#BSA – Federal Financial Analytics

7 09, 2023

DAILY090723

Eliza Allen2023-09-07T16:43:25-04:00September 7th, 2023|2- Daily Briefing|

FSB-IMF Report Lays Out Crypto-Policy Roadmap

The FSB and IMF today published a joint report synthesizing their policy and regulatory recommendations for cryptoassets, laying out a policy roadmap that breaks no new ground.

Senate Dems Try Again to End State Usury Ceilings

Senate Majority Whip Durbin (D-IL) yesterday introduced another effort (S. 2730) to impose a federal usury ceiling.

NGFS Warns Ecological Risk Could Be Systemic

The Network for Greening the Financial System (NGFS) today released a report on nature-related financial risk concluding that ecological risk transmission could cause contagion leading to systemic risk.

CFPB Soon to Advance Its Open-Banking Construct

CFPB Director Chopra today announced that the CFPB will be issuing proposed rules next month to reactivate its DFA consumer data rights powers (see FSM Report DATA3).

Global Securities Regulators Craft DeFi Standards

IOSCO today released a DeFi consultation report proposing nine policy recommendations intended to support heightened regulatory consistency and oversight.

Waters Presses Agencies to Change SSN Collection Requirements

HFSC Ranking Member Waters (D-CA) today wrote to the leadership of the banking agencies, Treasury, and FinCEN asking them to consider allowing financial institutions only to collect a SSN’s last four digits to minimize cybersecurity risks.

Fed Staff Suggest Solution to CBDC Privacy Problem

Addressing one of the biggest CBDC challenges in the U.S., Fed staff today published a report arguing that the use of privacy-enhancing technologies preserves digital asset user confidentiality while maintaining enough visibility for official audits in order to prevent illicit finance.

Daily090723.pdf…

6 04, 2023

DAILY040623

Eliza Allen2023-04-06T17:06:35-04:00April 6th, 2023|2- Daily Briefing|

Treasury Reiterates AML/CFT DeFi Concerns

Following on the President’s executive order (see Client Report CRYPTO26) and its own reports (see FSM Report CRYPTO30), Treasury today released its DeFi Risk Assessment, finding as prior reports have presaged that AML/CFT noncompliance is the sector’s primary vulnerability. Indeed, the analysis strongly states that firms must comply with these standards no matter their business model. It also highlights a regulatory gap where DeFi firms not classified as financial institutions under the BSA are exempt from stringent standards, suggesting both statutory and regulatory changes.

Daily040623.pdf…

4 04, 2023

DAILY040423

Eliza Allen2023-04-04T16:59:13-04:00April 4th, 2023|2- Daily Briefing|

House Republicans Launch Attack On New Small-Business Reporting Rule

House Republicans including Reps. Williams (R-TX), Barr (R-KY), and Ogles (R-TN) today introduced a resolution to overturn the CFPB’s small business data collection final rule via the Congressional Review Act.

Bipartisan Leaders Demand End to AML “Escape Hatch”

Accelerating the odds for a significant FinCEN rewrite, HFSC Chairman McHenry (R-NC), Senate Banking Chairman Brown (D-OH), Ranking Member Waters (D-CA) and a group of bipartisan lawmakers today sent a letter to Secretary Yellen and FinCEN Acting Director Das emphatically stating that FinCEN’s latest beneficial ownership proposal undermines the intent of the Corporate Transparency Act (see FSM Report AML133) by allowing an “escape hatch” through which firms can continue to do business with a customer even if they are unable to collect beneficial-ownership information.

IMF Says NBFIs Should Have Central-Bank Backing

The IMF’s financial-stability report includes a new chapter on NBFIs. Largely echoing all the concerns and policy recommendations in continuing FSB calls for NBFI standards, the Fund goes on to advocate also for NBFI access to central-bank backstops.

Global Regulators Like Look Of Systemic Insurance Standards, U.S. Implementation

IAIS today published a report assessing the implementation of its holistic supervisory framework across national jurisdictions, concluding that results demonstrate a “very positive outcome.” This is reflected in strong implementation of the holistic framework standards and good levels of observance across many of the standards, including by U.S. states.

Daily040423.pdf…

6 12, 2022

DAILY120622

Eliza Allen2022-12-06T16:40:03-05:00December 6th, 2022|2- Daily Briefing|

FSB Again Ratifies Focus on Crypto, Climate, Macro Risks

Following its meeting today, the FSB Plenary announced 2023 priorities to be finalized in January. Focus will center on heightened monitoring of financial stability risks, enhanced NBFI and CCP resilience, work on the global crypto regulatory framework, cross-border payments reform, cyber and operational resilience, and financial risks from climate change.

FinCEN Targets De-Risking Compliance

Pointing to possible enforcement actions, Treasury Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg today noted FinCEN concerns with the extent to which institutions apply a rules-based approach to de-risking rather than a risk-based one, leaving it vulnerable to fast-changing risks and without access to valuable suspicious activity information.

Warren, GOP Senators Put Silvergate On FTX Hotseat

Reflecting at least some bipartisan agreement on the need for new crypto standards, Sens. Warren (D-MA), Kennedy (R-LA), and Marshall (R-KS) late yesterday sent a letter to the CEO of Silvergate Bank demanding detailed information regarding its relationship with FTX and FTX affiliates.

GOP Threatens Woke Asset Managers With BHC Designation

The Senate Banking GOP report today on ESG asset management contains an interesting aside about the extent to which passive ownership of banking organizations could make the three largest asset managers de facto BHCs.

