Top Story Security Related

On Friday, FinCEN issued a notice to customers of financial institutions about reporting beneficial ownership information.

The Corporate Transparency Act requires certain entities, including many small businesses, to report to FinCEN information about the individuals who ultimately own or control them. A separate regulatory requirement currently requires many financial institutions to also collect beneficial ownership information from certain customers that seek to open accounts as part of Federal customer due diligence requirements. Today’s notice provides answers to key questions about: (1) reporting beneficial ownership information to FinCEN under the Corporate Transparency Act (https://www.fincen.gov/boi); and (2) providing beneficial ownership information to financial institutions in connection with Federal customer due diligence requirements.

FinCEN encourages financial institutions to share this reference guide with customers that may be required to report beneficial ownership information.

The notice reflects the current legal and regulatory situation. FinCEN has plans to revise the customer due diligence regulations by 2025, as required by the Corporate Transparency Act.

• Notice to Customers: Beneficial Ownership Information Reference Guide

OFAC has announced a $7,452,501 settlement with State Street Bank and Trust Company, a Massachusetts-based financial institution, on behalf of itself and its subsidiary, Charles River Systems, related to 38 apparent violations of OFAC's Ukraine-/Russia-Related sanctions. The apparent violations involved invoices that were redated or reissued by Charles River between 2016 and 2020 for certain customers who were subject to Directive 1 of Executive Order 13662, as well as certain payments outside of the applicable debt tenor accepted by Charles River from these customers.

For additional information, see "State Street settles for $7.5M penalty with OFAC" in BankersOnline's Penalty pages.

Yesterday, the Department of the Treasury issued two announcements concerning actions taken by its Office of Foreign Assets Control (OFAC).

OFAC sanctioned the Lopez Human Smuggling Organization, which “sought to smuggle thousands of migrants into the United States through an illegal transnational operation that exploited those in search of a better life for themselves and their families,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson.

OFAC also sanctioned the Congo River Alliance, known by its French name Alliance Fleuve Congo (AFC), a coalition of rebel groups that seeks to overthrow the government of the Democratic Republic of Congo (DRC) and is driving political instability, violent conflict, and civilian displacement.

For the names and identification information of the designated individuals and entities, see this July 25, 2025, BankersOnline OFAC Update.

The FDIC, OCC, and Federal Reserve yesterday jointly issued a statement reminding banks of potential risks associated with third-party arrangements to deliver bank deposit products and services. The agencies support responsible innovation and banks engaging in these arrangements in a safe and sound manner and in compliance with applicable law. While these arrangements can provide benefits, supervisory experience has identified a range of safety and soundness, compliance, and consumer-related concerns with the management of these arrangements.

The statement details the potential risks and provides examples of effective risk management practices for these arrangements. In addition, the statement reminds banks of relevant existing legal requirements, guidance, and related resources, and provides insights that the agencies have gained through their supervision. The statement does not establish new supervisory expectations.

Separately, the agencies have requested additional information on a broad range of bank-fintech arrangements, including with respect to deposit, payments, and lending products and services. The agencies are seeking input on the nature and implications of bank-fintech arrangements and effective risk management practices. Responses and comments will be accepted for 60 days following publication of the request for information in the Federal Register. [Update: Published 7/31/2024 at 89 FR 61577, with a 61-day comment period ending 9/30/2024.]

The agencies are considering whether additional steps could help ensure banks effectively manage risks associated with these various types of arrangements.

• OCC Bulletin 2024-20
• OCC Bulletin 2024-21
• FDIC FIL-45-2024

The FDIC has released a notice of the next meeting of its Board, scheduled for 10:00 a.m. on July 30, 2024. A link to a webcast of this open to public observation meeting can be found at https://www.fdic.gov/news/board-matters/video.html.

Matters to be considered include:

• Notice of Proposed Rulemaking on Brokered Deposit Restrictions.
• Notice of Proposed Rulemaking on Parent Companies of Industrial Banks and Industrial Loan Companies.
• Request for Information on Deposits.
• Final Guidance for Title I Resolution Plan Triennial Full Filers and Extension of Submission Deadline.
• Proposals regarding the Change in Bank Control Act Regulations and Procedures.
• Final Rule on Revisions to the FDIC’s Section 19 Regulations.
• Interim Final Rule on Clarification of Deposit Insurance Coverage for Legacy Branches of U.S. Banks in the Federated States of Micronesia, the Marshall Islands, and Palau.
• Notice of Proposed Rulemaking regarding the Financial Data Transparency Act.

On Wednesday, the Treasury Department reported that OFAC has sanctioned a network of six individuals and five entities based in the People’s Republic of China (PRC) involved in the procurement of items supporting the Democratic People’s Republic of Korea’s (DPRK) ballistic missile and space programs.

In violation of multiple UN Security Council Resolutions, the DPRK has continued to conduct launches using ballistic missile technology, including a recent failed effort to place a military satellite into orbit in late May 2024. Moreover, the DPRK has supplied ballistic missiles to the Russian Federation, which continues to target civilian population centers and infrastructure in Ukraine.

For the names and identification information of the designated individuals and entities, see this July 24, 2024, BankersOnline OFAC Update.

The Federal Trade Commission has posted a Consumer Alert describing a new delivery method for fake check scams. "Artists" are targeting young adults using social media, offering to pay them for permission to paint their photos.

Young adults report this scam begins with a direct message on social media from someone who says they like a target's photo and want to pay the target thousands of dollars to use it. Next, they’ll send the target a check. They’ll tell the target to deposit it, take some money out to send to the artist for supplies, and keep the rest. They may promise to reimburse any money the target sends back (but never do — it's a scam).

That first check, of course, is fake, and if deposited, it will bounce, leaving the hapless target out any money sent to the scammer and owing the bank any money withdrawn from the deposit.

FinCEN has updated its Beneficial Ownership Information Frequently Asked Questions to include new information for entities that are disregarded for U.S. tax purposes (Question F.13), as well as updated information that addresses the time frame for obtaining an Employer Identification Number (EIN) from the IRS (Question G.3). An in-page search for "July 24" will take you to the end of each of those new FAQs.

The updated FAQ can be downloaded as a 50-page PDF document, where the two new FAQs begin on pages 31 and 33, respectively.

The Treasury Department yesterday announced that, as part of implementing the historic Rebuilding Economic Prosperity and Opportunity for Ukrainians Act (the “REPO for Ukrainians Act”), OFAC has issued a new reporting requirement for financial institutions holding Russian sovereign assets. Under section 104(a) of the Act, all financial institutions at which Russian sovereign assets are located, and that know or should know of such assets, must provide notice of such assets to OFAC no later than August 2, 2024 or within 10 days of the detection of such assets, and can do so via OFAC’s new form, which can be found on OFAC's Reporting System webpage.

The Treasury Department yesterday reported that OFAC has targeted a network of three individuals associated with the expanded activities of the Islamic State of Iraq and Syria (ISIS) on the African continent. These individuals serve as key financiers and trusted operatives, enabling the activities of ISIS and its leaders across Central, Eastern, and Southern Africa. They also serve as critical links between far-flung ISIS operations, including ISIS affiliates in the Democratic Republic of the Congo (DRC), Mozambique, Somalia, and ISIS cells in South Africa, allowing ISIS leadership to leverage each affiliate’s capabilities to conduct terrorist attacks that undermine peace and security in the region.

Treasury also reported that OFAC has sanctioned two Mexican members of Cartel de Jalisco Nueva Generacion (CJNG) and two Mexican companies.

For the names and identification information of the designated individuals and entities, see this July 23, 2024, BankersOnline OFAC Update.