#SAR – Federal Financial Analytics

29 03, 2024

DAILY032924

Eliza Allen2024-03-29T12:07:52-04:00March 29th, 2024|2- Daily Briefing|

Treasury, FinCEN Pulled Into Firearm MCC Fray

Following her December letter to major payment networks, Sen. Warren (D-MA) and Rep. Dean (D-PA) lead 31 Democratic lawmakers urging Treasury, FinCEN, and the banking agencies to issue clear guidance instructing financial institutions and payment-card networks to implement the new Merchant Category Code (MCC) for firearm and ammunition retailers. Notably, they now press Treasury to use powers they seem to presume Treasury has to set a federal mandate for code use that would then preempt state prohibitions on transaction identification in this high-impact political arena. The letter also calls on FinCEN to issue an advisory about acts that may precede gun crime and firearm-purchase scenarios that should trigger SARs. Answers to questions pressing these policies are due by April 11.

Daily032924.pdf…

14 02, 2024

DAILY021424

Eliza Allen2024-02-14T17:29:47-05:00February 14th, 2024|2- Daily Briefing|

Global Regulators Propose Ways to Limit Variation-Margining Stress

As promised, CPMI and IOSCO have issued a discussion paper on CCP and clearing-member variation-margin practices. The global agencies propose eight principles to enhance the likelihood that margins will be covered in stress situations, a continuing challenge based on a recent IMF paper finding that up to a third of EU active-derivatives users would not be able to meet variation-margin calls under stress and would thus turn to liquidating MMF shares or other assets in a manner likely to amplify market stress.

HFSC Deploys Power of the Purse to Pressure FinCEN

As anticipated, today’s HFSC hearing with Treasury and FinCEN was highly partisan, with Republicans continuing to blast FinCEN for what they call SAR surveillance and now threatening to block any increased funding for FinCEN until it also improves beneficial-ownership reporting to the GOP’s liking. Rep. Loudermilk (R-GA) also criticized FinCEN for failing to release the statutorily-mandated BSA review and the $10,000 threshold review.

Barr Sees Banking System as Strong, Liquid

In remarks today, FRB Vice Chair Barr emphasized that, despite pockets of risk and CRE worries, the banking system is sound and he sees no liquidity-risk concerns across the financial system. Still, March 2023 taught hard lessons, he said, with banks since taking significant steps to reduce HTM holdings and enhance liquidity resilience.

Daily021424.pdf…

19 07, 2023

DAILY071923

Eliza Allen2023-07-19T16:57:05-04:00July 19th, 2023|2- Daily Briefing|

FTC/DOJ Propose Sweeping M&A Rewrite

Following an extensive inquiry into a new U.S. merger construct, the Department of Justice and Federal Trade Commission today released a draft formal policy statement that would codify issues previously raised in areas such as a transaction’s implications for workers.

White House Leaves Bank “Junk Fee” Attack As Is

Acting on President Biden’s competition executive order (see Client Report MERGER6), the White House today announced a slate of actions aimed at lowering consumer costs and promoting competition.

Bipartisan Senators Introduce New DeFi-AML/Sanctions Framework

Senator Reed (D-RI) yesterday introduced legislation along with Sens. Warner (D-VA), Rounds (R-SD), and Romney (R-UT) targeting DeFi-related money laundering and sanctions evasion.

Dems Reintroduce Bill Requiring Instant Consumer Deposit Access

Sens. Van Hollen (D-MD) and Warren (D-MA) and Reps. Pressley (D-MA) and Lynch (D-MA) have reintroduced the Payments Modernization Act, which requires financial institutions to recognize deposited funds in real-time and clarifies the moot point of whether the Fed has existing authority to build a real-time payments system.

Daily071923.pdf…

25 01, 2023

DAILY012523

Eliza Allen2023-01-25T16:55:15-05:00January 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…

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…

11 04, 2022

CBDC11

Arezou Rafikian2023-03-02T11:28:47-05:00April 11th, 2022|1- Financial Services Management|

Treasury Digital Dollar

Progressive Democrats in the House have introduced an alternative digital-dollar proposal (“e-cash”) to the “FedAccount” construct urged by Senate progressives that mandates an electronic currency created by the Treasury Department to devise an electronic substitute for physical fiat currency. The measure acknowledges at least some of the challenges in doing so (e.g., obstacles for those with disabilities or limited broadband access), but nonetheless mandates a very fast-paced implementation schedule that is governed by a new Treasury office with senior status and considerable independence. While a new inter-agency council would be established to address issues such as conflicts between e-cash issuance and monetary policy, the bill itself otherwise fails to address this fundamental question, as well as many others such as how it achieves privacy and anonymity goals….

CBDC11.pdf…

30 03, 2022

DAILY033022

Eliza Allen2023-03-27T14:58:35-04:00March 30th, 2022|2- Daily Briefing|

Overdraft Hearing Sure to Raise Fee, Inclusion Concerns

Although the HFSC memo on tomorrow’s overdraft hearing tees up legislation for possible action, we expect the Consumer Protection Subcommittee hearing to be a rhetorical exercise pressuring banks which still charge what Democrats, as well as Acting Comptroller Hsu and CFPB director Chopra, view as punitive fees.

