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The Department of the Treasury has reported that OFAC has designated two individuals and five entities associated with the Intellexa Consortium for their role in developing, operating, and distributing commercial spyware technology used to target Americans, including U.S. government officials, journalists, and policy experts.

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

The Federal Trade Commission has announced that the owners of a money-making scheme that claimed to use artificial intelligence to boost earnings for consumers’ e-commerce storefronts have agreed to surrender millions in assets to settle the FTC’s case against them. In addition, all the businesses and two of their owners face a lifetime ban on selling business opportunities or coaching programs involving ecommerce stores.

In a case filed in August 2023, the FTC charged that Roman Cresto, John Cresto, and Andrew Chapman, along with multiple companies they controlled, including Automators AI, Empire Ecommerce, and Onyx Distribution, deceived consumers with unfounded promises of “passive investment income” in online storefronts supposedly powered by AI.

In its complaint, the FTC charged that the defendants offered consumers high returns from profitable e-stores. The defendants also offered to teach consumers how to successfully set up and manage e-stores on Amazon and Walmart themselves using a “proven system” and the powers of artificial intelligence. The FTC alleged, however, that the vast majority of the defendants’ clients did not make the promised earnings or even recoup their sizable investment. Instead, most lost significant amounts of money, and Amazon and Walmart routinely suspended, blocked, or terminated the stores that defendants operated for their clients for repeated policy violations.

The orders contain a total monetary judgment of $21,765,902.65, which is partially suspended based on the defendants’ inability to pay the full amount. If the defendants are found to have lied to the FTC about their financial status, the full judgment would be immediately payable.

The OCC reports that Acting Comptroller of the Currency Michael J. Hsu yesterday offered remarks to the Financial Stability Board’s Crypto Working Group.

In his remarks, Mr. Hsu shared his perspective on the importance of coordination and collaboration on the supervision of global institutions, particularly with regard to crypto-asset activities. He also discussed the relationship between crypto and tokenization.

Acting Comptroller of the Currency Michael J. Hsu yesterday discussed banking and commerce, regulatory effectiveness, and financial stability in remarks at Vanderbilt University in Nashville, Tennessee.

In his remarks, Mr. Hsu discussed the blurring of the lines between banking and commerce in payments and private credit/equity, and how this might lead to financial instability. He also offered thoughts on the potential for the Financial Stability Oversight Council’s recently adopted analytic framework to identify and address financial stability risks as they emerge.

The Federal Trade Commission has finalized its Trade Regulation Rule on Impersonation of Government and Businesses (16 C.F.R. Part 461), which prohibits the impersonation of government, businesses, and their officials or agents in interstate commerce as deceptive or unfair acts or practices.

The new rule will become effective 30 days after it is published in the Federal Register.

The FTC has also issued a supplemental notice of proposed rulemaking that would, if finalized as proposed, amend the amend the new rule to revise its title, add a prohibition on the impersonation of individuals, and extend liability for violations of the rule to parties who provide goods and services with knowledge or reason to know that those goods or services will be used in impersonations of the kind that are themselves unlawful under the Rule.

In its press release announcing the rule on impersonation of government and businesses and the supplemental notice of proposed rulemaking that would amend the rule, the FTC said it is proposing the amendments in light of surging complaints around impersonation fraud, as well as public outcry about the harms caused to consumers and to impersonated individuals. The Commission said that “emerging technology – including AI-generated deepfakes – threatens to turbocharge this scourge, and the FTC is committed to using all of its tools to detect, deter, and halt impersonation fraud.”

Comments on the supplemental notice of proposed rulemaking will be accepted for 60 days after Federal Register publication.

The Treasury Department on Tuesday reported that OFAC has designated two individuals who are affiliates of the Russia-based ransomware group LockBit. This action is the first in an ongoing collaborative effort with the U.S. Department of Justice, Federal Bureau of Investigation, and international partners targeting LockBit.

For identification information on the two individuals, see BankersOnline's February 20, 2024, OFAC Update.

The Social Security Administration has published [89 FR 11773] a proposed rule, "Use of Electronic Payroll Data to Improve Program Administration," describing the agency’s plans for accessing and using information from payroll data providers to reduce improper payments, including overpayments, which improves service to customers.

Unreported, late reported, and incorrectly reported earnings are often a cause of overpayments for people who receive Social Security Disability Insurance (SSDI) benefits and Supplemental Security Income (SSI) payments. When a person has been overpaid, the law requires the agency to ask for repayment, which can create financial difficulties for beneficiaries.

Social Security is working to reduce wage-related improper payments by using its legal authority to establish information exchanges with payroll data providers. These exchanges will help ensure the agency receives timely and accurate wage data. These exchanges and the agency’s planned business process is called the Payroll Information Exchange (PIE).

PIE will help reduce manual reporting errors as well as the reporting burden for individuals who authorize Social Security to obtain their wage and employment information through these information exchanges and work for employers whose payroll data is available through the exchange. PIE will also help to more quickly identify wages that often go unreported or undetected and which can lead to improper payments.

Comments on the proposal will be accepted through April 15, 2024.

The OCC reports it has opened registration for its 2024 schedule of in-person workshops for board directors and senior management of national community banks and federal savings associations.

The OCC examiner-led workshops provide practical training and guidance to directors and senior management of national community banks and federal savings associations to support the safe and sound operation of community-based financial institutions.

The OCC offers five daylong workshops:

• Building Blocks: Developing Strong Management
• Risk Governance: Improving Effectiveness
• Compliance Risk: Understanding the Rules
• Credit Risk: Recognizing and Responding to Risk
• Operational Risk: Navigating Rapid Changes

The OCC is also offering a half-day workshop, Capital Markets: Keeping Current. This workshop covers balance sheet management risks, as well as hot topics and risk themes for bankers and regulators in the capital markets area.

Workshops are limited to 35 participants. Attendees will receive course materials, supervisory publications, and lunch.

Schedules, locations, cost and fee waiver information, and online registration are available on the OCC's website.

Yesterday, FinCEN issued a Financial Trend Analysis (FTA) reflecting an increase in Bank Secrecy Act (BSA) reporting associated with the use of convertible virtual currency (CVC) and online child sexual exploitation (OCSE) and human trafficking. This FTA is based on BSA reporting filed between January 2020 and December 2021.

The analysis detailed in this FTA furthers Treasury efforts to combat human trafficking as well as the illicit uses of CVC. For example, Brian Nelson, Treasury’s Under Secretary for Terrorism and Financial Intelligence, announced at the President’s Interagency Task Force to Monitor and Combat Trafficking that FinCEN has joined the Canadian financial intelligence unit’s Project Protect—a flagship public-private partnership on human trafficking. In addition, in June 2021, FinCEN identified human trafficking and cybercrime as among the “Anti-Money Laundering and Countering the Financing of Terrorism National Priorities” issued pursuant to the Anti-Money Laundering Act of 2020.

More recently, in October 2023, FinCEN issued a finding pursuant to Section 311 of the USA PATRIOT Act that CVC mixing is a class of transactions of primary money laundering concern and proposed reporting requirements to increase transparency in connection with CVC mixing.

FinCEN’s analysis highlights the value of BSA reporting filed by regulated financial institutions.

• FinCEN press release

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.