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  • FHFA proposes rule on GSE capital plans

    Federal Issues

    On December 16, FHFA issued a noticed of proposed rulemaking (NPRM) that would require Fannie Mae and Freddie Mac (GSEs) to submit annual capital plans and provide prior notice for certain capital actions, “consistent with the regulatory framework for capital planning for large bank holding companies.” Under the NPRM, the GSEs would be required to assess their risks and submit capital plans to FHFA annually by May 20. These capital plans must include several mandatory elements, including (i) “[a]n assessment of the expected sources and uses of capital over the planning horizon that reflects the [GSE]’s size, complexity, risk profile and scope of operations, assuming both expected and stressful conditions”; (ii) “[e]stimates of projected revenues, expenses, losses, reserves and pro forma capital levels,” along with any additional capital measures the GSEs deem relevant; (iii) “[a] description of all planned capital actions over the planning horizon”; (iv) a discussion of stress test results and how the capital plans will account for these results; and (iv) a discussion of any anticipated changes to a GSE’s business plan that may likely have a material impact on the GSE’s capital adequacy or liquidity. FHFA stated that it intends to review the capital plans for comprehensiveness, reasonableness, and relevant supervisory information, and plans to review the GSEs’ regulatory and financial reports, as well as the results of any conducted stress tests and any other information required by FHFA or related to the GSEs’ capital adequacy. Should the GSEs determine that there has been or will be a material change to their risk profile, financial condition, or corporate structure since the submission of the last plan (or if directed by FHFA), they must resubmit their capital plans within 30 days. The NPRM also incorporates the determination of the stress capital buffer into the capital planning process, which will be provided to the GSEs by August 15 of each year, along with an explanation of the results of the supervisory stress test. Comments on the NPRM are due within 60 days of publication in the Federal Register.

    Federal Issues Agency Rule-Making & Guidance FHFA Fannie Mae Freddie Mac GSE Capital Planning Federal Register

  • FinCEN seeks comments on updating AML/CFT regime

    Agency Rule-Making & Guidance

    On December 14, the Financial Crimes Enforcement Network (FinCEN) issued a request for information (RFI) in the Federal Register seeking comments from regulated entities; state, local, and Tribal governments; law enforcement; regulators; and other consumers of Bank Secrecy Act (BSA) data, on ways to redevelop the anti-money laundering and countering the financing of terrorism (AML/CFT) regime in the U.S. According to the announcement, FinCEN intends to collect comments regarding ways to modernize risk-based AML/CFT regulations and guidance so that they protect U.S. national security in a cost-effective and efficient manner. Additionally, the RFI “supports FinCEN’s efforts to conduct a formal review of BSA regulations and related guidance, which is required by Section 6216 of the Anti-Money Laundering Act of 2020.”

    As previously covered by InfoBytes, the Anti-Money Laundering Act of 2020 made numerous changes to the BSA, including amendments to the definition of “financial institution” to include a “person engaged in the trade of antiquities, including an advisor, consultant, or any other person who engages as a business in the solicitation or the sale of antiquities.” According to FinCEN, this “review will help FinCEN ensure that BSA regulations and guidance continue to safeguard the U.S. financial system from threats to national security posed by various forms of financial crime, and that BSA reporting and recordkeeping requirements continue to be highly useful in countering financial crime.” This review will also permit the agency “to identify regulations and guidance that are outdated, redundant, or otherwise do not promote a risk-based AML/CFT compliance regime for financial institutions, or that do not conform with U.S. commitments to meet international AML/CFT standards.” The findings of the review will be reported to Congress, and will include administrative and legislative recommendations. Comments are due by February 14, 2022.

    Agency Rule-Making & Guidance FinCEN Bank Secrecy Act Combating the Financing of Terrorism Financial Crimes Anti-Money Laundering Anti-Money Laundering Act of 2020 Federal Register

  • FinCEN issues NPRM on beneficial ownership

    Financial Crimes

    On December 7, FinCEN issued a notice of proposed rulemaking (NPRM) implementing the beneficial ownership information reporting provisions of the Corporate Transparency Act (CTA). As previously covered by InfoBytes, the CTA is included within the Anti-Money Laundering Act of 2021, which was enacted in January as part of the National Defense Authorization Act for Fiscal Year 2021. The proposed rule implements the reporting requirements under the CTA and “reflects FinCEN’s careful consideration of public comments received in response to its April advance notice of proposed rulemaking on the same topic.” (Covered by InfoBytes here.) Among other things, the NPRM addresses who must report beneficial ownership information, when to report it, and what information they must provide. According to FinCEN, gathering “this information and providing access to law enforcement, financial institutions, and other authorized users will diminish the ability of malign actors to hide, move, and enjoy the proceeds of illicit activities.” Treasury Deputy Secretary Wally Adeyemo released a statement noting that Treasury, through the public comments gathered from the NPRM, intends to “develop a regulatory approach that will safeguard the integrity of our markets and root out corruption in American real estate.” The comment period ends 60 days after publication in the Federal Register.

