Top Story Technology Related

The Federal Trade Commission has published [89 FR 2034] in this morning's Federal Register a proposal to amend the Children's Online Privacy Protection Rule, consistent with the requirements of the Children's Online Privacy Protection Act (COPPA).

The proposed modifications are intended to respond to changes in technology and online practices, and where appropriate, to clarify and streamline the Rule. The proposed modifications, which are based on the FTC's review of public comments and its enforcement experience, are intended to clarify the scope of the Rule and/or strengthen its protection of personal information collected from children.

Comments on the proposal are due by March 11, 2024.

Yesterday, we reported that FijnCEN had issued a final rule regarding access to Beneficial Ownership Information that certain entities will be required to file with FinCEN beginning January 1, 2024.

In connection with its press release announcing the final rule, FinCEN issued two interagency statements to give banks and non-bank financial institutions guidance on the interplay between the final rule and FinCEN’s existing Customer Due Diligence Rule.

• Interagency Statement for Banks
• Statement for Non-Bank Financial Institutions

FinCEN also issued a Fact Sheet about the final rule.

The Financial Crimes Enforcement Network (FinCEN) has scheduled for December 22, 2023, Federal Register publication a final rule with regulations regarding access by authorized recipients to beneficial ownership information (BOI) that will be reported to FinCEN pursuant to section 6403 of the Corporate Transparency Act (CTA).

The summary of the rule indicates the regulations implement the strict protocols required by the CTA to protect sensitive personally identifiable information (PII) reported to FinCEN and establish the circumstances in which specified recipients have access to BOI, along with data protection protocols and oversight mechanisms applicable to each recipient category. The disclosure of BOI to authorized recipients in accordance with appropriate protocols and oversight will help law enforcement and national security agencies prevent and combat money laundering, terrorist financing, tax fraud, and other illicit activity, as well as protect national security.

The Introduction in the Supplementary Information to be published with the rule states, "Financial institutions with customer due diligence requirements under applicable law will have access to BOI to facilitate compliance with those requirements, as will the Federal functional regulators or other appropriate regulatory agencies that supervise or assess those financial institutions’ compliance with such requirements." It also states "FinCEN will implement the CTA requirement to revise the 2016 CDD Rule [31 CFR 1010.230] through a future rulemaking process. That process will provide the public with an opportunity to comment on the effect of the final provisions of the BOI reporting and access rules on financial institutions’ customer due diligence obligations."

The rule will be effective 60 days after publication (February 20, 2024).

The FDIC has announced that its Board of Directors yesterday adopted a final rule to amend part 328 of its regulations to modernize the rules governing use of the official FDIC signs and advertising statements, and to clarify the FDIC’s regulations regarding false advertising, misrepresentations of deposit insurance coverage, and misuse of the FDIC’s name or logo.

Among the changes are rules on placement of the FDIC's official sign on digital channels, such as a bank's website and mobile banking app, through which depositors are increasingly handling their banking needs. Beginning in 2025, banks will be required to display a new black and navy blue official digital sign near the name of the bank on all bank websites and mobile apps, and on certain ATMs. The rule also—

• Modernizes requirements for display of the FDIC official sign in bank branches and other physical premises to account for evolving designs of bank branches and other physical bank locations where customers make deposits
• Requires the use of signs to differentiate insured deposits from non–deposit products across banking channels and to indicate that certain financial products “are not insured by the FDIC, are not deposits, and may lose value”
• Clarifies the FDIC’s regulations regarding misrepresentations of deposit insurance coverage by addressing specific scenarios where a person, including a non–bank entity, provides information to consumers that may be misleading, confuse consumers as to whether they are doing business with a bank, and whether their funds are protected by deposit insurance
• Requires insured depository institutions to maintain policies and procedures addressing compliance with Part 328
• Amends definitions of "non-deposit product" to include crypto-assets and specifically address safe deposit boxes

The amendments made by the final rule will take effect on April 1, 2024, with an extended compliance date of January 1, 2025.

