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Monday, 22 May 2017

EBA Insists On Access To Cloud Providers' Premises And Machines

Yes, it's 2017 and the European Banking Authority really does want financial regulators and their auditors to be able to visit the datacentres of regulated firms' cloud service providers, "including the full range of devices, systems, networks and data used for providing the services outsourced".  Responses on these 'recommendations' are due by 18 August 2017.

No one, including the EBA, really knows why regulators would need to do this, or what they would do on arrival - beyond exchanging pleasantries with the datacentre management and staff (who may not be co-located) and perhaps accepting the kind offer of tea or coffee from a robot or good old-fashioned dispensing machine.

The EBA simply presumes that other firms whose data is kept in the same datacentre (however fleetingly) will be happy for the financial regulators and their auditors to be allowed to wander among the cages amidst the pretty lights, exercising their "unrestricted rights of inspection and auditing".  And there's no mention of whether the EBA is happy for all firms' information security policies to be subject to the unauthorised access to their and their clients' sensitive data by audit teams from random financial (or other?) regulators, even where a firm and its clients are not the subject of the audit. 

Far better that the EBA recommendations focus on these thorny, practical issues instead of blithely insisting that firms negotiate broad, unfettered rights of access to datacentres on their regulators' behalf. 

Or maybe this is just a passive aggressive way of trying to prevent firms from using cloud services?

Thursday, 18 May 2017

Fake News, Screen-scraping and the European Banking Federation #PSD2

The old row between new financial service providers and the European Banking Federation has blown up again. At issue is whether the providers of new regulated "account information" services that rely on access to your payment account data should be able to copy it from your online account ('screen-scraping') or only get it through a different type of interface (API) directly provided and controlled by the bank.

Rather typically, the EBF has produced a video that purports to explain 'screen-scraping' (which could be done in a single slide) but actually misleads by suggesting that the motives of the new service providers who want to do it are unlawful. 

Of course, the method of accessing the account information really has nothing to do with the motives of this new type of regulated service provider.

Instead, the EBF's tactics merely reflects the major banks' age-old resistance to anyone else using "their" payment data to provide you with services that are more useful than the very limited data and features available in your bank account. In fact, that resistance led retailers to launch 'loyalty' programmes and behavioural targeting of advertising as far less efficient ways of figuring what you like to spend your money on.

But the data in your payment account is your data, and you should be able to combine it with your other data - or have trusted third parties do that for you - if you wish. 

That's why - refreshingly - the authorities insisted that PSD2 should specifically regulate the new 'account information service providers'; and, crucially, requires banks to make your payment account available to them, precisely so that you can - if you wish to - rely on their services to make sense of your financial affairs or know how much money you have available while shopping etc., without having to log-in to your bank account(s). 

PSD2 also obliges your payment account information service provider to comply with security and data protection requirements when accessing and handling your payment data, regardless of how they get access to that information. 

So, the latest dust-up is is really just an (old) technological argument about whether a service provider should use your log-in credentials to copy the information from the screen that you see, or only access the data through an interface provided (possibly badly) by the bank. It has nothing to do with the possible motives of the service provider in using the data - and they have to behave lawfully anyway.

The fact that the EBF has resorted to fake news and moral panic tells me that any real 'arguments' against screen-scraping are very weak indeed...

Tuesday, 16 May 2017

New Money Laundering Guidance

The complexity of the anti-money laundering regime has meant that practical guidance on how to comply has been particularly necessary. The best guidance has come from the Joint Money Laundering Steering Group of various organisations (JMLSG) in three parts. 

New EU directives on money laundering has led to consultation on how these should be implemented in new draft UK regulations that are due to take effect from 26 June 2017. 

And the JMLSG has used the draft regulations as the basis for consultations on updating Part I of its guidance (the mark-up is in 4 separate documents, Chapter 5 of which shows changes to the guidance on electronic identity verification), and more recently on Parts II and III. The consultation versions show the proposed changes to the current guidance, and are an invaluable tool for understanding how a firm's existing approach should change once the new regulations take effect.