Top Story Compliance Related

The Financial Crimes Enforcement Network (FinCEN) has scheduled for December 22, 2023, Federal Register publication a final rule with regulations regarding access by authorized recipients to beneficial ownership information (BOI) that will be reported to FinCEN pursuant to section 6403 of the Corporate Transparency Act (CTA).

The summary of the rule indicates the regulations implement the strict protocols required by the CTA to protect sensitive personally identifiable information (PII) reported to FinCEN and establish the circumstances in which specified recipients have access to BOI, along with data protection protocols and oversight mechanisms applicable to each recipient category. The disclosure of BOI to authorized recipients in accordance with appropriate protocols and oversight will help law enforcement and national security agencies prevent and combat money laundering, terrorist financing, tax fraud, and other illicit activity, as well as protect national security.

The Introduction in the Supplementary Information to be published with the rule states, "Financial institutions with customer due diligence requirements under applicable law will have access to BOI to facilitate compliance with those requirements, as will the Federal functional regulators or other appropriate regulatory agencies that supervise or assess those financial institutions’ compliance with such requirements." It also states "FinCEN will implement the CTA requirement to revise the 2016 CDD Rule [31 CFR 1010.230] through a future rulemaking process. That process will provide the public with an opportunity to comment on the effect of the final provisions of the BOI reporting and access rules on financial institutions’ customer due diligence obligations."

The rule will be effective 60 days after publication (February 20, 2024).

The FDIC has announced that its Board of Directors yesterday adopted a final rule to amend part 328 of its regulations to modernize the rules governing use of the official FDIC signs and advertising statements, and to clarify the FDIC’s regulations regarding false advertising, misrepresentations of deposit insurance coverage, and misuse of the FDIC’s name or logo.

Among the changes are rules on placement of the FDIC's official sign on digital channels, such as a bank's website and mobile banking app, through which depositors are increasingly handling their banking needs. Beginning in 2025, banks will be required to display a new black and navy blue official digital sign near the name of the bank on all bank websites and mobile apps, and on certain ATMs. The rule also—

• Modernizes requirements for display of the FDIC official sign in bank branches and other physical premises to account for evolving designs of bank branches and other physical bank locations where customers make deposits
• Requires the use of signs to differentiate insured deposits from non–deposit products across banking channels and to indicate that certain financial products “are not insured by the FDIC, are not deposits, and may lose value”
• Clarifies the FDIC’s regulations regarding misrepresentations of deposit insurance coverage by addressing specific scenarios where a person, including a non–bank entity, provides information to consumers that may be misleading, confuse consumers as to whether they are doing business with a bank, and whether their funds are protected by deposit insurance
• Requires insured depository institutions to maintain policies and procedures addressing compliance with Part 328
• Amends definitions of "non-deposit product" to include crypto-assets and specifically address safe deposit boxes

The amendments made by the final rule will take effect on April 1, 2024, with an extended compliance date of January 1, 2025.

• Board Memorandum with summary of the rule
• UPDATE: Published on 1/18/2024 at 89 FR 3504 in the Federal Register

The Federal Financial Institutions Examination Council (FFIEC) has announced that the Federal Reserve Board, FDIC, and OCC, as members of the FFIEC, have released data on small business, small farm, and community development lending during 2022. The Community Reinvestment Act regulations require the agencies to annually disclose these data.

The FFIEC also prepared aggregate disclosure statements of small business and small farm lending for all of the metropolitan statistical areas and non-metropolitan counties in the United States and its territories. The statements are available here.

• Fact Sheet
• Tables

On Wednesday, the Department of the Treasury reported that OFAC continued to tighten enforcement of the price cap on Russian oil by building on previous actions targeting shipowners and vessels implicated in transporting Russian crude oil above the cap. In line with actions previously taken by partners in the Price Cap Coalition, OFAC designated a Government of Russia-owned ship manager as well as several obscure oil traders who have emerged as frequent participants in the seaborne transportation of Russian-origin oil following the imposition of the price cap.

 

OFAC also, in coordination with the Price Cap Coalition, updated the Guidance on Implementation of the Price Cap Policy for Crude Oil and Petroleum Products of Russian Federation Origin. Yesterday’s actions are in line with commitments made by Leaders of the Group of Seven (G7) on December 6, 2023 to tighten compliance and enforcement of the price cap policy on Russian oil, including by imposing sanctions on those engaged in deceptive practices and by updating compliance rules and regulations as necessary.

 

For the names and identification information of the designated parties, and links to two new Russia-related General Licenses, see the December 20, 2023, BankersOnline OFAC Update.

The Financial Crimes Enforcement Network (FinCEN) has announced in Notice FIN-2023-NTC5 a further extension of time for certain Report of Foreign Bank and Financial Accounts (FBAR) filings in light of the notice of proposed rulemaking (NPRM) that FinCEN issued on March 10, 2016, which proposes to revise the regulations implementing the Bank Secrecy Act (BSA) requirements regarding FBARs. Specifically, one of the proposed amendments would expand and clarify the exemptions for certain U.S. persons with signature or other authority over foreign financial accounts. This proposed amendment seeks to address questions previously raised by members of the public regarding the filing requirement and its application to U.S. persons with signature authority over, but no financial interest in, certain types of foreign financial accounts.

 

On December 9, 2022, FinCEN issued Notice 2022-1 to extend the filing date to April 15, 2024, for the FBAR for certain U.S. individuals with signature authority over, but no financial interest in, one or more foreign financial accounts. FinCEN has previously issued identical extensions that applied to similarly situated individuals. As stated in previous Notices, FinCEN received questions following prior amendments to the FBAR regulations, which required additional consideration with respect to certain exemptions. The proposed amendments in the NPRM seek to address these exemptions but, because the proposed rulemaking is not yet finalized, FinCEN is further extending the filing due date to April 15, 2025, for individuals whose filing due date for reporting signature authority was previously extended by Notice 2022-1.

