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MoFo Reenforcement

The Enforcement Blog

FinCEN Issues a Proposed Beneficial Ownership Rule

Posted in Regulatory Developments

On December 7, 2021, the Financial Crimes Enforcement Network issued a Notice of Proposed Rulemaking to implement the beneficial ownership information reporting provisions of the Corporate Transparency Act, which was contained in the Anti-Money Laundering Act of 2020. The Proposed Rule addresses comments that FinCEN received in response to its April 5, 2021 Advance Notice of Proposed Rulemaking. FinCEN asserts that collecting and providing BOI to law enforcement, financial institutions, and other authorized users will help combat corruption, money laundering, terrorist financing, tax fraud, and other illicit financial activity. The agency is accepting comments on the NPRM until February 7, 2022.

This is the first of three rulemakings to implement the CTA, and FinCEN will issue additional rules on (1) persons authorized to access BOI and for what purposes, and the safeguards imposed to protect BOI; and (2) revisions to the Customer Due Diligence rule, which only applies to financial institutions.

Read our client alert.

CFPB Releases Fifth Report on the Consumer Credit Card Market

Posted in CFPB

On September 29, 2021, the Consumer Financial Protection Bureau released its fifth biennial report on the consumer credit card market. The Report summarizes the impact of the Credit Card Accountability Responsibility and Disclosure Act on the consumer credit card market. The Bureau issued the Report pursuant to the CARD Act’s requirement that the CFPB conduct a biennial review of this market.

The Report updates the results from the CFPB’s 2019 Report and details the CFPB’s recent review of the consumer credit card market, covering 2019–2020. The review also considered responses to the Bureau’s August 2020 request for information, as well as other data from regulators, industry, and consumers.

Read our client alert to see several highlights of the Bureau’s key findings.

CFPB Issues Small Business Data Collection Proposed Rule

Posted in CFPB

On September 1, 2021, the Consumer Financial Protection Bureau (CFPB or “Bureau”) issued its long-awaited small business lending data collection proposed rule (“Proposed Rule” or “Proposal”). The Proposed Rule would implement Section 1071 of the Dodd-Frank Act, which amended the Equal Credit Opportunity Act (ECOA) to direct the CFPB to require financial institutions to collect and report loan data on women-owned, minority-owned, and small businesses (collectively, “Small Businesses”) in connection with applications for credit. Under the Proposed Rule, covered financial institutions would be required to disclose application data from Small Businesses and demographic information about credit applicants.

Read our client alert.

Federal Banking Regulators Release Guide for Community Banks Conducting Due Diligence on Fintech Companies

Posted in Regulatory Developments

On August 27, 2021, the Federal Reserve Board, the FDIC and the OCC (the “Agencies”) jointly released a guide titled “Conducting Due Diligence on Financial Technology Companies — A Guide for Community Banks” (the “Guide”), which is intended to help community banks assess risks when considering relationships with fintech companies. While the Guide is not binding in its own right, it draws upon existing regulatory requirements and supervisory guidance — and, according to the Agencies, is consistent with proposed interagency guidance — and should be viewed by community banks both as a useful source of due diligence best practices and as a preview of potential areas of focus in future regulatory examinations. Fintech companies desiring to provide services to, or to collaborate with, community banks may find the Guide to be an important roadmap to the information and assurances community banks will expect to receive from fintech companies in discussions regarding future relationships.

Read our client alert.

Stop in the Name of the True Lender: President Biden Repeals OCC True Lender Rule

Posted in Regulatory Developments

On June 30, 2021, President Biden signed a Congressional Review Act (CRA) resolution rescinding the OCC True Lender Rule, a bright-line rule issued in October 2020 to simplify the standards governing when a traditional bank in a partnership with a non-bank is the “true lender.” The rule provided that a bank is the true lender if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan.

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AMLA Implementation: FinCEN Requests Input on Beneficial Ownership Rule

Posted in Regulatory Developments

Following the enactment of the Anti-Money Laundering Act of 2020 (AMLA), which encompasses the Corporate Transparency Act (CTA), the Financial Crimes Enforcement Network (FinCEN) published an Advance Notice of Proposed Rulemaking (ANPR) on April 5, 2021, to implement Section 6403 of the CTA, relating to beneficial ownership reporting. In the ANPR, FinCEN solicits comment within 30 days on 48 questions that cover, among other topics, reporting requirements, the beneficial ownership registry, and disclosure of beneficial ownership information (BOI) to third parties.

