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OFAC has posted a Notice of Actions announcing a $1,207,830 settlement with CoinList Markets LLC. CoinList agreed to settle its potential civil liability arising from processing 989 transactions on behalf of users ordinarily resident in Crimea between April 2020 and May 2022, in apparent violation of OFAC's Russia/Ukraine sanctions. The settlement amount reflects OFAC's determination that CoinList's conduct was non-egregious and not voluntarily self-disclosed.

For additional details, see "CoinList Markets LLC settles with OFAC for $1.2M+," in the BankersOnline Penalty pages.

The Treasury Department on Friday released a Joint Statement on the recent EU – U.S. Financial Regulatory Forum, which took place on December 4–5, 2023, hosted by the U.S. Department of the Treasury and the European Commission.

The Forum emphasized close ongoing EU and U.S. cooperation in a range of areas and focused on six themes: (1) market developments and financial stability; (2) regulatory developments in banking and insurance; (3) anti-money laundering and countering the financing of terrorism (AML/CFT); (4) sustainable finance; (5) regulatory and supervisory cooperation in capital markets; and (6) operational resilience and digital finance. Agency participation varied across themes, with representatives expressing views on issues in their respective areas of responsibility.

The Office of the Comptroller of the Currency yesterday reported the key issues facing the federal banking system in its Semiannual Risk Perspective for Fall 2023.

The OCC highlighted credit, market, operational, and compliance risks as the key risk themes in the report. The report also highlights artificial intelligence (AI) in banking as an emerging risk.

The OCC has reported that Deputy Comptroller for Compliance Policy and Acting Deputy Comptroller for the Office of Financial Technology Donna Murphy yesterday testified on the activities and initiatives of the OCC's Office of Financial Technology before the Subcommittee on Digital Assets, Financial Technology and Inclusion, Committee on Financial Services of the U.S. House of Representatives.

In her testimony, Ms. Murphy discussed the OCC’s supervision and regulation related to banks’ use of new and emerging financial technologies. She also highlighted the OCC’s work to engage with banks as they navigate rapid financial technology developments to balance safety, soundness and fairness with innovation and growth.

• Oral statement
• Written testimony

The Treasury Department's Fiscal Service has reported it recently completed the eleven millionth enrollment into electronic solutions such as direct deposit through Treasury's Go Direct program.

“This milestone represents one more step towards our vision for delivering an improved, inclusive payment experience for all Americans,” said Tim Gribben, Commissioner, Bureau of the Fiscal Service. “Today, thanks to efforts like Go Direct, nearly 99 percent of the over 1 billion Treasury-disbursed benefit payments are delivered electronically, ensuring Americans receive their federal payment on time without having to wait on the mail or pay fees to cash a paper check.”

The FDIC recently announced updates to its Technical Assistance Video Program, a series of educational videos designed to provide useful information to bank directors, officers, and employees on areas of supervisory focus and regulatory changes. These resources are intended for community bank directors, officers, and employees.

The FDIC recently added the following Technical Assistance Videos:

• Cybersecurity Awareness for Board Members: This video provides background information on cybersecurity and discusses the board’s role in overseeing their bank’s cybersecurity efforts.
• Cybersecurity Awareness for Bankers: This video discusses the important role bank offers have in designing and maintaining information security programs in a dynamic and evolving cyber threat environment.
• Information Technology: This video provides information for bank directors and trustees regarding oversight of a bank’s information technology program and FDIC information technology examinations.

These videos are available on the FDIC’s Technical Assistance Video Program webpage and on the FDIC’s YouTube channel.

The Financial Stability Board (FSB) this morning announced it has published a toolkit for financial authorities and financial institutions for their third-party risk management and oversight.

The toolkit was developed in response to concerns over the extent and nature of financial institutions’ interactions with a broad and diverse ecosystem of third-party service providers, which could have implications for financial stability.

The primary emphasis of the toolkit is on critical third-party services, given the potential impact of their disruption on financial institutions’ critical operations and financial stability. It also looks holistically at financial institutions’ third-party risk management in light of changing industry practices and recent regulatory and supervisory approaches to operational resilience.

The toolkit, which incorporates feedback from a public consultation conducted over the summer, aims to (i) reduce fragmentation in regulatory and supervisory approaches to third-party risk management across jurisdictions and different areas of the financial services sector; (ii) strengthen financial institutions’ ability to manage third-party risks and financial authorities’ ability to monitor and strengthen the resilience of the financial system; and (iii) facilitate coordination among relevant stakeholders (i.e. financial authorities, financial institutions and third-party service providers).

