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The FDIC Board yesterday announced it has approved a final rule to strengthen resolution planning for insured depository institutions (IDIs) with at least $50 billion in total assets. After careful consideration of comments received, the FDIC issued a final rule that incorporates several changes from the agency’s proposed rule published in September of 2023.

Under the rule announced yesterday, the FDIC will require large banks with total assets of at least $100 billion to submit comprehensive resolution plans that meet enhanced standards to support the FDIC’s ability to undertake an efficient and effective resolution under the Federal Deposit Insurance Act should such an institution fail.

The rule will require IDIs with total assets of at least $50 billion but less than $100 billion to submit more limited “informational filings” to assist in their potential resolution. The agency will not require these institutions to develop a resolution strategy and related valuation information as part of their submissions. These institutions are also exempt from submitting certain strategy-related content requirements regarding the institution’s franchise components.

The new rule strengthens the existing IDI resolution planning framework under 12 CFR § 360.10 by requiring a full resolution submission from most covered IDIs every three years with limited supplements filed in the off years. Covered IDIs affiliated with U.S. global systemically important banking organizations must file a full resolution submission every two years.

The final rule will take effect on October 1, 2024, and the first submissions are expected next year.

• Fact sheet
• FIL-34-2024
• Statement by Acting Comptroller of the Currency Michael J. Hsu
• Statement by CFPB Director Rohit Chopra
• Publication update: Published at 89 FR 56620 in the 7/9/2024 Federal Register

Yesterday, Treasury Secretary Janet L. Yellen announced that OFAC had sanctioned eight Mexico-based targets affiliated with La Nueva Familia Michoacana drug cartel for trafficking fentanyl, cocaine, and methamphetamine into the United States. In addition to narcotics trafficking, La Nueva Familia Michoacana smuggles migrants from Mexico into the United States.

Concurrently, Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a Supplemental Advisory to highlight critical new information to help U.S. banks and other financial institutions guard against activity associated with the illicit fentanyl supply chain. The advisory includes new trends and red flags that can be indicators of activity associated with the procurement of precursor chemicals and manufacturing equipment used for the synthesis of illicit fentanyl and other synthetic opioids. Reporting from financial institutions of suspected financial transactions involving illicit fentanyl and narcotics trafficking plays a key role in law enforcement investigations and Treasury’s sanctions efforts globally.

For the names and identification information of the designated parties, see the June 20, 2024, BankersOnline OFAC Update.

FinCEN has issued a FIN-2024-A002) to alert U.S. financial institutions to new trends in the illicit fentanyl supply chain and urge vigilance in identifying and reporting suspicious activity associated with Mexico-based transnational criminal organizations and their illicit procurement of fentanyl precursor chemicals and manufacturing equipment from People’s Republic of China-based suppliers. The supplemental advisory builds off FinCEN’s 2019 advisory with new typologies and red flags to identify and report suspicious transactions, and fulfills the requirement in Section 3202 of the recently enacted FEND Off Fentanyl Act.

• FinCEN news release
• Treasury Department news release
• Remarks by Treasury Secretary Janet L. Yellen

FinCEN recently issued a report of efforts through May 2024 to educate small businesses and other key stakeholders about new beneficial ownership reporting requirements. The report also included a list of upcoming events at which FinCEN representatives will provide information on the regulation.

The OCC has reported the key issues facing the federal banking system in its Semiannual Risk Perspective for Spring 2024.

The OCC reported that the overall condition of the federal banking system remains sound. However, the maturing economic cycle may cause consumer headwinds. It is important for banks to continue identifying material risks and their interconnected impacts. Continuous risk management improvement remains appropriate as this allows banks to guard against complacency.

The OCC highlighted credit, market, operational, and compliance risks as the key risk themes in the report.

Yesterday, the Treasury Department reported that OFAC has designated a network of two individuals and seven entities that provide major sources of revenue for U.S.-designated Republika Srpska President Milorad Dodik and his family. Dodik has used his official position to accumulate personal wealth through companies linked to himself and to Igor Dodik.

