The government of the United States has blocked the acquisition of MoneyGram International Inc., a renowned money transfer company. This acquisition was suppose to be done by the popular mobile wallet organization, Ant Financial and an affiliate of the biggest Chinese e-commerce, retail, and technology company, Alibaba Group Holdings Limited.
The mobile wallet company, Ant Financial had previously declared its interest to take over MoneyGram in Jan 2017. However, in the very next month, the bgoth Alibaba Group Holdings Limited and Ant Financial announced the cancellation of this deal as they were not able to obtain needed approval from the Committees of Foreign Investment in the US (“CFIUS”).
This happened due to the issues of cybersecurity and the confidentially of the personal data. The Committees of Foreign Investment in the United States is basically a Treasury Department-run multi-agency panel, which takes cares and evaluates all the foreign acquisitions of its country’s companies for national security issues.
This refusal of the proposal demonstrates a fundamental tension among the communal and accessible nature of financial offerings provided by Fintech businesses. It also illustrates the concerns of the national security, trade issues, and the protection as well as privacy of the personal data.
What Canada’s “Investment Canada Act” Says?
Canada is gradually becoming one of the most preferred destinations for the companies to set their headquarters at. The country has equivalent powers to The Committees of Foreign Investment in the United States or CFIUS to go through and review all the acquisitions of the Canadian businesses under its Investment Canada Act. According to this act, the Canadian government has full rights to review all the investments that may be injurious or unprofitable to the national security.
In contrast to the other limitations on the investments in the country’s businesses by other companies from different countries, which make the use of a minimum value threshold to evaluate whether a transaction is reviewable by the Canadian government, there is no min. investment size for a review or monitoring on the national security grounds. These national security grounds or provisions authorize the government to restrict any received proposal or investment, apply conditions on its completion or need divestiture of a finished investment.
Latest Technology leading to New Challenges for Regulators
As the Fintech companies are highly dominant in the financial services world, administrators as well as regulators will come across new challenges at the time of balancing personal data protection issues and cyber security concerns with the promotion of business and commerce across the country’s borders. click here for office setup here