21 Burst results for "OCC"
Stablecoins in the Hot Seat: Powell Calls Bitcoin a Substitute for Gold
"There was an absolute flurry of content and commentary yesterday around the place of bitcoin. Stable coins defy and the digital asset industry as a whole vis-a-vis. Us government regulation as well as how a digital dollar might shake that all up before we get into it. Let's at the terms of the debate. One of the competitors for this cycles top fudd is the government will ban it if it gets sufficiently threatening now to be clear banning depending on your sister could mean anything from an outright ban of use in holding too forceful seizure too limiting access to on and off ramps to the more benign from a commercial standpoint but no less threatening from a privacy standpoint integration of the full crypto infrastructure into the am l. kyc. Money surveillance apparatus. I've spent some time on this show looking into global versions where this fudd seems to be playing out in particular. We've been watching the evolving situation in india and nigeria india which seems gearing up for a bill that would have some sort of outright ban although at least one finance minister says that that's not the case and nigeria. Where the central bank of nigeria. I reiterated that banks should not be working with crypto users which they've then subsequently rolled back just a little bit either way however really what everyone has been focused on is the us particularly in the context of a new administration. The last administration had friends and foes alike when it came to bitcoin and crypto trump. Famously tweeted that he did not like bitcoin or crypto. But we didn't really take that seriously as a threat because it was so clearly about zuckerberg and libra mnuchin was a much bigger enemy. Probably wrote that text for trump's tweet even and clearly wanted to tighten the reins in his final act. He was trying to require exchanges to collect more information. When users transferred crypto to their own wallets on the flip side however there was brian brooks who was absolutely revolutionary at the office of the comptroller of the currency. The changes he oversaw are a huge reason. Why so many big institutions are now playing in this space. Why so many big traditional banks feel like they have to race to catch up to allow people to offer their customers crypto services however as we know from physics every action has a reaction and to some extent one reason why observers are so keenly watching the biden administration is to see how much they're going to respond or try to walk back with brooks in the occ changed on top of that. As the biden administration has come to power the price and volume around bitcoin stable coins and the rest of the digital asset industries have made them much more on ignore -able last time joe biden was in office. Bitcoin is about four hundred and thirty bucks. Now it's been over fifty thousand dollars for sixteen days in a row tether was barely out of diapers now. It has a market supply above forty billion in his doing upwards of one hundred billion dollars in volume per day combined with us dc. And you've got over. Fifty billion dollars of usd approximates there so lot more is at stake with that. People have been watching. Two things has come in and what they're saying on the who has come inside. Janet yellen is back for another round although this time is treasury secretary rather than as he chair gary genzer to is back. Although this time is as he c- chair. Instead of cftc chair of these two there is much more optimism around gessler who has done a pretty fair bit of work to understand where the crypto industry is coming from even teaching a course at mit about bitcoin and blockchain. And of course we have someone who still around in the form. Of jay powell. The federal reserve chairman. His ex factor. And all these discussions is the potential of a central bank digital currency a digital dollar. That could potentially shift the us's relationship with these projects now in terms of what we've seen these actors say so far over the last few months up until now it's been pretty standard fare one part. There's a lot of exciting potential here. One part we have to protect investors though and one part but it's also used by criminals over the last couple of days however we've gotten both comments and news that could shift as into our next phase of understanding what the us is relationship with. Bitcoin stable coins and other digital assets is going to look going forward. So let's talk about powell speaking about cdc's and cryptos at a bank for international settlements panel yesterday. Let's talk about the announcement of digital dollar prototypes coming this summer. And let's talk about new draft fat. If guidelines around cryptocurrencies. I up powell. Did a session yesterday with leaders from the bank for international settlements including augustine carstens. We talked about last week. He was asked about crypto currencies. And whether he saw them as a threat. And here's what he said. We call them crypto assets. You know. they're they're highly volatile. See bitcoin and therefore not real useful as a store of value in there not backed by anything. They're more of an asset for speculation. So they're also not particularly in use as a means of payment. It's more speculative asset. That's it's essentially a substitute for gold rather