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Top Story Security Related

10/23/2023

FinCEN Alert to counter financing to Hamas and its terrorist activities

On Friday, FinCEN issued FinCEN Alert FIN-2023-Alert006 to assist financial institutions in identifying funding streams supporting the terrorist organization Hamas. FinCEN is urging financial institutions to be vigilant in identifying suspicious activity relating to financing Hamas and reporting such activity to FinCEN.

Hamas raises funds to support its operations and members in a variety of ways, including through:

  • support from Iran
  • private donations
  • a global portfolio of investments
  • diverting aid and support from legitimate charities
  • the control of border crossings and avenues of commerce
  • racketeering business frameworks
  • extortionary practices around local populations
  • fundraising campaigns involving virtual currency and fictitious charities raising both fiat and virtual currency

Hamas moves funds through the smuggling of physical currency as well as a regional network of complicit money transmitters, exchange houses, and Hizballah-affiliated banks. FinCEN also reminds financial institutions that Hamas and many entities and individuals associated with Hamas are subject to extensive sanctions by the United States.

The Alert includes a list of seven "red flag" indicators to help detect, prevent, and report potential suspicious activity related the Hamas's terrorist financing activity.

FinCEN requests that financial institutions reference the alert by including the key term “FIN-2023-TFHAMAS” in SAR field 2 (Filing Institution Note to FinCEN) and the narrative to indicate a connection between the suspicious activity being reported and the alert.

10/20/2023

CFPB proposes rule to facilitate open banking

Yesterday, the CFPB announced a proposed rule that would accelerate a shift toward open banking, where consumers would have control over data about their financial lives and would gain new protections against companies misusing their data. The proposed Personal Financial Data Rights rule activates a dormant provision of law [section 1033 of the Consumer Financial Protection Act of 2010] enacted by Congress more than a decade ago. It would jumpstart competition by forbidding financial institutions from hoarding a person’s data and by requiring companies to share data at the person’s direction with other companies offering better products.

The proposed rule would establish 12 CFR part 1033, allow people to “break up with” banks that provide bad service, and forbid companies that receive data from misusing or wrongfully monetizing the sensitive personal financial data.

Comments on the proposed rule will be accepted through December 29, 2023.
UPDATE:

10/20/2023

FinCEN proposes new rule for transparency in CVC mixing

Yesterday, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced a Notice of Proposed Rule Making (NPRM) that would identify international Convertible Virtual Currency Mixing (CVC mixing) as a class of transactions of primary money laundering concern. This NPRM highlights the risks posed by the extensive use of CVC mixing services by a variety of illicit actors throughout the world and proposes a rule to increase transparency around CVC mixing to combat its use by malicious actors including Hamas, Palestinian Islamic Jihad, and the Democratic People’s Republic of Korea (DPRK).

Comments on the proposal will be accepted for 90 days following publication in the Federal Register.

Publication and comment deadline update: Published at 88 FR 72701 on 10/23/2023, with comments due by 1/22/2024.

10/20/2023

OCC bans two former bankers for theft from customers

The OCC has released enforcement actions against individuals currently and formerly affiliated with national banks and federal savings associations. The announcement states that the agency has begun to indicate when an individual's misconduct specifically involves elderly customers. The actions released yesterday include:

  • An Order of Prohibition against John S. Werner, former universal banker, North American Savings Bank, FSB, Grandview, Missouri, for using his position at the bank to embezzle funds from a customer’s account for his personal benefit, without the bank customer’s knowledge or authorization, which also resulted in a loss to the bank.
  • An Order of Prohibition against Robyn LaPenta, former branch manager, Evans Bank, N.A., Angola, New York, for abusing her position at the bank to initiate fraudulent cash transactions from the accounts of six elderly bank customers for her personal benefit, which also resulted in a loss to the bank.

Orders of Prohibition prohibit an institution affiliated person from any participation, in any manner, in the conduct of the affairs of any insured depository institution.

10/20/2023

Fed and NY fine New York bank $29.5M for CIP and 3rd-party risk management failures

The Federal Reserve Board has announced it has issued an enforcement action and fined Metropolitan Commercial Bank, of New York, New York, approximately $14.5 million for violations of customer identification rules and for deficient third-party risk management practices relating to the bank's issuance of prepaid card accounts.

