Regulatory Updates

FinCEN Issues Final Rule Regarding Access to Beneficial Ownership Information

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a final rule that establishes the framework for access to and protection of beneficial ownership information (BOI). Issued pursuant to the bipartisan Corporate Transparency Act (CTA), the final rule prescribes the circumstances under which BOI reported in compliance with FinCEN’s September 30, 2022, final BOI Reporting Rule may be disclosed to federal agencies; state, local, tribal, and foreign governments; and financial institutions, and how it is to be protected.

Treasury Targets Network Financing Houthi Attacks on International Shipping

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated one individual and three entities responsible for facilitating the flow of Iranian financial assistance to Houthi forces and their destabilizing activities. Among those designated was the head of the Currency Exchangers Association in Sana’a and three exchange houses in Yemen and Türkiye. These persons have facilitated the transfer of millions of dollars to the Houthis at the direction of U.S.-designated Sa’id al-Jamal, who is affiliated with Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).

President Signs Executive Order 14114, Providing Authorization for Treasury to Impose Sanctions on Financial Institutions for Engaging in Certain Transactions Related to Russia’s Military-Industrial Base

President Joe Biden signed a new Russia-related Executive Order (E.O.14114), which is an amendment to E.O 14024 signed in 2021. Executive Order 14114 provides the Secretary of the Treasury with authorization to impose sanctions on a foreign financial institution that has been found to conduct or facilitate any significant transactions, or provide any service, involving Russia’s military-industrial base or on behalf of any designated persons pursuant to the order.

OFAC Publishes Guidance for FFIs on how to Identify Sanctions Risks and Implement Corresponding Controls

OFAC published guidance for foreign financial institutions (FFIs) that may conduct or facilitate significant transactions or provide any service involving Russia’s military-industrial base. This guidance follows the President’s Executive Order (E.O. 14114), which provides OFAC with new authorities to target financial institutions for engaging in certain transactions.

U.S. Department of the Treasury Releases Fact Sheet on Actions to Prevent and Disrupt Corruption, Including Addressing Risks Associated with Investment Advisors and the Real Estate Sector

On December 11, the Department of the Treasury released a fact sheet covering its actions and planned efforts to prevent the laundering of corrupt proceeds, holding corrupt actors accountable, and strengthening global anti-corruption efforts.

Prometheum Gets the Go-Ahead from FINRA to Offer Digital Asset Securities Clearing Services

The Financial Industry Regulatory Authority (FINRA) granted Prometheum Ember Capital the ability to offer clearing and settlement services through its special purpose broker dealer license, which it obtained this past year from the Securities and Exchange Commission (SEC).

European Council and European Parliament Reach Agreement to Establish AMLA

A provisional agreement was reached on creating a new European authority for countering money laundering and financing of terrorism, the AMLA, which serves as the centerpiece of the anti-money laundering package and aims to protect EU citizens and the EU’s financial system against money laundering and terrorist financing. The AMLA will have direct and indirect supervisory powers over high-risk obliged entities in the financial sector.

Enforcement Updates

Brighton Bank Agrees to Consent Order with FDIC With Emphasis on AML Technology in Compliance Issues

Brighton Bank has entered into an agreement with the Federal Deposit Insurance Corp. (FDIC) to overhaul its anti-money-laundering technology and practices after a report from the regulator last year found the bank violated compliance laws.

Peoples Bank Agrees to Consent Order with FDIC and Indiana DF for Their BSA Program

The parent of Peoples Bank in Munster, Indiana, has agreed to a consent order from the Federal Deposit Insurance Corp. and the Indiana Department of Financial Institutions. The order accuses Finward Bancorp of “unsafe and unsound banking practices” related to the Bank Secrecy Act.

OFAC Settles With CoinList Markets LLC for $1,207,830 Related to Apparent Violations of the Ukraine-/Russia-Related Sanctions Regulations

CoinList Markets LLC, a San Francisco, California-based virtual currency exchange, has agreed to pay $1,207,830 to settle its potential civil liability arising from processing 989 transactions on behalf of users ordinarily resident in Crimea between April 2020 and May 2022, in apparent violation of OFAC’s Russia/Ukraine sanctions.

OFAC Settles With Nasdaq, Inc. for $4,040,923 Related to Apparent Violations of the Iranian Transactions and Sanctions Regulations Undertaken by Former Armenian Subsidiary

Nasdaq, Inc., a financial services corporation headquartered in New York, New York, that owns and operates stock exchanges and other businesses worldwide, has agreed to pay $4,040,923 to settle its potential civil liability for the conduct of its former wholly owned foreign subsidiary, Nasdaq OMX Armenia OJSC, the former owner and operator of the Armenian Stock Exchange (ASE). In this capacity, Nasdaq OMX Armenia processed trades and settled payments through the ASE platform involving the OFAC-designated Armenian subsidiary of Iran’s state-owned Bank Mellat. In doing so, Nasdaq OMX Armenia knowingly engaged in the exportation of services to Iran and the Government of Iran, thereby committing 151 apparent violations of OFAC sanctions on Iran.

Terraform Labs Ruled Liable for Selling Unregistered Securities - SEC Fraud Case Goes to Jury | View Reuters Article | View BNN Bloomberg Article

A federal judge ruled that cryptocurrency entrepreneur Do Kwon and his company Terraform Labs violated U.S. law by failing to register two digital currencies that collapsed in 2022. Terraform Labs and the SEC will head to trial next month after a judge ruled that the SEC’s fraud case against Terraform must be tried by a jury. U.S. District Judge Jed S. Rakoff ruled in favor of the regulator Thursday, agreeing that Terraform is liable for selling unregistered securities, though he threw out allegations that it had made transactions in unregistered security-based swaps.

This market update was prepared with assistance from Alexandra Barkoske and Clayton Gingrich.