than for the dollar. And i think with crypto acids the the the public needs to understand the risks. The principle thing is there's the volatility there's also the outsized energy requirements requirement for for mining. And the fact that they're not backed by anything so let's break out these three reasons that he wasn't particularly impressed by cryptos. I this idea of volatility or that. It's just an asset for speculation. Basically he's dismissing bitcoin and any other crypto as something that he does not have to stress about or really factor into his consideration around global monetary competition while many. Bitcoin is grabbed onto the essentially a substitute for gold piece as a great tweet and knocked to the gold bugs. Who they're trying to convert or at least undermined powell was saying this more. Like a giant shooing away. A fly gold is to him clearly. Irrelevant an unimportant antiquated part of the fiat system that he sits at the helm of in that way a substitute for that thing does not present a threat
"occ" Discussed on Banking Transformed with Jim Marous
"You can't have those Industries with social distancing you can open at 50% capacity that will extend your Runway to bankruptcy by a period of time but the industry itself is not viable on this basis and somehow, you know, people don't seem to be ready to come grips with that fact. So we look at those things and the reserve being taken against those assets and we see being dead. Flashing red lights on the horizon unless again, we either change our risk tolerance or figure out another way to adapt those kinds of things are problems. Then there are subject matter risks, like cyber-risk. We're off criminals and Sovereign threats have gone through the roof during this period I think the cybercriminals know that lots of us are glued to our screens all day today. We're not in our best decision-making framework because of the strength of the pandemic and shutdowns and everything and as a result much more likely to click a link we shouldn't click or to fall victim to an internet scam or whatever and in the world of managing, you know, the banking system is a real risk when foreign actors decide to take advantage of the situation. So there's a lot to worry about but again, I come back to I'm inherently an optimist. We've shut things down for six months, Hopefully, we're coming to a place where mostly we're seeing a reopening Trend Florida fully reopened recently even New York as allowing indoor dining at a limited-capacity starting this week. There's certain signs wage. Maybe we're going to come to our senses and reopen if that happens. I think the system will be okay. If not, we're going to have rethink risk management part of the whole dynamic of not being in this position ever before and you don't know what to measure it against you. Look at even miss a restaurant industry not knowing how many restaurants are simply open to pay their employees with the government checks at the receiving and really not in business and you were getting to the Fallen wage when that.
"occ" Discussed on Banking Transformed with Jim Marous
"Same time. There was a need to modernize the regulatory structure. We have worked under four decades over last four months. What does have been like and was it all that you expected. I expected a lot less than this. So it's been everything. I always wanted and more it would be the optimistic way of putting a gym. Thanks for having me and for giving this platform to chat with your listeners, I would say the toughest thing in A Moment Like This is not to let the Urgent overtake the important. There were a series of macro Trends going on birth. Finance long before the kovacic it down occurred. And if anything, I think what we've learned from Covetous, is that the change to a more modern Financial system has to accelerate if we're going to sort of everybody in this country who needs access to financial services. That's all the more urgent in a world where people aren't willing to go into retail shops. They don't want to go a bank branch. They don't want to touch cash all of these things in some level sort of accelerate this trend toward Technology Innovation. So we have to do those things. But at the same time we're in an environment where banks are under real stress. People are losing jobs. We're shutting down whole sectors of the economy. People are going bankrupt and banks have to support that so we have to be able do more than one thing at a time, but I don't want to be knocked off the long-term agenda because there's a short-term emergency. We have to be off to address both things it pretty much worked together at the time. We were shutting down the industry really ramped up in many ways from the perspective of certainly digital banking obviously, none of us in the industry worth. Here for the shutdown. It occurred in March or the financial ramifications of a country that pretty much was at a standstill how well you believe that both traditional and non-traditional financial institutions have managed to changes brought on by the pandemic, you know, I would say that it's been fine so far with an asterisk and so when I say fine Banks would tell you earnings are underage massive pressure because net interest margin no longer exists. There are loan delinquencies on the horizon. They have it all come through the system yet. But if we don't turn on the economy