Remittances from the EU down for the first time

Eurostat has recently started to collect and disseminate data related to the flows of household income generated by the permanent or temporary movement of people to other countries. Eurostat’s paper highlights the main characteristics of the new data set, which includes data on workers` remittances and compensation of employees.

In 2009, outflows of workers` remittances reached €29.6 billion. However, this figure represents a fall of 4% compared to 2008 and the first decline after a long period of continuous remittance growth.

You can download the full paper HERE.

UK Police arrest six over phishing scam

The Metropolitan Police's Central e-Crime Unit (PCeU) has arrested six people accused of phishing the details of more than 20,000 online banking and credit card accounts before using the information to steal millions of pounds.

Over the last few days the PCeU, working with the MPS Territorial Support Group and the Irish Garda, has executed five search warrants in London and an address in Navan, County Meath, Ireland.

The raids resulted in five men and one woman being arrested on suspicion of conspiracy to commit online banking fraud and Computer Misuse Act offences. All six are now in custody in London.

The PCeU says the arrests are part of Operation Dynamophone, an investigation into a network believed to have systematically obtained large quantities of personal information, such as online bank account passwords and credit card numbers.

The gang is believed to have acquired the information through phishing, sending large quantities of unsolicited spam e-mails, directing victims to spoof Web sites purporting to belong to legitimate banks.

Police enquiries suggest more than 10,000 online bank accounts and 10,000 credit cards have been compromised. The crooks attempted bank account take-over fraud worth £1.14 million, with £358,000 stolen successfully, say authorities.

Detective Inspector Colin Wetherill, PCeU, says: "A great deal of personal information was compromised and cleverly exploited for substantial profit. By disrupting the operation we have hopefully prevented further loss to individuals and institutions across the UK.

Mobile Payments & Electronic Transfers in the US

Two very interesting studies on the electronic payments space have just been published in Boston Fed’s January – June 2010 “Research Review”.

They are “Person-to-Person Electronic Funds Transfers: Recent Developments and Policy Issues” and “Mobile Payments in the United States at Retail Point of Sale: Current Market and Future Prospects”.

You can download the current edition of “Research Review” HERE.

2009 Report Foreign Exchange Report published

The Foreign Exchange Committee, which is sponsored by the New York Federal Reserve Bank, is an industry group that has been providing guidance and leadership to the global foreign exchange market since its founding in 1978.

The FXC includes representatives of major financial institutions engaged in foreign currency trading in the United States. The FXC is also an active partner to other foreign exchange committees and industry associations worldwide.

The FXC’s objectives include:

• serving as a forum for the discussion of good practices and technical issues in the FX market, 
• fostering improvements in risk management in the FX market by offering recommendations and guidelines, and 
• supporting actions that facilitate greater contractual certainties for all parties active in foreign exchange.

The report is available online on the FXC’s Website or you can download it HERE.

Do you really know why clearing is important?

Seems like a dumb question, right? But in all honesty how many of you out there can define clearing? And how many of you know the important role that clearing pays in the financial system?

In the financial 2007–08 financial crisis, the once mysterious topic of clearing of financial products took center stage in major policy debates. Generally speaking, clearing has to do with the nuts and bolts of the contractual performance of financial products after they have been traded.

Want to learn more? Download this insightful article “What is clearing and why is it important?” from the Chicago Fed.

Singapore’s DBS told to set aside S$230 million more for operational risk

The Singapore Monetary Authority (MAS) has asked the DBS Group to set aside S$230 million (US$170.5 million) additional regulatory capital for operational risk following the breakdown of the bank's network on July 5.

Analysts said the demand for regulatory capital shows that the MAS is sending a message to all banks operating in the city-state that it will not tolerate banking services disruptions in one of Asia's main banking centers.

Banking services at the Singapore branches and automated teller machines at DBS and its unit, POSB, were disrupted following technical problems last month. The services were restored within a few hours. See “Huge IT failure at Singapore bank” and “IBM employee fingered as culprit in massive DBS outage”.

Singapore, which is the Asian headquarters for many private banks such as Credit Suisse, competes against Hong Kong in the fields of wealth management and funds.

"This incident has revealed weaknesses in DBS Bank's technology and operational risk management control," the central bank said in a statement.

MAS also highlighted several steps DBS should take to ensure such incidents are avoided.

The central bank also said it has recently written to the CEOs of all financial institutions to remind them of maintaining robust technology risk management systems.

"MAS will not hesitate to take appropriate supervisory action against any financial institution which fails to meet the standards," it said.

DBS said in a statement the additional regulatory capital would result in the bank's pro-forma Tier 1 capital and total capital adequacy ratio to come down by 0.2 percentage points to 12.9 percent and 16.3 percent respectively.

"DBS would like to assure customers that taking into account the regulatory capital charge, our total capital adequacy ratio is still comfortably above the required levels," DBS CEO Piyush Gupta said in the statement.

DBS, which conducted an investigation with its main vendor IBM to determine what caused the first such major disruption for the bank, said it has taken several steps to prevent such breakdowns in the future.

"DBS is deeply sorry for the outage and once again, my apologies to our customers for all the inconvenience caused," Gupta said in the statement.

Royal Bank of Scotland Group fined £5.6m by the Financial Services Authority fines UK sanctions controls failings

The Financial Services Authority (FSA) has fined members of the Royal Bank of Scotland Group (RBSG) £5.6m for failing to have adequate systems and controls in place to prevent breaches of UK financial sanctions.

UK firms are prohibited from providing financial services to persons on the HM Treasury sanctions list. The Money Laundering Regulations 2007 require that firms maintain appropriate policies and procedures in order to prevent funds or financial services being made available to those on the sanctions list. These regulations require firms to establish and maintain appropriate policies and procedures in order to prevent funds or financial services being made available to designated persons on the list of financial sanctions targets maintained by HM Treasury. The Terrorism (United Nations Measures) Order 2006 and The Al-Qaida and Taliban (United Nations Measures) Order 2006 make it an offence to make funds or, in the case of the Terrorism Order, financial services available, directly or indirectly, to a designated person on the HM Treasury sanctions list unless a license is first obtained from HM Treasury.

According to the FSA during 2007, RBSG processed the largest volume of foreign payments of any UK financial institution. However, between 15 December 2007 and 31 December 2008, RBS Plc, NatWest, Ulster Bank and Coutts and Co, which are all members of RBSG, failed to adequately screen both their customers, and the payments they made and received, against the sanctions list. This resulted in an unacceptable risk that RBSG could have facilitated transactions involving sanctions targets, including terrorist financing.

The FSA considers that RBSG’s failings in relation to its screening procedures were particularly serious because of the risk they posed to the integrity of the UK financial services sector. This is the biggest fine imposed by the FSA to date in pursuit of its financial crime objective. It is also the first fine imposed by the FSA under the Regulations.

Margaret Cole, FSA director of enforcement and financial crime, said:

"The involvement of UK financial institutions in providing funds, economic resources or financial services to designated persons on the sanctions list undermines the integrity of the UK’s financial services sector. By failing to screen relevant customers and payments against the HM Treasury sanctions list, RBSG left itself open to the risk that it was facilitating terrorist financing.

"The scale of the fine shows how seriously the FSA takes this issue and should act as a warning to other firms to ensure that they have adequate screening procedures."

As RBSG agreed to settle at an early stage of the FSA investigation, it qualified for a 30% reduction in penalty. The FSA would have otherwise imposed a financial penalty of £8m.