Top Story Compliance Related

The Securities and Exchange Commission announced on Friday it has filed a complaint in the U.S. District Court for the Southern District of New York charging an investment adviser representative with stealing approximately $5 million from client accounts by initiating unauthorized wire transfers and issuing checks to third parties to cover personal expenses. The SEC alleges that Barry Connell, who worked in the New Jersey office of an unnamed major financial institution, conducted more than 100 unauthorized transactions by using falsified authorization forms misrepresenting that he received verbal requests from the clients.

The FDIC has released a list of 49 state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA) and the ratings they received. Five were rated Outstanding, 43 received a Satisfactory rating, and one was rated Needs to Improve.

Scenarios for 2017 Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Act stress test exercises have been released by the Federal Reserve Board, along with instructions to firms participating in CCAR. The OCC has released economic and financial market scenarios that will be used in the upcoming stress tests for covered institutions with more than $10 billion in assets. The supervisory scenarios include baseline, adverse, and severely adverse scenarios, as described in the OCC’s final rule that implement stress test requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (DFA). Additional information is found on the OCC stress test website.

OFAC has announced the imposition of sanctions against multiple entities and individuals involved in procuring technology and/or materials to support Iran’s ballistic missile program, as well as for acting for or on behalf of, or providing support to, Iran’s Islamic Revolutionary Guard Corps-Qods Force. For additional information see our OFAC update.

In an Executive Order issued on Friday, President Trump has declared seven "Core Principles" for regulation of the U.S. financial system: promoting independent consumer choices, preventing bailouts, fostering economic growth, promoting international competitiveness, advancing U.S. interests in international negotiations, tailoring regulations and ensuring regulatory accountability. The Order directs the Secretary of the Treasury to meet with the heads of the other members agencies of the Financial Stability Oversight Council to review how "existing laws, treaties, regulations, guidance, reporting and recordkeeping requirements, and other Government policies promote the Core Principles and what actions have been taken, and are currently being taken, to promote and support the Core Principles." An initial report to the president is due within 120 days.

Although the Dodd-Frank Act is not mentioned in the Order, it is generally seen as the most obvious target of the review. There is no clear vision of the outcome of the review, although several provisions of the Act, including the structure and funding of the CFPB, the Durbin Amendment (interchange fee limits on debit card transactions), and the Volcker Rule (restrictions on proprietary trading by banks) are seen as likely focuses of the ordered study.

President Trump issued an Executive Memorandum directing the Department of Labor to examine the Fiduciary Duty Rule to determine whether it may adversely affect the ability of Americans to gain access to retirement information and financial advice. He ordered an updated economic and legal analysis concerning the likely impact of the Fiduciary Duty Rule to consider, among other things :

• Whether the anticipated applicability of the Fiduciary Duty Rule has harmed or is likely to harm investors due to a reduction of Americans' access to certain retirement savings offerings, retirement product structures, retirement savings information, or related financial advice;
• Whether the anticipated applicability of the Fiduciary Duty Rule has resulted in dislocations or disruptions within the retirement services industry that may adversely affect investors or retirees; and
• Whether the Fiduciary Duty Rule is likely to cause an increase in litigation, and an increase in the prices that investors and retirees must pay to gain access to retirement services.

If the Department makes an affirmative determination of one or more of those considerations, it is directed to "publish for notice and comment a proposed rule rescinding or revising the Rule, as appropriate and as consistent with law." The rule is currently scheduled to take affect in April, but the acting Secretary of Labor said that the Department will consider its options to delay that date pending the required review.

The CFPB has posted version 4.0 of its Small Entity Compliance Guide for the Remittance Transfer Rule.

The NCUA has posted the video of the January 19, 2017, meeting of its board. At the January open meeting, the Board unanimously approved an advance notice of proposed rulemaking to solicit comments on alternative forms of capital that federally insured credit unions might use to meet capital standards required by statute and regulation. The Board also received a briefing from NCUA's Office of General Counsel on inflation adjustments to civil monetary penalties, which are required by federal law.

The OCC has released the ratings received by 20 national banks and federal savings associations recently evaluated for compliance with the provisions of the Community Reinvestment Act (CRA). Two institutions were rated outstanding and the other eighteen received a satisfactory rating.

The Conference of State Bank Supervisors has released an optional BSA/AML self-assessment tool that can be used by a financial institution to help in its risk assessment process. The tool is not a substitute for other parts of an institution's BSA/AML risk management program, but can be a supplement for such programs. The tool (available as a .ZIP file), instructions and a tutorial can be found on the CSBC Job Aids webpage. Before attempting to download the file, check with your IT security staff to determine whether .ZIP file downloads are permitted.