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Top Story Compliance Related


FDIC outlines modified approach to Resolution Planning Rule

The FDIC has outlined a modified approach to implementing its rule requiring certain insured depository institutions (IDIs) to submit resolution plans to facilitate resolution under the Federal Deposit Insurance Act. The modified approach applies to IDIs with $100 billion or more in total assets, extends the submission frequency to a three-year cycle, streamlines content requirements, and places enhanced emphasis on engagement with firms.

The modified approach preserves key content requirements that have helped FDIC staff develop resolution strategies for IDIs, but exempts filers from other content requirements that have been less useful or are obtainable through other supervisory channels. On a case-by-case basis, the FDIC also plans to exempt filers from certain content requirements based on its evaluation of how useful or material the information would be in planning to resolve each IDI.

Each filer covered under the statement will receive a letter from the FDIC that specifies exempted plan content and the due date for the next filing. Resolution plans will be submitted in two groups, with the first group consisting of IDIs whose top tier parent company is not a U.S. global systemically important bank or a category II banking organization. The second group will be all other IDIs with $100 billion or more in total assets. For institutions with less than $100 billion in total assets, the moratorium on submission of IDI plans announced in November 2018 remains in effect.


FTC orders 7-Eleven to divest stores

The Federal Trade Commission has announced that 7-Eleven, Inc. and Marathon Petroleum Corporation have agreed to divest hundreds of stores used to sell gasoline and diesel fuel in 293 local markets across 20 states to settle Commission charges that 7-Eleven’s acquisition of Marathon’s Speedway subsidiary violated federal antitrust laws. 7-Eleven consummated the acquisition on May 14, 2021, even though the company knew the acquisition violated Section 7 of the Clayton Act and Section 5 of the FTC Act.

A subsidiary of the Tokyo-based Seven & i Holdings Co., Ltd., 7-Eleven owns, operates, and franchises approximately 9,000 convenience stores in the United States, making it the largest U.S. convenience store chain. Almost half of 7-Eleven’s stores also sell fuel. Marathon operates a vertically integrated refining, marketing, retail, and transportation system for petroleum and petroleum products. Prior to closing, Marathon controlled Speedway, which operates almost 4,000 retail fuel outlets across the United States.

Under the terms of the proposed consent order, 7-Eleven, Inc. and Marathon are required to divest 124 retail fuel outlets to Anabi Oil, comprising 123 Speedway outlets and one 7-Eleven outlet. They are also required to divest 106 retail fuel outlets to Cross America Partners, comprising 105 Speedway outlets and one 7-Eleven outlet. And they must divest 63 Speedway retail fuel outlets to Jacksons Food Stores. To remove impediments that could prevent the buyers from competing vigorously in these markets, the proposed order also prohibits 7-Eleven from enforcing any noncompete provisions as to any franchisees or employees working at or doing business with the divested assets.


Victims of student loan scheme to receive FTC checks

The Federal Trade Commission has announced it is is sending checks totaling more than $316,000 to 10,689 people who lost money to a student loan debt relief scheme. A complaint filed by the FTC in March 2020 alleged SLAC (which also used the name Aspyre), Navloan, and Student Loan Assistance Center, and their owner, Adam Owens, falsely told consumers that, for an upfront fee of $699 and a monthly fee of $39, the defendants would permanently lower or eliminate student loan debt. In reality, the payments could change every year, and loan forgiveness was not guaranteed for any consumer. The FTC also alleged that the defendants paid consumers for positive reviews on the Better Business Bureau website and failed to disclose those payments.

As part of a settlement with the FTC, the defendants agreed to pay funds that are being used to send payments to affected consumers.


2021 list of distressed or underserved geographies

The FFIEC reports the Federal Reserve Board and the FDIC have announced the availability of the 2021 list of distressed or underserved nonmetropolitan middle-income geographies. These are geographic areas where revitalization or stabilization activities are eligible to receive CRA consideration under the community development definition. Distressed nonmetropolitan middle-income geographies and underserved nonmetropolitan middle-income geographies are designated by the agencies in accordance with their CRA regulations.


