#sanction – Page 3 – Federal Financial Analytics

17 07, 2023

DAILY071723

Eliza Allen2023-07-17T16:58:11-04:00July 17th, 2023|2- Daily Briefing|

HFSC to Tackle FinCen, Sanctions

The HFSC memo on the National Security Subcommittee’s Tuesday hearing makes it clear that Republicans have not wavered in their criticism of FinCEN’s beneficial-ownership standards (see FSM Report AML134). As before, the GOP’s principal concern is small-business burden, with bills to be considered including H.R. 4035 by Chair McHenry (R-NC) extending the small-business compliance deadline and a bill by Rep. Nunn (R-IA) to ensure at least a two-year compliance period.

Global Regulators Strengthen Crypto, Stablecoin Standards

The FSB today finalized its “same-activity/same-rule” standards for cryptoassets and stablecoins (see FSM Report CRYPTO34). We will soon provide clients with an in-depth analysis of the recommendations, which are effective immediately.

Gensler Sounds AI Systemic Alarm

In remarks today, SEC Chairman Gensler echoed his longstanding concern about predictive analytics and AI-related problems recently highlighted by CFPB Director Chopra and the banking agencies. He also cautions public issuers to ensure their AI-related disclosures are accurate, noting that AI-spawned market fraud is still fraud the SEC will vigorously pursue.

Daily071723.pdf…

30 06, 2023

DAILY063023

Eliza Allen2023-06-30T16:31:38-04:00June 30th, 2023|2- Daily Briefing|

Warren Blasts Goldman Over SVB Dual Role

Raising an issue that could lead to broad demands for internal firewalls, Sen. Warren (D-MA) today sent a letter to the CEO of Goldman Sachs demanding more information about the bank’s dual role advising and buying financial instruments from SVB. The senator raises concerns that this caused conflicts of interest and accuses the bank of using “accounting tricks” that were very costly to the DIF.

Key House Member Posits China Sanctions For Hong Kong Banking Activities

Joined by two U.K. MPs, House Select Committee on the CCP Chairman Mike Gallagher (R-WI) today sent a letter to HSBC’s CEO raising concerns with what he says was the bank’s decision as well as that of other unnamed banks to block Mandatory Provident Fund withdrawal requests for Hong Kong residents with British National (overseas) passports. Firing what may be a first shot into the broader battle of how global banks manage their relations with China, the letter highlights instructions to the fund’s trustee institutions – which include HSBC – from the Hong Kong Mandatory Provident Fund Authority to disregard BN(O) passports.

Daily063023.pdf…

7 06, 2023

DAILY060723

Eliza Allen2023-06-07T16:50:58-04:00June 7th, 2023|2- Daily Briefing|

Basel Advances Supervisory Rewrite, Wants Quick End To End-Game

The Basel Committee’s release today of its latest meeting confirms that global regulators plan to revise 2012’s core supervisory principles (see FSM Report REFORM92) in light of recent events, releasing a consultation next month. Work is also under way to update the 2022 crypto standards (see FSM Report CRYPTO37) to address permissionless blockchains and stablecoins.

HFSC Urges Careful Use of China Sanctions

At today’s HFSC National Security Subcommittee hearing on maintaining the dollar’s global dominance, Subcommittee Chairman Luetkemeyer (R-MO) and Reps. Petterson (D-CO) and Kim (R-CA) argued that the sanctions that would follow an invasion of Taiwan need to be used carefully to avoid unintended harm to the dollar’s global status.

Durbin Leads Renewed Charge For Credit-Card Network Choice

As anticipated, Senate Judiciary Committee Chairman Durbin (D-IL) along with Sens. Welch (D-VT), Marshall (R-KS), and Vance (R-OH) today reintroduced legislation to extend routing-system requirements to credit cards. The bill, which has also been reintroduced in the House by Reps. Gooden (R-TX) and Lofgren (D-CA), slightly revises last year’s measure (see FSM Report INTERCHANGE10) by addressing security and operational risks associated with unaffiliated network routing requirements.

Daily060723.pdf…

30 05, 2023

Daily053023

Eliza Allen2023-05-30T17:13:13-04:00May 30th, 2023|2- Daily Briefing|

Fed Study Validates Bank/Shadow-Bank Interconnections, Systemic Risk

A new study by staff from the Federal Reserve Banks of Boston and New York evaluates the banking-sector impact of fire sales across multiple NBFI segments, finding numerous bank vulnerabilities to nonbanks not only through direct exposures, but also through complex, indirect channels.

McHenry Protests U.S. Outbound-Investment Constraints

HFSC Chairman McHenry (R-NC) sent a letter to Secretary Yellen late Friday demanding information about a potential executive order that would enable CFIUS to prohibit or require notification of outbound investments into China, stating that the Administration’s interest in capital controls necessitates Congressional oversight.

IMF Article Calls SVB Resolution “Riskless Capitalism”

An article in the IMF’s forthcoming Finance and Development magazine issue argues that SVB’s uninsured depositors enjoyed “riskless capitalism,” concluding that high moral hazard-risks will persist without incentives for depositor due diligence.

FTC Demands Greater Debit-Card Data Access

The FTC today finalized a consent order requiring Mastercard to provide competing card networks with the customer account information necessary to process debit payments, alleging that the company illegally withheld that information to prevent merchants from using its competitors or Mastercard-branded debit cards saved in e-wallets outside of traditional networks.

Daily053023.pdf…

28 02, 2023

DAILY022823

Eliza Allen2023-02-28T17:16:34-05:00February 28th, 2023|2- Daily Briefing|

CFPB Treads Gingerly on Mortgage-Disclosure Exceptions

In a notice emphasizing the CFPB’s distaste for allowing regulatory exceptions, the Bureau asks for comment on an application for one to which it seems a bit more sympathetic.

