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  • U.S.-UK financial regulators discuss bilateral issues

    Financial Crimes

    On July 26, the U.S. Treasury Department issued a joint statement covering the recently held sixth meeting of the U.S.-UK Financial Regulatory Working Group. Participants included officials and senior staff from both countries’ treasury departments, as well as regulatory agencies including the Federal Reserve Board, CFTC, FDIC, OCC, SEC, the Bank of England, and the UK’s Financial Conduct Authority. The Working Group discussed, among other things, (i) market developments since the Russian invasion of Ukraine; (ii) continuing international and bilateral cooperation; (iii) the international financial sector priorities at the G7, the G20, the Financial Stability Board (FSB), and the International Organisation of Securities Commissions (IOSCO); (iv) the risks associated with the Non-Bank Financial Intermediation (NBFI) sector and interconnectedness with other financial and non-financial actors; and (v) “the mutual desire to promote multilateral cooperation around risk management in global derivatives and banking markets.” The Working Group participants will continue to engage bilaterally on these issues and others ahead of the next meeting, planned for later this year.

     

    Financial Crimes Department of Treasury Of Interest to Non-US Persons UK Federal Reserve FDIC OCC SEC Bank Regulatory CFTC

  • OFAC issues Russia-related sanction, general licenses, and FAQs

    Financial Crimes

    On July 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced Russia-related General License (GL) 45 and GL 46. GL 45 authorizes transactions related to the wind down of certain financial contracts prohibited by Executive Order (E.O.) 14071. GL 46 authorizes transactions in support of an auction process to settle certain credit derivative transactions prohibited by E.O. 14071. OFAC also announced that it published two new Frequently Asked Questions (FAQs) and two amended FAQs on “Russian Harmful Foreign Activities Sanctions.” Additionally, OFAC added a name to the SDN list.

    Financial Crimes SDN List Department of Treasury OFAC OFAC Designations Russia Of Interest to Non-US Persons

  • Creditors release statement on Ukraine

    Federal Issues

    On July 20, the Group of Creditors of Ukraine issued a joint statement regarding coordinated suspension of debt services for Ukraine through 2023, as the Russian invasion continues. According to the statement, the group noted that it would also consider the possibility of deferral for an additional year beyond 2023. The statement granted Ukraine’s request for deferral given the “exceptional circumstances, and acknowledging Ukraine’s exemplary track record of honoring debt service to date,” also “strongly encourage[s] all other official bilateral creditors to swiftly reach agreement with Ukraine on a debt service suspension.”

    Federal Issues Ukraine Ukraine Invasion Debt Collection Department of Treasury

  • U.S.-EU release statement on Joint Financial Regulatory Forum

    Financial Crimes

    On July 20, EU and U.S. participants, including officials from the Treasury Department, Federal Reserve Board, CFTC, FDIC, SEC, and OCC, participated in the U.S. – EU Joint Financial Regulatory Forum to continue their ongoing financial regulatory dialogue. Matters discussed focused on six themes: “(1) market developments and financial stability risks, (2) sustainable finance and climate-related financial risks, (3) regulatory developments in banking and insurance, (4) regulatory and supervisory cooperation in capital markets, (5) operational resilience and digital finance, and (6) anti-money laundering and countering the financing of terrorism (AML/CFT).”

    The statement acknowledged that the Russia/Ukraine conflict, as well as “inflationary pressures”, exposes “a series of downside risks to financial markets both in the EU and in the U.S.” The statement notes that financial markets have so far proven to be “resilient” and stressed that “[i]nternational cooperation in monitoring and mitigating financial stability risks remains essential in the current global environment in light of the negative impacts on global energy and commodities markets.” During the Forum, participants also discussed recent developments related to digital finance and crypto-assets, including so-called stablecoins, as well as potential central bank digital currencies. Additionally, participants discussed various issues related to third-party providers; climate-related financial risks and challenges, including sustainability reporting standards; the transition away from LIBOR; and progress made in strengthening their respective AML/CFT frameworks.

    Financial Crimes Digital Assets Of Interest to Non-US Persons Department of Treasury EU Central Bank Digital Currency Stablecoins Anti-Money Laundering Combating the Financing of Terrorism Fintech Climate-Related Financial Risks LIBOR

  • District Court grants final approval in a FCRA case remanded by the 9th Circuit

    Courts

    On December 15, the U.S. District Court for the Northern District of California granted final approval of a plaintiff’s motion for preliminary approval in a class action settlement in a FCRA case. In a class action against a credit reporting agency (CRA) for allegedly violating FCRA by erroneously linking class members to criminals and terrorists with similar names in a database maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), the district court ruled that all class members had standing to assert their FCRA claims. The jury returned a verdict for the plaintiffs and awarded punitive damages. As previously covered by InfoBytes, in February 2020, the 9th Circuit reduced the punitive damages award and affirmed the district court’s ruling that all class members had standing due to, among other things, the CRA’s alleged “reckless handling of information from OFAC,” which subjected class members to “a real risk of harm.” As previously covered by InfoBytes, in April 2020, the 9th Circuit granted a joint motion to stay the mandate pending the CRA’s filing of a petition for writ of certiorari with the U.S. Supreme Court. The Supreme Court granted the CRA’s petition for certiorari and reversed the 9th Circuit’s finding on standing, holding that the class members whose credit reports were not provided to third-party businesses did not suffer a concrete harm and thus did not have standing to assert their “reasonable procedures” claims under the FCRA. The Court also held that none of the class members had standing to pursue the disclosure claims under the FCRA because they had not “suffered a concrete harm.” The Ninth Circuit remanded to the district court for further proceedings consistent with the Supreme Court’s ruling.

