U.S. financial institutions from transmitting funds to or from PM2BTC. On 23rd September, the U.S. Department of the Treasury, alongside the Department of Justice, Department of State, U.S. Secret Service, and other federal agencies, took action against Russian individuals and entities involved in large-scale cybercrime operations. These efforts were supported by international law enforcement partners, including Europol, the Netherlands Police, and the Dutch Fiscal Information and Investigation Service...

On 25 September 2024, in moratorium hearing before the High Court of Singapore, Zettai Pte. Ltd. was enquired with several questions. The proceedings, presided over by Judicial Commissioner Kristy Tan, took place via Zoom over two days, with numerous creditors raising concerns about Zettai’s transparency, financial practices, and the fairness of the proposed moratorium. Zettai, which is connected to WazirX, a cryptocurrency platform implicated in a significant hack, sought a moratorium to reorganize its financial structure and address the fallout from the hack. However, creditors voiced strong opposition, casting doubt on Zettai's intentions and the legitimacy of its actions. During the hearing, creditors accused WazirX and Zettai of manipulating the voting process related to the moratorium. Several users alleged that they had not been given the opportunity to vote against the moratorium initially, resulting in skewed results in favor of Zettai. One participant remarked that the...