 

This latest extension applies to the reporting of signature authority held during the 2023 calendar year, as well as all reporting deadlines extended by previous Notices 2022-1, 2021-1, 2020-1, 2019-1, 2018-1, 2017-1, 2016-1, 2015-1, 2014-1, 2013-1, 2012-1 and 2012-2, along with Notices 2011-1 and 2011-2. For all other individuals with an FBAR filing obligation, the filing due date remains April 15, 2024.

 

Perhaps in 2024 we can stop waiting for the "other shoe to drop" with a final rule.

The Federal Trade Commission reported yesterday that, at the Commission's request, a federal court has temporarily halted the operation of a sprawling business opportunity scheme that has taken in millions of dollars from consumers with bogus promises of huge returns. The scheme has operated since at least 2018 under a number of names, including “Blueprint to Wealth,” according to the FTC’s complaint. Three individuals -- Samuel James Smith, Robert William Shafer and Charles Joseph Garis, Jr. -- and a company owned by one of them -- Business Revolution Group -- are charged in the complaint with operating the scheme.

The complaint alleges that consumers were charged at least $3,000 and as much as $21,000, plus additional hundreds in “administrative fees,” for membership in the scheme, which nominally promises its members turnkey online businesses that would be operated on the members’ behalf. Advertising and marketing for the businesses is controlled by the scheme’s operators and the businesses exist entirely to sell Blueprint to Wealth memberships, the complaint charges.

The court’s order temporarily bars the defendants from misrepresenting or assisting others in misrepresenting material facts about any business or money-making opportunity. It also freezes the defendants’ assets until further action by the court. The FTC’s complaint asks the court to shut down the defendants’ scheme permanently and allow the FTC to provide refunds to the consumers harmed by the scheme.

The FDIC and Federal Reserve have published [88 FR 87895] a final rule in this morning's Federal Register establishing for 2024 the asset-size thresholds used to define “small bank” and “intermediate small bank” in their Community Reinvestment Act regulations. As required, the adjustment to the threshold amounts are based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W).

Effective January 1, 2024, “small bank” will mean a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.564 billion, and “intermediate small bank” will mean a small bank with assets of at least $391 million as of December 31 of both of the prior two calendar years and less than $1.564 billion as of December 31 of either of the prior two calendar years.

The Treasury Department yesterday reported that OFAC has imposed sanctions on 10 entities and four individuals based in Iran, Malaysia, Hong Kong, and Indonesia supporting Iran’s unmanned aerial vehicle (UAV) production. This network, led by Iran-based Hossein Hatefi Ardakani, has facilitated the procurement of U.S.- and foreign-origin components worth hundreds of thousands of dollars for the Islamic Revolutionary Guard Corps Aerospace Force Self Sufficiency Jihad Organization (IRGC ASF SSJO) and its UAV program.

Concurrent with OFAC’s action and following a multi-year investigation by Homeland Security Investigations (HSI), the Department of Justice announced the unsealing of an indictment charging Hossein Hatefi Ardakani and Gary Lam with crimes related to an illicit procurement network and scheme to unlawfully export U.S.-origin, dual-use, and sensitive technology to Iran. HSI’s global investigation identified a network of Iranian intermediary companies, front companies, and logistics businesses used to procure and facilitate the transfer of sensitive U.S.- and foreign-origin technology to Iran for its weapons programs. On October 18, 2023, OFAC designated Gary Lam, whose primary name is Lin Jinghe, for his support to an Iran-based procurement agent working on behalf of the IRGC-owned Saberin Kish Company.

For a link to the names and identification information of the designated individuals and entities, see this BankersOnline OFAC Update.

The CFPB has announced the asset-size exemption thresholds for depository institutions under Regulation C. The Bureau also announced the asset-size exemption thresholds for certain creditors under the escrow requirements and small creditor portfolio and balloon-payment qualified mortgage requirements, and the small creditor exemption from the prohibition against balloon-payment high-cost mortgages under Regulation Z.

These adjustments are effective on January 1, 2024, consistent with relevant statutory or regulatory provisions.

• The HMDA (Regulation C) asset-size exemption in comment 2(g)-2 will increase to $56 million from $54 million.
• The Regulation Z exemption threshold in § 1026.35(b)(2)(iii) for the escrow requirement for HPMLs will increase to $2,640,000,000 from $2,537,000,000. The adjustment to the escrows asset-size exemption threshold also will increase the threshold for small-creditor portfolio and balloon-payment qualified mortgages under Regulation Z.
• The EGRRCPA asset-size exemption from escrow requirements for smaller federally-insured depository institutions and credit unions will be increased to $11.835 billion from $11.374 billion.

The BankersOnline Regulations pages have been updated to reflect these increases.

The OCC, the Federal Reserve Board, and the FDIC on Friday day issued a revised interagency statement to extend the “Extension of the Revised Statement Regarding Status of Certain Investment Funds and their Portfolio Investments for Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC Regulations.” The prior interagency statement was issued on December 22, 2022, and was set to expire on January 1, 2024.

The revised interagency statement explains that the agencies will continue to exercise discretion not to take action against banks or against certain companies that sponsor, manage, or advise investment funds and institutional accounts (fund complexes) that become principal shareholders of banks (principal shareholder fund complexes). The discretion relates to certain extensions of credit by banks to portfolio companies of the principal shareholder fund complex (fund complex-controlled portfolio companies) that otherwise would violate Regulation O, 12 CFR 215, provided certain eligibility criteria are satisfied.

• FDIC FIL-63-2023