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07/21/2020

FDIC seeks input on standards program for tech innovation

The FDIC has issued a Request for Information seeking the public's input on the potential for a public/private standard-setting partnership and voluntary certification program to promote the efficient and effective adoption of innovative technologies at FDIC-supervised financial institutions.

Released as part of the FDiTech initiative, the Request for Information asks whether the proposed program might reduce the regulatory and operational uncertainty that may prevent financial institutions from deploying new technology or entering into partnerships with technology firms, including “fintechs.” For financial institutions that choose to use the system, a voluntary certification program could help standardize due diligence practices and reduce associated costs.

Comments will be accepted for 60 days following Federal Register publication.

07/17/2020

FinCEN alert on Twitter virtual currency scam

FinCEN has issued an Alert [FIN-2020-Alert001] emphasizing a high-profile scam exploiting Twitter accounts to solicit fraudulent payments denominated in convertible virtual currency (CVC). Cyber threat actors compromised the accounts of public figures, organizations, and financial institutions to solicit payments to CVC accounts, claiming that any CVC sent to a wallet address would be doubled and returned to the sender. Persons who receive one of these solicitations should not send money or provide any personal or confidential information to these individuals without independent verification of authenticity.

The Alert says it is critical that CVC exchanges and other financial institutions identify and report suspicious transactions associated with this type of activity as quickly as possible. For example, a CVC or other financial account may receive a high volume of payments in a short period of time from previously unaffiliated accounts and/or multiple originating CVC addresses.

07/15/2020

Fiscal Service launches new financial data website

Treasury's Bureau of the Fiscal Service has announced the launch of its new website, FiscalData.Treasury.gov, which assembles 18 of the most popular federal financial datasets, including the Monthly Statement of the Public Debt, Monthly Treasury Statement, Daily Treasury Statement and Debt to the Penny. FiscalData.Treasury.gov will serve as the central location for financial data, giving customers the ability to:

  • Explore datasets on topics such as debt, revenue, and spending
  • Review timely and historical data, in one case dating as far back as 1790
  • View and analyze trends over time

Users will be able to download data in several machine-readable formats such as CSV, JSON, HTML, and through APIs. They will also have access to comprehensive metadata, data documentation, and data dictionaries.

07/01/2020

FATF 31st Plenary Meeting

The Treasury Department has reported that the Financial Action Task Force (FATF) concluded its 31st plenary meeting by calling on its members to tackle new threats and vulnerabilities posed by criminals during the COVID-19 crisis. The FATF also completed a 12-month review of progress made by jurisdictions on implementing the new FATF standards on virtual assets adopted during the U.S. presidency of the FATF. The international task force further agreed upon draft text, on which it will seek public consultation, revising its standards to incorporate measures to counter proliferation financing, and adopted a groundbreaking report on money laundering and illegal wildlife trafficking.

07/01/2020

Competition to develop innovative financial reporting

The FDIC announced on Tuesday a rapid prototyping competition to help develop a new and innovative approach to financial reporting, particularly for community banks.

The agency has invited 20 technology firms to participate. They will develop proposed solutions over several months for consideration by the FDIC. The agency intends that the modern tools developed in this and future competitions "will help make financial reporting seamless and less burdensome for banks, provide more timely and granular data to the FDIC on industry health, and promote more efficient supervision of individual banks."

06/30/2020

CFPB announces first Tech Sprints

The CFPB yesterday announced its first-ever Tech Sprints to reduce regulatory burden and improve consumer understanding of financial services. The Bureau’s Tech Sprints program will bring together regulators, technologists, software providers, consumer groups, and financial institutions to develop technological solutions to shared compliance challenges. The first Tech Sprint will kick off in October with another in March 2021.

The focus of the October session will be improving upon existing consumer disclosures, the use of digital technology and alternative delivery mechanisms such as online and mobile, for notification of adverse credit actions.

The March 2021 session will focus on the HMDA data submission process.

06/30/2020

Russian pleads guilty to $568M cybercrime fraud charges

One of the leaders of the Infraud Organization pleaded guilty Friday to Racketeering Influenced and Corrupt Organization Action (RICO) conspiracy following an investigation lead by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the Henderson, Nevada, police department. Infraud was an internet-based cybercriminal enterprise engaged in the large-scale acquisition, sale, and dissemination of stolen identities, compromised debit and credit cards, personally identifiable information, financial and banking information, computer malware, and other contraband.

Sergey Medvedev, aka “Stells,” “segmed,” “serjbear,” 33, of the Russian Federation, pleaded guilty in the U.S. District Court for the District of Nevada. According to the indictment, the Infraud Organization was created in October 2010 by Svyatoslav Bondarenko aka “Obnon,” “Rector,” and “Helkern,” 34, of Ukraine, to promote and grow interest in the Infraud Organization as the premier destination for “carding” – purchasing retail items with counterfeit or stolen credit card information – on the Internet. Under the slogan “In Fraud We Trust,” the organization directed traffic and potential purchasers to the automated vending sites of its members, which served as online conduits to traffic in stolen means of identification, stolen financial and banking information, malware, and other illicit goods. It also provided an escrow service to facilitate illicit digital currency transactions among its members and employed screening protocols that purported to ensure only high quality vendors of stolen cards, personally identifiable information, and other contraband were permitted to advertise to members. In March 2017, there were 10,901 registered members of the Infraud Organization.