For the names and identification information of the designated parties and links to new Balkans-related General Licenses, see the June 18, 2024, BankersOnline OFAC Update.

The OCC has released information on enforcement actions taken against national banks and federal savings associations and individuals currently or formerly affiliated with banks the OCC supervises.

• A Formal Agreement with Credit Suisse AG New York Branch, New York, NY, to address deficiencies in the branch’s compliance related to the Bank Secrecy Act and other anti-money laundering laws and regulations. The branch’s execution of this formal agreement was a condition for the branch’s conversion to a federal license. The provisions of the formal agreement are substantially the same as a December 2020 written agreement between the branch and the Federal Reserve Bank of New York and the New York State Department of Financial Services.
• A Formal Agreement with Touchmark National Bank, Alpharetta, GA, for unsafe or unsound practices, including those relating to the bank’s strategic planning, board and management oversight, liquidity risk management, interest risk management, credit risk management, audit, and information technology.

The OCC also issued Orders of Prohibition against:

• Manuel Alejandro Ramirez Perez, former relationship banker and credit solutions advisor at Bonita Springs and North Naples, Florida, branches of Bank of America, N.A., Charlotte, NC, for improperly accessing customer accounts and providing information on those accounts to a third-party individual.
• Aviana Rivera, former personal banker at a Bryan, Texas, branch of First National Bank Texas, Killeen, TX, for embezzling $11,500 from the account of a bank customer.

The Treasury Department has announced that OFAC has designated two individuals and five entities that have facilitated weapons procurement for Ansarallah, commonly referred to as the Houthis. OFAC is also designating one individual and one company, as well as identifying one vessel, that have facilitated the shipment of commodities, the sale of which provides an important funding stream to the Houthis that aids in their weapons procurement. This action targets key actors who have enabled the Houthis to generate revenue and acquire a range of materials to manufacture the advanced weaponry they are now using to conduct ongoing terrorist attacks against commercial ships.

For the names and identification information of the designated parties, see the June 17, 2024, BankersOnline OFAC Update.

The Federal Reserve Board on Friday announced its issuance of a Consent Cease and Desist Order against Evolve Bancorp, Inc., and Evolve Bank & Trust, both of West Memphis, Arkansas, for deficiencies in the bank's anti-money laundering, risk management, and consumer compliance programs.

Evolve partners with various financial technology companies that, in turn, provide access to banking products and services to their end customers. Examinations conducted in 2023 found that Evolve engaged in unsafe and unsound banking practices by failing to have in place an effective risk management framework for those partnerships. In addition, Evolve did not maintain an effective risk management program or controls sufficient to comply with anti-money laundering laws and laws protecting consumers.

The Board is requiring the bank to improve its policies and programs in those areas, in addition to requiring other remedial improvements. For current partnerships with financial technology companies, the Board's action requires Evolve to strengthen its risk management practices to address potential risks, including compliance and fraud risks, by implementing appropriate oversight and monitoring of those relationships, including through enhanced procedures related to recordkeeping and consumer compliance programs. The Board's enforcement action against Evolve is independent of the bankruptcy proceedings regarding Synapse Financial Technologies, Inc.

The Board's action was taken in conjunction with the Arkansas State Bank Department, the state supervisor of Evolve.

On Friday, the Treasury Department reported that OFAC has imposed sanctions on four individuals with links to the Islamic State of Iraq and Syria (ISIS), including members of an ISIS-linked human smuggling network. The investigations into these targets, as well as their subsequent designations, were taken in close coordination with the Government of Türkiye. As a result of this close cooperation, the Government of Türkiye concurrently took its own domestic action against this network.

Also on Friday, the State Department announced its designation of Tzav 9, a violent extremist Israeli group that has been blocking, harassing, and damaging convoys carrying lifesaving humanitarian assistance to Palestinian civilians in Gaza.

For additional information on the sanctioned parties, see BankersOnline’s June 14, 2024, OFAC Update.