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Top Story Compliance Related


Fed updates capital planning requirements

The Federal Reserve Board has announced a final rule that updates the Board's capital planning requirements to be consistent with other Board rules that were recently modified. The final rule is generally similar to the proposal. In 2019, the Board finalized a framework that sorts large banks into different categories based on their risks, with requirements that are tailored to the risks of each category. The Board's capital planning requirements for these large banks help ensure they plan for and determine their capital needs under a range of different scenarios.

The rule finalized yesterday reflects that new framework. In particular, firms in the lowest risk category are on a two-year stress test cycle and not subject to company-run stress test requirements. In a change from the proposal, the final rule applies capital planning requirements to large savings and loan holding companies that are not predominantly engaged in insurance or commercial activities.

The rule will become effective 60 days after publication in the Federal Register.


OFAC targets Venezuelan oil sector sanctions evaders

The Treasury Department announced yesterday that OFAC has designated three individuals, fourteen entities, and six vessels for their ties to a network attempting to evade United States sanctions on Venezuela’s oil sector. The principal actors designated include Alessandro Bazzoni, Francisco Javier D’Agostino Casado, Philipp Paul Vartan Apikian, Elemento Ltd, and Swissoil Trading SA. Also designated were nine entities owned or controlled by Bazzoni, D’Agostino, or Elemento, and a number of maritime entities and vessels.

For additional information on the targets of OFAC's action and other designations made by the State Department, see BankersOnline's OFAC Update.


Agencies issue final rules on supervisory guidance

The CFPB, FDIC, NCUA and the OCC have each issued a final rule that codifies the Interagency Statement Clarifying the Role of Supervisory Guidance issued on September 11, 2018 by the OCC, Federal Reserve Board, FDIC, NCUA and the CFPB. By codifying the 2018 Statement, with amendments, the final rule confirms that the OCC, FDIC, and Bureau will continue to follow and respect the limits of administrative law in carrying out their supervisory responsibilities.

Unlike a law or regulation, supervisory guidance does not have the force and effect of law and the agencies not take enforcement actions or issue supervisory criticisms based on non-compliance with supervisory guidance. Rather, supervisory guidance outlines supervisory expectations and priorities, or articulates views regarding appropriate practices for a given subject area.

In contrast to supervisory guidance, regulations do have the force and effect of law and enforcement actions can be taken if regulated institutions are in violation. Regulations are also generally required to go through the notice and comment process.


FinCEN reopens comment period on CVC/LTDA proposal

On January 15, FinCEN published [86 FR 3897] a supplemental notice of proposed rulemaking on recordkeeping and reporting of certain transactions involving convertible virtual currency (“CVC”) or digital assets with legal tender status (“legal tender digital assets” or “LTDA”), identifying additional authority for its proposed rule published on December 23, 2020, 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.

In the supplemental notice, FinCEN said that a final rule implementing the proposed reporting requirements would be effective 30 days after its publication, except that the requirement to report counterparty information (if adopted) would not take effect for 60 days.

  • UPDATE: FinCEN has taken several actions on this proposal. See our original Top Story where we've included a complete list of those actions.


FinCEN submits renewal of recordkeeping requirement

FinCEN has published at 86 FR 6411 in the January 21 Federal Register a notice and request for comments for the proposed renewal, without change, of its currently approved recordkeeping requirement for the issuance or sale of bank checks and drafts, cashier’s checks, money orders, and traveler’s checks when the issuance or sale involves the use of currency in an amount between $3,000 and $10,000, inclusive. Although no changes are proposed to the information collection itself, the request for comments covers a future expansion of the scope of the annual hourly burden and cost estimate associated with these regulations.

Comments will be accepted for 60 days, through March 22, 2021.


Bureau sues 1st Alliance Lending

The CFPB announced on Friday it has filled a lawsuit against 1st Alliance Lending, LLC, John Christopher DiIorio, Kevin Robert St. Lawrence, and Socrates Aramburu for allegedly engaging in various unlawful mortgage-lending practices. 1st Alliance, based in Hartford, Connecticut, originated residential mortgages from 2004 to September 2019 and stopped operating in November 2019. DiIorio was its chief executive officer and he, St. Lawrence, and Aramburu were 1st Alliance’s three managing executives.

The Bureau alleges that 1st Alliance, with DiIorio’s, St. Lawrence’s, and Aramburu’s participation, knowledge, and direction, violated the Truth in Lending Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Mortgage Acts and Practices—Advertising Rule, and the Consumer Financial Protection Act of 2010. The Bureau’s complaint, filed in the United States District Court for the District of Connecticut, seeks injunctions against the defendants, as well as damages, redress to consumers, disgorgement of ill-gotten gains, and the imposition of civil money penalties.


Capital One to pay $390M for BSA/AML violations

The Financial Crimes Enforcement Network (FinCEN) has announced that Capital One, National Association, has been assessed a $390,000,000 civil money penalty for engaging in both willful and negligent violations of the Bank Secrecy Act and its implementing regulations. FinCEN determined and Capital One admitted to willfully failing to implement and maintain an effective anti-money laundering program. Capital One also admitted that it willfully failed to file thousands of Suspicious Activity Reports and negligently failed to file thousands of Currency Transaction Reports with respect to a particular business unit known as the Check Cashing Group.

The violations occurred from at least 2008 through 2014, and caused millions of dollars in suspicious transactions to go unreported in a timely and accurate manner, including proceeds connected to organized crime, tax evasion, fraud, and other financial crimes laundered through the bank into the U.S. financial system. Capital One admitted to the facts set forth by FinCEN and acknowledged that its conduct violated the BSA and regulations codified at 31 C.F.R. Chapter X.

For additional information, see "Capital One, NA, pays $390M for BSA violations".


Fourth quarter call report info

The FDIC has posted in FIL-2-2021 the materials for to the Consolidated Reports of Condition and Income (Call Report) for the December 31, 2020, report date. Financial institutions should plan to complete as early as possible the preparation, editing, and review of their institution’s Call Report data and the submission of these data to the agencies’ Central Data Repository (CDR). Starting this preparation early will help institutions identify and resolve any edit exceptions before the submission deadline. If they later find that certain information needs to be revised, they should make the appropriate changes to their Call Report data and promptly submit the revised data file to the CDR.


OFAC issues Hong Kong-related sanctions rule

OFAC has posted a notice that it issued, on Friday, January 15, 2021, regulations to implement Executive Order 13936 of July 14, 2020, "Executive Order on Hong Kong Normalization." The rule adds a new Hong King-related sanctions regulation at 31 CFR part 585, with a January 15, 2021, effective date.


Cuban Ministry of Interior and leader sanctioned

On Friday, January 15, the Treasury Department announced that OFAC had designated the Cuban Ministry of Interior and the Minister of Interior, Lazaro Alberto Álvarez Casas, for serious human rights abuse, pursuant to Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption around the world.

For identification information for these designations and other additions and updates to OFAC's SDN List, see BankersOnline's OFAC Update.


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