Top Story Compliance Related

Treasury's Office of Foreign Assets Control has designated Hizballah financier Mohammad Ibrahim Bazzi and Hizballah’s representative to Iran Abdallah Safi-Al-Din as Specially Designated Global Terrorists (SDGTs) pursuant to Executive Order 13224, which targets terrorists and those providing support to terrorists or acts of terrorism. Also designated on Thursday as SDGTs are five companies located in Europe, West Africa, and the Middle East for being owned or controlled by Mohammad Bazzi and another SDGT. For identity information on the individuals and companies targeted by OFAC's actions, see our OFAC Update.

The Bureau has posted an article announcing the availability of a new list that identifies more ways to access credit scores for free.

The SEC has announced the settlement of charges against broker-dealers Chardan Capital Markets LLC and Industrial and Commercial Bank of China Financial Services LLC (ICBCFS) for failing to report suspicious sales of billions of penny stock shares. Broker-dealers are required to file Suspicious Activity Reports (SARs) for transactions suspected to involve fraud or with no apparent lawful purpose. According to the SEC, from October 2013 to June 2014, Chardan, an introducing broker, liquidated more than 12.5 billion penny stock shares for seven of its customers and ICBCFS cleared the transactions. Chardan failed to file any SARs even though the transactions raised red flags, including similar trading patterns and sales in issuers who lacked revenues and products. The SEC found that ICBCFS similarly failed to file any SARs for the transactions despite ultimately prohibiting trading in penny stocks by some of the seven customers.

Yesterday, in partnership with Saudi Arabia and the other member nations of the Terrorist Financing and Targeting Center, OFAC designated members of Hizballah’s Shura Council, the primary decision-making body of Hizballah. For details on the designees, see our OFAC Update.

On Wednesday, five days after the effective date of its Beneficial Ownership Requirements rule, FinCEN issued Administrative Ruling 2018-R002, granting a 90-day limited exceptive relief to covered financial institutions with respect to certificates of deposit and loan accounts that automatically roll over or renew that were established before May 11, 2018. The 90-day relief period started on May 11 and will end on August 9, 2018. The ruling says that, during this time, "FinCEN will determine whether and to what extent additional exceptive relief may be appropriate for such financial products and services that were established before May 11, 2018, but are expected to rollover [sic.] or renew after such date."

Editor's Note: The "exceptive relief" provided by FIN-2018-R002 extends only to certificates of deposit and loans that automatically rollover or renew. Loan renewals that are not automatic are not covered, and currently are subject to Beneficial Ownership requirements. They are covered, however, by Question 12 in FinCEN's April 3, 2018, Guidance FAQs (FIN-2018-G001).

The Bureau has updated its two versions of the Small Entity Compliance Guides (versions 4.1 and 5.2) and Guides to Forms (versions 1.5 and 2.1) to incorporate the changes made by the 2018 TRID rule (which becomes effective June 1, 2018). Due to the 2017 TRID Rule’s optional compliance period, which ends October 1, 2018, the Bureau has kept an old version and new version of each guide to provide implementation support during the optional compliance period. However, it has updated all versions for the 2018 TRID Rule, which will apply whether or not a creditor is choosing to comply early with the 2017 Rule. All four updated guides are available on the Bureau's TRID Rule Implementation page.

Treasury has announced that OFAC has imposed sanctions on the Governor and a senior official of the Central Bank of Iran, an Iraq-based bank and its chairman, and a key Hizballah official, all of whom have moved millions of dollars on behalf of the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) to Hizballah. They were designated as Specially Designated Global Terrorists (SDGTs) pursuant to Executive Order 13224, which targets terrorists and those providing support to terrorists or acts of terrorism.

For identification information on the Iraq-based bank and the four individuals sanctioned by OFAC's action, see our OFAC Update.

The Bureau has announced an opportunity to sign up for an email course to help consumers meet their financial goals. The "Get a Handle on Debt Boot Camp," a 21-day email course, will start in June.

On Friday, the FFIEC issued new examination procedures on the “Customer Due Diligence Requirements for Financial Institutions” rule finalized by FinCEN on May 11, 2016. The new examination procedures replace those in the current “Customer Due Diligence — Overview and Examination Procedures” section of the FFIEC’s Bank Secrecy Act/Anti-Money Laundering Examination Manual. In addition, a new overview and examination procedures were developed for the beneficial ownership requirements for legal entity customers. The revised procedures were issued on May 11, 2018, the day the rule became effective.

• Customer Due Diligence - Overview and Examination Procedures (PDF)
• Beneficial Ownership for Legal Entity Customers - Overview and Examination Procedures (PDF)

FinCEN has issued an Administrative Ruling (FIN-2018-R001) to provide exceptive relief to covered financial institutions with respect to the application of the Beneficial Ownership Requirements for Legal Entity Customers to premium finance lending products that allow for cash refunds. The regulation provides an exemption in § 1010.230(h)(1)(iii) for accounts of premium finance lenders to be used to "finance insurance premiums and for which payments are remitted directly by the financial institution to the insurance provider or broker," unless there is the possibility of cash refunds. FinCEN's ruling, issued Friday, allows a financial institution to open a new account for a premium finance lender when there is possibility of a cash refund.