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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.

The Treasury Department on Friday announced sanctions against a transnational procurement network supporting Iran's ballistic missile and unmanned aerial vehicle (UAV) programs.

In a separate release, Treasury announced sanctions against actors responsible for malicious cyber activities on critical infrastructure in the U.S. and other countries.

For the names and identification information of the designated individuals and entities, see BankersOnline's February 2, 2024, OFAC Update.

The FDIC has issued FIN-3-2024 announcing a recent joint notice and request for comment by the FDIC, OCC, and Federal Reserve Board on a proposal to revise certain FFIEC reports, including the Call Report, consistent with proposed changes to the agencies’ regulatory capital rule published by the agencies in the Federal Register on September 18, 2023 (proposed capital rule). The comment period for the proposed capital rule ended on January 16, 2024. The agencies are proposing substantive changes for banks currently filing the FFIEC 031 or banks that would be subject to the expanded risk-based approach under the proposed capital rule, and only making technical revisions to the FFIEC 041 and FFIEC 051.

The proposal would—

• Revise the FFIEC 041 and FFIEC 051, Schedule RC-R, Part I, to remove items that are no longer relevant and make other technical edits;
• Revise the FFIEC 031 instructions to require all banks subject to the expanded risk–based approach under the proposed capital rule to file the FFIEC 031; and
• Revise the FFIEC 031, Schedule RC–R, Part I, Regulatory Capital Components and Ratios, to align the calculation of regulatory capital for institutions subject to Category III or Category IV standards with the calculation used for institutions subject to Category I and Category II standards.

The agencies propose to make these reporting changes effective for the third quarter of 2025 (as of the September 30, 2025, report date), consistent with the proposed July 1, 2025, effective date for the proposed capital rule. For modifications made to the proposed capital rule when the rule is adopted in final form, the agencies would modify the Call Report proposal to incorporate such changes.

Comments will be accepted through March 26, 2024.