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Financial Services Law Insights and Observations


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  • California governor signs executive order on GenAI

    State Issues

    On September 6, California Governor Gavin Newsom signed an Executive Order (E.O.) instructing state agencies to evaluate how generative artificial intelligence (GenAI) may impact the State and its residents. Specifically, the E.O. requires certain state agencies to provide a report to the Governor which will examine “the most significant, potentially beneficial uses” of GenAI tools by the state. The report must also discuss “the potential risks to individuals, communities, and government and state government workers” from GenAI tools. Certain California agencies, including the Department of Technology, must perform a “risk analysis of potential threats to and vulnerabilities of California’s critical energy infrastructure by the use of GenAI.” The E.O. also requires that the State issue “general guidelines for public sector procurement, uses, and required training for use of GenAI,” and consider pilots of GenAI projects to be tested in “sandboxes.” Lastly, the E.O. directs the State to pursue a formal partnership with certain California higher education institutions to study the impacts of GenAI and support its safe growth.

    State Issues California Executive Order Artificial Intelligence Supervision Governors

  • Biden E.O. labels China as a country of concern; Treasury issues ANPR

    Federal Issues

    On August 9, the White House announced that President Biden signed an Executive Order on Addressing United States Investments In Certain National Security Technologies and Products In Countries of Concern (E.O.). The President explained his view that some countries create national security risks by using particular technologies to advance their “military and defense industrial sectors” rather than civilian and commercial sectors. Biden stated that although open global capital flows substantially benefit the U.S., the E.O. stated that certain investments may “accelerate and increase the success of the development of sensitive technologies and products in countries that develop them to counter United States and allied capabilities.” The E.O. directs the Secretary of the Treasury to issue regulations that (i) prohibit U.S. persons from participating in specific transactions associated with particular technologies and products that present a significant and urgent risk to national security; and (ii) mandate U.S. persons to notify the Treasury about different transactions related to specific technologies and products that may contribute to the national security threat. The annex to the E.O. identifies China, including Hong Kong and Macau, as the sole nation warranting concern. The E.O. also requires the Secretary to communicate with Congress and the public regarding the E.O., consult with other agency leaders, assess whether to amend the regulations within one year, and provide reports to the President and Congress.

    The Treasury simultaneously issued an Advance Notice of Proposed Rulemaking, requesting public comment on the implementation of the E.O., along with proposed definitions of key terms, before the program goes into effect. Written comments may be submitted within 45 days here.

    Federal Issues Department of Treasury Biden Of Interest to Non-US Persons China Hong Kong Artificial Intelligence Executive Order

  • OFAC adds regulations on Chinese military companies and WMDs

    Financial Crimes

    On February 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it is adding regulations to implement a November 2020 Executive Order (E.O.), which is related to securities investments that finance Communist Chinese military companies, as amended by a June 2021 E.O. related to the Chinese military-industrial complex and Chinese surveillance technology. As previously covered by InfoBytes, President Biden issued E.O. 14032, “Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies.” The E.O. took additional steps pursuant to the national emergency declared pursuant to E.O. 13959 (covered by Infobytes here), including the threat posed by the military-industrial complex of the People’s Republic of China (PRC) and “its involvement in military, intelligence, and security research and development programs, and weapons and related equipment production under the PRC’s Military-Civil Fusion strategy.” According to OFAC, with respect to the recent regulations, the agency “intends to supplement these regulations with a more comprehensive set of regulations, which may include additional interpretive guidance and definitions, general licenses, and other regulatory provisions.” The regulations took effect February 16.

    Additionally, OFAC announced that it is publishing an amendment to the Weapons of Mass Destruction Proliferators Sanctions Regulations “to revise an existing general license authorizing the provision of certain legal services and add a general license authorizing payments for legal services from funds originating outside the United States.” (Covered by InfoBytes here.) The amendment also took effect February 16. 

    Financial Crimes OFAC Of Interest to Non-US Persons China Executive Order Biden OFAC Sanctions

  • HUD to “fully enforce” prohibition against sex- and gender-based discrimination

    Federal Issues

    On February 11, HUD announced that it will administer and enforce the Fair Housing Act (FHA) to prohibit discrimination on the basis of sexual orientation and gender identity, in response to President Biden’s Executive Order (E.O.) 13988. According to a memorandum issued by HUD’s Acting Assistant Secretary for Fair Housing & Equal Opportunity (FHEO), the E.O. directs federal agencies to assess actions taken under federal statutes that “prohibit sex discrimination and to fully enforce those statutes to combat discrimination based on sexual orientation and gender identity,” in response to the recent Supreme Court opinion in Bostock v Clayton County (holding that prohibitions against sex discrimination in the workplace contained in Title VII of the Civil Rights Act of 1964 extend to and include discrimination on the basis of sexual orientation and gender identity). The memorandum notes that “the [FHA’s] sex discrimination provisions are comparable in text and purpose to those of Title VII of the Civil Rights Act,” thus HUD intends to enforce the FHA to prevent and combat similar discrimination. The memorandum directs HUD’s Office of Fair Housing and Equal Opportunity to, among other things, (i) “accept and investigate all jurisdictional complaints of sex discrimination, including discrimination because of gender identity or sexual orientation…”; (ii) “conduct all activities involving the application, interpretation, and enforcement of the [FHA]’s prohibition on sex discrimination consistent with its conclusion that such discrimination includes discrimination because of sexual orientation and gender identity”; and (iii) ensure FHEO regional offices and other associated agencies review, within 30 days, all allegations of alleged discrimination based on gender identity or sexual orientation received since January 20, 2020.