In 2020, Metropolitan opened prepaid card accounts for illicit actors who subsequently used the accounts to collect illegally-obtained state unemployment insurance benefits. By opening prepaid card accounts through a third-party program manager without having adequate procedures for verifying each applicant's true identity, Metropolitan violated customer identification rules of the Bank Secrecy Act. The Board is requiring Metropolitan to improve its customer identification, customer due diligence, and third-party risk management programs.

The Board's action is being taken in conjunction with an action by the New York Department of Financial Services (NYDFS), the state supervisor of Metropolitan. The penalties announced by the Board and the NYDFS total approximately $29.5 million.

For further details on the Federal Reserve Board and NYDFS action, see Metropolitan Commercial Bank fined $29.5M for CIP and vendor risk deficiencies in the BankersOnline penalty pages.

    10/19/2023

    Treasury issues new Venezuela General Licenses

    The Treasury Department announced yesterday that, in response to the signing of an electoral roadmap agreement between Venezuela’s Unitary Platform and representatives of Maduro, and in support of the Venezuelan people, OFAC has issued four General Licenses suspending select sanctions.

    OFAC yesterday—

    • Issued a six-month general license temporarily authorizing transactions involving the oil and gas sector in Venezuela. The license will be renewed only if Venezuela meets its commitments under the electoral roadmap as well as other commitments with respect to those who are wrongfully detained.
    • Issued a second general license authorizing dealings with Minerven – the Venezuelan state-owned gold mining company – which Treasury assesses would have the effect of reducing black-market trading in gold.
    • Amended two relevant licenses to remove the secondary trading ban on certain Venezuelan sovereign bonds and PdVSA debt and equity. The ban on trading in the primary Venezuelan bond market remains in place. Treasury assesses that this, too, would have the positive effect of displacing nefarious players in this market, and with negligible financial benefit to the Venezuelan regime.
    • Provided several related FAQs.

    For links to the new and related amended General Licenses and FAQs and a document with FAQs concerning yesterday's Venezuela-related actions, see this BankersOnline OFAC Update.

    10/19/2023

    Actors supporting Iran's missile and UAV programs sanctioned

    Treasury has also announced that OFAC yesterday sanctioned 11 individuals, eight entities, and one vessel based in Iran, Hong Kong, the People’s Republic of China, and Venezuela that are enabling Iran’s destabilizing ballistic missile and unmanned aerial vehicle (UAV) programs.

    OFAC took this action jointly with the Department of State, which is designating eight individuals and entities related to Iran’s missile, conventional arms, and UAV activities.

    Additionally, in coordination with the U.S. Departments of State, Commerce, and Justice, Treasury issued new public guidance to private industry regarding Iranian missile procurement and related U.S. sanctions and export restrictions.

    For the names and identification information of the designated parties and a link to the public guidance on Iranian missile procurement, see this BankersOnline OFAC Update.

    10/19/2023

    Hamas operatives and financial facilitators sanctioned

    Yesterday, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on ten key Hamas terrorist group members, operatives, and financial facilitators in Gaza and elsewhere including Sudan, Türkiye, Algeria, and Qatar. This action targets members managing assets in a secret Hamas investment portfolio, a Qatar-based financial facilitator with close ties to the Iranian regime, a key Hamas commander, and a Gaza-based virtual currency exchange and its operator.

    For the names and identification information of the designated parties, see this BankersOnline OFAC Update.

    10/17/2023

    Treasury announces cybersecurity cooperation MoU with UAE

    The U.S. Department of the Treasury and the Cyber Security Council of the United Arab Emirates (UAE) have announced the finalization of a bilateral Memorandum of Understanding (MoU) on Cybersecurity Cooperation.

    Specifically, the MoU enhances cooperation in the following areas:

    • Information sharing relating to the financial sector including cybersecurity information on incidents and threats
    • Staff training and study visits to promote cooperation in the area of cybersecurity
    • Competency-building activities such as the conduct of cross-border cybersecurity exercises

    This new partnership is part of Treasury’s continued collaborative approach to improving cybersecurity outcomes for the financial system, including public-private partnerships and close relationships with international partners.

    10/16/2023

    Consumers get permanent free weekly credit report access

    The Federal Trade Commission has posted a Consumer Alert to report that the three national credit reporting agencies — Equifax, Experian, and TransUnion — have permanently extended a program that lets consumers check their credit reports at each of the agencies once a week for free.

    Consumers should go to AnnualCreditReport.com to request free copies of their credit reports. Other sites may impose a charge or be fraudulent sites set up to steal personal information, according to the FTC.

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