FDIC Sees Sunny Side of Bank Earnings Data

In its review of banking-industry fourth-quarter results, the FDIC today notes a sharp increase in the gap between bank loan yield and deposit interest costs.

Basel Forecasts End-Game Capital Shortfalls

The Basel Committee today issued its latest monitoring report, finding that large global banks saw capital decreases to pre-pandemic levels even as liquidity ratios continued to improve.

Bipartisan China Bills Fly Through HFSC Markup

As anticipated, HFSC today reported five bills to censure China and protect Taiwan, along with bills addressing drug-trafficking financing, biomedical security and bank service company examinations.

Democrats Stand Firm versus Privacy Preemption

Following an orderly and bipartisan start to today’s HFSC markup, Democrats and Republicans today came to verbal blows over the Chairman’s data privacy bill.

Daily022823.pdf…

24 02, 2023

Al022723

Eliza Allen2023-02-24T16:57:09-05:00February 24th, 2023|3- This Week|

The Bull In China’s Shop

As we noted as Russia sanctions were introduced almost exactly a year ago and again on Friday, the U.S. is using this “soft-power” tool not only to punish Russia for invading Ukraine, but also to deter other nations – and most especially China – from going beyond rhetorical to military support. This, combined with the subsequent oil-price cap, has kept most neutral nations on the military sidelines, also forcing China to navigate carefully between anti-Taiwan bellicosity and pro-Russian sympathy. However, China has now gone beyond floating the spy balloon that so peeved Members of Congress at an earlier hearing at which sanction sabers were noisily rattled. The House Financial Services Committee will mark up the mildest of its sanctions bills on Tuesday, but China is now in full-throated alliance with Russia, possibly soon sending it armaments and other essentials in express violation of current G7 sanctions. What’s next?

Al022723.pdf…

24 02, 2023

FedFin on: Custody Reform

Arezou Rafikian2023-02-24T16:53:29-05:00February 24th, 2023|The Vault|

Making full use of powers granted in the 2010 Dodd-Frank Act, the SEC is proposing a wholesale rewrite of the rules dictating how investment advisers must place assets in custody and which institutions are considered qualified for this purpose. Although the proposal was sparked first by controversies surrounding custody for cryptoassets and then by significant investment losses, the NPR reaches most assets held in the direct or indirect possession of investment advisers or to which the adviser may gain possession, also redefining qualified custodians to exclude not only most crypto platforms, but also foreign firms and other entities the Commission believes do not ensure sufficient safeguards protecting investor assets in the event of the adviser’s malfeasance, insolvency, or operational failure….

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

24 02, 2023

CUSTODY5

Eliza Allen2023-02-24T11:15:03-05:00February 24th, 2023|1- Financial Services Management|

Custody Reform

Making full use of powers granted in the 2010 Dodd-Frank Act, the SEC is proposing a wholesale rewrite of the rules dictating how investment advisers must place assets in custody and which institutions are considered qualified for this purpose. Although the proposal was sparked first by controversies surrounding custody for cryptoassets and then by significant investment losses, the NPR reaches most assets held in the direct or indirect possession of investment advisers or to which the adviser may gain possession, also redefining qualified custodians to exclude not only most crypto platforms, but also foreign firms and other entities the Commission believes do not ensure sufficient safeguards protecting investor assets in the event of the adviser’s malfeasance, insolvency, or operational failure. Many of the proposal’s new requirements – e.g., control over beneficial-ownership changes, strict segregation – are already followed by those bank custodians with fiduciary obligations due to their own protocols and regulatory requirements, perhaps giving banks a head-up complying with new standards. However, the new standards may be problematic for at least some custody banks – the SEC wants them to resume fiduciary obligations and does not appear wholly satisfied with bank rules governing qualified custodians.

CUSTODY5.pdf…

3 02, 2023

DAILY020323

Eliza Allen2023-02-03T16:59:55-05:00February 3rd, 2023|2- Daily Briefing|

House GOP Bill Sanctions Digital Yuan

Ahead of a major HFSC anti-China push next week, Chairman of the Subcommittee on National Security, Illicit Finance, and International Financial Institutions Luetkemeyer (R-MO) today introduced H.R. 804 to bar money servicing businesses from engaging in any transaction involving Chinese CBDC.

HFSC Plans Wide-Ranging China Attack

Emphasizing the priority Republicans have placed on U.S.-China policy, HFSC’s staff memo for Tuesday’s full committee hearing details numerous initiatives the panel may advance to isolate China and the Communist Party from the U.S. and global financial system.

HFSC Anti-Woke Group Targets SEC, Proxy Voting

Following his promise to go after “woke” policies during the HFSC organizational meeting, Chairman McHenry (R-NC) today announced the formation of a Republican ESG working group. It has no legislative jurisdiction and will instead combat the “far-left” influence over capital markets by addressing SEC regulatory “overreach,” reinforcing the materiality standard for disclosures, and preventing the misuse of the proxy process.

Daily020323.pdf…

6 06, 2022

DAILY060622

Eliza Allen2023-02-10T15:53:41-05:00June 6th, 2022|2- Daily Briefing|

US Sanctions Bosnians for “Destabilizing Action”

In an unusual move, Treasury today sanctioned two officials from Bosnia and Herzegovina for “destabilizing behavior.” The order cites various actions related to efforts to reawaken conflicts from the 1990s, noting for example that the sanctioned individuals refused to nominate judges to fill court vacancies and changes in jurisdiction designed, the U.S. asserts, to undermine what the 1995 Dayton Agreement advocated for.

Daily060622.pdf…