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10/02/2020

Ransomware advisories

The Treasury Department announced yesterday that its Office of Terrorism and Financial Intelligence today issued a pair of advisories to assist U.S. individuals and businesses in efforts to combat ransomware scams and attacks, which continue to increase in size and scope.

FinCEN issued an advisory [FIN-2020-A006], entitled "Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments," to provide information on the role of financial intermediaries in payments, ransomware trends and typologies, and related financial red flags. It also provides information on effectively reporting and sharing information related to ransomware attacks.

OFAC also issued an advisory, entitled "Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments," to highlight the sanctions risks associated with facilitating ransomware payments on behalf of victims targeted by malicious cyber-enabled activities.

10/01/2020

FinCEN seeks comments on CDD and EDD requirements

FinCEN published [85 FR 61104] in the September 29 Federal Register a 60-day notice to renew the Office of Management and Budget (OMB) control number assigned to the regulatory requirements to conduct due diligence and enhanced due diligence over foreign correspondent accounts and private banking accounts.

In the notice, FinCEN proposes for review and comment a methodology to expand the scope of future estimates of cost and time for purposes of the Paperwork Reduction Act to be more granular in the estimates of resources expended to comply with these regulatory requirements. The notice requests feedback from the industry on or before November 30, 2020.

10/01/2020

Fed extending capital resilience measures

The Federal Reserve Board announced yesterday it will extend for an additional quarter several measures to ensure that large banks maintain a high level of capital resilience in this period of continued economic uncertainty during the pandemic. For the fourth quarter of this year, large banks—those with more than $100 billion in total assets—will be prohibited from making share repurchases. Additionally, dividend payments will be capped and tied to a formula based on recent income.

10/01/2020

New and amended OFAC sanctions regulations

OFAC has posted a notice of recent actions announcing it is adding new Part 520 to 31 CFR Chapter V regulations [85 FR 61816] to implement Executive Order 13928 of June 11, 2020 (“Blocking Property of Certain Persons Associated With the International Criminal Court”).

In addition, OFAC is amending the Weapons of Mass Destruction Proliferators Sanctions Regulations and Iranian Transactions and Sanctions Regulations at 31 CFR Parts 544 and 560 [85 FR 61823].

The new regulation and the amendments to Parts 544 and 560 are effective upon publication today in the Federal Register,

10/01/2020

Treasury continues targeting facilitators of Assad regime

On Wednesday, Treasury announced that it took action against key enablers of the Assad regime that are associated with the Fourth Division of the Syrian Arab Army, the Syrian General Intelligence Directorate, and the Central Bank of Syria. Specifically, Treasury's Office of Foreign Assets Control (OFAC) added three individuals and 13 entities to the Specially Designated Nationals and Blocked Persons List, pursuant to Syria sanctions authorities.

At the same time, the State Department acted against three Syrian persons pursuant to Section 2 of Executive Order (E.O.) 13894, “Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria.”

For identity information on the six individuals and 13 entities added to the SDN List, and another individual added under the Cuba sanctions, plus information on a new Syria General License, see BankersOnline's OFAC Update.

09/30/2020

Blanco encourages specificity in COVID-19-related SARs

In remarks delivered yesterday during a virtual AML conference, FinCEN Director Kenneth Blanco encouraged attendees to read FinCEN's advisories related to COVID-10 medical fraud, imposter scams, and cyber-related crime. He said that the most common trend FinCEN is seeing in COVID-19 related SARs involves fraudsters targeting multiple COVID-19 related government stimulus programs, employing money mules and cyber techniques. The largest share of COVID-19 SARs addresses fraud against federal or state COVID-19 stimulus programs. Stimulus programs intended to benefit both individual taxpayers and small businesses have been targeted for fraud, with multiple Automated Clearinghouse (ACH) payments disbursed to a single account representing the most common financial pattern reported in SARs.

Blanco recommended that SARs be specific in describing the activity being reported, to make them as useful as possible for law enforcement. Detailed information can help get SARs routed to the correct investigative team. For example, reports of medical scams like fake test kits, non-delivery of goods, and price gouging go to a specialized team of attorneys and investigators across the government. Specificity in the SAR about the fraudulent or suspicious medical aspects, both in the narrative and by checking box 34z, will get a SAR to this team more quickly.

