Australia's current financial services regulatory & compliance landscape is changing rapidly - Clyde & Co's weekly Regulatory Roundup will ensure you are up to date with the most important changes. In each edition, we will set out key developments from the past week for you to consider. 

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1. APRA regulatory guidance regarding CPS230 Operational Risk Management. APRA has released the CPS230 Operational Risk Management guide with several noteworthy features. This includes a more concise focus on meeting standard expectations, an extension of 12 months for non-Significant Financial Institutions to comply with specific CPS 230 requirements on business continuity and scenario analysis, introduction of a "day one" checklist to aid implementation, and provision of a three-year supervision plan outlining APRA's approach to CPS 230 oversight, supporting industry implementation and planning efforts. It is a great toolkit. If you have not already started your implementation, and are cross-stitching CPS 230 with your FAR implementation, start now!   

2. RBA Proposes Measures Against Buy Now, Pay Later Services. The RBA has flagged further regulation on buy now, pay later businesses, indicating that it may force them to let retailers pass the cost of the short-term credit on to customers. The average fee on purchases made through buy now, pay later is 3.5 per cent of the cost of the goods, compared to 0.4 per cent for debit cards and 0.8 per cent for credit cards. The RBA's head of payments, Ellis Connolly said that "Surcharges could be used by merchants to signal to consumers that they are using a relatively expensive payment method".  It is worth noting the RBA’s estimated average costs (see here) for eftpos, debit and credit cards (the latter being the highest, at 1.5%). 

3. ASIC Appeals Court Decision in Block Earner Case. ASIC has appealed the Federal Court's decision to relieve Block Earner from liability to pay a penalty for offering its crypto-related Earner product without an AFSL. The Federal Court found that Block Earner had contravened the requirement to hold an AFSL when providing financial services, but was not required to pay a penalty. ASIC argued that the Federal Court erred in relieving Block Earner from liability on several grounds, including that Block Earner could not rely on legal advice when that advice had not been tendered, Block Earner had made a profit from the contraventions, regulatory complexity was not a relevant consideration in relieving Block Earner from liability, and ASIC's press release (which Jackman J took issue with) was not a reason to relieve Block Earner from liability.

4. AUSTRAC Launches National Risk Assessments to Combat Financial Crimes. AUSTRAC CEO Bendan Thomas has spoken on AUSTRAC's “national risk assessments” which provide a strategic overview of the threats and vulnerabilities associated with money laundering, proliferation financing, and terrorism financing in Australia. These risk assessments are intended to provide financial institutions and other industry sectors with guidance on the scale and impact of risks their businesses face, and inform the development of their own risk assessments and transaction monitoring programs. He has said that “…this year we have also been focusing on particular sectors, being digital currency exchanges, payment platforms, bullion dealers, corporate bookmakers and the non-bank lending sectors”.  Mr Thomas also called out the need for strong / visible commitment from boards to AML / CTF; ineffective management of high-risk customers, products and services; and, the risks with a “set and forget” transaction monitoring program.

International perspective: the US SEC declared in 2018 that Ether is not a security, though in 2023 the SEC changed tack and started investigated the digital asset as a security.  Market participants sued the SEC in April 2024, seeking a court order that would halt the SEC’s investigation, on the grounds that ETH is a commodity and therefore the SEC lacks jurisdiction to investigate or regulate it.  The Enforcement Division of the SEC has stated it is closing its investigation into Ethereum 2.0.  A dramatic, and big win for the digital asset industry!