Technology Update

• Digitalisation: Who is the superhero accountant of the future?
• The new European Commission President puts forward her political priorities on technology
• ESMA Report looks into licensing regime for FinTech business models in EU
• IOSCO report on the application of main cyber frameworks
• FATF Guidance for a risk-based approach to virtual assets and virtual asset service providers

Digitalisation: Who is the superhero accountant of the future?

The technological revolution can help accountants and auditors deliver more value to businesses and society. Accountancy Europe Digital Day 2018 provided insights on how to make opportunities out of technology. We explored what skills accountants should gain to get future-ready by interviewing our speakers.

How do those experts describe the Superhero Accountant of the future? To find out, check out our interactive visual and read the complete interviews.

The new European Commission President puts forward her political priorities on technology

Ursula von der Leyen’s vision in the area of technology is to grasp the opportunities within safe and ethical boundaries. Her strategic agenda includes:

• putting forward legislation for a coordinated European approach on the human and ethical implications of AI
• developing joint standards for 5G networks
• investing in blockchain, high-performance computing, quantum computing, algorithms and tools to allow data sharing and data usage as well as defining standards for this new generation of technologies
• implementing a new Digital Services Act to upgrade liability and safety rules for digital platforms, services and products, and complete Digital Single Market
• establishing a joint cybersecurity unit

Read more

ESMA Report looks into licensing regime for FinTech business models in EU

In its report on the status of licensing of fintech firms across the EU, ESMA concluded that currently most innovative business models using financial technology can operate within the existing EU rules. Consequently, for the time being, ESMA does not put forward additional recommendations to the EC for changes to the EU financial services legislation.

However, the report points out that crypto-assets, initial coin offerings, and distributed ledger technology are “the primary area where regulatory gaps and issues have been identified by national competent authorities and where fintech firms do not fit neatly within the existing rules”. In this respect, the national authorities called for more clarity at the EU level regarding the definition of financial instruments and the legal nature of crypto-assets, according to the report. Read more

Bruno Le Maire proposes to consider creating a public cryptocurrency

Facebook’s announcement to launch a new digital currency – Libra project – has raised red flags among regulators, politicians, central bankers and data protection officials. The main concerns relate to privacy, the risks of money laundering, terrorist financing, tax evasion and disruption to financial stability.

For example, the French finance minister Bruno Le Maire has openly rejected the Facebook’s Libra cryptocurrency as such that could undermine the monetary sovereignty of states and could result in systemic risks. He has suggested to create a public cryptocurrency “I propose that we start thinking about a public digital currency issued by central banks that would guarantee the total security of transactions, their speed, simplicity and free of charge”.

The ICO Guidance for small businesses and organisations to comply with data protection after a no-deal Brexit

The Information Commissioner’s Office (ICO), the UK’s data protection authority, has published guidelines for SMEs in the event of a no-deal Brexit, urging businesses to “prepare for all scenarios”. “In the event of ‘no deal’, EU law will require additional measures to be put in place when personal data is transferred from the European Economic Area (EEA) to the UK, in order to make them lawful.” Read more

IOSCO report on the application of main Cyber frameworks

IOSCO issued a report looking into the application of three internationally recognised cyber standards and frameworks by IOSCO member jurisdictions. The report identifies potential gaps in the standards application.

IOSCO aims for this report to serve as a resource for financial market regulators and firms, raise awareness of existing international cyber standards and frameworks and encourage the adoption of good practices to protect against cyber risk, which is one of main threats to financial markets today. Read more

FATF Guidance for a risk-based approach to virtual assets and virtual asset service providers

The Financial Action Task Force (FATF) published its “Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers”. The guidance aims to help countries and virtual asset service providers understand their anti-money laundering (AML) and counter-terrorist financing (CTF) obligations, and effectively implement the FATF standards in the context of virtual asset activities and related service providers.

It is also intended to help national authorities and private sector entities seeking to engage in these activities to better understand their AML/CFT obligations and how they can effectively comply with these requirements. Read more

Big tech in finance: opportunities and risks – BIS Annual Economic Report

In its annual economic report, the Bank for International Settlements (BIS) has highlighted that the entry of large technology firms (“big techs”) into financial services promises potential benefits such as efficiency gains and better financial inclusion. At the same time, they introduce potential risks to financial stability, competition and data protection.

There is a need for regulators to ensure a level playing field between big techs and banks, as big techs have access to broad customer base, access to information and wider-ranging business models. Read more

ACCA and CA ANZ report: Audit and technology

ACCA and Chartered Accountants Australia and New Zealand (CA ANZ) published a report examining different technologies that impact the audit profession such as distributed ledger technology, data analytics, robotic process automation, drones, AI, machine learning and others. These advancements offer enormous opportunities for auditors to deliver high quality audits to their clients. The auditors of tomorrow will need to be adaptable to new technology enabled business models as well as to understand technologies used. Read more

ICAEW report: New technologies, ethics and accountability

How can companies build greater confidence in their use of new technologies? This ICAEW thought leadership report outlines how ethics and accountability underpin this confidence, and considers the role of the accountancy profession in this area. Read more