    Financial Crimes FinCEN Agency Rule-Making & Guidance Of Interest to Non-US Persons Anti-Money Laundering Act of 2020 Anti-Money Laundering Bank Secrecy Act Beneficial Ownership Federal Register Corporate Transparency Act

  • SEC adopts HFCAA rules

    Securities

    On December 2, the SEC adopted a final rule regarding the submission and disclosure requirements in the Holding Foreign Companies Accountable Act (HFCAA). The final rule applies “to registrants the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the Public Company Accounting Oversight Board (PCAOB) is unable to inspect or investigate (Commission-Identified Issuers).” Among other things, the final rule requires: (i) Commission-Identified Issuers to submit documentation to the SEC establishing that they are not owned or controlled by a governmental entity in the public accounting firm’s foreign jurisdiction, if indeed true; and (ii) disclosure in a foreign issuer’s annual report regarding the audit arrangements of, and governmental influence” on those who register. According to the final rule, the SEC will identify Commission-Identified Issuers for fiscal years starting after December 18, 2020. Additionally, if a registrant is identified as a Commission-Identified Issuer based on its annual report for the fiscal year ended December 31, 2021, the registrant will be required to comply with the submission or disclosure requirements in its annual report filing covering the fiscal year ended December 31, 2022.

    The same day, SEC Chair Gary Gensler released a statement noting that, “[t]he finalized rules will allow investors to easily identify registrants whose auditing firms are located in a foreign jurisdiction that the [Public Company Accounting Oversight Board] cannot completely inspect.” The rule is effective on 30 days after publication in the Federal Register.

    Securities SEC Federal Register Foreign Banks Of Interest to Non-US Persons Agency Rule-Making & Guidance Holding Foreign Companies Accountable Act

  • CFPB seeks input on HMDA

    Federal Issues

    On November 16, the CFPB issued a notice and request for comments regarding the rules for implementing the Home Mortgage Disclosure Act (HMDA). The Request for Information (RFI) solicits public comments on its plans to assess the effectiveness of the HMDA Rule, focusing on, among other things: (i) institutional and transactional coverage; (ii) data points; (iii) benefits of the new data and disclosure requirements; and (iv) operational and compliance costs. According to the CFPB, the RFI follows a 2021 HMDA report, which found that mortgage lenders deny credit and charge higher interest rates to Black and Hispanic applicants more often than white applicants, and a July 2021 report that analyzed 2020 HMDA loan data and examined the differences in mortgage characteristics across Asian American and Pacific Islander subgroups. (Covered previously by InfoBytes here and here.) Additionally, the RFI notes that the Bureau expects to issue a report on the findings of its assessment of the HMDA Rule by January 1, 2023. The Bureau also notes that it “plans to review recent changes to the rule and evaluate their effectiveness,” and that the assessment “will strengthen the CFPB’s ability to maintain a fair, competitive, and non-discriminatory mortgage market.” The deadline for submitting comments on the RFI is 60 days after the notice is published in the Federal Register.

    Federal Issues CFPB Consumer Finance HMDA Federal Register Agency Rule-Making & Guidance Mortgages

  • FinCEN final rule updates reporting and recordkeeping requirements

    Financial Crimes

    On November 15, the Financial Crimes Enforcement Network (FinCEN) published a final rule in the Federal Register, which updates regulation 31 CFR 1010.370 to mirror statutory amendments to Section 5326 of the Bank Security Act (BSA). Specifically, Section 5326 has been amended three times (in 1992, 2001, and 2017) to expand the authority of the Secretary of the Department of the Treasury. The final rule updates the regulation to reflect the subsequent statutory amendments by, among other things, updating the authority of FinCEN to issue orders imposing additional reporting and recordkeeping requirements on financial institutions and nonfinancial trades or businesses in a geographic area. The final rule also notes that since the amendments promulgated by the rule conform the regulation to the statute and reflect no discretionary or substantive determination, no public comment was solicited; therefore, the final rule is effective immediately.

