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05/18/2021

FDIC seeks info on digital assets activities

The FDIC has issued a Request for Information and comments regarding insured depository institutions’ current and potential digital assets activities. In FIL-35-2021, the agency reported that—

  • Banks are increasingly exploring several roles in the emerging digital asset ecosystem, and consumers are beginning to seek access to digital assets products and services, such as being custodians, reserve holders, issuers, and exchange or redemption agents; performing node functions; and holding digital asset issuers’ money deposits.
  • The FDIC recognizes there are novel and unique considerations related to digital assets. This Request for Information is intended to help inform the FDIC’s understanding and any potential policymaking in this area.
  • Part 362 of the FDIC’s Rules and Regulations may apply to certain digital asset activities or investments. FDIC-supervised institutions are encouraged to engage in discussions with FDIC supervisors, as appropriate, before engaging in such activities or investments.
  • Comments will be accepted through July 16, 2021.

05/18/2021

Agencies extend comment period for info gathering on uses of AI

The Fed, CFPB, FDIC, NCUA, and OCC have announced they are extending the comment period on their request for information on financial institutions' use of artificial intelligence (AI) until July 1, 2021.

The agencies are seeking information from the public on how financial institutions use AI in their activities, including fraud prevention, personalization of customer services, credit underwriting, and other operations. More specifically, the RFI seeks comments to better understand the use of AI, including machine learning, by financial institutions; appropriate governance, risk management, and controls over AI; and challenges in developing, adopting, and managing AI.

05/18/2021

OFAC targets ISIS facilitators and Burmese military officials

The Treasury Department has announced that OFAC has designated three individuals — Alaa Khanfurah, Idris Ali Awad al-Fay, and Ibrahim Ali Awad al-Fay — and one entity — Al-Fay Company — in connection with the Islamic State of Iraq and Syria (ISIS). The individuals and company played a crucial role connecting ISIS with a network of international donors and enabled ISIS to access the financial system in the Middle East. This action coincides with the fourteenth meeting of the Counter ISIS Finance Group (CIFG), which includes nearly 70 countries and international organizations, and plays a fundamental role in coordinating efforts to deny ISIS access to the international financial system and eliminate its sources of revenue.

Treasury also reported that OFAC sanctioned designated 16 individuals and one entity connected to Burma’s military regime. Thirteen of the individuals are key members of Burma’s military regime. The other three individuals are adult children of previously designated senior Burmese military officials. The entity is the State Administration Council (SAC), the body created by the military to support its unlawful overthrow of the democratically elected civilian government. These designations were made under the authority of Executive Order 14014, “Blocking Property with Respect to the Situation in Burma.” These sanctions are not directed at the people of Burma. In concurrent actions, the U.K. and Canada also sanctioned persons and/or entities in relation to the on-going coup in Burma.

Identification information on the individuals and entities added to OFAC's SDN List in these two actions can be found in this BankersOnline OFAC Update.

05/17/2021

FTC questions 7-Eleven/Speedway merger

The Federal Trade Commission has issued a statement in response to the announcement by 7-Eleven’s parent company that it had pressed forward in its merger agreement with Marathon Petroleum Corporation during the agency’s ongoing investigation:

“Today, Seven & i Holdings, the Tokyo-based owner of 7-Eleven, announced that it closed a $21 billion transaction with Marathon Petroleum Corporation, purchasing roughly 3,900 Speedway retail gasoline and convenience store businesses from Marathon.

"We have reason to believe that this transaction is illegal under Section 7 of the Clayton Act and Section 5 of the Federal Trade Commission Act, raising significant competitive concerns in hundreds of local retail gasoline and diesel fuel markets across the country. In many local markets, the transaction is either a merger-to-monopoly or reduces the number of competitors from three to two. With the support of a majority of Commissioners, the Commission can and routinely does challenge these harmful mergers.

"The Commission has spent significant resources investigating this transaction but has not yet come to an agreement with the parties and a majority of the Commission that would fully resolve the competitive concerns. Seven and Marathon’s decision to close under these circumstances is highly unusual, and we are extremely troubled by it.

