Top Story Security Related

The Federal Reserve Board has announced it has issued cease and desist orders against:

• Small Business Bank, Lenexa, Kansas, for deficiencies in various areas, including the bank's operations and risk management practices, and compliance with the Bank Secrecy Act and related rules and regulations
• Industry Bancshares, Inc., Industry, Texas (jointly issued with the Texas Department of Banking), which owns and controls Bank of Brenham, National Association, Brenham, Texas; The First National Bank of Shiner, Shiner, Texas; The First National Bank of Bellville, Bellville, Texas; Industry State Bank, Industry, Texas; Fayetteville Bank, Fayetteville, Texas; and Citizens State Bank, Buffalo, Texas, for deficiencies with respect to the operations of Bancshares, including with respect to its ability to serve as a source of strength to those banks

The FDIC has made its November 2024 updates to its Risk Management Manual of Examination Policies (RMS Manual). The Manual provides FDIC examiners information relating to examination activities and supervisory practices. The FDIC conducts examinations at financial institutions to ensure public confidence in the banking system and to protect the Deposit Insurance Fund. The Manual promotes consistency in examination activities, which center on evaluating an institution’s capital, assets, management, earnings, liquidity, sensitivity to market risk, and adherence to laws and regulations.

This month's updates are found in Section 22.1 — Examination Documentation Modules. The FDIC has added 25 Reference ED Modules to this section.

OFAC has issued a Penalty Notice imposing a $1,104,408 penalty on a natural U.S. person for 75 violations of OFAC sanctions on Iran valued at approximately $561,802.

Between 2019 and 2022, the individual executed a plan to purchase, renovate, and operate a hotel in Iran. In furtherance of this scheme, this individual used foreign money services businesses in Iran and Canada to evade U.S. sanctions, while aware at all times of U.S. sanctions on Iran. The penalty amount reflects OFAC’s determination that the violations were egregious and were not voluntarily self-disclosed.

Yesterday, the Treasury Department reported that OFAC sanctioned a network of nine Mexican nationals involved in fentanyl, heroin, and other deadly drug trafficking and money laundering. Individuals designated in this network also engage in human smuggling in furtherance of their drug trafficking activities. Additionally, as members of the Cartel Jalisco Nueva Generacion (CJNG), some of the individuals sanctioned today played a prominent role in the early stages of the U.S. opioid crisis, a leading factor driving the United States’ modern fentanyl crisis. CJNG is a violent Mexico-based drug trafficking organization responsible for a significant proportion of fentanyl and other deadly drugs trafficked into the United States.

Treasury also reported that OFAC designated six senior Hamas officials, including the terrorist group’s representatives abroad, a senior member of the Hamas military wing, the Izz Al-Din Al-Qassam Brigades, as well as individuals involved in supporting the terrorist group’s fundraising efforts and weapons smuggling into Gaza.

For the names and identification information of the designated individuals, see yesterday's BankersOnline OFAC Update.

Yesterday, the Treasury Department reported that OFAC was sanctioning Amana the Settlement Movement of Gush Emunim Central Cooperative Association Ltd (Amana), a settlement development organization that is involved with U.S.-sanctioned individuals and outposts that perpetrate violence in the West Bank, and its subsidiary Binyanei Bar Amana Ltd. Concurrently, the Department of State was designating three individuals and one entity.

For the names and identification information of the designated individuals and entities, see yesterday's BankersOnline OFAC Update.

The CFPB has published its Personal Financial Data Rights Rule at 89 FR 90838 in this morning's Federal Register.

Subject to the outcome of pending litigation against the rule, it will become final on January 17, 2025, with compliance dates for data providers beginning April 1, 2026; April 1, 2027; April 1, 2028; April 1, 2029; or April 1, 2030, based on the criteria set forth in § 1033.121(c).

FinCEN has updated two FAQs related to access to Beneficial Ownership Information. The topics covered are in Section O (Access FAQs), and include FAQ O1 (Access to BOI for authorized recipients) and FAQ O2 (Access to BOI for Federal agencies).

FAQ O1 indicates that access is being offered in five phases. The first four phases will extend the opportunity to request access to Federal and State, local, and Tribal law enforcement partners. The fifth phase, expected to begin in the spring of 2025, will extend the opportunity to request access to financial institutions subject to due diligence requirements under applicable law and their supervisors.

Yesterday, the Treasury Department reported that OFAC has sanctioned 26 companies, individuals, and vessels associated with the Al-Qatirji Company, a Syrian conglomerate responsible for generating hundreds of millions of dollars in revenue for Iran’s Islamic Revolutionary Guard Corps-Qods Force and the Houthis through the sale of Iranian oil to Syria and the People’s Republic of China.

For the names and identification information of the designated persons and vessels, see yesterday's BankersOnline OFAC Update.

OFAC has announced a $178,421 settlement with American Life Insurance Company (ALICO), a subsidiary of MetLife, Inc. ALICO agreed to settle its potential civil liability for 2,331 apparent violations of OFAC sanctions on Iran. The apparent violations related to insurance policies provided to entities in the United Arab Emirates that were owned or controlled by the Government of Iran. The settlement amount reflects OFAC's determination that the apparent violations were voluntarily self-disclosed and were not egregious.

FRBServices has announced the expansion of FedDetect Duplicate Notification for Check Services to include commercial checks, alongside its existing Treasury check notification service. Financial institutions can now see deposit information and images of potential duplicate items for commercial checks, supplementing their existing check fraud mitigation tools.

“Commercial checks remain a critically important form of payment, but they’re also vulnerable to fraud,” said Shonda Clay, FRFS executive vice president and chief of product and relationship management. “With the expansion of our FedDetect service, we are providing financial institutions of all sizes another powerful tool in their risk mitigation toolkit. Even better, we are now offering this service at no cost as part of our commitment to supporting depository institutions in the collective, industry-wide mission to combat fraud.”

The FedDetect service helps financial institutions mitigate loss of funds due to fraud or deposit capture errors by sending notices of potential duplicate Treasury or commercial checks across multiple payment channels and financial institutions.