Washington Report 360 | October 14, 2022

Large bank resolutions. Financial crimes. Beneficial ownership. Climate risks. AI risks.

Key Highlights

Large bank resolutions. FRB and FDIC released a joint ANPR for $250-$750 billion large bank resolutions.

Records retention. SEC finalized electronic recordkeeping rules that “modernize” requirements for broker-dealers, security-based swap dealers and major security-based swap participants.

Financial crimes. OFAC and FinCEN announced individual but related settlements with a virtual currency exchange for “apparent” sanctions violations and violations of BSA/AML and SAR reporting requirements. This is OFAC’s largest virtual currency enforcement to date and the first OFAC/FinCEN parallel enforcement action related to virtual currencies.

Beneficial ownership. FinCEN states that it intends to issue its Access Rule proposal, the second of three beneficial ownership rules, “in the near term.” (See related KPMG Regulatory Alert, here.)

Climate risks. FSB final report on regulatory and supervisory approaches to climate-related risks plus two reports status reports on climate-related disclosures.

AI risks. Blueprint for an AI Bill of Rights issued by the White House highlighting five principles: safe and effective systems; algorithmic discrimination protections; data privacy; notice and explanation; human consideration, alternatives, and fallback. (See related KPMG Regulatory Insights POV, here.)

Financial services regulatory news
SEC	Final rule on electronic record keeping requirements for broker-dealers, security-based swap dealers, and major security-based swap participants Reopening of comment periods for several rulemaking releases Speech on DEI; Staff FAQ on Investment Adviser consideration of DEI factors
Interagency	FRB and FDIC ANPR on large bank resolutions FRB and CFPB announcement of dollar thresholds in Regulation Z and Regulation M for exempt consumer credit and lease transactions FRB, OCC, and CFPB 2023 threshold for small loan exemption from appraisal requirements for higher-priced mortgage loans
FRB	Speeches: Restoring Price Stability in an Uncertain Economic Environment Managing the Promise and Risk of Financial Innovation NY FRB: ARRC Loan Remediation Survey Results Blog: With Abundant Reserves, Do Banks Adjust Reserve Balances to Accommodate Payment Flows?
OCC	Speeches: Crypto and the Regulatory Perimeter Skeuomorphism, Commingling, and Data Gaps in Crypto
CFPB	Report on college banking and credit card agreements; related Department of Education blog on schools’ responsibility to “students’ best financial interests”
Treasury	OFAC sanctions-related enforcement action for over $24M and separate but related FinCEN BSA/AML enforcement action of $29M against virtual currency exchange FinCEN speech noting second Beneficial Ownership rule to be issued in near term G7 Finance Ministers and Central Bank Governors´ statements on: Climate issues The global economic impacts of Russia-Ukraine war
FTC	Meeting with DOJ and EU commission on Technology Competition Policy Dialogue (TCPD)
DOL	Proposed rule on classifying employees and independent contractors under Fair Labor Standards Act
FSB	Proposed framework for international regulation of Crypto-asset activities; related questions for consultation Outline of next steps for enhancing cross-border payments Reports on climate-related risks: Final report on supervisory and regulatory approaches to climate-related risks Progress report on climate-related disclosures 2022 TCFD Status Report
BIS	Working paper on Gender diversity in bank boardrooms and green lending