#sanctions

30 01, 2024

DAILY013024

2024-01-30T17:13:26-05:00January 30th, 2024|2- Daily Briefing|

FinCEN Estimates High Bank-BOI Reporting Costs

FinCEN via the Federal Register today requested comment on the estimated total annual reporting and recordkeeping burden for new Access Rule beneficial ownership information (BOI) reporting requirements (see FSM Report AML135).

Brown Puts More Pressure on Powell

Following Sen. Warren’s rate-cut demands and affordable housing concerns yesterday, Senate Banking Committee Chairman Brown (D-OH) today sent a letter to FRB Chair Powell also calling for less restrictive monetary policy on grounds that elevated rates negatively impact home affordability, limit the housing supply, restrict small business growth, and dampen wages.

HFSC Targets China Sanctions, Outbound Investments

Today’s HFSC National Security Subcommittee Hearing focused on China sanctions and restrictions on outbound investments.

GOP Demands Retraction of CFPB Tech-Payment Proposal

Reiterating their opposition to the Bureau’s pending digital-payment rule (see FSM Report PAYMENT27), HFSC Chairman McHenry (R-NC) alongside Digital Assets Subcommittee Chairman Hill (R-AR) and Rep. Flood (R-NE) sent a letter today urging the CFPB to reopen and extend the comment period and reconsider finalizing the rule as proposed.

Daily013024.pdf

24 01, 2024

Daily012424

2024-01-25T10:33:20-05:00January 24th, 2024|2- Daily Briefing|

FSB Plans Resolution Refinement, New Repo Standards

Renewing much of what it has said in the past, the FSB today released its 2024 official work program. Although the FSB’s head said earlier this week that current FSB resolution standards suffice, global standards are still set to be finalized for resolution reforms, which include a toolkit for CCP resolution authorities to be completed in May as well as publication of a list of insurers subject to the resolution planning standards in December.

CFPB Goes After Fees Banks Have Yet to Charge

Tackling fees it acknowledges banks have yet even to charge, the CFPB today proposed banning NSF fees for real-time non-processed transaction declines such as those at ATMs.

Senate Advances “Nuclear” Asset-Seizure Option

Following a 40-0 vote in the House Foreign Affairs Committee, the Senate Foreign Relations Committee today voted 20-1 (Paul, R-KY) for S.2003, legislation giving the White House clear authority to seize frozen Russian assets to assist Ukraine.

Daily012424.pdf

18 12, 2023

Karen Petrou: Why U.S. Soft Power is So Squishy

2023-12-18T09:28:13-05:00December 18th, 2023|The Vault|

Late last week, Treasury issued a super-perky blog post asserting that U.S.-led sanctions will soon subdue Russia’s military might.  However, judging by the data Treasury rallies, saying sanctions subdued Russia’s war-making capabilities is akin to a Yorkie’s confidence that it can tackle a Rottweiler.  The terrier can indeed get in a few painful nips, but bring the big dog down?  It could if sanctions worked.  But, they don’t.  The more Treasury persuades itself they do, the faster U.S. might dissipates thanks to resolute attacks and internal insouciance.

Why has U.S. soft power gone so squishy?  Some problems are of the U.S.’s making, some not, but all pose a significant challenge as the world has again become a very dangerous place for a faltering super-power that not-unreasonably still thinks of itself as the bastion of democracy.

As I noted in a talk last week, one foundation of American might has long been the “Almighty dollar.”  As a lot of data make clear, the dollar remains potent, but it’s no longer decisive.  Nations come and go as reserve-currency issuers and the U.S. is going because, as I detail, it’s squandered the payment-system, financial-market efficacy, sovereign-obligation impregnability, and unquestioned rule-of-law pillars on which reserve-currency status rests.  Enemies wielding currencies they seek to turn into global go-tos combined with the anonymity and evasion power of digital assets don’t help, but the U.S. seems to be doing its damnedest to speed the dollar’s demise not by express action, but rather by unfounded assumptions that, …