broadly and soon, you know, we we know that a lot of choice loan categories are going to be under stress. If we don't have another cares act and we don't open the economy. We could have major recessionary pressures. So it's fine today. Remember this is a recession of choice. We have decided that it is less risky to turn off the entire economy than it is to endure the pretty unevenly distributed depredations of the coronavirus. So that's a choice we've made off. A choice will become more costly overtime. So that's a problem. So traditional Banks they're doing fine. They're well-capitalized are serving their customers. Their loans are being, you know worked out in ways that we would want them to work out at the same time. There's really really good that we've got this Tech sector in finance today because when it came time to roll out the paycheck protection Loan program, for example, or various other of these rescued packages, we really need an innovator's to figure out a way to rapidly reach large numbers of customers at the big Banks were a little bit slow to do. We need a fraud detection systems. The traditional systems couldn't capture Etc and a lot of that helped him from fintech. I'll just tell you one very quick vignette, which is early in the rollout of these various covid-19 packages. We convened a series of listening sessions with both Banks and fintech companies. And what was very clear year was they each needed each other, you know, the banks needed context to help them do risk assessments and identity verification checks and other things and the syntax needed the banks as the source of capital through which you know these dollars off. A flow so it was a good thing in the end. I think you meant to loan business. And obviously the impact on the on all types of loans has yet to be realized all financial institutions increase their loan reserves while some back into companies have all been shut down their operations from a loan perspective. What risks are you looking at closely? There are a couple of things that are of great concern to us at a macro-level took very concerned that we continue to have examine our banks remotely. And so regardless of what you're talking about credit risk or operational risk cyber risk for something else. It's always easier to detect problems face-to-face off indeed as I've learned from our bank examiners here at the OCC many of the greatest Bank froze in history weren't discovered based on management reports or slide decks to the board. They were discovered. Well examiner sat in a meeting and he heard something that seemed inconsistent with something somebody else said in that meeting and he followed up and that's when he discovered there was some kind of a fraud or some kind of a cover-up. So to macro level simply having birth. Work from home is a risk to the entire system and I think is not a sustainable long-term strategy. If you go one level below that we think about it in terms of their individual sector wrists that are really standing out to us. So for example on the credit side, there's some industries that are doing just fine and some industries that seem like they are under real threat. So anybody who's an investor in a commercial office property right now is really wonder is anyone in America ever going to come back to work? Because if they don't we've got a lot of square footage that's going to go make and that's going to be a problem. If you're a lender to the hospitality industry or the travel industry industries that depend on density and turning tables and room occupancy..
"occ" Discussed on Consumer Finance Monitor
"In. The FDIC determined to add that last phrase in whole, or in part to support securitisations in the sales of participations, and to alleviate the issue of whether the transfer of a loan full stop would contemplate a the the sale of transfer of a of a partial if you will interest in in the loan or part of the bundle of rights, that a creditor has under the loan. So I. Again, the rationale for doing so was very similar to that of the O c. see one of the concerns that they you know I. They were careful to say that they were codifying longstanding guidance in this area. Like the like the OCC had again, we were discussing some of the market uncertainties that the you know that the current state of affairs had with respect to valid when made. It was really attended to address that marketplace uncertainty in to quell it. They also had a concern that in the event the FDIC would have tate would take a bank into receivership and would be in the position of having to sell assets. They wanted to be sure that they would be able to price those assets at that the traditional valuation of those assets. Assets and not have have discounted because of concern over a valid when made and then finally it, in terms of supporting the civility of the financial system the FDA recognized that in addition to its duties as a conservator that there was the other to provide assurance to the marketplace regarding a buyer's ability to to charge that same interest rate of. So those are the main rationales in the main points of the rule I will point out that that the FDIC rule when beyond this most important change. In at provided other provisions in par three, three, one, mainly to codify existing law with respect to a interest rate parody between state, Bank and National Bank branches that are