The Regulation of Internet Banking and Financial Services
Head of the Information Technology Law Unit
Centre for Commercial Law Studies
Queen Mary & Westfield College, University of London
Banking and financial services are highly regulated sectors of commerce. However, that regulation has, up to now, been based solely on the geographic location of the financial organisation. Laws and regulatory regimes have differed from country to country.
This presented few difficulties when financial organisations limited their sales and marketing activities to their own national markets. Infringements of foreign laws and regulations were largely accidental (e.g. a regulated advertisement in a national publication, a few copies of which are available in other jurisdictions), and ignored by national regulators because there was little danger of their own citizens purchasing financial products as a result.
The Internet, however, offers financial institutions the possibility of entering a truly global marketplace, without the need to establish premises, staff and infrastructure abroad. This presents them with two challenges:
- How to act lawfully (or as lawfully as possible) in respect of foreign laws and regulations which suddenly become applicable.
- How to anticipate and lobby for a regulatory regime which will be effective on a global scale, and which will not act as a barrier to their doing business via the Internet.
This paper primarily addresses the second of these issues, though the first necessarily receives some attention on the way.