Brown Fires First Shot in 2023 ILC Wars

Putting down a market for the next Congress, Senate Banking Chairman Brown and two Democratic colleagues today introduced their bill end bar ILC charters for nonbank parents.

Daily120622.pdf…

26 08, 2022

DAILY082622

Eliza Allen2023-01-04T10:29:58-05:00August 26th, 2022|2- Daily Briefing|

GAO Presses for Better Data on SAR Value Add

Reflecting longstanding industry hopes for analysis of the actual law-enforcement value of complex and costly SAR findings, GAO yesterday issued recommendations to the DoJ that it improve its BSA data-collection and annual reports. GAO also concludes that FinCEN is limited in its ability to support law enforcement and provide feedback to financial institutions due to the DoJ failing to collect and share BSA report data.

SEC Expands Whistleblower Awards to Actions Brought by Banking Agencies

The SEC today announced new whistleblower incentives that may encourage whistleblowing also on offenses subject to banking-agency enforcement. The SEC’s amended rule allows the Commission to pay awards to whistleblower actions brought by appropriate agencies other than the Commission, which are defined not only as the U.S. Department of Justice and state AGs, but also as the OCC, the Fed, and the FDIC.

Daily082622.pdf…

10 06, 2022

DAILY061022

Eliza Allen2023-01-27T15:45:24-05:00June 10th, 2022|2- Daily Briefing|

Treasury Emphasizes Crypto BSA Compliance

Treasury Deputy Secretary Wally Adeyemo today outlined his agency’s digital-asset priorities not only in adherence to the President’s executive order (see Client Report CRYPTO26), but also recent developments. Treasury’s top priority is ensuring BSA compliance in this sector, followed by addressing illicit-finance risk posed by unhosted wallets.

HFSC to Advance Overdraft, ILC Legislation

The schedule for Tuesday’s HFSC mark-up includes a revised version of H.R. 4277, long-pending Maloney (D-CA) legislation to restrict overdrafts (see FSM Report OVERDRAFT4). The Democratic memo acknowledges that many banks have reformed or eliminated overdraft and related fees, but says some continue to charge pernicious fees and others could resume this practice without new law.

GAO Recommends Fed Improve Alternative-Data Use, Stress Testing

The GAO today issued several recommendations to the Fed on alternative data use and improving stress testing. The alternative data recommendations reiterate a prior call to the FDIC related to working with fintechs and vendors, calling for the Fed in coordination with other banking regulators and the CFPB to provide clear written guidance to banks who engage with third-party fintech lenders on the appropriate use of alternative underwriting data.

Daily061022.pdf…

13 05, 2022

Al051622

Arezou Rafikian2023-02-21T15:16:59-05:00May 13th, 2022|3- This Week|

Mark-Up Mayhem

On Tuesday, the House Financial Services Committee will meet in open, hybrid session to have another go at each other. The increasingly nasty mood was in relative abeyance when Secretary Yellen testified last week (see Client Report FSOC27), but it was on full display later in the day when Republicans launched a full-bore attack against Acting Comptroller Hsu and earlier in the week when what should have been a staid session on the credit-rating agencies became a sparring match between Chairwoman Waters (D-CA) and Rep. Huizenga (R-MI) over who controls the Committee’s agenda. None of these ill feelings has dissipated and all will be in clear view when the panel meets to report several high-profile, controversial measures.

Al051622.pdf…

26 01, 2022

Daily012622

Eliza Allen2023-04-12T13:55:15-04:00January 26th, 2022|2- Daily Briefing|

CFPB As Good as Its word on Campaign vs. “Junk” Fees
Today, the CFPB acted on its promise to the President to counter “junk fees,” announcing a new request for public input on “inflated and back-end” fees which Director Chopra says allow banks and other financial institutions to exploit average Americans.

In Side Note, Powell Backs SEC MMF Reforms
Although his press conference today almost entirely focused on monetary policy, FRB Chair Powell was also asked about asset price stability. He continues to stand by the Fed’s financial stability report (see Client Report SYSTEMIC92) suggesting risk, while elevated, is within acceptable bounds.

Partisan Battle Over Crypto Emerges on China Competition Bill
House Democrats’ America COMPETES Act introduced yesterday includes several provisions of note addressing financial-stability risks seeming to emanate from China.

Daily012622.pdf…

6 01, 2022

AML135

Arezou Rafikian2023-04-25T15:44:59-04:00January 6th, 2022|1- Financial Services Management|

AML/CFT Regulatory Reform

As the banking industry has long hoped and Congress last year directed, FinCEN is beginning to develop a new policy framework prioritizing ways to make anti-money laundering (AML) and countering the financing of terrorism (CFT) regulation more risk-based. FinCEN is taking the opportunity of its request for information (RFI) also to seek views on ways to modernize AML/CFT standards, make them more efficient, ensure adherence to global protocols, and toughen rules where necessary to protect national security. Last year’s law required Treasury to enhance law enforcement and submit a report on AML/CFT reform by January of 2022.

AML135.pdf…

6 01, 2022

Analysis of AML/CFT Regulatory Reform

Arezou Rafikian2023-04-25T15:45:12-04:00January 6th, 2022|The Vault|

As the banking industry has long hoped and Congress last year directed,1 FinCEN is beginning to develop a new policy framework prioritizing ways to make anti-money laundering (AML) and countering the financing of terrorism (CFT) regulation more risk-based. FinCEN is taking the opportunity of its request for information (RFI) also to seek views on ways to modernize AML/CFT standards, make them more efficient, ensure adherence to global protocols, and toughen rules where necessary to protect national security. Last year’s law required Treasury to enhance law enforcement and submit a report on AML/CFT….

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