Top of the Agenda
House Passes Legislation to End Anonymous Shell Companies, Reform AML
On October 22, the House passed legislation to end anonymous shell companies and to strengthen and modernize the anti-money laundering (AML) regime by a bipartisan vote of 249-173. The House approved HR 2513, the Corporate Transparency Act of 2019, with the full text of HR 2513, the Coordinating Oversight, Upgrading and Innovating Technology, and Examiner Reform Act of 2019 (COUNTER Act). The Corporate Transparency Act, sponsored by Congresswoman Carolyn Maloney (D-NY), would prohibit anonymous shell companies, which are used by criminals to hide assets for a range of dangerous and illicit activities, including human trafficking, terrorist financing, money laundering and corruption by foreign governments. The COUNTER Act would strengthen and modernize the AML regulatory regime, including a focus on technology and increased feedback between regulators, law enforcement and financial institutions.
“Reform of AML and shell company laws would allow banks and their partners in law enforcement to better detect illegal activities,” BPI President and CEO Greg Baer said in a release. “Today’s House passage makes it clear that momentum is building to finally make these commonsense fixes.” BPI has long supported legislative efforts to end anonymous shell companies and modernize the anti-money laundering regime. A group of eight senators has introduced similar legislation to end anonymous shell companies and modernize the AML system. To review additional BPI resources on the issues, please visit www.EndAnonymousShellCompanies.com.
5 Stories Driving the Week
1. Fed, FDIC Issue Request for Information on Use and Implications of CAMELS Rating System
On October 18, the Federal Reserve and the FDIC issued a request for information (RFI) on the CAMELS rating system. Federal banking agencies use the CAMELS system to evaluate the condition of insured depository institutions according to the following six factors: (i) capital adequacy, (ii) asset quality, (iii) management, (iv) earnings, (v) liquidity, and (vi) sensitivity to market risk. The RFI specifically solicits feedback on the “consistency of ratings assigned” under the system and their use for enforcement and bank applications such as new branches and bank mergers and acquisitions transactions. The RFI is consistent with the agencies’ commitment to “increase transparency, improve efficiency, support innovation, and provide opportunities for public feedback.” The Federal Financial Institutions Examination Council (FFIEC) first adopted the rating system in 1979 to provide supervisors with a methodology for evaluating the soundness of depository institutions on a uniform basis. The system has not been updated since 1996. BPI has long supported a reevaluation of the CAMLELS system and its usage in applications processes, including in April testimony before the Senate Banking Committee.
2. GAO Finds That Several Federal Reserve Guidance Documents Are Rules Under the Congressional Review Act
In Case You Missed It
Judge Rules Against OCC FinTech Charter
On October 21, a Southern District of New York judge ruled that the OCC cannot issue bank charters to institutions that do not take deposits, dealing a blow to the agency’s attempt to offer a limited national charter to financial technology firms. The case was brought by the New York Department of Financial Services. The U.S. District Court of D.C. ruled in September that a similar lawsuit brought by the Conference of State Bank Supervisors did not have standing since no charter had yet been issued. The OCC announced October 22 that it will appeal the Southern District of New York’s decision.
BPI, ABA, and SIFMA Provide Recommendations to NIST on Draft Privacy Framework
On October 24, BPI, through its technology policy division known as BITS, along with the American Bankers Association (ABA) and the Securities Industry and Financial Markets Association (SIFMA), submitted a comment letter to the U.S. Department of Commerce regarding the National Institute of Standards and Technology’s (NIST) preliminary draft of the Privacy Framework. The Privacy Framework is a voluntary tool designed to help organizations of all sizes identify and assess privacy risk and implement solutions to better protect consumers. “We believe that the NIST Privacy Framework can serve as a valuable tool that organizations may use to build and adapt a privacy program that fits the size, complexity, risk profile, and unique attributes of a particular institution and their sector,” the associations wrote in their letter.
US Financial Regulators Join Global Financial Innovation Network
The CFTC, FDIC, OCC and the SEC announced on October 24 that they are joining the Global Financial Innovation Network. The Network consists of 46 other financial authorities, central banks and international organizations working together to foster greater cooperation among financial authorities on a variety of innovation topics, regulatory approaches, and lessons learned. Separately, the CFTC also announced on October 24 at its Fintech Forward Conference that LabCFTC will become an independent operating office of the CFTC, reporting directly to Chairman Heath Tarbert. LabCFTC is charged with engaging with fintech innovators and promoting responsible innovation.
The full press releases can be viewed here:
- 10/29/2019 — House Financial Services Subcommittee Hearing on LGBTQ+ Discrimination in Lending and Financial Services
- 10/29/2019 — Federal Reserve FOMC Meeting
- 10/29/2019 — House Financial Services Committee Markup
- 10/31/2019 — American Action Forum Panel Event on “The Federal Reserve and Real-Time Payments” with BPI’s Mike Lee and Rep. Ted Budd (R-NC)
- 11/06/2019 — CFPB Hosts Small Business Lending Marketplace
- 11/14/2019 — Fed’s Clarida Delivers Keynote Remarks at Cato Monetary Policy Conference
- 11/14/2019 — AEI Event titled “Can the Federal Reserve manage the next economic crisis?”
- 11/19/2019 — The Clearing House + BPI 2019 Annual Conference: The Clearing House and BPI will host the 2019 Annual Conference from November 19 to 21. The event provides a forum for the industry’s leaders to examine the changing dynamics of the bank regulatory and payments landscapes with two and half days of high-level keynote speakers, in-depth expert panels, and networking. Registration ends soon.
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