FDIC Joins Campaign for Climate-Risk Management Standards

The FDIC today issued a request for comment on climate-risk management similar in many respects to the OCC’s outstanding release (see FSM Report GREEN12).

Senators Urge Treasury, SEC to Close Private Investment Sanctions Gap

Sens. Warren (D-MA) and Whitehouse (D-RI) today asked in a letter to Treasury and the SEC to accelerate closing the AML/CFT gap posed by private investment firms.

CFPB Revs Up Democratic Overdraft Anger

Ahead of tomorrow’s overdraft hearing, the CFPB today put out a strong blog post saying that, while some banks have properly addressed consumer risk, many have yet to do so.

Senate Dems Demand More Small-Business Lending

Senate Banking Committee Chairman Brown (D-OH), Majority Whip Durbin (D-IL), and eight other Democrats today wrote to all the banking agencies demanding that they do something to ensure that banks lend more to small businesses.

Daily033022.pdf…

16 03, 2022

DAILY031622

Eliza Allen2023-04-03T14:41:40-04:00March 16th, 2022|2- Daily Briefing|

U.S. Merger Construct Clarity Delayed

The DOJ and FTC have extended the deadline for comment on the current U.S. antitrust construct.

Bureau Casts Wide, Sharp Net for Consumer-Finance Discrimination

Renewing his pledge to stamp out financial discrimination, CFPB Director Chopra today announced a new enforcement policy based on a revised examination manual.

Warren Demands Still More Antitrust Reform

Building on her campaigns against bank mergers (see FSM Report MERGER8) and more recent, broader competition concerns, Sen. Warren (D-MA) and Rep. Jones (D-NY) have introduced legislation barring large mergers in any sector and allowing the Department of Justice or FTC to break up companies without necessary resort to court order.

OCC Opens Window to AML Regtech

The OCC has finalized a rule based on its proposal allowing exemptions to SAR filing requirements for national banks and federal thrifts whose AML-compliance programs satisfy a set of criteria designed to spur regtech without undermining compliance. The final rule clarifies a critical question by making it clear that the OCC can only grant an exemption if FinCEN concurs.

Fed-Nominee Voting Advances

Due to the Fed’s monetary-policy shift, today’s press conference after the FOMC meeting provided few insights into regulatory policy. Chairman Powell reiterated that he would like a full Board complement but the System is functioning fine without one.

Daily031622.pdf…

7 03, 2022

DAILY030722

Eliza Allen2023-04-04T12:23:58-04:00March 7th, 2022|2- Daily Briefing|

Liang Reiterates Climate, Digital Worries

Treasury Under-Secretary Liang’s comments to international bankers today addressed the U.S. financial-reform agenda after noting market turbulence and reiterating the importance and effectiveness of current Russian sanctions.

Mandatory Disclosures for Mandatory Arbitration?

Ahead of a hearing tomorrow, Senate Banking Chairman Brown (D-OH) released a statement on S. 3755, legislation cosponsored by senior Democrats on both the Banking and Judiciary Committees banning pre-dispute arbitration clauses and class-action waivers.

Hsu Emphasizes Sanctions Compliance, Climate, Inclusion

Acting Comptroller Hsu today told international bankers that they must ensure compliance with U.S. sanctions, heighten cybersecurity vigilance, and work together to protect continuing trust in cross-border finance.

FinCEN Sets Up Red Flags, High Alert

FinCEN today issued sanctions “red flags”, assisting compliance, but also laying out clearer markers for enforcement should its concerns about cryptocurrency and other possible evasions remain at individual institutions or exchanges. The release emphasizes SARs for immediate reporting of suspicious activities related to Russian state actors and/or oligarchs and related entities.

GOP Seeks to Widen Russian Financial Sanctions

As Congress and the White House wrestle with additional ways to sanction Russia, senior House Republicans today have advanced a package of bills which may well find at least some Democratic support. Among the most likely to advance on a bipartisan basis is H.R. 6900 from Rep. Huizenga (R-MI) expanding current sanctions on Russian sovereign debt to bar U.S. financial institutions from secondary dealings in Russian sovereign debt regardless of issuance date.

Daily030722.pdf…

18 01, 2022

Daily011822

Arezou Rafikian2023-04-24T13:38:11-04:00January 18th, 2022|2- Daily Briefing|

FinCEN Takes Cautious Steps to AML Innovation
In remarks just released today, Acting FinCEN Director Him Das largely revisited recent FinCEN actions in response to Congressional requirements.

Brown Lays Out Fed Confirmation Plan
Senate Banking Chairman Brown (D-OH) today told press that he will accelerate hearings on Fed-nominees Bloom Raskin, Cook, and Jefferson as well as seek floor time in early February. He did not make it clear if he hopes to package all these nominations with Mr. Powell’s in hopes that this will provide additional votes, but Senate procedure requires votes on each nomination even if all are taken up together.

DOJ/FTC Propose Structural Antitrust Rewrite
Although the Department of Justice already has opened the door for public comment on bank mergers (see FSM Report MERGER10), it and the Federal Trade Commission today sought comment on the entire U.S. antitrust construct.

Daily011822.pdf…