    Federal Issues HUD Fair Housing Act Fair Lending Executive Order

  • Biden directs HUD to examine disparate impact rule

    Federal Issues

    On January 26, President Biden issued an Executive Order (E.O.) directing the secretary of HUD to examine the effects of the September 2020 final rule amending the agency’s interpretation of the Fair Housing Act’s 2013 disparate impact standard (2013 Rule). As previously covered by a Buckley Special Alert, the final rule is intended to align its 2013 Rule with the Supreme Court’s 2015 ruling in Texas Department of Housing and Community Affairs et al. v. Inclusive Communities Project, Inc. and among other things, includes a modification of the three-step burden-shifting framework in its 2013 Rule, several new elements that plaintiffs must show to establish that a policy or practice has a “discriminatory effect,” and specific defenses that defendants can assert to refute disparate impact claims. The E.O. emphasizes HUD’s “statutory duty to ensure compliance with the Fair Housing Act,” and requires the HUD secretary to take any necessary steps, “to implement the Fair Housing Act’s requirements that HUD administer its programs in a manner that affirmatively furthers fair housing and HUD’s overall duty to administer the Act (42 U.S.C. 3608(a)) including by preventing practices with an unjustified discriminatory effect.”

    Federal Issues Executive Order Disparate Impact Fair Housing Act Fair Lending HUD Biden

  • Arkansas governor issues executive order suspending certain notarization requirements

    State Issues

    On March 30, the Arkansas governor issued an executive order suspending certain provisions of the Arkansas Code regarding notaries public for the duration of the emergency. The executive order permits an official signature or seal of a notarial certificate or seal to be executed when the principal or signer is present remotely. It also suspends provisions requiring electronic notaries public when a notary public is an Arkansas-licensed attorney, Arkansas-licensed title agent, or is employed by a financial institution registered with the Arkansas State Bank Department and the document signer or witness is present via real-time audio and visual means.

    State Issues Arkansas Executive Order Governors Covid-19

  • Colorado issues executive order temporarily suspending the personal appearance requirement for notarization due to the presence of Covid-19

    State Issues

    On March 27, the Colorado governor issued an executive order temporarily suspending the requirement to appear personally before notarial officers to perform notarizations. The order authorizes the Secretary of State to issue temporary emergency rules to permit notarial officers to perform remote notarizations. The order does not affect the rights or duties of parties to existing contracts of insurance or other private contracts that may require or anticipate in-person notarization of documents. The order expires within 30 days of issuance, unless extended further by executive order.

    State Issues Colorado Governors Executive Order Covid-19 Notary

  • Kentucky governor orders closing of all non-life-sustaining businesses

    State Issues

    On March 25, Kentucky Governor Andy Beshear issued an executive order mandating that only “life-sustaining businesses” may remain open and encouraged citizens to remain “healthy at home.” The list of life-sustaining businesses includes banks, credit unions, mortgage companies, payday lenders, check cashers, money transmitters, and securities institutions.

    State Issues Governors Credit Union Mortgages Payday Lending Mortgage Lenders Kentucky Covid-19 Executive Order

  • Indiana Department of Financial Institutions issues statement on essential businesses

    State Issues

    On March 23, Indiana Department of Financial Institutions (DFI) issued a statement reiterating that Indiana’s Executive Order 20-08 deems the following financial institutions as essential businesses that are encouraged to stay open and adhere to social distancing guidelines: banks, currency exchanges, consumer lenders, including, but not limited to, credit unions, pawnbrokers, consumer installment lenders and sales finance lenders, title companies, appraisers, financial markets, trading and futures exchanges, payday lenders, affiliates of financial institutions, entities that issue bonds, related financial institutions, and institutions selling financial products.

    State Issues Indiana Financial Institutions Executive Order Credit Union Covid-19

  • Georgia governor issues shelter in place executive order for specific populations

    State Issues

    On March 23, Georgia’s governor issued an Executive Order ordering specific populations to shelter in place and limiting the number of persons gathered in a single location. The order does not address financial institutions or otherwise identify categories of essential business, and expires on April 6.

    State Issues Executive Order Georgia Covid-19 Governors


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