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FDIC Financial Institution Letter FIL-15-2024, issued yesterday in coordination with today's FinCEN Federal Register request for information and comment, is an advisory to reemphasize the requirements under the Customer Identification Program (CIP) Rule as it relates to collecting identifying information from customers. The advisory reminds institutions of the information required to be collected from the customer prior to account opening. The CIP rule has been in effect for more than 20 years (since October 1, 2003).

• The CIP Rule requires a bank to implement a program that includes risk-based verification procedures that enable the bank to form a reasonable belief that it knows the true identity of its customers. These requirements exist regardless of whether the bank establishes this relationship directly with the customer or through an intermediary.
• These procedures must include collecting, at a minimum, the customer’s name, date of birth (for an individual), address, and identification number.
• A bank is required to collect the taxpayer identification number (TIN) from a customer that is a U.S. person prior to account opening or another approved identification from a non-U.S. person. This applies to all accounts with the exception of credit card accounts.

FinCEN has published [89 FR 22231] in this morning's Federal Register a notice and request for information and comment regarding the Customer Identification Program (CIP) Rule requirement for banks to collect a taxpayer identification number (TIN), among other information, from a customer who is a U.S. person, prior to opening an account (the “TIN collection requirement”).

Generally, for a customer who is an individual and a U.S. person (“U.S. individual”), the TIN is a Social Security number (SSN). FinCEN specifically seeks information to understand the potential risks and benefits, as well as safeguards that could be established, if banks were permitted to collect partial SSN information directly from the customer for U.S. individuals and subsequently use reputable third-party sources to obtain the full SSN prior to account opening. FinCEN seeks this information to evaluate and enhance its understanding of current industry practices and perspectives related to the CIP Rule's TIN collection requirement, and to assess the potential risks and benefits associated with a change to that requirement.

The notice also serves as a reminder from FinCEN, and staff at the Agencies, that banks must continue to comply with the current CIP Rule requirement to collect a full SSN for U.S. individuals from the customer prior to opening an account (“SSN collection requirement”).

Comments will be accepted for 60 days, through May 28, 2024.

The CFPB yesterday announced it has issued a new circular warning remittance transfer providers that false advertising about the cost or speed of sending a remittance transfer can violate federal law. The Bureau said that companies in the marketplace are charging junk fees on international money transfers and making false claims about the speed of transfers. The circular highlights several marketing practices relating to sending international money transfers that may violate the Consumer Financial Protection Act’s (CFPA) prohibition on deceptive acts or practices. This prohibition is enforced by the CFPB, states, and other regulators. Guidance in the circular applies both to traditional providers of international money transfers and to “digital wallets” that offer the capability to send money internationally from the United States.

Specifically, today’s circular addresses the following practices by remittance providers, including digital wallet providers that offer remittance services, that consumers have complained to the CFPB about and that the CFPB has observed in its market monitoring:

• Falsely marketing “no fee” or “free” services
• Burying promotional conditions in fine print
• Deceptively advertising how long transfers will take

The OCC has reported cumulative trading revenue of U.S. commercial banks and savings associations of $11.6 billion in the fourth quarter of 2023. The fourth quarter trading revenue was $1.6 billion, or 11.8 percent, less than in the previous quarter and $2 billion, or 20.4 percent, more than a year earlier.

According to the Quarterly Report on Bank Trading and Derivatives Activities—

• a total of 1,185 insured U.S. national and state commercial banks and savings associations held derivatives
• four large banks held 87.4 percent of the total banking industry notional amount of derivatives
• credit exposure from derivatives decreased in the fourth quarter of 2023 compared with the third quarter of 2023. Net current credit exposure decreased $68.0 billion, or 22.0 percent, to $240.0 billion
• derivative notional amounts decreased in the fourth quarter of 2023 by $11.7 trillion, or 5.7 percent, to $192.5 trillion
• derivative contracts remained concentrated in interest rate products, which totaled $136.3 trillion or 40.8 percent of total derivative notional amounts

Yesterday, the Treasury Department announced that OFAC, in coordination with the Republic of Korea (ROK), has sanctioned six individuals and two entities based in Russia, China, and the United Arab Emirates that generate revenue and facilitate financial transactions for the Democratic People’s Republic of Korea (DPRK). Funds generated through these actors are ultimately funneled to support the DPRK’s weapons of mass destruction (WMD) programs.

The Department also reported OFAC has designated two individuals and three entities as key financial facilitators involved in fundraising for Hamas.

For the names and identification information of the designated parties, see ourMarch 27, 2024, BankersOnline OFAC Update.

Yesterday, the FDIC issued Financial Institution Letters FIL-13-2024 and FIL-14-2024 to provide guidance the help financial institutions and facilitate recovering in areas of Maine and Rhode Island, respectively, affected by severe storms and flooding December 17–19, 2023 (Rhode Island) and January 9–13, 2024 (Maine and Rhode Island).

The Treasury Department has reported that the Financial Action Task Force—the global standard-setting body for anti-money laundering, countering the financing of terrorism, and countering proliferation financing (AML/CFT/CPF)—announced that the United States has been upgraded to “largely compliant” with FATF Recommendation 24, which relates to beneficial ownership transparency for legal persons.

The FATF published the updated rating in the Seventh Enhanced Follow-Up Report of the United States, recognizing Treasury’s historic efforts to increase beneficial ownership transparency and address key vulnerabilities in the U.S. AML/CFT framework.

Yesterday, the Treasury Department reported that OFAC had sanctioned six entities, one individual and two tankers that are based or registered in Liberia, India, Vietnam, Lebanon, and Kuwait that have engaged in facilitating commodity shipments and financial transactions for the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), the Houthis, and Hizballah.

Treasury also reported that OFAC had sanctioned 11 individuals and entities supporting the regime of Syrian President Bashar Al-Assad through the facilitation of illicit financial transfers and trafficking of illegal drugs, as well as the extraction and export of Syrian commodities.

For the names and identification information of the designated individuals, entities, and vessels, see our March 26, 2024, BankersOnline OFAC Update.

Yesterday, the Treasury Department reported that OFAC had sanctioned thirteen entities and two individuals for operating in the financial services and technology sectors of the Russian Federation economy including persons developing or offering services in virtual assets that enable the evasion of U.S. sanctions. Five entities were designated for being owned or controlled by OFAC-designated persons.

Treasury also reported that OFAC had sanctioned Wuhan Xiaoruizhi Science and Technology Company, Limited (Wuhan XRZ), a Wuhan, China-based Ministry of State Security (MSS) front company that has served as cover for multiple malicious cyber operations. OFAC also designated Zhao Guangzong and Ni Gaobin, two Chinese nationals affiliated with Wuhan XRZ, for their roles in malicious cyber operations targeting U.S. entities that operate within U.S. critical infrastructure sectors, directly endangering U.S. national security.

For the names and identification information of all the designated parties, see the March 25, 2024, BankersOnline OFAC Update.

FFIEC announcement 2024-02, issued on Friday, reports that the FFIEC's member agencies are making several changes to the Uniform Bank Performance Report on or shortly after March 25, 2024. These changes are necessitated by the current expected credit losses methodology (CECL) nomenclature changes to the March 2024 Consolidated Reports of Condition and Income (Call Reports). Changes are also being made in response to the Accounting Standards Update 2022–02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.”