• Board Memorandum with summary of the rule
• UPDATE: Published on 1/18/2024 at 89 FR 3504 in the Federal Register

The CFPB yesterday announced it has ordered U.S. Bank National Association to pay nearly $21 million for keeping out-of-work consumers from accessing unemployment benefits at the height of the COVID-19 pandemic. U.S. Bank froze tens of thousands of accounts due to unprecedented numbers of fraudulent unemployment claims. However, it failed to provide people a reliable and quick way to regain access. The bank also failed to provide provisional account credits, while investigating potentially unauthorized transfers. The CFPB’s order requires U.S. Bank to pay $5.7 million to consumers harmed by its actions and to pay a $15 million penalty.

The Office of the Comptroller of the Currency reported it has separately fined U.S. Bank $15 million for the same conduct.

For additional information and links to the consent orders issued by the CFPB and OCC, see "U.S. Bank fined $30M for illegal conduct during pandemic" in BankersOnline’s Penalty pages.

FRBservices has announced that FedNow Service participation continues to show strong growth and diversity heading into 2024, with 331 institutions, headquartered in 45 states and ranging in size from under $500 million to over $3 trillion in assets, now sending or receiving on the network.

The FedNow Service launched in July with 35 participating institutions. The Federal Reserve Banks expect strong network growth to continue in 2024, bringing accessibility to the FedNow Service through the long-standing connections that the Federal Reserve has with thousands of financial institutions across the country.

The Federal Reserve Banks developed the FedNow Service to facilitate nationwide reach of instant payment services by financial institutions — regardless of size or geographic location — around the clock, every day of the year. Through financial institutions participating in the FedNow Service, businesses and individuals can send and receive instant payments at any time of day, and recipients have full access to funds immediately, giving them greater flexibility to manage their money and make time-sensitive payments. Access is provided through the Federal Reserve’s FedLine network, which serves more than 9,000 financial institutions directly or through their agents.

OFAC has posted a Notice of Actions announcing a $1,207,830 settlement with CoinList Markets LLC. CoinList agreed to settle its potential civil liability arising from processing 989 transactions on behalf of users ordinarily resident in Crimea between April 2020 and May 2022, in apparent violation of OFAC's Russia/Ukraine sanctions. The settlement amount reflects OFAC's determination that CoinList's conduct was non-egregious and not voluntarily self-disclosed.

For additional details, see "CoinList Markets LLC settles with OFAC for $1.2M+," in the BankersOnline Penalty pages.

The Treasury Department on Friday released a Joint Statement on the recent EU – U.S. Financial Regulatory Forum, which took place on December 4–5, 2023, hosted by the U.S. Department of the Treasury and the European Commission.

The Forum emphasized close ongoing EU and U.S. cooperation in a range of areas and focused on six themes: (1) market developments and financial stability; (2) regulatory developments in banking and insurance; (3) anti-money laundering and countering the financing of terrorism (AML/CFT); (4) sustainable finance; (5) regulatory and supervisory cooperation in capital markets; and (6) operational resilience and digital finance. Agency participation varied across themes, with representatives expressing views on issues in their respective areas of responsibility.

The Office of the Comptroller of the Currency yesterday reported the key issues facing the federal banking system in its Semiannual Risk Perspective for Fall 2023.

The OCC highlighted credit, market, operational, and compliance risks as the key risk themes in the report. The report also highlights artificial intelligence (AI) in banking as an emerging risk.

The OCC has reported that Deputy Comptroller for Compliance Policy and Acting Deputy Comptroller for the Office of Financial Technology Donna Murphy yesterday testified on the activities and initiatives of the OCC's Office of Financial Technology before the Subcommittee on Digital Assets, Financial Technology and Inclusion, Committee on Financial Services of the U.S. House of Representatives.

In her testimony, Ms. Murphy discussed the OCC’s supervision and regulation related to banks’ use of new and emerging financial technologies. She also highlighted the OCC’s work to engage with banks as they navigate rapid financial technology developments to balance safety, soundness and fairness with innovation and growth.

• Oral statement
• Written testimony