Editor's Note

The following newsletter provides a roundup summarizing enforcement actions, guidance, rulemakings, and other public statements taken by a federal and/or state financial services regulatory agency, specifically focusing on: (1) the source of the development (regulator, legislative body, etc.), (2) the subject matter (consumer lending, money transmission, capital markets, etc.), and (3) the general issue covered.

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Regulatory Developments

  • Federal Deposit Insurance Corporation. Bank Merger Transactions. On March 21, 2024, FDIC proposed revisions to its "Statement of Policy on Bank Merger Transactions." The revised policy reflects changes to the scope of transactions subject to FDIC approval, the FDIC's process for evaluating merger applications, and the principles that guide the FDIC's consideration of the applicable statutory factors in the Bank Merger Act since it was last amended in 2008. FDIC Chairman Martin J. Gruenberg discussed the implications of the revisions in an accompanying statement.
  • Federal Deposit Insurance Corporation. Consumer Compliance Examination Manual Updates. On March 28, 2024, FDIC issued revisions to the following sections of its Consumer Compliance Examination Manual: II-6.1 (Communicating Findings); VI-1.1 (Expedited Funds Availability Act); and VII-2.2 (FTC Rule – Preservation of Claims and Defenses).
  • Financial Crimes Enforcement Network. Customer Identification Program Requirement. On March 28, 2024, FinCEN issued a request for information to help it understand and evaluate the risks, benefits, and safeguards if banks were permitted to collect partial SSN information from a customer, and subsequently use reputable third-party sources to obtain the full SSN prior to account opening. FDIC issued an advisory reemphasizing the existing requirements under the Customer Identification Program (CIP) Rule as it relates to identifying information that must be collected from customers prior to account opening.

Rulemaking Updates

  • Federal Reserve Board. Community Reinvestment Act. On March 21, 2024, FRB, FDIC, and OCC jointly issued an interim final rule extending the applicability date of certain provisions in the Community Reinvestment Act (CRA) final rule issued in October 2023. The agencies extended the applicability date of the facility-based assessment areas and public file provisions from April 1, 2024, to January 1, 2026. In addition, the agencies also issued technical, non-substantive amendments to the CRA final rule and to the related agency regulations that reference it. Comments will be taken until May 13, 2024.
  • Financial Industry Regulatory Authority. Newsletter for FINRA Neutrals. On March 29, 2024, FINRA released Volume 1 of The Neutral Corner: The Newsletter for FINRA Neutrals, which provides "arbitrators and mediators with current updates on important rules and procedures within securities dispute resolution."

Research and Analysis

  • Department of the Treasury. AI-Specific Cybersecurity Risks in the Financial Sector. On March 27, 2024, Treasury released a report titled, "Managing Artificial Intelligence-Specific Cybersecurity Risks in the Financial Services Sector." The report outlines steps to address immediate AI-related operational risk, cybersecurity, and fraud challenges. These steps include addressing: the AI-capability gap between large and small financial institutions; the need for regulatory coordination in a rapidly changing environment; and the need for a "common AI lexicon" that "would not only facilitate appropriate discussion with third parties and regulators but could help improve understanding of the capabilities AI systems may have to improve risk management or to amplify new risks."
  • Federal Deposit Insurance Corporation. Consumer Compliance Supervisory Highlights. On March 29, 2024, FDIC released the 2024 edition of its annual Consumer Compliance Supervisory Highlights, which provides an overview of consumer compliance issues identified through the FDIC's supervision of state-chartered non-member banks and thrifts in 2023.

Other News of Note

  • Nationwide Multistate Licensing System. NMLS Policy Guidebook Changes. On March 29, 2024, NMLS updated its Policy Guidebook. The changes are summarized here.
  • Office of the Comptroller of the Currency. Compliance Risk Management. On March 25, 2024, Acting Comptroller of the Currency Michael J. Hsu discussed how banks can improve their ability to anticipate and adapt to emerging compliance risk issues by elevating and developing a strong internal sense of fairness, which can improve banks' abilities to "anticipate and adapt to emerging compliance risk issues."

Jonathan Cristol is a regulatory analyst with Davis Wright Tremaine LLP.