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09/08/2023

FSB and IMF report on response to crypto-asset activities

The Financial Stability Board (FSB) and International Monetary Fund (IMF) have published a report outlining a comprehensive policy and regulatory response to crypto-asset activities.

The report synthesizes the IMF and FSB’s policy recommendations and standards. It illustrates macroeconomic and financial stability implications of crypto-asset activities, how they may interact, and how the IMF and FSB’s policy recommendations fit together. The report also encourages implementation of the Financial Action Task Force (FATF) anti-money laundering and counter-terrorist financing (AML/CFT) standards to address risks to financial integrity and mitigate criminal and terrorist misuse of the crypto-assets sector.

The report finds that a comprehensive policy and regulatory response for crypto-assets is necessary to address the risks of crypto-assets to macroeconomic and financial stability. To address macroeconomic risks, jurisdictions should safeguard monetary sovereignty and strengthen monetary policy frameworks, guard against excessive capital flow volatility and adopt unambiguous tax treatment of crypto-assets. Comprehensive regulatory and supervisory oversight of crypto-assets can help to address financial stability and financial integrity risks while supporting macroeconomic policies. Comprehensive regulatory and supervisory oversight of crypto-assets should be a baseline to address macroeconomic and financial stability risks.

09/08/2023

U.S. and UK sanction more members of Trickbot cybergang

A Treasury Department release on Thursday reported that OFAC, in coordination with the United Kingdom, sanctioned eleven individuals who are part of the Russia-based Trickbot cybercrime group. The Department of Justice concurrently unsealed indictments against nine individuals in connection with the Trickbot malware and Conti ransomware schemes, including seven of the individuals designated yesterday.

For the names and identification information of the designated individuals, see the September 7, 2023, BankersOnline OFAC Update.

09/08/2023

CFPB spotlights impact of big tech firms on mobile payments

The CFPB has announced its publication of a new Issue Spotlight report, "Big Tech's Role in Contactless Payments: Analysis of Mobile Device Operating Systems and Tap-to-Pay Practices," which highlights the impacts of Big Tech companies’ policies and practices that govern tap-to-pay on mobile devices like smartphones and watches. Apple currently forbids banks and payment apps from accessing the tap-to-pay functionality on Apple iOS devices and imposes fees through Apple Pay. Google’s Android operating system does not currently have such a policy. The issue spotlight explains how regulations imposed by mobile operating systems can have a significant impact on innovation, consumer choice, and the growth of open and decentralized banking and payments in the U.S.

According to the CFPB, as of the second quarter of 2023, Apple’s iOS operating system was on 55 percent of smartphones shipped in the U.S., and Google’s Android operating system was on 45 percent of smartphones shipped. Apple and Google set regulations that govern app developers’ ability to integrate near field communication (NFC) technology into their apps, which is needed to execute tap-to-pay transactions. The dominant market share of these two operating systems, coupled with the increasing shift toward mobile device payments, underscores the important role their policies and practices play in retail payments.

The report states that restrictive tap-to-pay practices may reduce consumer choice and hamper innovation. That can inhibit progress toward a more robust open banking ecosystem, where consumers have more control over their personal financial information and developers provide payments solutions that better meet consumers’ needs. For example, Apple’s current NFC policy prohibits directly integrating tap-to-pay functionality into existing banking applications and other payment apps (e.g., PayPal, Venmo, Cash App).

09/06/2023

FDIC announces new portal for consumer compliance and CRA exams

The FDIC has released Financial Institution Letter FIL-49-2023 to announce a new Banker Engagement Site (BES) through FDICconnect. BES provides a secure and efficient portal to exchange documents, information, and communications for consumer compliance and Community Reinvestment Act (CRA) examinations. Specifically, BES provides a financial institution’s authorized staff the ability to communicate with FDIC examination staff and to respond to the information and document requests made throughout the supervisory process.

BES is being introduced as the primary tool for exchanging examination planning and other information for Division of Depositor and Consumer Protection (DCP) consumer compliance and CRA activities. BES offers new functionality to improve the banker experience in pre-examination process and improves efficiencies through the following features:

  • The ability for bank users to collaborate with the FDIC’s examination team when responding to information and document requests;
  • The capability to submit questions and comments to the examination team;
  • The ability to view submitted responses and documents;
  • The capability to associate responses with specific requests;
  • The ability to manage the bank’s user roles and permissions;
  • The availability of informative user guides and training resources;
  • Contact information for the examination team;
  • Access to the pre-examination planning response provided for the previous examination; and
  • An ability to opt-out of using BES (institutions will be provided an alternative method to respond to pre-examination planning requests and to exchange information).

The FDIC’s existing tool to exchange examination information, the Enterprise File Exchange (EFX), will continue to be used when the pre-planning for consumer compliance and CRA activity initiated prior to the availability of BES and also may be utilized in some additional circumstances. The FDIC’s examination management will inform financial institutions, during their initial pre-examination contact, of the application that will be used for their examination during the transition to BES. BES is designed to support the consumer compliance examination process and is not planned for the use in other FDIC examinations, such as safety and soundness examinations. For such activities where BES is not used, institutions should continue to use EFX and reference FIL-63-2019.

BES is integrated with the FDIC’s identity access system via FDICconnect for user authentication. External users must be registered with FDICconnect to benefit from the enhanced capability provided by BES. External users will continue to be authenticated using a secure two-factor authentication process.

08/30/2023

DHS proposing temporary REAL ID waivers for mobile state IDs

The Department of Homeland Security has published [88 FR 60056] in this morning's Federal Register a proposal that would amend the REAL ID regulations to waive, on a temporary and state-by-state basis, the regulatory requirement that mobile or digital driver’s licenses or identification cards (“mobile driver’s licenses” or “mDLs”) must be compliant with REAL ID requirements to be accepted by Federal agencies for official purposes, as defined by the REAL ID Act, when full enforcement of the REAL ID Act and regulations begins on May 7, 2025.