For consumer related fraud, especially targeting the elderly or other vulnerable individuals with a COVID-19 related scam, such as a fake COVID relief charity or bogus person-in-need scam, specificity in SARs is also encouraged. Using the SAR check box 38d for elder financial exploitation will expedite getting the SAR to the right team.

Regarding SARs reporting suspected fraud in government programs, Blanco said vague references to “stimulus” or “CARES Act” or “benefit” in SARs hinder FinCEN's ability to get the information into the hands of the right team. The more specific filers are in their SAR narratives, the faster their reports will get to the right investigators. For example:

  • If the suspicious activity is related to an ACH payment from a state unemployment insurance program, filers should clearly mention COVID19 UNEMPLOYMENT INSURANCE FRAUD in field 2 of the SAR (Filing Institution Note to FinCEN) as well as in the narrative. This will make it much easier for the SAR to get to law enforcement teams working with the states on unemployment fraud.
  • If the activity involves a counterfeit check or ACH payment for the EIDL program, filers should clearly mention COVID19 EIDL FUNDS FRAUD in field 2 of the SAR and state this in the narrative, because there are specific prosecutorial teams working on EIDL fraud.

Blanco said that, from February 1 to September 12, banks and credit unions filed over 64,000, or about 71 percent, of all COVID-19-related SARs.

09/30/2020

Regulators issue two final temporary rules

The Federal Reserve, OCC, and FDIC have announced they have finalized two rules, which are either identical or substantially similar to interim final rules currently in effect and issued earlier this year.

The final rule temporarily deferring appraisal and evaluation requirements is substantially similar to the interim final rule issued in April. It will allow individuals and businesses to more quickly access real estate equity to help address needs for liquidity as a result of the coronavirus. In response to comments, the final rule clarifies which loans are subject to the deferral. The final rule is effective upon publication in the Federal Register and will expire on December 31, 2020.
PUBLICATION UPDATE: Published October 16, 2020, at 85 FR 65666.

The final rule pertaining to Federal Reserve liquidity facilities adopts without change three interim final rules issued in March, April, and May, 2020. Earlier this year, the Federal Reserve launched several lending facilities to support the economy in light of the coronavirus response. The final rule neutralizes the regulatory capital and liquidity coverage ratio effects of participating in the Money Market Mutual Fund Liquidity Facility and Paycheck Protection Program Liquidity Facility because there is no credit or market risk in association with exposures pledged to these facilities. It will be effective 60 days after publication in the Federal Register.
PUBLICATION AND EFFECTIVE DATE UPDATE: Published on 10/28/2020, with effective date of 12/28/2020.

09/29/2020

FinCEN Aviso FIN-2020-A005

FinCEN has posted a Spanish language version of its July 30, 2020, FIN-2020-A005 Advisory on Cybercrime and Cyber-Enabled Crime Exploiting the COVID-19 Pandemic.

09/28/2020

OFAC issues General License and FAQs

09/28/2020

FDIC August enforcement actions

The FDIC has released a list of 13 orders of administrative enforcement actions taken against banks and individuals in August 2020. The administrative enforcement actions in those orders consisted of one cease and desist order, four consent orders of prohibition, and eight Section 19 orders.

CBW Bank, Weir, Kansas, was issued a consent cease and desist order related to findings that the bank's BSA/AML program was deficient. In the order, the bank was directed to cease all activity pertaining to foreign financial institution customers, including funds transfers, remote deposit capture, U.S. dollar repatriation, MSB remittances, ACH transfers, etc., until the FDIC determines the bank has taken sufficient corrective action and can be permitted to resume some or all of those activities.

The prohibition orders were issued to—

  • a former loan teller at Arrowhead Bank, Llano, Texas, for using fraudulent general ledger tickets to conceal unauthorized withdrawals from bank customers' accounts, using the funds for her personal benefit
  • the former president of PrimeSouth Bank (now CB&S Bank, Inc.), Tallassee, Alabama, for obtaining unauthorized advances from a loan to a bank customer and applying the proceeds to unrelated loans of other persons
  • the former CEO of Border State Bank (now Border Bank), Roseau, Minnesota, for arranging for bank customers to obtain loans from the bank and transfer the loan proceeds to himself in violation of Regulation O, and for issuing unauthorized letters of credit in furtherance of a personal investment
  • a former teller at BancorpSouth Bank, Tupelo, Mississippi, for embezzling funds from her teller drawer and the bank's vault for her personal use

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