Risk Insights Newsletter: No.5

Good day, everyone! Sharing this week’s updates as follows. Don’t hesitate to reach out - happy to discuss any of the following and its impact upon your business.

1. BCBS - Principles for Third-Party Risk Management

   The Basel Committee on Banking Supervision (BCBS) published a preliminary Guidance on how the sector can approach third-party risk management. The document presents 12 high-level principles and is open for comments from relevant institutions until 9 October 2024. Once finalized, the Guidance will supersede the 2005 edition. On 4 December 2023, the Financial Stability Board also published a third-party risk management toolkit, advising how financial institutions can identify, manage and monitor third-party risks and dependencies.

2. EBA - Travel Rule Guidance

   The European Banking Authority issued new Guideline on Travel Rule implementation with the purpose of disrupting money laundering and terrorism financing across crypto-related funds and asset transfers. The regulator is determined to adopt an effective approach on travel rule implementation across the EU, enabling relevant authorities to have full visibility where and when necessary.

3. Google DeepMind - Generative AI Misuse Tactics

   Based on over 200 incident reports from report January 2023 to March 2024, the report identifies exploitation of generative AI (GenAI) capabilities and the compromise of GenAI systems as the two main categories of misuse tactics involving the technology. The document also mentions one of the most publicized deepfake incidents, involving a Hong Kong based company that resulted in a loss of HKD 200 million (USD 26 million). The Monetary Authority of Singapore also released a new guidance to raise awareness among financial institutions on GenAI threats and mitigation measures.

4. BIS - Investigations of Export Control and Anti-Boycott Violations

   Bureau of Industry and Security (BIS) of the US Department of Commerce published an insightful document advising on enforcement actions against parties who violated export control and anti-boycott regulations. Companies and individuals involved in export controls are the primary audience of this guidance.

5. RUSI - Findings from the New Sanctions Taskforce

   The United Kingdom’s Royal United Services Institute (RUSI) published a new report advising on findings and discussions from its new sanctions taskforce. The purpose of the group is to strengthen the UK sanctions strategy. The report identified various deficiencies that undermine the effectiveness of the UK sanctions policy and, thus, requiring further government attention.

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Thanks for your support!

Alexey