    The parties participated in a mediation and reached a class-wide settlement. The plaintiff moved for preliminary approval, which the district court granted on July 19. The settlement class is composed of two categories of individuals: (1) the 1,853 class members that the defendant CRA identified in its pre-trial stipulation as individuals for whom the defendant had delivered a credit report containing OFAC data to a third-party, and (2) class members from the remaining group of 6,332 individuals not identified in the stipulation who submit a claim demonstrating publication of OFAC data to a third-party during the class period. The Settlement agreement, among other things, requires the defendant to establish a settlement fund of $9 million, which includes attorney fees and costs.

    Courts FCRA Credit Reporting Agency Class Action OFAC Department of Treasury

  • OFAC settles with bank for alleged Foreign Narcotics Kingpin Sanctions Regulations violations

    Financial Crimes

    On July 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $430,500 settlement with a subsidiary of a national bank for allegedly processing transactions in violation of the Foreign Narcotics Kingpin Sanctions Regulations. According to OFAC’s web notice, between May 2018 and July 2018, the bank allegedly processed 214 transactions totaling $155,189, in violation of OFAC’s Kingpin sanctions. Specifically, OFAC noted that the processed transactions were for an account whose supplemental card holder was designated in connection with illegal drug distribution and money laundering.

    In arriving at the settlement amount of $430,500, OFAC considered various aggravating factors, including that the bank “is a large and sophisticated financial institution with a global presence,” and “conferred $155,189.42 in economic benefit to an account associated with a [person] who was designated for involvement in illegal drug distribution and money laundering.” OFAC also considered various mitigating factors, including that the bank cooperated with OFAC throughout the investigation, and has undertaken remedial measures intended to minimize the risk of recurrence of similar conduct.

    Financial Crimes Of Interest to Non-US Persons Department of Treasury Settlement Anti-Money Laundering OFAC OFAC Sanctions OFAC Designations Enforcement

  • Treasury clarifies impact of sanctions on agricultural commodities, agricultural equipment, or medicine relating to Russia

    Financial Crimes

    On July 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a Fact Sheet to clarify that the U.S. has not imposed sanctions on the production, manufacturing, sale, or transport of agricultural commodities, agricultural equipment, or medicine relating to Russia. Additionally, OFAC issued General License (GL) 6B to expand agricultural and medical authorizations to now cover transactions related to agricultural equipment that would normally be prohibited by the Russian Harmful Foreign Activities Sanctions Regulations. OFAC emphasized that U.S. sanctions on Russia issued in response to its war against Ukraine “do not stand in the way of agricultural and medical trade.” OFAC referred to guidance issued in April for more details on authorizations under U.S. sanctions related to agricultural and medical transactions, nongovernmental organization activities, and Covid-19 relief, among others, to support people impacted by Russia’s war (covered by InfoBytes here).

    Financial Crimes Of Interest to Non-US Persons Department of Treasury OFAC OFAC Sanctions OFAC Designations Russia Ukraine Ukraine Invasion

  • OFAC sanctions Mexican cartel facilitator

    Financial Crimes

    On July 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to the Foreign Narcotics Kingpin Designation Act against an individual engaged in the trafficking of high-caliber firearms from the U.S. to a Mexican drug organization. According to OFAC, the designated individual acted for or on behalf of a violent drug trafficking organization based in Mexico, which is responsible for a significant proportion of drugs trafficked into the U.S. OFAC further noted that the designation “is the result of ongoing efforts by U.S. agencies and the Government of Mexico to disrupt Mexican drug trafficking organizations’ procurement of weapons, including those sourced in the United States.” As a result of the sanctions, all property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from engaging in any dealings involving the property of blocked or designated persons.

    Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons SDN List OFAC Sanctions OFAC Designations Mexico

  • Treasury solicits comments on digital assets

    Federal Issues

    On July 12, the U.S. Treasury Department released a notice seeking public comment regarding potential opportunities and risks presented by digital assets. According to the announcement, Treasury is requesting input that will inform its work in carrying out its mandate under Executive Order 14067, Ensuring Responsible Development of Digital Assets, which directs Treasury, in consultation with the Secretary of Labor and other relevant agencies, to report to President Biden on the implications of development and adoption of digital assets and changes in financial market and payment infrastructures. The notice also seeks feedback from the public on potential risks associated with digital asset markets and how digital assets may benefit or pose risk to vulnerable populations. Comments must be received by August 8.

    Federal Issues Digital Assets Agency Rule-Making & Guidance Department of Treasury Biden

  • OFAC sanctions Iranian petrochemical network

    Financial Crimes

    On July 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13846 against an international network of individuals and entities for facilitating the delivery and sale of hundreds of millions of dollars’ worth of Iranian petroleum and petrochemical products from Iranian companies to East Asia through a web of Gulf-based front companies. The designations follow OFAC sanctions announced June 16 against a network of Iranian petrochemical producers, as well as front companies in the People’s Republic of China and the United Arab Emirates, working to support Iranian petrochemical sales (covered by InfoBytes here). As a result, all property and interests in property of the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC, as well as any entities owned 50 percent or more by such persons. U.S. persons are also generally prohibited from entering into transactions with the sanctioned persons. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated today could be subject to U.S. sanctions.”

    Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons OFAC Sanctions OFAC Designations Iran China SDN List

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