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On September 26, the U.S. Department of Treasury announced that FinCEN is repealing a 2004 rule that required certain U.S. financial institutions to terminate correspondent or payable-through accounts for, or on behalf of, two Burmese banks, and to apply due diligence to guard against the banks’ indirect use of correspondent or payable-through accounts. The repeal takes effect upon publication in the Federal Register.
On September 19, FinCEN announced the availability of electronic reporting of cash payments. Under the Bank Secrecy Act any person engaged in a trade or business that, in the course of that trade or business, receives more than $10,000 in cash in one transaction or in two or more related transactions is required to report such transactions. FinCEN encourages covered persons to begin using the new electronic Form 8300 to report cash payments. FinCEN will continue to accept paper filings of Form 8300 for the near future, but eventually will require electronic filing of all reports.
On September 17, FinCEN announced that it will host a roundtable discussion on its proposed customer due diligence requirements on September 28, 2012 in Chicago, Illinois. The announcement identifies a series of “key issues” on which the roundtable discussion will focus, including (i) how institutions currently identify, collect, and verify beneficial ownership information, (ii) the costs associated with collecting and verifying such information, and (iii) how institutions currently conduct due diligence on trust accounts. Last week, FinCEN released a summary of a public hearing held in July on its customer due diligence proposal. The summary provides the final agenda for the hearing, a general summary of topics covered, and statements and other materials submitted for the record.
The DOJ is expected to release soon guidance on compliance with the FCPA, which originally was promised in November 2011 by Assistant Attorney General for the Criminal Division Lanny Breuer. Recent FCPA settlements obtained by the DOJ set the stage for the guidance and provide companies with insight as to what the guidance likely will include. For example, as part of its recent $60 million FCPA settlement, Pfizer agreed to a detailed series of FCPA-specific compliance undertakings, augmenting the more general rendition of program elements. The Pfizer deferred prosecution agreement (i) details the structure of the company’s compliance program staffing and oversight, (ii) mandates the maintenance and content of certain anti-corruption policies and procedures, (iii) provides mechanisms and resources for internal compliance reporting, (iv) requires annual company-wide, corruption-related risk assessments and five market-specific proactive compliance reviews annually, (v) requires thorough corruption-risk diligence prior to acquisitions, (vi) describes a program of third-party diligence and control, and (vii) directs a program of biennial training for specific personnel and directors, and a three-year training rotation for certain third parties. The BuckleySandler FCPA Team has prepared a Client Update and a checklist of the entire list of “Enhanced Compliance Obligations”, allowing compliance counsel to conduct a quick cross-check of their company’s existing compliance program elements.
On September 10, FinCEN announced that its new search application providing access to data collected and maintained by FinCEN is now available for use by authorized users from other state and federal law enforcement and regulatory authorities. FinCEN has completed a series of meetings with other law enforcement officials to introduce them to FinCEN Query, a tool that will allow those authorities to access and analyze eleven years of data collected by FinCEN through its enforcement of the Bank Secrecy Act. The new tool replaces the existing database with updated technology to provide more complex search and analysis capabilities.
On August 20, the U.S. Department of Treasury announced that next month Jennifer Shasky Calvery will replace James Fries as the Director of FinCEN. Ms. Calvery joins FinCEN after a fifteen year career with the U.S. Department of Justice. Most recently she served as Chief of the Asset Forfeiture and Money Laundering Section.
FinCEN Issues Reminder Regarding New AML Compliance Obligations for Non-Bank Residential Mortgage Lenders and Originators
On August 13, FinCEN reminded non-bank residential mortgage lenders and originators (RMLOs) that their obligation to comply with new anti-money laundering (AML) regulations started this week. In February, FinCEN finalized a rule to extend to RMLOs certain AML regulations already applicable to other types of financial institutions, requiring non-bank RMLOs to establish AML compliance programs and file suspicious activity reports (SARs). The rule took effect April 16, 2012, but non-bank RMLOs had until August 13, 2012 to comply. This week’s announcement, as well as an advisory issued by FinCEN on August 16, remind covered companies that all FinCEN reports must be filed electronically and provide other compliance guidance. For additional information and compliance tips, please check out BuckleySandler’s three-part Spotlight Series on these new requirements for non-bank RMLOs.
On August 9, the DOJ and the SEC reportedly halted their respective criminal and civil investigations of a major investment bank with regard to certain of the bank’s mortgage-backed securities offerings. The reports indicate that the DOJ will not pursue criminal charges against the bank or individual employees at this time. The DOJ had begun an inquiry into the bank’s activities at the prompting of the Senate Select Permanent Subcommittee on Investigations, which produced a report in 2011 that was critical of the bank’s MBS activities. According to reports, a separate SEC investigation concerning a $1.3 billion sale of mortgage-backed securities also appears to have been abandoned.
On August 2, the Missouri Attorney General (AG) and the parent company of indicted firm DocX LLC announced a settlement of the state’s criminal allegations that the company engaged in so-called "robosigning." In his February indictment, the AG alleged that DocX (i) directed employees to falsely sign mortgage documents in the names of various bank vice presidents without proper authorization, (ii) falsely notarized the forged documents, and (iii) subsequently filed the documents in courthouses across the state. Pursuant to the agreement, DocX agreed to pay a $1.5 million fine plus fees and costs of the investigation, and will continue to cooperate with the AG’s office as it pursues criminal charges against the company’s former president.
On August 7, the DOJ and the SEC announced the resolution of FCPA allegations against Pfizer Inc. (Pfizer) and two of its subsidiaries, Pfizer H.C.P. and Wyeth LLC. The DOJ announced that it filed a criminal information in the U.S. District Court for the District of Columbia, as well as a deferred prosecution agreement pursuant to which Pfizer H.C.P. admitted to making improper payments to public officials in Russia and other eastern European countries in attempts to influence decisions to approve and register certain pharmaceutical products. Pfizer H.C.P. must pay a $15 million penalty, but the agreement acknowledges Pfizer’s efforts to investigate and self-report the matter, as well as the company’s “significant cooperation” and extensive remedial efforts. Civil charges brought by the SEC through separate complaints against Pfizer and Wyeth involve similar allegations regarding the companies’ conduct in numerous countries. While Wyeth neither admitted nor denied the SEC allegations, the two parties resolved the cases by agreeing to pay a combined $45 million, committing to certain remedial actions, and reporting to the SEC. Like the DOJ, the SEC notes Pfizer’s voluntary disclosure and cooperation. The SEC complaints and the DOJ deferred prosecution agreements are available on BuckleySandler’s FCPA Score Card.
- Jonice Gray Tucker to discuss “Getting your company ready: Managing fair lending for IMBs” at the Mortgage Bankers Association Independent Mortgage Bankers Conference
- Jonice Gray Tucker to discuss “Be Your Compliance Best in 2022” at the California Mortgage Bankers Association webinar
- Lauren R. Randell to discuss “Significant legal developments in the Northeast” at the 37th Annual National Institute on White Collar Crime
- Jonice Gray Tucker to discuss “Small business & regulation: How fair lending has evolved & where it is heading?” at the Consumer Bankers Association Live program
- Jonice Gray Tucker and Kari Hall to discuss “Equity, equality, regulation and enforcement – The evolving regulatory landscape of fair lending, redlining, and UDAAP” at the ABA Business Law Committee Hybrid Spring Meeting