18 12, 2023

m121823

2023-12-18T09:26:36-05:00December 18th, 2023|6- Client Memo|

Why U.S. Soft Power is So Squishy

Late last week, Treasury issued a super-perky blog post asserting that U.S.-led sanctions will soon subdue Russia’s military might.  However, judging by the data Treasury rallies, saying sanctions subdued Russia’s war-making capabilities is akin to a Yorkie’s confidence that it can tackle a Rottweiler.  The terrier can indeed get in a few painful nips, but bring the big dog down?  It could if sanctions worked.  But, they don’t.  The more Treasury persuades itself they do, the faster U.S. might dissipates thanks to resolute attacks and internal insouciance.

m121823.pdf

17 02, 2023

Al022023

2023-02-17T12:18:34-05:00February 17th, 2023|3- This Week|

Will Any Crypto Be Left For Congress?

Although media last week seems suddenly to have discovered that banking is getting a divorce from cryptoassets, FedFin noted the inevitability of a parting following our analysis of the Fed’s crypto standards (see FSM Report CRYPTO31), the inter-agency statement reaffirming it, and Basel’s tough stand on crypto-related capital requirements (see FSM Report CRYPTO37).  Many in the cryptoverse have demanded that the SEC stop de facto regulation via tough enforcement actions, but they may well think differently when they look at the agency’s new proposal for crypto-related custody.  As we noted last week, this proposal has broad implications for custodian banks and the investment advisers who need them, but its stringent new standards could be so toxic to cryptoassets as to reconfigure them into the tokenized versions of fiat-currency obligations to which the banking agencies and the SEC are far more friendly.

Al022023.pdf

17 02, 2023

DAILY021723

2023-02-17T12:16:37-05:00February 17th, 2023|2- Daily Briefing|

Senate Dems Frame FRB-Nomination Demands

In conjunction with a bill spearheaded by Sen. Jack Reed (D-RI), Banking Chairman Brown (D-OH) joined other Democrats yesterday in introducing S. 496, legislation to require that the Federal Reserve Board have a governor dedicated to worker interests much as the seat now held by Gov. Bowman is by law required to focus on community-bank considerations.  The measure was also introduced in the last Congress and was then as now intended more to send a signal to the White House about the candidates Senate Banking will view with the greatest favor rather than as a serious effort to change the law.

Swiss Bank Role In SEC Crypto Action Sure To Hike Pressure On Banking Agencies

We draw to your attention the reference to a Swiss bank in the SEC’s enforcement order against Terraform Labs and its founder, Do Kwon.  Although criticized today by Republicans as an example of the SEC’s prior regulatory failures, the order itself is unsurprising given that Mr. Kwon is a fugitive and the algorithmic stablecoin’s collapse shocked previously complacent crypto markets and regulators.  The SEC’s order says only that $100 million was illegally transferred into a “Swiss bank,” not naming the institution.

Daily021723.pdf

27 01, 2023

DAILY012723

2023-01-27T17:09:47-05:00January 27th, 2023|2- Daily Briefing|

IOSCO Report Calls for More Hedge-Fund Liquidity Data, Studies Continue on MMFs/OEFs

IOSCO today released its Investment Funds Statistics Report, consisting almost entirely of data on matters such as leverage, portfolio liquidity, and fund exposures.  The paper also mentions recent SEC proposals to amend the investment adviser reporting form and to require more frequent portfolio reporting.

Fed Takes Tough Stand Against Wyoming Crypto Charter

The Federal Reserve today took two policy-making actions cracking down on non-traditional charters.  We will shortly provide clients with an alert and then an in-depth analysis of a new Fed policy redefining state-member bank charter powers.

Fed Not Only Quashes Custodia, But Also Constrains Non-Traditional Charter Powers

In addition to rejecting Custodia’s member application (see prior FedFin alert), the Fed today issued a sweeping policy statement scuttling efforts to use uninsured state member banks for activities  impermissible for state IDIs and, in most cases, those allowed for national banks.

White House Expands Crypto Legislative Demands

In a new White House crypto “roadmap,” National Economic Council Director Brian Deese largely reiterated actions such as those by the Fed today and ongoing efforts to block AML and sanctions violations in this volatile sector.

