FinCEN Ruling Clarifies Currency Transaction Report (CTR) Filing Obligations of Financial Institutions

By Carl A. Fornaris, Kyle R. Freeny ‡ and Marina Olman-Pal on Posted in Financial Crimes Enforcement Network, GT Alert, white collar

On Feb. 10, 2020, the U.S. Department of the Treasury, Financial Crimes Enforcement Network (FinCEN) published administrative ruling FIN-2020-R001, to clarify requirements of financial institutions reporting on currency transactions involving sole proprietorships and legal entities operating under a “doing business as” (DBA) name (“FinCEN Ruling”). The FinCEN Ruling, which becomes effective April 6, 2020 (Sept. 1, 2020, for BSA E-Filing batch filers), replaces and rescinds two previous FinCEN rulings: FIN-2006-R003 and FIN-2008-R001, which were based on the now obsolete FinCEN Form 104. The FinCEN Ruling addresses reporting obligations when filing using the current CTR FinCEN Form 112.

Read the full GT Alert, “FinCEN Ruling Clarifies Currency Transaction Report (CTR) Filing Obligations of Financial Institutions.”

* Special thanks to Laura Buchholz for her valuable assistance in preparing this GT Alert.

FDIC and OCC Extend Comment Period for Proposed Changes to the Community Reinvestment Act Regulations

By Jennifer D. Newton on Posted in banking, Banks, FDIC, Investment Regulation

On Feb. 19, the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency (collectively, the “Agencies”) announced an extension of the public comment period on the Notice of Proposed Rulemaking (NPRM) to amend the regulations implementing the Community Reinvestment Act (CRA). The Agencies announced they are extending the public comment deadline to April 8, 2020.

The Agencies previously released proposed regulations on Dec. 12, 2019, seeking to make comprehensive changes to the CRA regulatory framework. The purpose of the proposed changes is to ensure the CRA remains an effective and efficient tool for encouraging banks to serve the needs of their communities. The proposed rule seeks to amend the CRA in four key areas: (1) clarifying the type of activities that would qualify for CRA credit; (2) expanding the type of activities and the location of the activities that would count toward CRA obligations; (3) establishing an objective standard to evaluate a bank’s CRA performance; and (4) revising data collection, recordkeeping and reporting of CRA activities.

The initial comment period on the NPRM was set to close on March 9, 2020. However, the Agencies received written requests asking to extend the comment period. After finding that an extension of the comment period would provide the public an additional opportunity to prepare comments to address the matters raised by the NPRM, the Agencies concluded it was appropriate to grant a 30-day extension of the NPRM comment period to April 8, 2020.

The CRA has not been substantially updated since the 1990s. The extension of the comment period offers banks and other CRA stakeholders a keen opportunity to modernize the current regulatory framework.

LIBOR Transition Newsletter – Issue 3

By Oscar Stephens, Graeme McLellan, Arleen A. Nand, Sylvie A. Durham and Susan E. D. Neuberg on Posted in Client Alert, GT Alert, LIBOR

Welcome to the third issue of Greenberg Traurig’s LIBOR Transition Newsletter, where we provide updates, analysis, and occasional commentary on the latest developments relating to the highly anticipated phasing-out of LIBOR at the end of 2021 – less than two years from now. This issue covers the following:

  • ARRC Releases a Consultation on Potential Spread Adjustment Methodologies
  • Bank of England, FCA and Sterling Working Group Joint Statement
  • Other Recent Developments, including comments from Federal Reserve Chairman Jerome Powell
  • Most-Favored Nation Clauses in LIBOR Fallback Provisions

Read the full GT Libor Transition Newsletter.

Crypto Asset Custody Regulations in Japan

By Makoto Koinuma on Posted in Blockchain, Blockchain Technology Task Force, Client Alert, cryptocurrency, GT Alert

On Jan. 14, 2020, the Financial Services Agency of Japan published draft amendments of enforcement orders, cabinet office ordinances and guidelines concerning the recently amended and enacted crypto asset laws. The amended laws enhance the regulations on transactions related to crypto assets, such as cryptocurrency trades and administration, crypto derivatives, and security token offerings.

The proposed amendment provides details for the regulations on crypto assets, including those on crypto custody services.

Read the full GT Alert.

SEC Issues MD&A Disclosure Guidance and Proposes Amendments to Modernize and Enhance MD&A Financial Disclosures

By Laurie L. Green, Barbara A. Jones, Marc M. Rossell, Maria Sendra, Jason K. Zachary and María Velasco on Posted in Capital Markets, Client Alert, Financial Regulation, GT Alert, Securities, Securities and Exchange Commission

On Jan. 30, 2020, the Securities and Exchange Commission (SEC) issued (i) guidance regarding the disclosure of key performance indicators (KPIs) and metrics in Management’s Discussion and Analysis, or MD&A (the “Guidance”), which is effective immediately and applies to the upcoming annual reports on Form 10-K and 20-F as well as related earnings releases; and (ii) a proposal to eliminate duplicative disclosures required by Regulation S-K Items 301 (Selected Financial Data), Item 302 (Supplementary Financial Information), and Item 303 (MD&A), and modernize and enhance MD&A disclosures for the benefit of investors, while simplifying compliance efforts for companies (the “Proposed Amendments”). In addition, on Jan. 24, 2020, the SEC staff issued certain Compliance & Disclosure Interpretations, or C&DIs, to clarify recent changes that allow companies to omit in the MD&A the earliest of the three years in certain circumstances. This GT Alert summarizes the guidance and proposed amendments.

Read the full GT Alert.

