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Top Story Compliance Related

10/07/2021

Treasury targets CJNG members

Yesterday, Treasury announced that OFAC had designated Mexican nationals Aldrín Miguel Jarquín Jarquín, José Jesús Jarquín Jarquín, César Enrique Díaz de León Saucedo, and Fernando Zagal Antón under the the Foreign Narcotics Kingpin Designation Act (Kingpin Act). These four individuals are members of the Cártel de Jalisco Nueva Generación (CJNG) operating through the port of Manzanillo in Colima, Mexico and the surrounding areas. CJNG, a violent Mexico-based organization, is responsible for trafficking a significant proportion of the fentanyl and other deadly drugs that enter the United States.

As a result of OFAC’s action, all property and interests in property of the designated individuals or entities that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all transactions by U.S. persons or persons within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons.

Since June 2000, more than 2,200 entities and individuals have been sanctioned pursuant to the Kingpin Act for their role in international narcotics trafficking. Penalties for violations of the Kingpin Act range from civil penalties of up to $1,548,075 per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines of up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals could face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

For identification details on the four designated individuals, see the BankersOnline October 6, 2021 OFAC Update.

10/06/2021

Hemp company charged with fraud by SEC

The Securities and Exchange Commission has announced it has charged CanaFarma Hemp Products Corp. and its co-founders with fraudulently raising approximately $15 million from investors, and misappropriating a significant portion of the investor funds for personal use and other unrelated purposes.

The SEC’s complaint alleges that in 2019 and 2020, CanaFarma, a Canadian startup hemp company with offices in Vancouver and New York City, and its co-founders Vitaly Fargesen and Igor Palatnik raised millions of dollars from investors. According to the complaint, while raising these funds, the defendants made misrepresentations to investors, including claims that CanaFarma was a fully integrated company that was processing hemp from its own farm when in fact it had not processed any of this hemp and its products used hemp supplied by third parties. The complaint also alleges that financial information provided to investors misstated historical revenue numbers and included baseless projections about future revenues. In addition, according to the complaint, Fargesen and Palatnik misappropriated at least $4 million and used the funds for their personal use and purposes unrelated to CanaFarma.

The SEC seeks permanent injunctions, disgorgement and prejudgment interest, and civil penalties against the defendants, and also seeks officer-and-director and penny stock bars against them.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Fargesen and Palatnik.

10/06/2021

Hsu on promoting diversity on bank boards

In remarks yesterday at the Women in Housing & Finance Public Policy Luncheon in Washington, D.C., Acting Comptroller of the Currency Michael J. Hsu discussed the importance of promoting diversity and inclusion in the financial services sector. "Without diverse leadership," said Hsu, "banks and their regulators may develop blind spots or suffer from groupthink. These blind spots can lead to the kinds of nasty surprises that threaten safety and soundness – and possibly the financial sector as a whole. There is a growing body of empirical evidence that companies that address these blind spots by having diverse boards of directors have stronger earnings, more effective corporate governance, better reputations, and less litigation risk.”

Hsu said the OCC is considering requiring banks “to either diversify their boards or explain why they have not.” He mentioned several models for implementing such requirements, including new Nasdaq rules, recently approved by the Securities and Exchange Commission, that require companies listed on the stock exchange to publicly disclose consistent transparent diversity statistics regarding their board composition; and diversity rules adopted by the California state legislature.

10/06/2021

Reserve Banks release CRA ratings

Our research of the Federal Reserve Board's archives of CRA evaluation ratings reveals that the Reserve Banks released 18 evaluation ratings in September. Fifteen of the institutions whose evaluations were made public last month received a "Satisfactory" rating. We congratulate three institutions whose evaluations were rated "Outstanding":

10/05/2021

Call Report for third quarter 2021

The Call Report forms for September 30, 2021, are available for printing and downloading from the FFIEC’s webpage for each version of the Call Report, which can be accessed from the FFIEC Reporting Forms webpage and the FDIC Bank Financial Reports webpage. Updates to the Call Report instruction books for September 2021 will be available soon on those webpages. In addition, institutions should refer to the Supplemental Instructions for guidance on certain reporting issues.

10/05/2021

EU - U.S Joint Financial Regulatory Forum statement

The European Union and U.S. participants in the EU - U.S. Joint Financial Regulatory Forum met virtually on September 29 and 30, 2021, to exchange views on topics of mutual interest as part of their ongoing financial regulatory dialogue. The Forum underscored EU and U.S. cooperation and focused on six themes: (1) market developments and current assessment of financial stability risks, (2) sustainable finance, (3) multilateral and bilateral engagement in banking and insurance, (4) regulatory and supervisory cooperation in capital markets, (5) financial innovation, and (6) anti-money laundering and countering the financing of terrorism (AML/CFT).

10/05/2021

Chopra confirmed as CFPB Director

In case you missed it, Rohit Chopra's nomination to serve as Director of the Consumer Financial Protection Bureau was confirmed Thursday, in a party-line vote of 50–48.

10/05/2021

FDIC posts CRA evaluation ratings

The FDIC has released its October 2021 list of banks examiners for CRA compliance whose evaluations have recently been made public. Of the 71 banks listed, 60 received ratings of "Satisfactory." Two banks received "Needs Improvement" ratings. We congratulate nine banks whose evaluations were rated "Outstanding":

10/05/2021

CFPB issues Debt Collection Rule FAQs

The CFPB has posted a new Compliance Aid—A series of 27 Frequently Asked Questions on the Debt Collection Rule (Regulation F, 12 CFR part 1006). The FAQs address five areas:

  • Limited-Content Messages (9)
  • Telephone Call Frequency (1)
  • Telephone Call Frequency: Presumptions (8)
  • Telephone Call Frequency: Excluded Calls (5)
  • Telephone Call Frequency: Rebutting the Presumptions (4)

    10/04/2021

    Canada makes AML/CFT progress

    The Financial Action Task Force (FATF) has issued a report that indicates Canada has taken a number of actions to strengthen its framework to combat money laundering and terrorist financing since the 2016 assessment of Canada’s AML/CFT measures.

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