FCA prioritises technology and AI innovation; ESMA releases its final report on greenwashing; US Treasury seeks feedback on use of AI & more

Good morning! We hope you had a nice weekend.

The issue of striking a balance between innovation and regulation in financial technology is discussed in this edition of RegTech X Weekly among many other themes.?The rapid evolution of financial technology may be seen as a dual-edged sword: on one side, it brings about groundbreaking advancements that can revolutionise financial services; on the other, it poses significant regulatory challenges that need to be addressed to ensure stability, security, and fairness in the financial system.

At the Investment Association's 2024 annual conference, Nikhil Rathi, chief executive at the Financial Conduct Authority highlighted that the FCA aims to support technological advancements, including AI, without obstruction. The focus is on ensuring that AI and technology governance comply with Consumer Duty rules and market integrity standards. The chief executive officer of the FCA said that the regulator is against overregulating artificial intelligence, and is ‘not at the moment minded to jump in and write lots of detailed rules’ on the subject.

At the same time the US Department of the Treasury is seeking public comment on the risks and opportunities posed by the use of AI in financial services. The agency is looking to improve its understanding of the opportunities and risks presented by the development and application of AI within the sector.

In Europe, the topic of greenwashing continues to be in trend. The European Securities and Markets Authority's (ESMA) newly released Final Report on Greenwashing provides recommendations to enhance supervision and mitigate risks, responding to the European Commission's mandate for a risk-based supervisory approach to promote transparency and accountability in sustainable finance across key sectors.

And the European banking regulator (EBA) has observed an increase in allegations of greenwashing as ESG (Environmental, Social, and Governance) regulations become more stringent.

On the technology and AI front, Visa looks to generative AI to enhance tokenisation aiming to improve the security and convenience of e-commerce transactions. The company highlights how tokens have significantly boosted e-commerce revenue and aims to further transform consumer experiences by integrating generative AI while ensuring data security and consumer trust.

AI already takes a large part of our lives, so regulation is needed. That's why some countries have AI laws, or they work on new policies. While artificial intelligence opens new perspectives each day, the way we use it is questionable.

Two-thirds of banking and financial markets CEOs believe that the potential productivity gains from generative artificial intelligence outweigh the potential risks of the technology, according to?a new survey by IBM.

Find more links to?industry news in the full version of RegTech X Weekly by Evgeny Likhoded & Anna Antimiichuk .

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