Top Story Compliance Related

OFAC, in coordination with the FBI, has designated four entities and three individuals in Iran and Turkey for their involvement in the procurement of equipment, including European-origin engines of unmanned aerial vehicles (UAV) in support of Iran’s UAV and weapons programs. This procurement network operates on behalf of Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL), which oversees several firms involved in UAV and ballistic missile development.

For the names and identification information of the designated parties, see this BankersOnline OFAC Update.

• Treasury Department press release

The Securities and Exchange Commission has announced it has updated its Registration of Municipal Advisors Frequently Asked Questions webpage to add a section on completions of:

• Form MA, for an application for municipal advisor registration, annual update of municipal advisor registration, and an amendment of a prior application for registration;
• Form MA-I, for information regarding natural persons who engage in municipal advisor activities; and
• Form MA-NR, for designation of U.S. agent for service of process for non-residents. 

The CFPB published in today's Federal Register a final rule to make non-substantive corrections and updates to Bureau and other Federal agency contact information found at certain locations in Regulations B, E, F, J, V, X, Z, and DD, including Federal agency contact information that must be provided with Equal Credit Opportunity Act adverse action notices and the Fair Credit Reporting Act Summary of Consumer Rights.

This final rule also revises the chapter heading, makes various non-substantive changes to Regulations B and V, and provides a Bureau website address where the public may access certain APR tables referenced in Regulation Z.

The rule is effective April 19, 2023. However, the mandatory compliance date for the amendments to appendix A to Regulation B, appendix A to Regulation J, and appendix K to Regulation V is March 20, 2024.

The CFPB has released a bulletin warning servicers of their obligation to halt unlawful conduct with respect to private student loans that have been discharged by bankruptcy courts. The bulletin details recent findings by CFPB examiners that certain loan servicers were illegally returning loans to collections after bankruptcy courts had discharged the loans. The CFPB is directing these servicers to return illegally collected payments to affected consumers and immediately cease these unlawful collection tactics. The bulletin also makes clear that the CFPB will continue to examine student loan servicers’ handling of these loans to detect whether these illegal practices persist at other companies.

• Bulletin 2023-01, "Unfair Billing and Collection Practices After Bankruptcy Discharges of Certain Student Loan Debts"

Yesterday, the Securities and Exchange Commission proposed three changes to cybersecurity-related regulations. First, the Commission announced proposed amendments to Regulation Systems Compliance and Integrity to expand the scope of entities subject to the regulation and to update certain provisions.

• Fact Sheet

The SEC also announced proposed amendments to 17 CFR Parts 232, 240, 242, and 249 to require broker-dealers, clearing agencies, major security-based swap participants, the Municipal Securities Rulemaking Board, national securities associations, national securities exchanges, security-based swap data repositories, security-based swap dealers, and transfer agents (collectively, “Market Entities”) to address their cybersecurity risks.

• Fact sheet

And the SEC announced proposed changes to Regulation S-P that would enhance the protection of customer information by, among other things, requiring broker-dealers, investment companies, registered investment advisers, and transfer agents to provide notice to individuals affected by certain types of data breaches that may put them at risk of identity theft or other harm.

• Fact sheet

The Federal Trade Commission has sent a report to Congress detailing the consumer issues that affect American Indian and Alaska Native (AI/AN) populations, as well as the FTC’s enforcement, outreach and education work on these issues.

The report summarizes the agency’s efforts to hear directly from tribal leaders, community members, advocates, and others about issues affecting their communities, and provides analysis of the FTC’s data from the Consumer Sentinel Network database.

The report reflects the FTC’s conversations with community members and advocates about issues such as: auto purchasing and financing, predatory lending, impersonation scams, tech support scams and romance scams, among others. The FTC’s own consumer report data shows that government impersonation and prize, sweepstakes, and lottery scams were the most frequent scams reported to the FTC from majority AI/AN ZIP codes. Government and business impersonation scams are the focus of an ongoing Commission rulemaking effort.

The report recommends continuing to expand partnerships with AI/AN organizations, tribal leaders, advocates, and other groups to inform the Commission’s law enforcement, education and outreach, and research efforts moving forward.

• Press release

Yesterday, Treasury reported that OFAC has designated three individuals in Bosnia and Herzegovina (BiH) pursuant to Executive Orders 14033 or 14059:

• Osman "Osmica" Mehmedagic
• Dragan Stankovic
• Edin Gacanin

For identification information on these individuals, see this BankersOnline OFAC Update.

The CFPB has posted the HMDA 2023 Institutional Coverage Chart and 2023 Transactional Coverage Chart in the "Coverage charts" section of its HMDA reporting requirements compliance resources page.

The charts reflect the reduced 25 closed-end loans in each of the previous two calendar years threshold for reporting closed-end applications and loans.

The Financial Action Task Force (FATF), an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction, has revised its Guidance on Beneficial Ownership for Legal Persons, also known as FATF Recommendation 24.

The revisions respond to the significant misuse of legal persons for money laundering, terrorist financing, and also for proliferation financing in a number of jurisdictions, and to the outcomes of FATF Mutual Evaluations which show a generally insufficient level of effectiveness in combating the misuse of legal persons for money laundering and terrorist financing globally.

The revised Recommendation 24 explicitly requires countries9 to use a multi-pronged approach, i.e., to use a combination of different mechanisms, for collection of beneficial ownership information to ensure that adequate, accurate and up-to-date information on the beneficial ownership of legal persons is available and can be accessed by the competent authorities in a timely manner.

Within the past few days, the FDIC has established two bridge banks, Silicon Valley Bridge Bank, N.A. and Signature Bridge Bank, N.A., to assume the deposits and obligations of two failing banks. On Tuesday, the FDIC issued FIL-10-2023 with a reminder that all contracts entered into with those banks before they failed, and their counterparties were transferred into the bridge banks by the FDIC as receiver. Accordingly, vendors and counterparties with contracts with the bridge bank — including other banks — are legally obligated to continue to perform under the contracts, and the bridge bank is obligated to and has the full ability to make timely payments to vendors and counterparties and otherwise perform its obligations under the contract.

Key points in the document:

• The bridge bank is performing under all failed bank contracts and expects all counterparties to similarly fulfill their contractual obligations.
• All vendors providing services should continue to provide such services.
• All authorized signers, account details, Tax Identification Number, wire/ACH instructions, and pre-failure processes remain in effect, and can and should be utilized to provide such services, until such time as the bridge bank notifies you.
• Vendors and counterparties should be aware that the FDIC as receiver is authorized to enforce such contracts (12 USC 1821(e)(13)) and to transfer the contract notwithstanding any apparent limits on transfer in the contract (12 USC 1821(d)(2)).
• Accordingly, vendors and counterparties with contracts with the bridge bank are legally obligated to continue to perform under the contract, and the bridge bank is obligated to and has the full ability to make timely payments to vendors and counterparties and otherwise perform its obligations under the contract.
• All obligations of the bridge banks are backed by the FDIC and the full faith and credit of the U.S. government.
• Failure to meet these obligations may result in legal action by the U.S. government.