This proposed rule is part of an incremental rulemaking that would temporarily permit Federal agencies to accept mDLs for official purposes until TSA issues a subsequent rule that would set comprehensive requirements for mDLs. TSA believes it is premature to issue such requirements before the May 7, 2025, deadline due to the need for emerging industry standards and government guidelines to be finalized.

Comments on the proposal will be accepted through October 16, 2023.

08/28/2023

Proposed regs on sales and exchanges of digital assets

The Treasury Department and the Internal Revenue Service have released proposed regulations on the sale and exchange of digital assets by brokers, in an effort to crack down on tax cheats while helping law-abiding taxpayers know how much they owe on the sale or exchange of digital assets.

The proposed regulations, which are open for public comment and feedback until October 30, 2023, would require brokers of digital assets to report certain sales and exchanges. The proposed regulations would clarify and adjust the rules regarding the tax reporting of information by brokers, so that brokers for digital assets are subject to the same information reporting rules as brokers for securities and other financial instruments.

Under current law, taxpayers owe tax on gains and may be entitled to deduct losses on digital assets when sold, but for many taxpayers it is difficult and costly to calculate their gains. These proposed rules require brokers to provide a new Form 1099-DA to help taxpayers determine if they owe taxes, and would help taxpayers avoid having to make complicated calculations or pay digital asset tax preparation services in order to file their tax returns. These regulations align tax reporting on digital assets with tax reporting on other assets, and, as a result, avoid preferential treatment between different types of assets.

Under the proposed rules, the first year that brokers would be required to report any information on sales and exchanges of digital assets is in 2026, for sales and exchanges in 2025. 

08/16/2023

CFPB to propose data broker regulations

CFPB Director Rohit Chopra, in remarks yesterday at a White House Roundtable on Protecting Americans from Harmful Data Practices, announced the Bureau has decided to launch a rulemaking to ensure that modern-day digital data brokers are not misusing or abusing consumers' sensitive data.

Chopra described two of the proposals under consideration. First, rules under consideration would define a data broker that sells certain types of consumer data as a “consumer reporting agency” to better reflect today’s market realities. The CFPB is considering a proposal that would generally treat a data broker’s sale of data regarding, for example, a consumer’s payment history, income, and criminal records as a consumer report, because that type of data is typically used for credit, employment, and certain other determinations. This would trigger requirements for ensuring accuracy and handling disputes of inaccurate information, as well as prohibit misuse.

A second proposal under consideration will address confusion around whether so called “credit header data” is a consumer report. Much of the current data broker market runs on personally identifying information taken from traditional credit reports, such as those sold by the big three credit reporting conglomerates – Equifax, Experian, and TransUnion.

This includes key identifiers like name, date of birth, and Social Security number that are contained in consumer reports generated by the credit reporting companies. The CFPB expects to propose to clarify the extent to which credit header data constitutes a consumer report, reducing the ability of credit reporting companies to impermissibly disclose sensitive contact information that can be used to identify people who don’t wish to be contacted, such as domestic violence survivors.

The Bureau intends to publish next month an outline of proposals and alternatives under consideration for a proposed rule. The CFPB will soon convene a small business panel to help craft the rule, which the Bureau plans to propose for comment in 2024.

08/16/2023

SBA announces cybersecurity grant recipients

The Small Business Administration has announced six new recipients and $6 million in total funding for the SBA's Cybersecurity for Small Business Pilot Program. All six grantees are state entities that will assist small businesses in advancing cybersecurity infrastructure and mitigating cyber threats.

  • Colorado Office of Economic Development & International Trade
  • Indiana Economic Development Corporation
  • Ohio State University
  • Old Dominion University
  • State of Hawaii Cybersecurity Assistance for Small Businesses
  • University of Wyoming

The federal budget for the SBA’s Cybersecurity for Small Business Pilot Program for 2023-2024 is $6 million, and the SBA awarded six grants of $1 million each. The period of performance for this award is one year, beginning August 31, 2023.

08/15/2023

FDIC publishes 2023 Risk Review

The Federal Deposit Insurance Corporation (FDIC) has published its 2023 Risk Review. The report summarizes conditions in the U.S. economy, financial markets, and banking industry.

The 2023 Risk Review provides a comprehensive summary of key developments and risks in the U.S. banking system, as in prior reports, and includes a new section focused on crypto-asset risk. The report focuses on the effects of key risks on community banks in particular, as the FDIC is the primary federal regulator for the majority of community banks in the U.S. banking system.

The FDIC’s Risk Review is an annual publication and based on year-end banking data from the prior year. This year’s expanded report incorporates data and insights related to the recent stress to the banking sector through first quarter 2023.

08/09/2023

Fed program to supervise novel activities

The Federal Reserve Board on Tuesday provided additional information on its program to supervise novel activities in the banks it oversees. Novel activities include complex, technology-driven partnerships with non-banks to provide banking services to customers; and activities that involve crypto-assets and distributed ledger or "blockchain" technology.

The goal of the novel activities supervision program is to foster the benefits of financial innovation while recognizing and appropriately addressing risks to ensure the safety and soundness of the banking system. The program will be integrated into the Federal Reserve's existing supervisory processes, with program experts working alongside current supervisory teams to oversee banks engaged in novel activities.

Also on Tuesday, the Board provided additional information on the process for a state bank supervised by the Federal Reserve to follow before engaging in certain dollar token or stablecoin activity, including demonstrating to its Federal Reserve supervisors that it has appropriate safeguards to conduct the activity safely and soundly.

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