    Financial Crimes Bank Secrecy Act FinCEN Of Interest to Non-US Persons Federal Register Department of Treasury

  • SEC proposes amendments to electronic filing requirements

    Securities

    On November 4, the SEC announced two proposed amendments (Updating EDGAR Filing Requirements and Electronic Submission of Applications for Orders under the Advisers Act and the Investment Company Act, Confidential Treatment Requests for Filings on Form 13F, and Form ADV-NR; Amendments to Form 13F), which update electronic filing requirements. These proposed amendments are intended to increase efficiency, transparency, and operational resiliency by modernizing how information is submitted to the SEC and disclosed. The proposed rule and form amendments would require, among other things, certain forms to be filed or submitted electronically and would make technical amendments to certain forms to require structured data reporting and eliminate outdated references. According to the SEC, the Commission currently allows, and at times requires, certain forms to be filed or submitted in paper format. The SEC also noted that publicly filed electronic submissions would be more readily accessible to the public and would be available in a searchable format on the SEC’s website. The public comment period will be open for 30 days after publication in the Federal Register.

    The same day, the SEC published a fact sheet clarifying, among other things, how the rule applies and what is required under the proposed amendments. According to a statement released by SEC Chair Gary Gensler, “just as we are hoping to update our rules for market participants in the face of rapidly changing technology, it’s also important that we update our rules to make filing obligations more efficient.”

    Securities SEC EDGAR Fintech Federal Register Agency Rule-Making & Guidance

  • CFPB seeks comments on recent orders to U.S. tech companies

    Agency Rule-Making & Guidance

    On November 5, the CFPB published a notice in the Federal Register seeking public comments on recently issued orders to six large U.S. technology companies requesting information and data on their payment system business practices (covered by InfoBytes here). According to the notice, the Bureau invites comments from “any interested parties, including consumers, small businesses, advocates, financial institutions, investors, and experts in privacy, technology, and national security.” The notice is “one of many efforts within the Federal Reserve System to plan for the future of realtime payments and to ensure a fair and competitive payments system in our country.” Comments are due by December 6.

    Agency Rule-Making & Guidance CFPB Federal Register Consumer Finance Payments Privacy/Cyber Risk & Data Security

  • FDIC finalizes rule amending real estate lending

    Agency Rule-Making & Guidance

    On October 22, the FDIC adopted a final rule amending the Interagency Guidelines for Real Estate Lending Policies to include consideration of the capital framework established in the community bank leverage ratio (CBLR) rule into the method of calculating the ratio of loans in excess of the supervisory loan-to-value limits (LTV limits), which applies to all FDIC-supervised financial institutions. As previously covered by InfoBytes, the FDIC issued the proposed rule to amend the Interagency Guidelines for Real Estate Lending Policies in June by proposing to establish supervisory LTV criteria for certain real estate lending transaction types and allowing exceptions to the supervisory LTV limits. Among other things, the final rule: (i) “revises the Appendix so that all FDIC-supervised institutions calculate the ratio of loans in excess of the supervisory LTV limits using tier 1 capital plus the appropriate allowance for credit losses in the denominator, regardless of an institution’s CBLR election status”; and (ii) “provides a consistent approach for calculating the ratio of loans in excess of the supervisory LTV limits at all FDIC-supervised institutions,” and “would approximate the historical methodology . . . for calculating the ratio of loans in excess of the supervisory LTV limits.” The final rule is effective 30 days after publication in the Federal Register.

    Agency Rule-Making & Guidance FDIC Federal Register LTV Ratio Community Banks Real Estate Bank Regulatory

  • SEC reopens comment period on listing standards for recovery of erroneously awarded compensation

    Securities

    On October 14, the SEC reopened the comment period on proposed rules for listing standards for the recovery of erroneously awarded compensation. According to the notice, the reopened comment period allows for the submission of comments and data on rule amendments first proposed in 2015, and requests comments in response to questions being raised by the SEC now in its reopening release. Among other things, the proposed rules would prohibit national security exchanges and national securities associations to list any issuer of any security unless the issuer adopts a compensation recovery policy that meets certain standards applicable to recovering incentive-based compensation awards based on erroneously reported financial results that are later restated to correct material errors to previously issued financial statements. According to a statement in support of the re-opened comment period on the Dodd-Frank Act rule regarding clawbacks of erroneously awarded incentive-based compensation, SEC Chair Gary Gensler stated that this is “an opportunity to strengthen the transparency and quality of corporate financial statements as well as the accountability of corporate executives to their investors.” Comments are due 30 days after publication in the Federal Register.

    Securities SEC Incentive Compensation Dodd-Frank Federal Register Enforcement Agency Rule-Making & Guidance

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