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Top Story Compliance Related

03/25/2024

Treasury targets Sinaloa fentanyl network

On Friday, Deputy Secretary of the Treasury Wally Adeyemo announced, alongside local leaders and law enforcement in Arizona, that OFAC had sanctioned operatives in a Black Market Peso Exchange scheme to launder millions in illicit fentanyl proceeds for the Sinaloa Cartel. OFAC designated 15 Sinaloa Cartel members—several of whom are fugitives—and six Mexico-based businesses pursuant to Executive Order (E.O.) 14059. The Sinaloa Cartel, which is one of the most notorious and pervasive drug trafficking organizations in the world, is responsible for a significant portion of the illicit fentanyl and other deadly drugs trafficked into the United States.

For the names and identification information of the designated parties, see the March 22, 2024, BankersOnline OFAC Update.

03/25/2024

FDIC special committee adds three non-voting members

The FDIC has announced that the Special Committee of its Board has appointed three non-voting members in its efforts to oversee an independent, third-party review of the agency's workplace culture:

  • Linda Miller, the CEO of Audient Group, a services firm specializing in anti-fraud solutions for commercial and government clients
  • Elizabeth McCaul, a member of the Supervisory Board of the European Central Bank
  • Valerie Mosley, the founder of BrightUp and Valmo Ventures and a member of the board of directors of several large companies and the New Profit Social Venture Fund

The Special Committee intends to complete its independent review in the second quarter of 2024.

03/22/2024

Agencies postpone applicability dates on some parts of CRA update rule

Just eleven days before the effective date of most provisions of their revised Community Reinvestment Act regulations issued in October 2023 (published on February 1, 2024), the Federal Reserve Board, OCC, and FDIC have jointly announced a supplemental interim final rule that extends the applicability date of certain provisions.

To promote clarity and consistency, the agencies extended the applicability date of the facility-based assessment areas and public file provisions from April 1, 2024, to January 1, 2026. Therefore, banks will not have to make changes to their assessment areas or their public files as a result of the 2023 CRA final rule until January 1, 2026. This extension aligns these provisions with other substantive parts of the 2023 CRA final rule that are applicable on January 1, 2026. For example, all provisions about where banks are evaluated will now apply on the same date. Comments on the extended applicability date must be received 45 days after the rule is published in the Federal Register.

The supplemental interim final rule, which becomes effective on April 1, 2024, also includes technical, non-substantive amendments to the CRA final rule and related agency regulations that reference it. For example, one of these technical amendments clarifies that banks do not need to make changes to their public notices until January 1, 2026.

Federal Reserve Board Governor Michelle W. Bowman, who has criticized the October 2023 rule as "unnecessarily complex and extraordinarily lengthy," issued a statement of concern that the change announced yesterday "will not be the only significant issue that will require further consideration given the length and complexity of the final rule as the agencies continue to work toward implementation of the changes. ... This interim final rule illustrates the rushed, overly complex, and unwieldy nature of the CRA rulemaking."

  • FDIC FIL-12-2024
  • Published at 89 FR 22230
  • on 3/29/2024. The supplemental interim final rule will be effective 4/1/2024. Comments will be accepted through May 13, 2024.

03/22/2024

FDIC proposes updates to policy statement on bank mergers

The FDIC has announced its Board of Directors yesterday approved a request for public comment on proposed revisions to the agency's Statement of Policy on Bank Merger Transactions.

The revised Statement of Policy (SOP) reflects legislative and other developments that have occurred since it was last amended in 2008, including the establishment of the statutory factor regarding the risk to the stability of the United States banking or financial system. The revised SOP is principles based; describes the types of applications subject to FDIC approval; addresses each statutory factor separately; and highlights other relevant matters and considerations, such as related statutes pertaining to interstate mergers, and applications from non-banks or banks that are not traditional community banks. Further, the revised SOP reflects consideration of comment letters received in response to the FDIC’s March 2022 Request for Information and Comment on Rules, Regulations, Guidance, and Statements of Policy Regarding Bank Merger Transactions.

Comments on the proposed revised Statement of Policy will be accepted for 60 days following publication in the Federal Register.

03/21/2024

OCC opens registration for Project REACh summit on financial inclusion

The OCC has announced that registration is open for its Project REACh Financial Inclusion Summit on May 29-30, 2024, at its headquarters in Washington, D.C.

The OCC’s Project REACh, or the Roundtable for Economic Access and Change, brings together leaders from the banking industry, national civil rights organizations, business, technology, and community development to identify and reduce specific barriers that prevent underserved and minority communities from full, equal, and fair participation in the nation’s economy.

Registration is required to attend the Summit and is open until May 15, 2024, or until full, whichever occurs first. For security reasons, attendees will be subject to screening and must present a valid government-issued identification to enter the building.

The Summit will be recorded, and the video will be posted to OCC.gov.

Information on how to register to attend the Summit and the agenda are available on the Summit's webpage.

