A snapshot of regulatory interventions in the banking space from around the world.
Financial Transactions and Reports Analysis Centre of Canada: FAQs on Politically Exposed Persons in Canada and Heads of International Organizations
The Financial Transactions and Reports Analysis Centre of Canada issued FAQs on politically exposed persons in Canada and heads of international organizations.
In order to more effectively detect and deter money laundering and terrorist financing, the Government of Canada had, in June 2017, implemented new legal requirements in relation to politically exposed persons in Canada and heads of international organizations.
2. UNITED STATES:
i) Federal House of Representatives: Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act Guidance
The Federal House of Representatives repealed Bureau of Consumer Financial Protection’s (CFPB) Indirect Auto Lending Guidance (Guidance). The Guidance applied to indirect auto lenders within the jurisdiction of the CFPB, including both depository institutions and nonbank institutions.
According to the House Financial Services Committee Chairman, Jeb Hensarling, the Guidance ‘essentially outlawed the practice of auto dealers in the US being able to take wholesale financing from third parties and charge retail rates.’
ii) Federal Financial Institutions Examination Council: Bank Secrecy Act – Customer Due Diligence and Beneficial Ownership Examination Procedures
The Federal Financial Institutions Examination Council released the customer due diligence and beneficial ownership sections of the Bank Secrecy Act/Anti-Money Laundering Examination Manual.
The manual applies to all Federal Deposit Insurance Corporation-supervised banks and savings associations, including community institutions.
iii) Federal Reserve Board: Final amendments to Regulation A
The Federal Reserve Board approved final amendments to Regulation A. Regulation A governs extensions of credit by Federal Reserve Banks.
a) revise the provisions regarding the establishment of primary credit rate at the discount window in a financial emergency; and
b) delete obsolete provisions relating to the use of credit ratings for collateral for extensions of credit under the former Term Asset Backed Securities Loan Facility program.
The amendments will become effective 30 days after the revised Regulation A is published in the Federal Register.
iv) Financial Crimes Enforcement Network: Customer Due Diligence Requirements for Financial Institutions
The Financial Crimes Enforcement Network’s (FINCEN) final rule, “Customer Due Diligence Requirements for Financial Institutions ” (the CDD Rule) became effective.
The CDD Rule requires covered financial institutions to establish and maintain written policies and procedures to:
a) identify and verify identity of customers;
b) identify and verify identity of the beneficial owners of companies opening accounts;
c) understand the nature and purpose of customer relationships to develop customer risk profiles; and
d) conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.
i) Central Bank of Nigeria: Anti-Money Laundering and Combating the Financing of Terrorism (Administrative sanctions) Regulations, 2018
The Central Bank of Nigeria published Anti-Money Laundering and Combating the Financing of Terrorism (Administrative Sanctions) Regulations 2018 (AML/CFT Administrative Sanctions Regime).
The AML/CFT Administrative Sanctions Regime is sequel to Financial Action Task Force’s Recommendation 35 on effective, proportionate and dissuasive sanctions and the Intergovernmental Action Group against Money Laundering in West Africa’s 2007 Mutual recommendation that Nigeria’s AML/CFT sanctions regime be reviewed and made to be proportionate and dissuasive.
The sanctions regime has been gazetted.
ii) Central Bank of Nigeria: Nigerian Payments System Risk and Information Security Management Framework
In furtherance of its mandate to develop safe and secure electronic payments system in Nigeria, the Central Bank of Nigeria (CBN) issued draft Nigerian Payments System Risk and Information Security Management Framework.
Comments on the draft framework are to be submitted to the CBN on or before May 31, 2018.
Bank for International Settlement: Strategy on Reducing the Risk of Wholesale Payments Fraud Related to Endpoint Security
The Bank for International Settlement’s Committee on Payments and Market Infrastructures published Strategy on Reducing the Risk of Wholesale Payments Fraud Related to Endpoint Security (Strategy).
Aimed at encouraging and helping to focus industry efforts to reduce the risk of wholesale payments fraud related to endpoint security, the Strategy comprises seven elements designed to work holistically to address all areas relevant to preventing, detecting, responding to and communicating about fraud.
5. UNITED KINGDOM:
Competition and Markets Authority: Transparency in Consumer Enforcement Cases – Draft Supplementary Note
The Competition and Markets Authority (CMA) issued Transparency in Consumer Enforcement Cases – Draft Supplementary Note (Draft Supplementary Note).
The Draft Supplementary Note provides information about the CMA’s approach to transparency in consumer enforcement cases, in particular the circumstances in which it may publicly name parties under investigation.
The consultation closes on June 6, 2018.
6. HONG KONG:
i) Hong Kong Monetary Authority: Strengthening Information and Intelligence Sharing
The Hong Kong Monetary Authority released Money Laundering and Terrorist Financing Risk Assessment Report. The Report outlines Hong Kong Government’s policy commitment to strengthen law enforcement efforts and intelligence capability to tackle domestic and international money laundering and terrorist financing activities.
ii) Hong Kong Monetary Authority: Circular on Credit Risk Management for Personal Lending Business
The Hong Kong Monetary Authority issued Circular on Credit Risk Management for Personal Lending Business (Circular). The Circular informs authorized institutions that they may adopt credit risk management techniques and practices enabled by technology for personal lending business.
Reserve Bank of India: Revised Guidelines on Lending to Priority Sector for Primary (Urban) Co-operative Banks
The Reserve Bank of India issued Revised Guidelines on Lending to Priority Sector for Primary (Urban) Co-operative Banks.
The key features of the revised guidelines include the following:
a) target for lending to total priority sector and weaker section will continue as 40% and 10%, respectively, of adjusted net bank credit or credit equivalent of off-balance sheet exposure, whichever is higher.
b) loan limits for housing loans qualifying under priority sector have been revised; and
c) priority sector assessment will be monitored through quarterly and annual statements.
The guidelines took effect immediately.
Central Bank of Malta: Amendments to the Trading Licences Regulations
The Central Bank of Malta (Bank) launched draft amendments to the Trading Licences Regulations. The draft amendments: i) introduce a licensing regime for credit reference agencies operating in Malta; and ii) lay down procedure to be followed by an applicant.
Stakeholders are required to submit comments to the Bank no later than May 23, 2018.
Bermuda Monetary Authority: Draft Sector-Specific AML/ATF Guidance Notes for Corporate Service Provider Business
Bermuda Monetary Authority (BMA) issued for consultation draft Sector-Specific AML/ATF Guidance Notes for Corporate Service Provider Business (AML/ATF Guidance Notes).
The BMA had reviewed the AML/ATF Guidance Notes to ensure compliance with the revised 40 recommendations which the Financial Action Task Force (FATF) published in 2012.
The consultation ends on June 11, 2018.
*An expert on banking law and regulation, Olakunle Komolafe holds an LL.M. from Harvard Law School, United States and another LL.M. in Energy, Natural Resources and Environmental Law from the University of Calgary, Canada.