Regulatory Action Highlights as of August 2024 (Part 2)
Continuing our look at recent actions from regulators all across the globe.
Continuing the series where we look into what various regulators across the world have been up to, this week we are honing in on the Middle East and Asia with some notable actions that were taken. You can find a full slate of these in our database by becoming a premium member, with our latest update being that we will be soon be adding a ton of actions from the very active NFRA in China. Now to some more highlights from the regulators as promised:
6)
Company: Panda/Propserity Benefit Services
Regulator: FTC (United States)
Fine: None yet
Why: Falsifying affiliation with the Department of Education by means of a student debt relief scheme that resulted in $20.3 million from consumers, along with offering loan forgiveness that never came.
What's Next: Despite the slew of initiatives including PSLF (Public Service Loan Forgiveness), interest rate pauses during the pandemic, IDRP (Income Driven Repayment Plan) and more from federal loans, private student lending continues to grow. And with it, comes companies like this offering "easy ways to cut through the BS" type of approaches. The website is nothing but fluff, yet reading through the order the push and scamming seems to have come through live interactions with consumers.
7)
Company: HSBC
Regulator: RBI (India)
Fine: ₹29.60 lakh ($35,259 USD)
Why: While calculating minimum payments on credit card accounts, the bank failed to look for negative amortization, something that is also called out here in the US as part of the TILA/Reg Z.
What's Next: The amount is never really at issue when it comes to the RBI, but who they are going after is as the regulator almost always stays local. While any internationally-focused bank is subject to local laws and regulations, this is the first time I can think of in a while (at least in 2024) where the RBI has gone directly after a foreign-owned bank (and not through some local affiliate/authorized dealer). It's also been a terrible year for HSBC on the regulatory front, with open actions to deal with from the PRA and FCA in the UK and FINMA in Switzerland. Does this mark a shift in the RBI's approach and do we see Citi/et al in these pages in the future?
8)
Company: XFOX Market Sdn. Bhd. (and others)
Regulator: BNM (Malaysia)
Fine: None, but seized goods were valued at approximately RM30 million or $6,783,493
Why: Money-laundering, through and through. XFOX is a fairly large investment company with plenty of online presence and even had some of its partners weigh in with their thoughts that this was a nothing burger. Despite the fact that the raid/seizures spanned 12 locations across the country.
What's Next: The raid was an inter-regulatory effort, with four other institutions including the police involved in coordinating. It remains to be seen whether the aforementioned partner will change his mind and realize he is being manipulated, but this action certainly provides the BNM with some ability to show it has teeth and is not just putting out consent orders/alerts.
9)
Company: Symphony Services Limited
Regulator: DFSA (UAE)
Fine: AED 513,221 ($140,000 USD)
Why: The company apparently backdated and created documents to meet regulatory requests during an exam. It goes without saying, but the best policy when dealing with a regulator and you don't have something, is to just be honest. As much as we hear public news about what goes wrong, behind the scenes there's always multiple opportunities to get things right i.e. escalation of issues from MRAs to MRIAs to consent orders.
What's Next: On the other hand, you could argue this was being grossly negligent, to not have any AML risk assessment in place. It is also interesting to see this agency becoming active again after a very quiet 2024. The agency just announced some key amendments to go harder in the crypto space, so this could be related.
10)
Company: 17 banks
Regulator: NFRA (China)
Fine: 17 million yuan ($2.37 million)
Why: We're highlighting this more or less to call out the massive efforts underway by this relatively new regulator in China. We haven't really focused much on Chinese regulatory activity but have recently gained access to the NFRA's list of enforcement actions. After initially being impressed by the RBI (India's) list of enforcement actions and their pace, the scale of activity undertaken by this body blows them out of the water. We will be working to update our enforcement tracker with these actions over the coming weeks (become a premium member if you want access to them)
What's Next: Legitimate regulatory efforts will hopefully help to create a truly thriving economy. On the other hand, over-regulation will discourage investment, so let's see where things shake out.
~~
Stay tuned for details on our next in-person event in September, being held with Finovate Fall, along with an update about virtual events this month and our upcoming podcast!