Top Story Compliance Related

The Labor Department announced yesterday that it has issued a final rule that expands overtime pay protections by increasing the salary thresholds required to exempt a salaried bona fide executive, administrative or professional employee from federal overtime pay requirements.

Effective July 1, 2024, the salary threshold will increase to the equivalent of an annual salary of $43,888 and increase to $58,656 on Jan. 1, 2025. The July 1 increase updates the present annual salary threshold of $35,568 based on the methodology used by the prior administration in the 2019 overtime rule update. On January 1, 2025, the rule’s new methodology takes effect, resulting in the additional increase. In addition, the rule will adjust the threshold for highly compensated employees. Starting July 1, 2027, salary thresholds will update every three years, by applying up-to-date wage data to determine new salary levels.

The U.S. Department of Labor has announced it has finalized its Retirement Security Rule to protect the millions of workers who are saving for retirement diligently and rely on advice from trusted professionals on how to invest their savings. This final rule will achieve this by updating the definition of an investment advice fiduciary under the Employee Retirement Income Security Act and the Internal Revenue Code.

The final rule and related amended prohibited transaction exemptions require trusted investment advice providers to give prudent, loyal, honest advice free from overcharges. These fiduciaries must adhere to high standards of care and loyalty when they recommend investments and avoid recommendations that favor the investment advice providers’ interests — financial or otherwise — at the retirement savers’ expense. Under the final rule and amended exemptions, financial institutions overseeing investment advice providers must have policies and procedures to manage conflicts of interest and ensure providers follow these guidelines.

The updated definition of an investment advice fiduciary, which takes effect on September. 23, 2024, applies when trusted financial services providers give compensated investment advice to retirement plan participants, individual retirement account owners and plan officials responsible for administering plans and managing their assets.

The Federal Trade Commission yesterday announced a final rule to promote competition by banning noncompetes nationwide.

Under the FTC’s new rule, existing noncompetes for the vast majority of workers will no longer be enforceable after the rule’s effective date. Existing noncompetes for senior executives — who represent less than 0.75% of workers — can remain in force under the FTC’s final rule, but employers are banned from entering into or attempting to enforce any new noncompetes, even if they involve senior executives. Employers will be required to provide notice to workers other than senior executives who are bound by an existing noncompete that they will not be enforcing any noncompetes against them.

In the final rule, the Commission has determined that it is an unfair method of competition, and therefore a violation of Section 5 of the FTC Act, for employers to enter into noncompetes with workers and to enforce certain noncompetes.

The Commission said that trade secret laws and non-disclosure agreements (NDAs) both provide employers with well-established means to protect proprietary and other sensitive information. Researchers estimate that over 95% of workers with a noncompete already have an NDA.

The final rule will become effective 120 days after it is published in the Federal Register.

On Tuesday, a Treasury Department news release reported that OFAC has sanctioned two companies and four individuals involved in malicious cyber activity on behalf of the Iranian Islamic Revolutionary Guard Corps Cyber Electronic Command (IRGC-CEC). These actors targeted more than a dozen U.S. companies and government entities through cyber operations, including spear phishing and malware attacks. In conjunction with today’s action, the U.S. Department of Justice and the Federal Bureau of Investigation unsealed an indictment against the four individuals for their roles in cyber activity targeting U.S. entities.

Treasury also reported that OFAC had sanctioned two leaders of al-Qa’ida-aligned terrorist group Jama’at Nusrat al-Islam wal-Muslimin (JNIM) for hostage-taking of U.S. persons in West Africa. The Department of State concurrently announced its designation of seven JNIM leaders.

For names and identification information of the designated parties, see the April 23, 2024, BankersOnline OFAC Update.

HUD has announced it has published [89 FR 30850] in this morning's Federal Register a final rule with a Federal Flood Risk Management Standard (FFRMS) to help communities prepare for and reduce flood damage. This rule aims to protect communities from flood risk, heavy storms, increased frequency of severe weather events and disasters, changes in development patterns, and erosion.

The final rule implements the FFRMS required by Executive Order 13690 (1/30/2015) by updating two of HUD’s regulations: Part 55, Floodplain Management and Protection of Wetlands and Part 200, Minimum Property Standards. This rule strengthens standards by increasing elevations and flood proofing requirements of properties in areas at risk of flooding, where federal funds are used to develop or provide financing for new construction within the now defined FFRMS floodplain. It also applies to substantial improvement to structures financed through HUD grants, subsidy programs, and applicable multifamily programs. The update to Minimum Property Standards only applies to FHA-insured new construction within the 100-year floodplain.

Yesterday was Earth Day. FinCEN issued a reminder to financial institutions to remain vigilant in identifying and reporting suspicious activity related to environmental crimes. Environmental crimes frequently involve transnational criminal activity related to several of FinCEN’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) National Priorities, including corruption, fraud, human trafficking, and drug trafficking.

FinCEN has previously published resources to help stakeholders identify and combat environmental crimes and associated illicit financial activity. FinCEN’s December 2021 Financial Threat Analysis contains information on wildlife trafficking threat patterns and trend information identified in Bank Secrecy Act (BSA) data. FinCEN’s Notice FIN-2021-NTC4 provides financial institutions with specific Suspicious Activity Report (SAR) filing instructions and highlights illicit financial activity related to several types of environmental crimes such as wildlife trafficking and illegal logging, fishing, or mining. SAR filings, along with effective implementation of BSA compliance requirements, are crucial to identifying and stopping environmental crimes and related money laundering.

On Friday, the Treasury Department reported that OFAC has imposed sanctions on two entities — Mount Hebron Fund and Shlom Asiraich — for their roles in establishing fundraising campaigns on behalf of Yinon Levi and David Chai Chasdai, two violent extremists who were sanctioned on February 1, 2024, in connection with violence in the West Bank.

Concurrently, the Department of State designated Ben Zion Gopstein, the founder and leader of Lehava, an organization whose members have engaged in destabilizing violence affecting the West Bank.

For identification information on the designated parties, see BankersOnline’s April 19, 2024, OFAC Update.

The FDIC has published at 89 FR 29222 in today's Federal Register the proposed Statement of Policy on Bank Merger Transactions that it announced last month. Comments are due by June 19, 2024.

FinCEN has updated its Beneficial Ownership Information FAQs to include new questions and updated information about reporting companies, beneficial ownership through trusts, and access to beneficial ownership information, among other topics. New and updated FAQs carry an April 18, 2024, date.

The Treasury Department yesterday announced that, in response to Iran's April 13 attack on Israel, OFAC has targeted 16 individuals and two entities enabling Iran’s UAV production, including engine types that power Iran’s Shahed variant UAVs, which were used in the April 13 attack. OFAC also designated five companies in multiple jurisdictions providing component materials for steel production to Iran’s Khuzestan Steel Company (KSC), one of Iran’s largest steel producers, or purchasing KSC’s finished steel products.

OFAC also sanctioned three subsidiaries of Iranian automaker Bahman Group, which have continued to materially support the IRGC and other entities designated pursuant to counterterrorism authorities, including Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL). Bahman Group itself was concurrently designated for owning these entities.

For the names and identification information of the designated parties, see the April 18, 2024, BankersOnline OFAC Update.