Top Story Compliance Related

The Securities and Exchange Commission yesterday voted to end its defense of its rules requiring disclosure of climate-related risks and greenhouse gas emissions.

The rules, adopted by the Commission on March 6, 2024, create a detailed and extensive special disclosure regime about climate risks for issuing and reporting companies. States and private parties have challenged the rules. The litigation was consolidated in the Eighth Circuit (Iowa v. SEC, No. 24-1522 (8th Cir.)), and the Commission previously stayed effectiveness of the rules pending completion of that litigation. Briefing in the cases was completed before the change in Administrations.

Following yesterday’s Commission vote, SEC staff sent a letter to the court stating that the Commission withdraws its defense of the rules and that Commission counsel are no longer authorized to advance the arguments in the brief the Commission had filed.

• SEC press release, 3/27/2025

Yesterday, in its first press release since February 3, 2025, the CFPB reported that its Acting Director, Russ Vought, is seeking to vacate the settlement the CFPB extracted from Townstone Financial. According to its press release, the CFPB used a “redlining screen” based on an arbitrary number of mortgages to destroy a small Midwest firm with about ten employees and a radio program called Townstone Financial.

After a thorough review, the CFPB is seeking to make Townstone whole by returning the six-figure penalty they were forced to pay.

See also:

• CFPB sues non-bank mortgage creditor for redlining, July 16, 2020
• CFPB proposes settlement with Townstone Financial, November 4, 2024

The Treasury Department reported that OFAC, in coordination with the FBI, has imposed sanctions on three Iranian Ministry of Intelligence and Security officials who were involved in the abduction, detention, and probable death of former FBI Special Agent Robert A. “Bob” Levinson. The individuals designated today, Reza Amiri Moghadam, Gholamhossein Mohammadnia, and Taqi Daneshvar, all played a role in Mr. Levinson’s abduction, probable death, and Iran’s efforts to cover up or obfuscate their responsibility.

Yesterday’s action was taken under Executive Order 14078, which implements the Robert Levinson Hostage Recovery and Hostage-Taking Accountability Act, and holds to account terrorist organizations, criminal groups, and other malicious actors who take hostages for financial, political, or other gain—as well as foreign states that engage in the practice of wrongful detention, including for political leverage or to seek concessions from the United States.

For a link to identification information on the three designated individuals, see yesterday's BankersOnline OFAC Update.

The Federal Trade Commission has announced it is requiring operators of a deceptive business opportunity to pay hundreds of thousands of dollars to settle allegations they misled consumers with false promises of big returns selling goods through Amazon and Walmart.

Under the settlement orders entered by the court, Trevor Duffy Young and Wessam Baiz, along with two companies associated with Baiz, will turn over the profits they made from the alleged scam, which operated under the names Lunar Capital Ventures, Ecom Genie and Profitable Automation, and before that as Valiant Consultants.

The court orders ban Young, Baiz, and Baiz’s companies from any involvement with the sales, marketing, or operations of any business opportunity. The orders also prohibit them from deceiving consumers about any good or service they sell or market.

• Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief as to Trevor Duffy Young
• Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief as to Wessam Baiz, Salespreneurs, LLC, and Baiz Sales, LLC

FinCEN has posted a series of 19 Frequently Asked Questions on its March 11, 2025, Geographic Targeting Order Involving Certain Money Services Businesses in California and Texas on the Southwest Border.

Editor's Note: The FAQs are numbered from 1 to 21, but numbers 16 and 19 are omitted.

On Friday, March 21, FinCEN issued an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act.

In the interim final rule, FinCEN revises the definition of “reporting company” in its implementing regulations to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as “foreign reporting companies”). FinCEN also exempts entities previously known as “domestic reporting companies” from BOI reporting requirements.

Thus, through this interim final rule, all entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners will be exempt from the requirement to report BOI to FinCEN. Foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines, detailed below. These foreign entities, however, will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not be required to report BOI with respect to any such entity for which they are a beneficial owner.

Upon the publication of the interim final rule, the following deadlines apply for foreign entities that are reporting companies:

The Treasury Department has reported that OFAC has designated a “teapot” oil refinery and its chief executive officer for purchasing and refining hundreds of millions of dollars’ worth of Iranian crude oil, including from vessels linked to the Foreign Terrorist Organization, Ansarallah, commonly known as the Houthis, and the Iranian Ministry of Defense of Armed Forces Logistics (MODAFL).

OFAC also sanctioned 19 entities and vessels responsible for shipping millions of barrels of Iranian oil, comprising part of Iran’s “shadow fleet” of tankers supplying teapot refineries like Luqing Petrochemical. The State Department also designated an entity for having knowingly engaged in a significant transaction for the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran.

For a link to the list of designations under these actions, see yesterday's BankersOnline OFAC Update.

EDITORIAL NOTE: The OFAC Notice referred to in our OFAC Update also indicates that OFAC published its final rule extending certain recordkeeping requirements to ten years. OFAC published an interim final rule with that requirement on September 13, 2024, with an effective date of March 12, 2025.

The Federal Reserve Board has announced execution of two enforcement actions.

• Cease and Desist Order against Frankewing Bancshares, Inc., Frankewing, Tennessee
• Civil money penalty of $15,500 against Bank of Hawaii, Honolulu, Hawaii, for a pattern or practice of violations of section 208.25 of Regulation H, which implements the provisions of the National Flood Insurance Act.

The FTC has announced it has obtained a federal court's temporary restraining order halting a business opportunity scheme known as Click Profit, which allegedly took millions from consumers by falsely promising them that they could earn big profits through online sales.

In its complaint, the FTC alleged that Click Profit and its owners deceived consumers by promising they could make large sums in “passive income” using a proprietary system powered by artificial intelligence. The system supposedly enables consumers to sell goods through online platforms such as Amazon, Walmart, and TikTok. Click Profit also deceived consumers by claiming to be affiliated with major companies like Nike and Disney as a ploy to convince consumers to turn over tens of thousands of dollars each, according to the complaint.

Consumers who purchased the company’s business opportunity were charged a “management fee” of at least $45,000, in addition to thousands of dollars more, purportedly to buy inventory for their stores. The complaint alleges that few of these consumers see a return on their investments, much less the promised earnings. In fact, most consumers lose their entire payments, and some are saddled with burdensome credit card debt and unsold products.

The FTC’s complaint charges that Click Profit, its co-founders Emslie and Patrick McGeoghean, partners Jason Masri and William Holton, and a number of associated companies have violated the FTC Act, the Business Opportunity Rule, the Consumer Review Fairness Act, and the Rule On Impersonation of Government and Businesses.

Yesterday, OFAC sanctioned Jumilca Sandivel Hernandez Perez (Hernandez Perez), a key leader of the Lopez Human Smuggling Organization (HSO), a Guatemala-based Transnational Criminal Organization responsible for the smuggling of thousands of illegal aliens from Guatemala, through Mexico, and into the United States. Additionally, Hernandez Perez has coordinated her illegal activity with members of the violent U.S.-sanctioned drug trafficking organization, La Linea, which among other heinous acts is responsible for the November 2019 murders of nine American citizens, including six children, in the Mexican state of Sonora.

OFAC also issued an alert to raise awareness of sanctions and criminal liability risks for foreign financial institutions and other entities with exposure to international cartels recently designated as terrorist organizations, some of which had been previously designated as transnational criminal organizations engaged in human smuggling and other violent acts.

For a link to identification information on Hernandez Perez, see yesterday's BankersOnline OFAC Update.