03/21/2024

OCC reports March 2024 enforcement actions

The OCC has released enforcement actions that it took during the month of March 2024:

  • Its previously announced Cease and Desist Order and $250 million Civil Money Penalty against JPMorgan Chase Bank, N.A., for deficiencies in its trade surveillance program.
  • An Order of Prohibition against Samantha Cherry, Former Manager at a St. Louis, Missouri, branch of UMB Bank, N.A., Kansas City, Missouri, for embezzling $439,000 in cash from the bank.
  • A Personal Cease and Desist Order and $30,000 Civil Money Penalty against Nicholas Jurun, Former Mortgage Loan Originator and Sales Manager at a Rancho Palos Verdes office of Barrington Bank & Trust Company, N.A., Barrington, Illinois, for making payments to receive referrals for mortgage loans, attempting to hide at least two of these payments from the bank with false documentation, and engaging in a conflict of interest.
  • An Order of Prohibition and $150,000 Civil Money Penalty against Thomas Lopp, Former President, Chief Operating Officer, and Chief Financial Officer, Sterling Bank and Trust, FSB Southfield, Michigan, for failing to appropriately oversee the bank’s operation of its Advantage Loan Program, supervise bank employees, and intervene when an individual who was not a bank officer issued directives to bank employees and otherwise participated in bank operations.
  • An Order of Prohibition against Elijah V. McBride-Bey, Former Personal Banker, at a North Waltham, Massachusetts, branch of Santander Bank, N.A., Wilmington, Delaware, for establishing unauthorized online banking access and using that access to make unauthorized withdrawals totaling approximately $11,140 from an elderly customer’s account.
  • An Order of Prohibition and $120,000 Civil Money Penalty against Michael Montemayor, Former President of Retail and Commercial Banking, Sterling Bank and Trust, FSB, Southfield, Michigan, for failing to appropriately oversee the bank’s operation of its Advantage Loan Program, and appropriately supervise bank employees, or escalate concerns to the board’s attention.
  • An Order of Prohibition against Juan F. Velez Restrepo, Former Personal Banker at a New York branch of Citibank, N.A., Sioux Falls, South Dakota, for abusing his access to an elderly bank customer’s account and misappropriating over $166,000 in customer funds.

03/21/2024

Treasury announces OFAC actions

Yesterday, the Treasury Department announced that OFAC had targeted three procurement networks –– based in Iran, Türkiye, Oman, and Germany –– that have supported Iran’s ballistic missile, nuclear, and defense programs.

The Treasury Department also reported that OFAC had designated two individuals and two entities for services they provided the Government of the Russian Federation in connection with a foreign malign influence campaign, including attempting to impersonate legitimate media outlets.

For the names and identification information of the designated parties, see the March 20, 2024, BankersOnline OFAC Update.

03/20/2024

FDIC demands three companies stop false and misleading statements

The FDIC yesterday announced it has issued letters demanding three companies and certain associated parties cease and desist from making false and misleading statements about FDIC deposit insurance. The FDIC is demanding that PrizePool, Inc., AmeriStar, LLC, and HighLine Gold, LLC take immediate corrective action to address these false or misleading statements. In the case of AmeriStar and HighLine Gold, the FDIC has reason to believe these companies are related entities sharing several of the same principals and the same physical address, and therefore, issued a joint letter to them.

Based upon evidence collected by the FDIC, these companies and certain associated parties made false representations by: (1) stating or suggesting they are FDIC-insured or that certain uninsured financial products are insured by the FDIC; (2) misusing the FDIC name or logo; (3) misrepresenting the nature or extent of deposit insurance; and/or (4) failing to clearly identify the insured depository institutions with which they have a relationship for the placement of customer deposits and into which funds may be deposited. The evidence suggests these misrepresentations are causing harm, or have the potential to cause harm, to consumers.

03/20/2024

Outlook Live event rescheduled

The Philadelphia Federal Reserve Bank has reported that the Outlook Live event, Compliance Resources, Learning Where to Find Answers to Your Compliance Questions, originally scheduled for March 20, 2024, has been rescheduled for Wednesday, April 17, 2024.

Those who preregistered for the March session do not have to re-register. Additional registrations can be made HERE.

03/19/2024

Two investment advisers charged for false and misleading statements

The Securities and Exchange Commission has announced settled charges against two investment advisers, Delphia (USA) Inc. and Global Predictions Inc., for making false and misleading statements about their purported use of artificial intelligence (AI). The firms agreed to settle the SEC’s charges and pay $400,000 in total civil penalties.

According to the SEC’s order against Delphia, from 2019 to 2023, the Toronto-based firm made false and misleading statements in its SEC filings, in a press release, and on its website regarding its purported use of AI and machine learning that incorporated client data in its investment process. For example, according to the order, Delphia claimed that it “put[s] collective data to work to make our artificial intelligence smarter so it can predict which companies and trends are about to make it big and invest in them before everyone else.” The order finds that these statements were false and misleading because Delphia did not in fact have the AI and machine learning capabilities that it claimed. The firm was also charged with violating the Marketing Rule, which, among other things, prohibits a registered investment adviser from disseminating any advertisement that includes any untrue statement of material fact.

In the SEC’s order against Global Predictions, the SEC found that the San Francisco-based firm made false and misleading claims in 2023 on its website and on social media about its purported use of AI. For example, the firm falsely claimed to be the “first regulated AI financial advisor” and misrepresented that its platform provided “[e]xpert AI-driven forecasts.” Global Predictions also violated the Marketing Rule, falsely claiming that it offered tax-loss harvesting services, and included an impermissible liability hedge clause in its advisory contract, among other securities law violations.

Without admitting or denying the SEC’s findings, Delphia and Global Predictions consented to the entry of orders finding that they violated the Advisers Act and ordering them to be censured and to cease and desist from violating the charged provisions. Delphia agreed to pay a civil penalty of $225,000, and Global Predictions agreed to pay a civil penalty of $175,000.

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