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The U.S. Department of the Treasury yesterday announced that OFAC has a procurement network responsible for facilitating the illegal export of goods and technology from over two dozen U.S. companies to end-users in Iran, including the Central Bank of Iran (CBI), which is designated for its role in providing financial support to the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and Hizballah. These designations target three individuals and four entities tied to the procurement of sophisticated U.S. technology for use by CBI in violation of U.S. export restrictions and sanctions.

Among the goods and technology acquired by CBI were items classified as information security items subject to national security and anti-terrorism controls by the U.S. Department of Commerce’s Bureau of Industry and Security.

For the names and identification information of the designated entities and individuals, see BankersOnline's February 14, 2024, OFAC Update.

Yesterday, FinCEN issued a Financial Trend Analysis (FTA) reflecting an increase in Bank Secrecy Act (BSA) reporting associated with the use of convertible virtual currency (CVC) and online child sexual exploitation (OCSE) and human trafficking. This FTA is based on BSA reporting filed between January 2020 and December 2021.

The analysis detailed in this FTA furthers Treasury efforts to combat human trafficking as well as the illicit uses of CVC. For example, Brian Nelson, Treasury’s Under Secretary for Terrorism and Financial Intelligence, announced at the President’s Interagency Task Force to Monitor and Combat Trafficking that FinCEN has joined the Canadian financial intelligence unit’s Project Protect—a flagship public-private partnership on human trafficking. In addition, in June 2021, FinCEN identified human trafficking and cybercrime as among the “Anti-Money Laundering and Countering the Financing of Terrorism National Priorities” issued pursuant to the Anti-Money Laundering Act of 2020.

More recently, in October 2023, FinCEN issued a finding pursuant to Section 311 of the USA PATRIOT Act that CVC mixing is a class of transactions of primary money laundering concern and proposed reporting requirements to increase transparency in connection with CVC mixing.

FinCEN’s analysis highlights the value of BSA reporting filed by regulated financial institutions.

• FinCEN press release

FinCEN has issued a Notice of Proposed Rulemaking to be published in the February 15, 2024, Federal Register that would require certain investment advisers to apply Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) requirements pursuant to the Bank Secrecy Act (BSA), including implementing risk-based AML/CFT programs, reporting suspicious activity to FinCEN, and fulfilling recordkeeping requirements.

The proposed rule would add investment advisers to the list of businesses classified as “financial institutions” under the BSA. Investment advisers registered with the Securities and Exchange Commission (SEC), as well as those that report to the SEC as exempt reporting advisers, would be required to implement AML/CFT programs. They would also be required to file suspicious activity reports, fulfill certain recordkeeping requirements, and fulfill other obligations applicable to financial institutions subject to the BSA and FinCEN’s implementing regulations.

The proposed rule would also apply information-sharing provisions between and among FinCEN, law enforcement government agencies, and certain financial institutions, along with special measures that have been applied under Section 311 of the USA PATRIOT Act. Finally, FinCEN is proposing to delegate examination authority for this rule to the SEC given the SEC’s expertise in the regulation of investment advisers and experience in examining other financial institutions with respect to AML/CFT responsibilities.

Treasury today also published its risk assessment of this sector, which identifies illicit finance threats and vulnerabilities in the sector, including how the uneven application of AML/CFT requirements across the sector allows both legitimate and illicit investors to “shop around” for an adviser who does not need to inquire into their source of wealth.

Comments on the proposal are due by April 15, 2025.

• FinCEN press release
• Fact Sheet on the proposed rule

The FDIC has issued FIL-6-2024 with guidance to help financial institutions and facilitate recovery in areas of Michigan affected by severe storms, tornadoes, and flooding August 24–26, 2023.

Yesterday, the Treasury Department announced that OFAC has taken its second Russian oil price cap enforcement action of 2024, imposing sanctions on four entities and identifying one vessel as blocked property. The network of these entities and the vessel were involved in a price cap violation scheme in late 2023.

OFAC also issued two new determinations that implement G7 commitments to ban the importation of Russian diamonds. First, OFAC issued a determination prohibiting the importation of on non-industrial diamonds mined or extracted in Russia, notwithstanding whether they have been substantially transformed in a third country, effective beginning on March 1, 2024 for certain categories of diamonds, and expanding on September 1, 2024 to include additional categories. Second, OFAC issued a determination prohibiting the importation of diamond jewelry and unsorted diamonds of Russian Federation origin or exported from the Russian Federation, effective March 1, 2024.

For identification information on the designated entities and vessel and links to the Determinations and a related General License, see BankersOnline's February 8, 2024, OFAC Update.

In prepared remarks at the Brookings Institution on Tuesday, NCUA Chairman Todd M. Harper reported that the NCUA intends to review several aspects of compliance with consumer protection laws and regulations. He said, " Overdraft and non-sufficient fund fees are a key component of the NCUA’s review. NCUA examiners this year will continue an expanded review of credit union overdraft programs, including website advertising, balance calculation methods, and settlement processes. Problematic overdraft programs and non-sufficient funds alerts include fees that aren’t reasonable and proportional, rely on systems that authorize positive and settle negative, or impose multiple representment fees, often in one day."

Chairman Harper added, "NCUA’s fair lending examinations will also increase in number and focus on ensuring policies and practices are fair and not discriminatory. And examiners will continue to evaluate credit unions’ policies and procedures governing compliance with flood insurance rules. The NCUA's other areas of emphasis for 2024 include Bank Secrecy Act compliance and support for small credit unions and minority depository institutions."

The Treasury Department has reported that OFAC has sanctioned one of Ecuador’s most violent gangs, Los Choneros, and its leader, José Adolfo Macías Villamar (a/k/a “Fito”), pursuant to counter narcotics authorities.

For identification information on Los Choneros and Macías Villamar, see BankersOnline's February 7, 2024, OFAC Update.

The FDIC has published [89 FR 8427] a notice that it has fulfilled its obligations and made all dividend distributions required by law for the receiverships of the following nine closed banks, effective February 1, 2024:

• Silver State Bank, Henderson, Nevada
• Ocala National Bank, Ocala, Florida
• Integrity Bank, Jupiter, Florida
• First Chicago Bank & Trust, Chicago, Illinois
• Bank of Whitman, Colfax, Washington
• Premier Bank, Wilmette, Illinois
• Heritage Bank of Florida, Lutz, Florida
• Banks of Wisconsin, Kenosha, Wisconsin
• Sunrise Bank, Valdosta, Georgia

Yesterday, the FDIC issued FIL-4-2024 to announce regulatory relief and facilitate recovery in areas of West Virginia affected by severe storms, flooding, landslides, and mudslides from August 28 to August 30, 2023; and FIL-5-2024 to announce regulatory relief and facilitate recovery in areas of Maine affected by severe storms and flooding from December 17 to December 21, 2023.

FinCEN has published [89 FR 7767] a notice and request for comments on its proposal to renew without changes, its existing information collection requirements relating to Currency Transaction Reports (CTRs). Comments will be accepted though April 5, 2024.