"The parties have closed their transaction at their own risk. The Commission will continue to investigate to determine an appropriate path forward to address the anticompetitive harm and will also continue to work with State Attorneys General.”

[Editor's note: We have published the FTC statement because the transaction in question may affect deposit account and other bank relationships.]

05/17/2021

Tennessee storm relief guidance

The FDIC has announced steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Tennessee (Davidson, Williamson, and Wilson Counties) affected by severe storms, tornadoes, and flooding.

05/17/2021

Narcotics Trafficking and Kingpin Sanctions Regs amended

OFAC has announced it is amending the Narcotics Trafficking Sanctions Regulations and the Foreign Narcotics Kingpin Sanctions Regulations to add or amend general licenses with respect to payments for legal services, certain transactions for personal maintenance, certain transactions for maintenance of blocked tangible property, and emergency medical services, among other things.

The amendments were published in a final rule at 86 FR 26661 in this morning's Federal Register, and became effective today.

05/13/2021

Broker-dealer charged with failure to file SARs

The SEC has settled charges against GWFS Equities Inc., a Colorado-based registered broker-dealer and affiliate of Great-West Life & Annuity Insurance Company, for violating the federal securities laws governing the filing of suspicious activity reports. GWFS provides services to employer-sponsored retirement plans.

According to the order filed by the SEC, from September 2015 through October 2018, GWFS was aware of increasing attempts by external bad actors to gain access to the retirement accounts of individual plan participants. The order further finds that GWFS was aware that the bad actors attempted or gained access by, among other things, using improperly obtained personal identifying information of the plan participants, and that the bad actors frequently were in possession of electronic login information such as user names, email addresses, and passwords.

The order stated that GWFS failed to file approximately 130 SARs, including in cases when it had detected external bad actors gaining, or attempting to gain, access to the retirement accounts of participants in the employer-sponsored retirement plans it serviced. Further, for nearly 300 SARs that GWFS did file, the order finds that GWFS did not include the “five essential elements” of information it knew and was required to report about the suspicious activity and suspicious actors, including cyber-related data such as URL addresses and IP addresses.

Without admitting or denying the SEC’s findings, GWFS agreed to a settlement that imposes a $1.5 million penalty, a censure, and an order to cease and desist from future violations.

05/13/2021

Ninth batch of EIP3 payments disbursed

Yesterday, the IRS announced it had disbursed nearly one million payments in the ninth batch of Economic Impact Payments from the American Rescue Plan. That brings the total disbursed so far to approximately 165 million payments, with a total value of approximately $388 billion, since these payments began rolling out to Americans in batches in March.

The ninth batch began processing May 7, with an official payment date of May 12. It included more than 960,000 payments totaling more than $1.8 billion. Nearly 500,000 of the payments were made as direct deposits totaling $946 million.

05/13/2021

Treasury identifies Sinaloa-based drug trafficker and network

The Treasury Department announced on Wednesday that OFAC has identified Jesus González Peñuelas and the González Peñuelas Drug Trafficking Organization as Significant Foreign Narcotics Traffickers in accordance with the Foreign Narcotics Kingpin Designation Act. OFAC also designated today six individuals and one entity as Specially Designated Narcotics Traffickers pursuant to the Kingpin Act for their links to the González Peñuelas DTO.

As a result of yesterday’s OFAC action, all property and interests in property of the identified or designated persons 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.

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 under Title 18 of the United States Code for criminal violations of the Kingpin Act.

For identification information on the individuals and entities designated by OFAC in this action, see this BankersOnline OFAC Update.

05/12/2021

FDIC's 2021 risk review of banking system

The FDIC has published its 2021 Risk Review, a comprehensive summary of emerging risks in the U.S. banking system. The FDIC began reporting key banking sector risks in its Risk Review publication in 2019, and this year’s report expands coverage of key risks during a time of heightened uncertainty.

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