Read our client alert.

 

Stop; Reverse That: CFPB Rescinds Abusiveness Policy Statement

Posted in CFPB

On March 11, 2021, the Consumer Financial Protection Bureau (CFPB or “Bureau”) issued a Rescission of Statement of Policy rescinding its January 24, 2020 Policy Statement regarding the prohibition on abusive acts or practices (“2020 Policy Statement”). The CFPB indicates that it is rescinding the 2020 Policy Statement “to better protect consumers and the marketplace … and to enforce the law as Congress wrote it.” The Bureau’s action signals a return to the “Know It When You See It” standard for UDAAP abusiveness, which will require regulated entities to “read the tea leaves” based on allegations in enforcement actions and statements in CFPB supervisory guidance and the CFPB examination manual.

Read our client alert.

FDIC Brokered Deposits Final Rule: Key Aspects for Broker Dealers

Posted in Regulatory Developments
On January 22, 2021, the Federal Deposit Insurance Corporation (“FDIC”) published its final rule (“Final Rule”) revising and modernizing its regulations related to brokered deposits and the interest rate restrictions that apply to insured depository institutions (“IDIs”) that are less than well capitalized. Under Section 29 of the Federal Deposit Insurance Act, certain IDIs that are not well capitalized are prohibited from accepting, or require a waiver to accept, deposits from a deposit broker. Section 29 defines a “deposit broker” and sets forth nine exclusions from the definition of deposit broker. The Final Rule establishes a new framework for analyzing certain aspects of the “deposit broker” definition, including what constitutes “facilitating” the placement of deposits and what business arrangements satisfy the “primary purpose exception.” This alert summarizes the Final Rule and identifies key aspects for broker dealers.

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A Sign of Things to Come: The California DFPI Exercises Its New Authority in Regulating Earned Wage Access Products

Posted in Regulatory Developments

The law creating a new California mini-CFPB took effect on January 1, 2021, and a few weeks later, the California Department of Financial Protection and Innovation (DFPI) entered into “first-of-their kind” memoranda of understanding (MOUs), by which the DFPI will regulate earned wage access (EWA) products offered by five companies in California. These MOUs follow the CFPB’s issuance of an advisory opinion for EWA products, but they go much further in imposing pricing limitations and reporting and examination obligations for products that the DFPI gained authority to regulate under the new California Consumer Financial Protection Law (CCFPL). These MOUs, along with the CFPB’s advisory opinion, signal creation of regulatory guardrails for previously unregulated products. They also reflect the DFPI’s continued focus on capping interest rates for financial products offered in California.

Read our client alert.

OCC Permits National Banks and Federal Savings Associations to Use Independent Node Verification Networks and Stablecoins for Payment Activities

Posted in Regulatory Developments, Uncategorized

As part of the Office of the Comptroller of the Currency’s (OCC) declared effort to keep pace with a mounting demand for faster, cheaper, and more efficient payments, and the widespread adoption of new technologies, the agency’s Senior Deputy Comptroller & Chief Counsel issued an interpretive letter on January 4, 2021 (the “Interpretive Letter”) clarifying the permissibility of independent node verification networks (INVNs) and related stablecoins. Under the Interpretive Letter, national banks and federal savings associations (FSAs) may use such new technologies to conduct bank-permissible functions, as long as such activities are conducted in a safe and sound manner and in accordance with applicable law.

The Interpretive Letter comes shortly after the release of a December 23, 2020 statement from the President’s Working Group on Financial Markets (the “Working Group Statement”) on the regulatory and supervisory considerations for stablecoin arrangements. The Working Group Statement encourages responsible payments innovation, while highlighting the requirement to strictly comply with applicable law, including all relevant anti-money laundering (AML), countering the financing of terrorism (CFT), and economic sanctions obligations. The OCC shares the Working Group Statement’s emphasis on the importance of legal compliance in the development of INVN and stablecoin arrangements.

Read our client alert.