Fed Gets New Payments Security Head, Bitcoin Gets More Scrutiny

While the world watched bitcoin, there were other events in the regulatory arena that bore watching.

A few among them?

Take some executive moves at the Federal Reserve, for example.

Last week it was announced that Kenneth Montgomery, who serves as first vice president and chief operating officer of the Federal Reserve Bank of Boston, had been named to helm the central bank’s fraud and risk operations tasked with boosting the security of the nation’s payment system, writ large. He will be chairman of the Secure Payments Task Force, the Federal Reserve System said.

Looking overseas for other headlines, we find that small businesses in the U.K. may face rough sledding in as the General Data Protection Regulation comes to pass next year.  Zurich, the insurance company, said that research shows that many SMBs would have to pay out “significant fines,” as they are unaware of the mandates tied to the new legislation. Among those mandates are data protection employment requirements stipulating that businesses also have data protection specialists on staff.  As many as 44 percent of the more than 1,000 businesses surveyed said they were unaware of such staffing requirements.

Reuters noted that Mexico’s senate passed legislation that would put in place at least some regulations governing the FinTech arena, with a goal of preventing money laundering and terrorist financing activities.  A vote by the lower house is expected this week.  Other measures in the legislation would enable the central bank to govern virtual currencies such as bitcoin.

Similarly, Indonesia’s central bank has issued its own mandates tied to cryptocurrencies, as the authority said that it is looking into whether trading of those currencies should be regulated.  Those currencies are not to be used in payments by companies that operate in the payments processing space.

Looking ahead to PSD2, theregister.com reported last week that “poorly written code” is putting banks at risk for bad actors to gain access to financial firms’ systems, with possible harm to end customers and even theft from accounts. CAST, a firm that looks at coding quality, said that financial services firms were among those with the highest number of coding mistakes, leaving firms vulnerable.