Welcome to our weekly round-up newsletter

Today the FT reports that the UK has a problem with maths, but is this problem more widespread? Windfall taxes on banks are spreading across Europe like wildfire, as governments seek to claw back booming profits. But are we looking at the wrong numbers? Maria Demertzis, senior fellow at Bruegel, argues that taxpayers are being misled.

As rates have risen, central banks are paying billions in annual interest to commercial banks on their reserves. Is it right, during a cost of living crisis, that taxpayers should foot this bill??

The European Central Bank doesn’t think so. In July, it re-set its monetary policy to pay less to commercial banks. Will other central banks follow suit? Let us know on this LinkedIn post. Have a read of Maria’s piece to see the research which she says prompted the ECB to take action and an estimate of just how many billions are being paid out in the UK, the euro area and the US.

Elsewhere, money laundering and terrorist financing are hot topics. This week, the UK’s National Crime Agency launched a new portal to speed up its handling of suspicious activity reports, which are ticking up towards one million filings (at the last count), but critics say the system is broken.?

“It is long acknowledged that the SARs system and the [NCA’s Financial Intelligence Unit] is not fit for purpose in regard to its IT infrastructure, its capacity to deal with an increasing burden of SARs and ability to support investigations,” says Joby Carpenter of industry body the Association of Certified Anti-Money Laundering Specialists.

Why are SARs soaring? The NCA’s intelligence unit points to fintechs and crypto firms, but industry experts accuse “under-resourced” banks of submitting too many SARs to cover their backs and blame law enforcers for letting the “bad guys” flourish. This is one ding-dong that isn’t going to die down anytime soon. Read the full story from Ellesheva Kissin.?

Perhaps the solution to fighting the bad guys lies less in finger-pointing and more in collaboration. Regulators and banks around the world are uniting to pool information on suspicious customers in the global battle against financial scams. Giovanni Legorano brings you the latest update on data-sharing platforms, from the UK to Hong Kong and Spain to Singapore.

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Policy and Regulation

ECB cautions on Italy’s windfall tax

The tax could impair the resilience of the eurozone’s banks and distort markets, says the ECB, amid tensions over rising rates. Read more

South Korean banking overhaul met with scepticism

Plans to tackle South Korean banks’ vulnerability to credit risk are unlikely to work, and may even trigger risky lending. Read more

Neobanks’ poor compliance fuels rise in digital fraud

Challenger banks have grown too quickly at the expense of them implementing proper compliance procedures, says Europol. Read more

Experts identify four main sources of human rights risk

Banks face a “wave of human-rights litigation” when a new European directive is adopted next year, top law firms have warned. Read more

The Expert View

Metro’s dearth of data leaves PRA unimpressed

The UK challenger bank is clashing with the prudential regulator over moves to free up capital. Nicholas Dunbar investigates. Read more

Banks in emerging markets must beef up hedging tools

The Bank for International Settlements says banks need to use smarter tools to hedge against growing exposures to interest rates. Read more

We’ve got it wrong on windfall taxes

It’s time for central banks to stop paying banks billions of taxpayers’ money in interest, argues Maria Demertzis. Read more

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