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Top Story Compliance Related

12/21/2020

FinCEN proposes virtual currency and digital assets rules

The Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has issued a proposed rule to be published Wednesday in the Federal Register that would require banks and money services businesses (MSBs) to submit reports, keep records, and verify the identity of customers in relation to transactions above certain thresholds involving CVC/LTDA wallets not hosted by a financial institution (also known as “unhosted wallets”) or CVC/LTDA wallets hosted by a financial institution in certain jurisdictions identified by FinCEN.

The proposed rule complements existing BSA requirements applicable to banks and MSBs by proposing to add reporting requirements for CVC and LTDA transactions exceeding $10,000 in value. Pursuant to the proposed rule, banks and MSBs will have 15 days from the date on which a reportable transaction occurs to file a report with FinCEN. Further, the proposed rule would require banks and MSBs to keep records of a customer’s CVC or LTDA transactions and counterparties, including verifying the identity of their customers, if a counterparty uses an unhosted or otherwise covered wallet and the transaction is greater than $3,000.

Comments on this FinCEN proposal will be accepted for only 12 days from publication, through January 4, 2021.

  • Press release
  • PUBLICATION UPDATE: Published at 85 FR 83840 on 12/23/2020.
  • UPDATE: Proposal and comment period changed— On January 15, FinCEN published [86 FR 3897] a supplemental NPR identifying additional authority for its proposed rule, providing additional information regarding the reporting form, and reopening the comment period. FinCEN is providing an additional 17 days (through 2/1/2021) for comments on the proposed reporting requirements regarding information on CVC or LTDA transactions greater than $10,000, or aggregating to greater than $10,000, that involve unhosted wallets or wallets hosted in a jurisdiction identified by FinCEN. FinCEN is providing an additional 45 days (through 3/1/2021) for comments on the proposed requirements that banks and MSBs report certain information regarding counterparties to transactions by their hosted wallet customers, and on the proposed recordkeeping requirements.
  • FURTHER PUBLICATION AND COMMENT PERIOD UPDATE: On 1/28/2021, FinCEN will publish a third notice to combine the two comment periods and extend the comment deadline for 60 days, through 3/29/2021, on all aspects of the proposed rule.

12/21/2020

OFAC adds pressure on Venezuela's Maduro regime

On Friday, OFAC designated Ex-Cle Soluciones Biometricas C.A. for materially supporting the illegitimate President of Venezuela Nicolas Maduro Moros, including by providing goods and services that the Maduro regime used to carry out the fraudulent December 6, 2020, parliamentary elections. OFAC also designated Guillermo Carlos San Agustin and Marcos Javier Machado Requena for having acted for or on behalf of Ex-Cle Soluciones Biometricas C.A.

Identification details can be found in BankersOnline's OFAC Update.

12/21/2020

New Year brings new Nacha rule

Nacha has posted a notice on its site that a new rule on "Egregious Violations" will take effect on January 1, 2021.

The new Rule defines an “egregious violation” as a willful or reckless action by a Financial Institution, Originator, or Third-Party Sender, involving at least 500 entries or multiple entries totaling a minimum of $500,000. The ACH Rules Enforcement Panel will have the authority to determine whether a violation is “egregious.” If it is, the Panel can then determine whether it’s a Class 2 or Class 3 Rules violation. For Class 3 violations, Nacha will have the authority to report it to the ACH Operators, federal and state banking officials, consumer protection authorities, and other appropriate regulators and agencies.

12/18/2020

NCUA Board approves rules and proposals

The National Credit Union Administration Board held the first of two consecutive open meetings in December. At the meeting, the Board approved these five items:

  • A final rule on subordinated debt.
  • A temporary final rule that extends regulatory relief measures in response to COVID-19.
  • A proposed rule that permits federal credit unions to purchase mortgage-servicing rights from other federal credit unions under certain conditions;
  • A proposed rule revising the definition of a service facility for multiple common bond federal credit unions; and
  • A proposed rule on overdraft policy

12/18/2020

OCC proposes SAR filing exemptions

The OCC has invited comment on a proposed rule that would modify the requirements for national banks and federal savings associations to file suspicious activity reports. The proposal would amend the agency’s SAR regulations to allow the agency to issue exemptions from the requirements of those regulations. The OCC would be able to grant relief to national banks or federal savings associations that develop innovative solutions intended to meet Bank Secrecy Act requirements more efficiently and effectively. For exemption requests from the OCC’s SAR regulation that would also require an exemption from FinCEN’s SAR rules, the request would have to be filed with both the OCC and FinCEN.