FATF 4th virtual plenary concludes

The Treasury Department reported Friday that the Financial Action Task Force has concluded its fourth virtual plenary since the start of the ongoing COVID-19 pandemic. The FATF advanced its core work on virtual assets, proliferation finance, digital transformation, and peer member assessments. Actions include:

  • adoption of guidance on proliferation financing risk and mitigation
  • completion of a second 12-month review on AML/CTF obligations in the virtual assets sector
  • report on the financing of racially and ethnically motivated violent extremism
  • report on money laundering risks from conservation crimes
  • adoption of the mutual evaluation reports on Japan and South Africa


HUD proposes to reinstate 2013 FHA Discriminatory Effects Standard

In 2020, HUD published a rule titled “HUD's Implementation of the Fair Housing Act's Disparate Impact Standard." Prior to the effective date of the 2020 rule, the U.S. District Court for the District of Massachusetts issued a preliminary injunction in Massachusetts Fair Housing Center v. HUD, staying HUD's implementation and enforcement of the rule. Consequently, the 2020 Rule never took effect. After reconsidering the 2020 Rule, HUD is proposing to recodify its previously promulgated rule titled, “Implementation of the Fair Housing Act's Discriminatory Effects Standard,” which, as of the date of publication of this Proposed Rule, remains in effect due to the preliminary injunction. HUD believes the 2013 Rule better states Fair Housing Act jurisprudence and is more consistent with the Fair Housing Act's remedial purposes.

HUD's proposal to recodify the 2013 rule has been published at 86 FR 33590 in this morning's Federal Register. Comments on the proposal are due by August 24, 2021.


ICO Issuer charged by SEC

The Securities and Exchange Commission has announced settled charges against Loci Inc. and its CEO John Wise for making materially false and misleading statements in connection with an unregistered offer and sale of digital asset securities in an Initial Coin Offering (ICO).

According to the SEC's order

  • Loci provided an intellectual property search service for inventors and others users through its software platform called InnVenn.
  • From August 2017 through January 2018, Loci and Wise raised $7.6 million from investors by offering and selling digital tokens called “LOCIcoin.”
  • In promoting the ICO, Loci and Wise made numerous materially false statements to investors and potential investors, including false statements concerning the company’s revenues, number of employees, and InnVenn’s user base.
  • Wise misused $38,163 in investor proceeds to pay his personal expenses.
  • Although LOCIcoins constituted securities, Loci’s offering was not registered with the SEC and no exemption from registration applied.

The SEC’s order imposes a $7.6 million civil penalty against Loci, and an officer and director bar as to Wise. Loci and Wise must destroy their remaining tokens, request the removal of the tokens from trading platforms, publish the SEC's order on Loci's social media channels, and refrain from participating in future digital asset securities offerings.


June 2021 FATF plenary

The Financial Action Task Force has announced that delegates representing 205 members of the Global Network and observer organizations including the International Monetary Fund, the United Nations and the Egmont Group of Financial Intelligence Units will take part in the virtual meeting of the FATF Plenary this week. During five days, they will discuss key issues to strengthen global action against the financial flows that fuel crime and terrorism.

Delegates will discuss the assessments of Japan and South Africa’s measures to combat money laundering and terrorist financing. They will hear the progress made by some jurisdictions identified as presenting a risk to the financial system.

The FATF will finalize key reports, including on money laundering and environmental crime, ethnically and racially motivated terrorist financing and two reports that explore the opportunities that technology can offer to improve anti-money laundering and counter-terrorist financing efforts. The FATF will also finalize its second 12-month review of the implementation of revised FATF standards for virtual assets and virtual asset service providers, and guidance on proliferation financing risk assessment and mitigation. The outcomes of the FATF Plenary will be published on Friday, June 25, at the close of the meeting.


OFAC sanctions Belarusian officials and entities

Yesterday, OFAC designated 16 individuals and five entities pursuant to Executive Order 13405 in response to the Lukashenka regime’s escalating violence and repression in Belarus, including its reckless forced diversion of a commercial Ryanair flight and arrest of journalist Raman Pratasevich and his companion, Sofia Sapega. The United States was joined in this action by Canada, the European Union, and the United Kingdom.

For identification information on the individuals and entities designated by OFAC yesterday, and links to a Belarus-related General License and FAQs, see the June 21, 2021, BankersOnline OFAC Update.


Updates to FFIEC BSA/AML Exam Manual

The Federal Financial Institutions Examination Council (FFIEC) has released updates to four sections of the BSA/AML Examination Manual:

The FFIEC's press release indicates the updates should not be interpreted as new instructions or increased focus on certain areas; instead, they offer further transparency into the examination process and support risk-focused examination work.

The Manual provides instructions to examiners for assessing the adequacy of a bank’s or credit union’s BSA/AML compliance program and its compliance with BSA regulatory requirements. The Manual itself does not establish requirements for banks; such requirements are found in statutes and regulations.


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