2020 SEC Exam Priorities for Securities Industry Registrants

By Richard M. Cutshall and Vincent Lewis on Posted in Brokers, Client Alert, Compliance, FINRA, Fintech, GT Alert, investment advisor, OCIE, SEC, Securities and Exchange Commission

The Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission (SEC) released its annual list of 2020 Examination Priorities on Jan. 7, 2020. Many of OCIE’s 2020 examination priorities, including the focus on retail investors, fraud, conflicts (and related disclosures), among others, are perennial risk areas that OCIE routinely prioritizes. While the SEC release discusses new issues in greater detail than continuing areas of interest, practitioners must continue to focus on these areas and monitor whether the SEC provides guidance throughout the year.

Most securities industry participants (with a specific emphasis on registered investment advisers (RIAs), broker-dealers, registered investment companies, municipal advisors, and transfer agents) are subject to examination. Such examinations remain firmly grounded in four pillars: promoting compliance, preventing fraud, identifying and monitoring risk, and informing policy. Accordingly, OCIE has continued its practice of organizing its priorities around thematic areas. This year’s areas are:

  • Retail Investors, Including Seniors and Those Saving for Retirement
  • Information Security
  • Financial Technology (Fintech) and Innovation, Including Digital Assets and Electronic Investment Advice
  • Additional Focus Areas Involving RIAs and Investment Companies
  • Additional Focus Areas Involving Broker-Dealers and Municipal Advisors
  • Anti-Money Laundering (AML) Programs
  • Market Infrastructure
  • Focus on Oversight of FINRA (Financial Industry Regulatory Authority) and MSRB (Municipal Securities Rulemaking Board)

Read the full GT Alert.

FINRA’s 2020 Risk Monitoring and Examination Priorities Letter

By William Mack and Jennifer D. Newton on Posted in Client Alert, Consumer Financial Services, Financial Regulation, FINRA, GT Alert, Regulatory Compliance

On Jan. 9, 2020, the Financial Industry Regulatory Authority (FINRA) released its 2020 Risk Monitoring and Examination Priorities Letter, in which it identifies its areas of examination focus for 2020. The cover note also highlights key changes in FINRA’s risk monitoring and examination program. These changes include the consolidation of FINRA’s three examination programs into a single risk monitoring framework. As part of this new framework, FINRA expects to categorize every FINRA member firm (“Firm”) into one of five business categories: (1) Retail; (2) Capital Markets; (3) Carrying and Clearing; (4) Trading and Execution; and (5) Diversified. Additionally, the cover note details FINRA’s plans to assign each Firm a senior agency leader who will be responsible for the Firm’s examination and risk monitoring.

As part of FINRA’s continuing efforts to provide Firms with compliance and risk management support, the president’s note also points out that this year’s Priority Letter includes a list of practical considerations and questions that Firms may use to assess and evaluate their risk management programs, as well as a new appendix with links to additional FINRA resources related to examination priorities.

Read the full GT Alert.

SEC Publishes OCIE 2020 Examination Priorities

By Richard M. Cutshall on Posted in investment advisor, Investment Regulation, OCIE, Regulatory Compliance, SEC

On Jan. 7, the SEC announced the publication of the annual Office of Compliance Inspections and Examinations (OCIE) 2020 Examination Priorities. In addition to the examination priorities themselves, the 28-page publication includes statistics related to OCIE’s 2019 examination program, touting OCIE’s completion of over 3,000 examinations covering ~15% of registered investment advisers and verification of 31 million investor accounts aggregating over $1.5 trillion in fiscal year 2019. The examination priorities themselves are a mix of perennial classics (conflicts of interest, fee and expense disclosures, never-before/not-recently-examined advisers, market infrastructure, a focus on FINRA and the MSRB), potential new hits and more recent additions (digital assets, electronic investment advice), and exams focused on newly adopted regulations (Regulation Best Interest, the interpretation of investment adviser standard of care, Form CRS).

As further discussions and guidance develop, and the staff clarifies its approach to these topics, we will be issuing clarifying GT Alerts providing guidance to our readers on the SEC staff issues and priorities identified in the release.

Read additional posts on OCIE.

New York State Department of Financial Services Proposes Guidance on Adoption or Listing of Virtual Currencies by Exchanges

By William Mack, Barbara A. Jones, Michele L. Kulerman and India L. Sneed on Posted in Blockchain, Blockchain Technology Task Force, Client Alert, Compliance, convertible virtual currency, cryptocurrency, Financial Regulation, Fintech, GT Alert

In the summer of 2015, the New York State Department of Financial Services (DFS) finalized its regulatory framework for virtual currency firms seeking to conduct certain virtual currency (VC) business activities in the state. Since then, it has issued two dozen licenses and charters involving virtual currency transmission (VC licenses). To promote efficiency and reflect the growing marketplace, DFS has now issued two proposals for which comments are due Jan. 27, 2020. The first proposal would list all current virtual currencies (coins) permitted for business activities of the VC licensees, without prior approval by DFS. The list would be updated if the coins listed have not been subject to modifications, divisions, or change after their listing on the DFS webpage. The second proposal involves a coin-listing framework that would be tailored to the specific VC licensee’s business model and risk profile to create a firm-specific coin listing or adoption policy.

Read the full GT Alert.

LIBOR Transition Newsletter – Issue 2

By Oscar Stephens, Sylvie A. Durham, Arleen A. Nand and Graeme McLellan on Posted in LIBOR

Welcome to the second issue of Greenberg Traurig’s LIBOR Transition Newsletter, which contains updates, analysis, and commentary on the latest developments relating to the highly anticipated phasing-out of LIBOR at the end of 2021 – barely two years from now. This issue covers the following:

  • LSTA – Concept SOFR Credit Agreement
  • Recent Developments
  • Parting Shot – What if Someone Finds the Proposed LIBOR Replacement Fallback Language “Too Long”?

Read the full LIBOR Transition newsletter – Issue 2.

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