The Financial Crimes Enforcement Network (FinCEN) issued a final rule that requires minimum standards for anti-money laundering (AML) programs for banks lacking a federal functional regulator (the Federal Reserve Board, OCC, FDIC, OTS, NCAU, and SEC), i.e., banks and similar financial institutions that are subject only to state regulation and supervision, and certain international banking entities (collectively, “covered banking entities”).

The final rule also extends customer identification program (CIP) and beneficial ownership requirements (also known as the Customer Due Diligence or CDD Rule) to covered banking entities. Such banking entities may include private banks, international banking entities, non-federally-insured credit unions, state banks, savings associations, and trust companies.

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In a series of recent interviews (including with the American Bankers Association and a podcast with the ABA Banking Journal), Acting Comptroller of the Currency Brian Brooks discussed the Office of the Comptroller’s (OCC’s) plans to soon roll out another special purpose national bank (SPNB) charter specifically geared toward payments companies. This “payments charter” could be especially appealing for those companies looking for a national licensing platform for their payments business because it would provide federal preemption of state money transmitter licensing and related laws, which would eliminate the need to obtain a license to operate in each state.

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The Office of the Comptroller of the Currency (OCC) issued a final rule on May 29 clarifying that when a national bank or national savings association sells, assigns, or otherwise transfers a loan, interest permissible before the transfer (the maximum rate permitted in the bank’s home state) continues to be permissible after the transfer. This marks one of the first acts of Acting Comptroller of the Currency Brian P. Brooks, who assumed office that same day.

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The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the US Department of the Treasury’s Financial Crimes Enforcement Network, in conjunction with the Conference of State Bank Supervisors, issued a joint statement on December 3 to provide more clarity regarding Bank Secrecy Act (BSA) compliance for banks that service customers with hemp-related businesses.

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A working group composed of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the US Department of the Treasury’s Financial Crimes Enforcement Network issued a joint statement on July 22 that is intended to provide greater clarity regarding the risk-focused approach used by examiners for planning and performing Bank Secrecy Act (BSA)/anti-money laundering (AML) examinations.

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The five federal banking agencies (Federal Reserve, Bureau of Consumer Financial Protection, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of the Comptroller of the Currency – collectively Agencies) have issued a joint statement on the role of supervisory guidance.

The statement says that supervisory guidance does not have the force and effect of law, and that the Agencies do not take enforcement actions based on supervisory guidance. However, the Agencies state that supervisory guidance outlines the Agencies’ “supervisory expectations or priorities and articulates the [A]gencies’ general views regarding appropriate practices for a given area.” For example, supervisory guidance often contains examples of practices that the Agencies “generally consider consistent with safety-and-soundness standards or other applicable laws and regulations.”

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It’s here. The Federal Reserve Board and the Federal Deposit Insurance Corporation have released a proposed rule (Proposed Rule) that would make important modifications to Section 13 of the Bank Holding Company Act, commonly known as “the Volcker Rule.” The Proposed Rule is intended to address the “complexity” of the Volcker Rule, which has created “compliance uncertainty” and, in the words of Fed Chairman Jerome Powell, to “allow firms to conduct appropriate activities without undue burden and without sacrificing safety and soundness.”

The remaining three agencies responsible for implementation of the Volcker Rule (Office of the Comptroller of Currency, the US Securities and Exchange Commission, and the Commodity Futures Trading Commission) are expected to release their proposals shortly. Other than agency-specific variations, the proposal released by each of the five agencies is expected to be the same. The comment period for the Proposed Rule will be 60 days from the date of publication of the proposal in the Federal Register.

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We usually don’t blog about financial regulatory nonevents, but sometimes it is useful simply to point out when something is just that. Our “nonevent event” example of the day is the April 30 dismissal (read the accompanying order here) by the US District Court for the District of Columbia of the Conference of State Bank Supervisors (CSBS) lawsuit against the Office of the Comptroller of the Currency (OCC), where the CSBS challenged the OCC’s authority to issue national bank nondepository fintech charters. The court dismissed the lawsuit in part for lack of “ripeness,” which is administrative lawspeak for “there’s nothing to challenge here.” Put simply, the OCC has not chartered any fintech banks and has not even issued final guidance on the chartering process, and the court therefore found itself without anything to review or decide. Administrative law aficionados therefore should not be at all surprised by that aspect of the court’s decision and reasoning. As the court trenchantly stated, “Indeed, there may ultimately be no case to decide at all if the OCC does not charter a Fintech.” A similar lawsuit against the OCC that was filed by the New York State Department of Financial Services was dismissed last year on similar grounds, and we surmised at that time that the CSBS suit might suffer the same procedural fate.

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US financial reform at the congressional and regulatory agency levels continues to move along—albeit more in fits and starts than in a blaze of big happenings. Below is a recap on where matters currently stand.

Congress

The US Senate financial regulatory reform bill, “The Economic Growth, Regulatory Relief and Consumer Protection Act” (S. 2155), about which we have previously written, remains on the Senate legislative calendar and now has 25 co-sponsors (12 Democrats, 12 Republicans, and 1 Independent who caucuses with the Democrats). No major actions on the bill have been taken. Given the bipartisan nature of the bill, it stands a reasonable chance of passing in the Senate (a vote will reportedly occur sometime in March) but will face strong opposition from Senator Elizabeth Warren and other progressive Democrats. There has been no indication from the House of Representatives thus far as to whether it will take up the Senate bill (if passed) or push for broader regulatory reform to align with its own financial regulatory reform bill.

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On November 16, the US Senate confirmed by a 54–43 vote the appointment of President Donald Trump’s nominee Joseph Otting as the new Comptroller of the Currency. Mr. Otting will assume his new duties upon being sworn in, which is expected to occur at or near the end of November. Reportedly, current acting Comptroller Keith Noreika will return to the private sector.

Mr. Otting, who at one time in his career was chief executive officer of OneWest Bank Group, which acquired most of the business of the failed IndyMac Bank and which was headed by Secretary of the Treasury Steven Mnuchin, is expected to support the administration’s efforts to move bank regulation and supervision in a more deregulatory direction. During his confirmation hearing, Mr. Otting drew strong criticism from Senate Democrats, mostly for his industry ties and the mortgage foreclosure activities of OneWest in the aftermath of the financial crisis. Mr. Otting’s prior public statements suggest that, as comptroller, he will focus on matters such as regulatory relief for community banks and regulatory and supervisory actions that would promote bank lending. He also has expressed support, however, for the overall bank regulatory framework, suggesting that he may adopt a more measured approach to changes in bank regulation and supervision.