Comments will be accepted for 30 days following publication in the Federal Register.

12/18/2020

OCC November enforcement actions

The OCC has released a list of enforcement actions taken in November, which included:

12/18/2020

Fed and FDIC adjust CRA thresholds

The Federal Reserve Board and FDIC have jointly announced the annual adjustment to the asset-size thresholds used to define small bank and intermediate small bank under their Community Reinvestment Act (CRA) regulations. Financial institutions are evaluated under different CRA examination procedures based upon their asset-size classification. Those meeting the small and intermediate small institution asset-size thresholds are not subject to the reporting requirements applicable to large banks unless they choose to be evaluated as a large institution. The definitions of small and intermediate small institutions for CRA examinations will change on January 1, 2021, as follows:

  • "Small bank" means an institution that, as of December 31 of either of the prior two calendar years, had assets of less than $1.322 billion.
  • "Intermediate small bank" means a small institution with assets of at least $330 million as of December 31 of both of the prior two calendar years and less than $1.322 billion as of December 31 of either of the prior two calendar years.

12/17/2020

FATF updates COVID-19 report

The FATF issued a report in May 2020 highlighting COVID-19-related money laundering and terrorist financing risks and policy responses. Yesterday it released an update to the report, highlighting the latest developments.

Using input from the FATF Global Network of over 200 countries and jurisdictions, and from private and public sector webinars in July and September, the update details how criminals continue to exploit the crisis. A selection of case studies illustrates how the risks have evolved as the pandemic has progressed, and how authorities have dealt with them. These include mounting cases of counterfeiting medical goods, cybercrime, investment fraud, charity fraud and abuse of economic stimulus measures.

To respond to evolving risks, FATF urged authorities and the private sector need to take a risk-based approach, as required by the FATF Standards. This means mitigating the money laundering and terrorist financing risks without disrupting essential and legitimate financial services or driving financial activities towards unregulated service providers.

12/17/2020

Supporters of Iranian petrochemical sales sanctioned

The Treasury Department has announced that OFAC has designated four entities for facilitating the export of Iranian petrochemical products by Triliance Petrochemical Co. Ltd., an entity designated by Treasury in January 2020. These China- and United Arab Emirates-based companies have provided Triliance with critical shipping services or conducted financial transactions on behalf of the company, enabling Triliance to continue brokering and moving Iranian petrochemical exports.

The State Department concurrently imposed sanctions on Vietnam Gas and Chemicals Transportation Corporation in connection with significant transactions for the transport of petroleum products from Iran, and on the company’s Managing Director, Vo Ngoc Phung, for serving as a principal executive officer of the company.

Identification information for the entities and individual designated by OFAC and the State Department can be found in BankersOnline's OFAC Update.

12/16/2020

Proposal to permit additional SAR filing exemptions

FDIC FIL-114-2020, issued yesterday, announced the FDIC Board of Directors has authorized publication of a notice of proposed rulemaking that would amend the FDIC’s Suspicious Activity Report (SAR) regulation [12 CFR Part 353] to permit the FDIC to issue additional, case-by-case exemptions from SAR filing requirements to FDIC-supervised institutions. The FDIC expects that the amendments to the SAR regulation will reduce regulatory burden on financial institutions and encourage technological innovation in the banking sector.

The FDIC’s current SAR regulation allows exemptions from SAR filing requirements for physical crimes (robberies and burglaries) and lost, missing, counterfeit, or stolen securities. The proposed amendments would allow the FDIC, in conjunction with FinCEN, to grant exemptions to FDIC-supervised institutions that develop innovative solutions to otherwise meet Bank Secrecy Act requirements more efficiently and effectively. The FDIC is proposing this rule as a proactive measure to address the likelihood that FDIC-supervised institutions will leverage existing or future technologies to report, share, or disclose suspicious activity in a different manner.

Comments on the proposed rule will be accepted for 30 days after publication in the Federal Register.

Publication and Comment Period Update: Scheduled for publication on 1/22/2021, with a comment period ending 2/22/2021.

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