Financial Regulatory Forum

Consumer Financial Protection Bureau white paper spotlights overdraft opt-in as costly choice

By Bora Yagiz, Compliance Complete

NEW YORK, June 18 (Thomson Reuters Accelus) - A recent white paper by the Consumer Financial Protection Bureau (CFPB) on bank and credit union overdraft practices found that consumers who opt in for overdraft coverage end up with more costs and more involuntary account closures. (more…)

Basel paper offers new look at bail-in models for ailing institutions

By Bora Yagiz, Compliance Complete

NEW YORK, June 12 (Thomson Reuters Accelus) - A recent Bank for International Settlements (BIS) quarterly review article attempts to solve the too-big-to-fail (TBTF) problem without causing systemic disruption to financial markets, by offering a new resolution template to recapitalize banks on the verge of bankruptcy. It may, however, inadvertently legitimize a de facto bail-in model against the consent of depositors, and put their money at risk.

Since the financial crisis of 2008, regulators worldwide have sought to reduce the likelihood of a TBTF failure through increase in capital quality and quantity enshrined internationally in Basel III, as well as setting various resolution mechanisms set to wind down failing institutions.  (more…)

Financial industry anxious for clarity on swap-facility rules; business conduct a key compliance issue

By Emmanuel Olaoye, Compliance Complete

WASHINGTON/NEW YORK, June 11 (Thomson Reuters Accelus) - The financial industry is scrambling to understand the Commodity Futures Trading Commission’s final rules for firms trading derivatives on an electronic platform.

Representatives say several aspects of the rules adopted in May remain unclear, including which trades have to be traded electronically, how to adequately disclose risks in swaps, and the time frames for complying with the rules.  (more…)

U.S. Justice Department chooses former prosecutor to be HSBC compliance monitor

By Brett Wolf, Compliance Complete

NEW YORK, June 6 (Thomson Reuters Accelus) - The U.S. Justice Department on Wednesday said it has chosen a former New York County prosecutor who is known for his innovative pursuit of criminals to police HSBC’s efforts to clean up its anti-money laundering program.

The Department’s decision to announce its choice at a time when a federal judge’s hesitation to sign-off on its settlement with HSBC has raised questions over the settlement’s prospects suggests the move is an attempt to win the judge’s approval, compliance experts said. (more…)

AML reports a key tool for analyzing “21st century crime scene,” New York prosecutors say

By Stuart Gittleman, Compliance Complete

NEW YORK, June 4 (Thomson Reuters Accelus) – The suspicious-activity reports and other filings submitted by anti-money laundering officers are quite unlike a child’s letters to Santa Claus — they can be assured of an audience, Manhattan’s top local prosecutor and top staffers told reporters last week.
New York County District Attorney Cyrus Vance Jr. said his staff is continuing the war Bob Morgenthau, his predecessor, waged against the usual focus of AML efforts – drugs, fraud, taxes and terrorism – but they are using new tools and methods to fight emerging criminal threats as well as lower-level “street crime.” (more…)

Digital currency firms rush to adopt anti-money laundering rules amid global crackdown

By Thomson Reuters Reporting Team

NEW YORK, June 3 (Thomson Reuters Accelus/Reuters) – These are unsettling times for digital currency businesses and the venture capitalists backing them.

On Tuesday, the authorities in Spain, Costa Rica and New York arrested five people at the digital currency firm Liberty Reserve, including its founder Arthur Budovsky, and seized related bank accounts and Internet domains.  (more…)

Goldman standards review reflects new compliance landscape

By Nick Paraskeva, for Compliance Complete

NEW YORK, May 29 (Thomson Reuters Accelus) - Goldman Sachs’ report on new business ethics and practices voiced lofty ambitions that are both frequently aired and difficult to implement. But it also articulated higher standards on issues such as reputational risk, suitability and conflicts of interests, which are increasingly demanded by customers, regulators and investors.

The 30-page report was adopted by Goldman Sachs after an extensive review in the wake of financial-crisis scandals that saw it hauled before Congress and pilloried in the press. Violations of compliance standards such as those at Goldman also emerged at several other firms in the post-crisis period. This misconduct has hurt the reputation of the entire financial industry. (more…)

CFTC rules on swaps trading put demands on compliance oversight

By Nick Paraskeva, for Compliance Complete

NEW YORK, May 29 (Thomson Reuters Accelus) - New U.S. rules requiring many over-the-counter derivatives to be traded on swap execution facilities and exchanges will have a major impact on the compliance and risk processes of market participants. Price quotation, execution and trade reporting requirements adopted last week by the Commodity Futures Trading Commission aim to bring transparency to the previously unregulated swaps markets.

The rules contain some concessions in response to industry lobbying against earlier proposals, but they did not squelch the opposition. (more…)

No bank is ‘too big to jail,’ U.S. Attorney General Holder warns

By Stuart Gittleman, Compliance Complete

NEW YORK, May 20 (Thomson Reuters Accelus) - Corruption, cyber threats and transnational organized crime – and the money laundering that greases the wheels of illicit commerce – are high on the list of law enforcement priorities, U.S. Attorney General Eric Holder told the House Judiciary Committee on Wednesday. (more…)

U.S. consumer bureau’s first criminal referral is a warning for regulated banks

By Emmauel Olaoye, Compliance Complete

WASHINGTON, May 15 (Thomson Reuters Accelus) - Lenders who work closely with unregulated financial companies should conduct a thorough background check on the track record of such companies if they want to avoid being sanctioned by regulators.

The advice comes a few days after federal prosecutors charged debt settlement company Mission Settlement Agency and four individuals with mail and wire fraud. The charges were the result of allegations that the defendants ran a scheme that victimized more than 1,200 people across the United States. (more…)

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