The FSB promotes international financial stability by coordinating national financial authorities and international standard-setting bodies as they work toward developing strong regulatory, supervisory and other financial sector policies. It fosters a level playing field by encouraging coherent implementation of these policies across sectors and jurisdictions. Working through its members, it seeks to strengthen financial systems and increase the stability of international financial markets. The policies developed in the pursuit of this agenda are implemented by jurisdictions and national authorities.

Yesterday, Treasury reported that OFAC sanctioned eight foreign-based Democratic People’s Republic of Korea’s (DPRK) agents that facilitate sanctions evasion, including revenue generation and missile-related technology procurement that support the DPRK’s weapons of mass destruction (WMD) programs. Additionally, OFAC sanctioned cyber espionage group Kimsuky for gathering intelligence to support the DPRK’s strategic objectives. OFAC acted in coordination with Australia, Japan, and the Republic of Korea.

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

The FDIC has released a list of enforcement actions taken in October 2023. Included were three consent orders to pay civil money penalties, three consent orders to cease and desist, and two removal/prohibition orders :

• Transportation Alliance Bank (DBA TAB Bank), Ogden, Utah, was ordered to pay a civil money penalty of $315,000 for deceptive practices involving a "rebate processing fee" for early payment of certain loans.
• Paramount Bank, Hazelwood, Missouri, was assessed an $85,000 penalty for reporting inaccurate HMDA data for 2020 and 2021.
• Range Bank, Marquette, Michigan, was assessed a $4,000 civil money penalty for failing to require escrow of flood insurance premium payments on four loans on which the bank collected escrow payments for taxes and homeowner's insurance premiums.
• Herring Bank, Amarillo, Texas, was issued a cease and desist order (jointly issued with the Texas Department of Banking) due in part to weaknesses in access controls for IT and in its corporate bond accounting software.
• Royal Business Bank, Los Angeles, California, was issued a cease and desist order (issued jointly with the California Department of Financial Protection and Innovation) related to the bank's Bank Secrecy Act/Anti Money Laundering Compliance Program.
• TrustTexas Bank, SSB, Cuero, Texas, received a cease and desist order, issued jointly with the Texas Department of Savings and Mortgage Lending, for allegedly unsafe or unsound banking practices relating to interest rate risk exposure, deterioration in capital protection and earnings, and deficiencies in management and oversight by the Board.
• Brian Ferris, a former loan officer of Berkshire Bank, Pittsfield, Massachusetts, received a corrected order of prohibition relating to his alleged participation in a conspiracy to defraud the bank by submitting fraudulent loan applications to the bank that were referred to him by two co-conspirators who operated a loan brokerage business.
• Patricia Westmoreland, a former bank manager for Branch Banking and Trust Company, now known as Truist Bank, Charlotte, North Carolina, received an order of prohibition for allegedly embezzling approximately $201,000 and falsifying bank records.

On Monday, the Securities and Exchange Commission reported it has charged Payward Inc. and Payward Ventures Inc., together known as Kraken, with operating Kraken’s crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency.

According to the SEC’s complaint, since at least September 2018, Kraken has made hundreds of millions of dollars unlawfully facilitating the buying and selling of crypto asset securities. The SEC alleges that Kraken intertwines the traditional services of an exchange, broker, dealer, and clearing agency without having registered any of those functions with the Commission as required by law. Kraken’s alleged failure to register these functions has deprived investors of significant protections, including inspection by the SEC, recordkeeping requirements, and safeguards against conflicts of interest, among others.

The SEC’s complaint also alleges that Kraken’s business practices, deficient internal controls, and poor recordkeeping practices present a range of risks for its customers. Kraken allegedly commingles its customers’ money with its own, including paying operational expenses directly from accounts that hold customer cash. Kraken also allegedly commingles its customers’ crypto assets with its own, creating what its own auditor had identified as “a significant risk of loss” to its customers.

In February of this year, Kraken agreed to cease offering or selling securities through crypto asset staking services or staking programs and pay a civil penalty of $30 million. [Editor's note: According to The Motley Fool, “staking” is the way many cryptocurrencies verify their transactions, and it allows participants to earn rewards on their holdings; crypto staking involves committing one's crypto assets to support a blockchain and confirm transactions.]