Daily012723.pdf

25 01, 2023

DAILY012523

2023-01-25T16:55:15-05:00January 25th, 2023|2- Daily Briefing|

SEC Re-Proposes Rule Targeting ABS Conflicts of Interest

The SEC today voted 5-0 to re-propose a controversial 2011 rule required under the Dodd-Frank Act (see FSM Report ABS17) barring the kinds of conflicts of interest all too evident before the great financial crisis related to asset-backed securitizations (ABS).  Although the vote was unanimous, GOP commissioners had significant concerns with the proposal, several of which were shared by Democratic Commissioner Crenshaw.  Questions on which the SEC will seek comment or where regulatory changes are possible include the extent to which internal firewalls could be considered sufficient under the law as barriers to conflicts of interest and/or if disclosures to investors are a possible alternative.

FinCEN Targets CRE Sanctions Evasion

Building on its sanctions evasion alert last year, FinCEN today issued an alert detailing red flags that may signal potential sanctions evasion via U.S. CRE investment.  Citing the lack of visibility in CRE markets and its large proportion of foreign investors, FinCEN again warns that Russian oligarchs may use shell companies, third-parties, or other proxies to circumvent money laundering and beneficial ownership controls.  It also lists the use of an offshore private investment vehicle, ownership of CRE through multiple jurisdictions without a clear business purpose, and failure to disclose beneficial ownership information, among others, as potential red flags that may warrant a suspicious activity report.

Daily012523.pdf

23 11, 2022

DAILY112322

2022-11-23T12:42:48-05:00November 23rd, 2022|2- Daily Briefing|

OFAC Updates Guidance For Price-Cap Sanction Compliance

Reflecting ongoing negotiations about the level of the oil-price cap, OFAC last night provided updated guidance to banks and insurers about when transactions may violate this latest sanction.  The new guidance identifies “covered services” for financing; this means a commitment for the provision or disbursement of debt, equity, or economic resources related to the maritime transport of Russian oil.  However, and as before, U.S. persons are authorized to provide covered services if the Russian oil is purchased at or below the price cap.

FDIC Signals Tougher GSIB Resolution Reviews

With the FDIC signaling a tough new approach to resolution plan approval, the FRB and FDIC today announced the results of the resolution plans filed by U.S. GSIBs in July, 2021.  All the banking organizations saw their plans approved except for Citigroup, which had noted shortcomings due to data quality and management concerns; the bank now has until January 31, 2023 to submit a revised plan.  FDIC Acting Chairman Gruenberg noted that, going forward, the agencies will conduct more detailed reviews of internal testing results and independent capability assessments.

Daily112322.pdf

20 10, 2022

DAILY102022

2022-10-20T17:36:06-04:00October 20th, 2022|2- Daily Briefing|

Fed Staff Study: Climate Risk-Based Capital Impossible for Foreseeable Future

FRB staff released a stylized study of one critical climate-risk policy question:  the extent to which banks should hold capital against it.  Members of Congress have suggested this over recent years (see FSM Report GREEN9) and the BIS at the outset of its thinking recommended both “brown-penalty” and “green-incentive” capital charges (see Client Report GREEN).

FSB Presses for MMF, Open-End Rules; Government-Bond CCPs

Continuing its NBFI focus (see Client Report NBFI), the FSB today issued new recommendations to address government-security market illiquidity.

Gruenberg Gives No Clue as to Timing, Content of Inter-Agency Crypto Guidance

In remarks today, Acting Chairman Gruenberg reiterated the risks laid out in the FSOC digital asset report (see Client Report CRYPTO33), repeated warnings against misrepresenting FDIC deposit insurance, and announced forthcoming interagency crypto guidance without providing any details or timeline.

Bipartisan Senators Press Secondary Sanctions for Enactment

Sens. Toomey (R-PA) and Van Hollen (D-MD) released a readout of a conversation with the Ukrainian Ambassador on the upcoming G7 Russian oil price cap, positioning their oil sanctions amendment for inclusion in the National Defense Authorization Act (NDAA) in light of the Ambassador’s support for it.

Warren Calls for Stronger, More Transparent CFPB Remittance Rule

Joined by four Senate Democrats, Sen. Warren (D-MA) today sent a letter to CFPB Director Chopra asking that the agency strengthen its remittance rule to ensure greater transparency for exchange rates and fees it …

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