06/30/2020

OCC report on key risks for banking system

An OCC press release has reported the agency's publication of its Semiannual Risk Perspective for Spring 2020, listing the key issues facing the federal banking system and the effects of the COVID-19 pandemic on the federal banking industry.

Banks entered the national health emergency related to COVID-19 in sound condition but face weak economic conditions resulting from the economic shutdown in response to the pandemic that will stress financial performance in 2020. The OCC reported weak financial performance, and increasing credit, operational, and compliance risks, among the key risk themes in the report.

Highlights from the report include:

  • Financial performance will be affected by higher credit losses, overhead expenses, and lower net interest income.
  • The onset of the national health emergency created an uncertain credit environment that will test the resiliency of commercial and retail loan portfolios. Credit risk management practices will need to be flexible and proactive to meet the challenges of the current environment.
  • Operational risk is heightened as banks amended business processes and engaged third parties to support widespread remote work capabilities, increased technological capacity, and solutions to maintain operations under elevated operational volumes.
  • Compliance risk is elevated because of a combination of altered operations, employees working remotely, and several new federal and state programs designed to support consumers such as the CARES Act, Paycheck Protection Program, and a variety of forbearance and deferred payment programs. Among other challenges, these conditions complicate the compliance responsibilities associated with managing high volumes and various programs of consumer and business lending in a weakened economy.

06/16/2020

Fed to resume bank exams

The Federal Reserve Board announced Monday it will resume examination activities for all banks. The Board had announced in March a reduced focus on exam activity due to the COVID-19 pandemic. However, the Board said banks have had time to implement contingency operating plans and adapt their operations, and exam activity will therefore resume. It will continue to be conducted offsite "until conditions improve."

06/05/2020

OCC proposing regs updates

On Thursday, the Office of the Comptroller of the Currency announced it has published a Notice of Proposed Rulemaking (NPR) [85 FR 40794, 7/7/2020] for public comment to update its rules for national bank and federal savings association activities and operations. The agency also released an Advance Notice of Proposed Rulemaking (ANPR) [85 FR 40827, 7/7/2020] seeking comment on rules on those institutions' digital activities.

The NPR would make various changes to 12 CFR 7 to update or eliminate outdated regulatory requirements that no longer reflect the modern financial system and clarify and codify recent OCC interpretations. Among the significant proposed changes are:

  • incorporating and streamlining OCC interpretations addressing permissible derivatives activities for national banks;
  • codifying OCC interpretations to permit national banks and federal savings associations to engage in certain tax equity finance transactions;
  • codifying OCC interpretations regarding national bank membership in payment systems and clarifying that federal savings associations are subject to the same requirements as national banks;
  • expanding the ability of national banks to choose corporate governance provisions under state law;
  • clarifying the extent to which a national bank may adopt anti-takeover provisions permissible under state corporate governance law;
  • clarifying when national bank participation in a financial literacy program on the premises of, or a facility used by, a school or other organization would not be a branch; and
  • codifying OCC interpretations of the National Bank Act relating to capital stock issuances and repurchases.

The ANPR invites comment on OCC regulations at 12 CFR part 7, subpart E and part 155, and any other banking issues related to digital technology and innovation, including:

  • whether the legal standards in 12 CFR 7, subpart E, and 12 CFR 155 are sufficiently flexible and clear in light of the technological advances that have transformed the financial industry over the past two decades;
  • whether these legal standards create unnecessary hurdles or burdens to innovation by banks;
  • whether there are digital banking activities or issues that are not covered by these rules that the OCC should address (e.g., digital finders’ activities, certain software, and correspondent services);
  • what activities related to cryptocurrencies or cryptoassets are financial services companies or bank customers engaged in and what are the barriers or obstacles to further adoption of crypto-related activities in the banking industry;
  • how is distributed ledger technology used or potentially used in activities related to banking;
  • how are artificial intelligence and machine learning techniques used or potentially used in activities related to banking;
  • what new payments technologies and processes should the OCC be aware of and what are the potential implications of these technologies and processes for the banking industry;
  • what new or innovative tools do financial services companies use to comply with regulations and supervisory expectations (i.e., “regtech”);
  • what issues are unique to smaller institutions regarding the use and implementation of innovative products, services, or processes that the OCC should consider;
  • what other changes to the development and delivery of banking products and services should the OCC be aware of and consider; and
  • whether there are issues the OCC should consider in light of changes in the banking system that have occurred in response to the COVID-19 pandemic.

Comments on both the NPR and the ANPR are due by August 3, 2020.

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