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Top Story Compliance Related

04/09/2020

Temporary relief for business development companies

The Securities and Exchange Commission has announced that it is providing temporary, conditional exemptive relief for business development companies (BDCs) to enable them to make additional investments in small and medium-sized businesses, including those with operations affected by COVID-19. BDCs were created to provide capital to smaller domestic operating companies that otherwise may not be able to readily access the capital markets. The relief announced Wednesday will provide additional flexibility for BDCs to issue and sell senior securities in order to provide capital to such companies, and to participate in investments in these companies alongside certain private funds that are affiliated with the BDC. The relief is subject to investor protection conditions, including specific requirements for obtaining an independent evaluation of the issuances’ terms and approval by a majority of a BDC’s independent board members.

04/09/2020

OFAC adjusts penalties for inflation

​OFAC has published a final rule at 85 FR 19884 in today's Federal Register amending its regulations to adjust certain civil monetary penalties for inflation as required by law. The rule is effective upon publication.

04/08/2020

SEC publishes risk alerts regarding inspections

The SEC office of Compliance Inspections and Examinations (OCIE) has issued two risk alerts: Examinations that Focus on Compliance with Regulation Best Interest and Examinations that Focus on Compliance with Form CRS. These risk alerts provide broker-dealers and investment advisers with advance information about the expected scope and content of the initial examinations for compliance with Regulation Best Interest and Form CRS. Regulation Best Interest and Form CRS are key components of a broader package of rules and interpretations, adopted contemporaneously on June 5, 2019, to enhance the quality and transparency of retail investors’ relationships with broker-dealers and investment advisers. The compliance date for Regulation Best Interest and Form CRS is June 30, 2020.

04/08/2020

OCC supports FinCEN’s responses to COVID-19

Bulletin 2020-34 has been issued by the OCC in support of FinCEN’s regulatory relief and risk-based approach for financial institution compliance to COVID-19. The FinCEN BSA Notice provides for certain regulatory relief under the risk-based approach to BSA compliance, including exempting from beneficial ownership requirements new loans extended to existing customers under the CARES Act Paycheck Protection Program (under certain conditions). The OCC supports this approach and encourages all banks to follow a risk-based approach to managing their BSA compliance programs. When evaluating a bank’s BSA compliance program, the OCC will consider the actions taken by banks to protect and assist employees, customers, and others in response to the COVID-19 pandemic, including any reasonable delays in BSA report filings, beneficial ownership verification or re-verification requirements, and other risk management processes. Banks are encouraged to contact their examiners if they anticipate delays.

04/08/2020

Treasury has updated its PPP FAQs

The Treasury Department has updated its FAQ document on Paycheck Protection Program Loans. Participating banks should "bookmark" that page and check it regularly for updates.

The changes to the FAQs as of April 6 provide these clarifications:

  1. That lenders may rely on borrower certifications as to the applicability of affiliation rules (question 4).
  2. That lenders do not need to re-verify beneficial ownership information for existing customers. (If participating depository institutions have not yet collected beneficial ownership information on an existing customer, they are not required to do so when that customer applies for PPP loans, unless the lender's risk-based BSA compliance program indicates otherwise.) (question 18)
  3. How payroll is defined under the CARES Act, including the calculation of non-cash benefits and coverage of paid leave. (Various questions)
  4. Methods for determining payroll to calculate maximum loan amounts. (various questions)
  5. That lenders who processed applications based on the April 2 interim final rule may rely on the laws, rules and guidance available at the time. (question 17)

Also, the SBA has approved and made available a promissory note that can be used for PPP loans. The agency has also established a new lender gateway at connect.sba.gov to be used for submitting loan authorization requests. For updated lender information on the SBA's Paycheck Protection Program, access the Lender Forms and Guidance section of its Paycheck Protection Program webpage.

04/08/2020

Fed CRA evaluations released in March

Our monthly review of the Federal Reserve's Community Reinvestment Act performance evaluation releases reveals that 16 evaluations were made public in March, all with ratings of Satisfactory or better. We congratulate two Missouri banks that received ratings of Outstanding (links are to their evaluation reports):

04/07/2020

Cantor Fitzgerald pays $3.2M to settle SEC charges

The SEC has reported that Cantor Fitzgerald & Co. has agreed to pay $3.2 million to settle charges for providing the SEC with incomplete and inaccurate securities trading information known as “blue sheet data.” According to the SEC’s order, for almost five years, Cantor Fitzgerald made numerous deficient blue sheet submissions containing missing or inaccurate data for approximately 35 million transactions, largely due to inadequate processes designed to validate the accuracy of its submissions and undetected coding errors. Broker-dealers are required to provide this information, which the SEC uses to carry out its enforcement and regulatory obligations, including investigations of insider trading and other fraudulent activity.

04/07/2020

Russian white supremacist group and leaders designated

The State Department announced yesterday the designation of Russian Imperial Movement, or RIM, and members of its leadership as specially designated global terrorists – the first time in the history that the department has designated a racially or ethnically motivated terrorist group.

Coordinator for Counterterrorism Ambassador Nathan Sales said that RIM is a "terrorist group that provides paramilitary-style training to neo-Nazis and white supremacists, and it plays a prominent role in trying to rally likeminded Europeans and Americans into a common front against their perceived enemies." He went on to say "this designation denies RIM and its leaders and its members access to the United States financial system. Any assets that they had in the United States or that are subject to U.S. jurisdiction are now frozen. We think that that’s going to make it substantially more difficult for them to move money throughout the international financial system."

For further identification information, see BankersOnline's OFAC Update

04/06/2020

FinCEN updates COVID-19 info

FinCEN has posted a notice updating its March 16, 2020 COVID-19 Notice to provide additional information to assist financial institutions in complying with their Bank Secrecy Act (BSA) obligations during the COVID-19 pandemic, and announces a direct contact mechanism for urgent COVID-19-related issues.

FinCEN recognizes financial institutions face challenges related to the COVID-19 pandemic. In addition, FinCEN is committed to promoting the success of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including the need to facilitate expeditious disbursal of CARES Act funds. Accordingly, FinCEN will issue further information, as appropriate, as the CARES Act is implemented and questions arise.

FIN-2020-R001 implementation suspended
FinCEN has suspended implementation of its February 10, 2020, Ruling (FIN-2020-R001) on CTR filing obligations related to transactions of sole proprietorships and entities operating under a DBA name until further notice. Institutions that have already made the necessary changes to implement the Ruling need not revert to prior practice, and may report CTRs in accordance with the suspended ruling. Other institutions should continue to file CTRs involving sole proprietorships and DBAs under the prior practice.

04/06/2020

Temporary rule under FFCRA published

The Wage and Hour Division of the Department of Labor has published [85 FR 19326] temporary regulations to implement public health emergency leave under Title I of the Family and Medical Leave Act (FMLA), and emergency paid sick leave to assist working families facing public health emergencies arising out of Coronavirus Disease 2019 (COVID-19) global pandemic. The leave is created by a time-limited statutory authority established under the Families First Coronavirus Response Act, Public Law 116-127 (FFCRA), and is set to expire on December 31, 2020. The FFCRA and this temporary rule do not affect the FMLA after December 31, 2020. The rule is effective from April 2 through December 31, 2020, and became operational on April 1, 2020.

Gerard Panero will present a BOL Learning Connect webinar, Alternatives to Layoffs During COVID-19, on April 23, 2020.

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