located in hosts states that had long been the law. There hasn't been any implementing rag. They took the opportunity to do that again. To further strengthen the parody between exportation and. In Interest Rate Brampton of that is typically been unseen between the State Chartered Banks under the AC and national banks under the National Bank. Okay So, Let's turn now to the so called Trud Lender. Doctrine and I'm GONNA. Go back to you bland on that Could you describe? What. That doctrine is all about and. And, how does it differ from the so-called mad doctrine? The truth lender. Doctrine is the other Arrow in the quiver, if you will of the state regulators and Agee's and consumer groups that seek to attack the the back model, thank sponsorship programs that we've been discussing. The concept generally is that. In the scenario that I had described earlier. The bank is really not the true lender. They're they're apply. They're approving alone. Then immediately selling it off to the say the online provider and online provider is typically providing the servicing in the marketing and all of the other aspects of this product that in fact, it's a sham that in fact, it is not the lender. The bank is not really the quote, true lender, but rather is the online provider. And why are they making that argument? Because by by switching out who the actual lender is, they no longer can. The provider can no longer rely. Rely on the fact that it was a say, a national bank or a state back the had made the loan, and therefore can't rely on the preemption authority that those banks have therefore they are then left with whatever state they're operating in and the usery laws that may be in effect in those states and can find that though.
"occ" Discussed on Consumer Finance Monitor
"Access alternative funding sources manage concentrations of assets and better meet customer needs and be able to lend. The OCC addresses the numerous comments it received on the on the notice proposed rulemaking, indicating that this this rule is not subject to the preemption determination requirements that were established under dodd frank in other words. It's not a preemption determination. It's an interpretation of federal law. And the OCC answer the question. Does this support predatory lending with a very strong statement that the OCC does not approve of predatory lending, and this does not support predatory lending and consumers are well protected by a number of mechanisms at the OCC sites. So that's the OCC ruling a nutshell. Okay, Let's go to Glen now. To tell us about what the FDIC did. Sure thing Allen the FDIC rule was just issued five days ago. So it's it's very fresh. Indeed, it is intended according to them to mirror the OC final rule, though the two final rules are are not identical in every respect, the the FDIC had posited that section twenty, seven of the Federal Deposit Insurance Act, which along with section, twenty, four of that act sets up the statutory framework for the ability of state, chartered insured depository institutions to enjoy parallel interest, rate preemption and most favored lender benefits that are permitted for national banks under under the National Bank Act. Act in they posited that the law contained couple of statutory gaps as they refer to them. I section twenty seven doesn't explicitly state at what point in time the validity and enforceability of the interest rate of a bank's loan should be determined for purposes of that section, the other gap that they perceived was a section twenty seven, while while expressly gives state banks, the right to make loans in the rates permitted by their home states the section doesn't explicitly list all the components of that right like the right to assign the loans made under the preemptive authority of section twenty seven. So one of the one of the rules that the FDIC put out really addresses. Both of those points by in their parts, three, three, thirty, one of title twelve provides that whether interest on a loan is permissible under section twenty. Seven of the FDA is determined as of the date. The loan was made. And then interest on a loan that is permissible under section twenty seven would not be affected by a change in state law. A change in the relevant commercial paper rate after the loan was made in that language has put in because one of the permissible interest rates that can be charges based on a margin above the the commercial, the corporate paper rate, and so that carries through that language carries through or the sale, assignment or other transfer of the loan in whole impart..
"occ" Discussed on Consumer Finance Monitor
"So there's certain factors that you frequently see in enforcement actions where regulators pursue individuals rather than the entities themselves You know these factors include instances where the Amal program failures involve systemic repeated breakdowns. And where issues. Continue unabated for very long periods of time instances in which the AM L. failures inflict significant harm on customers. Instances where access Was Allowed for those engaging in criminal behavior and also where red flags were consistently ignored by the individuals and then in terms of steps to try to minimize potential liability. I think one of the most important is ensuring that you're an email program is properly tailored and implemented and you know this needs to be re evaluated on a pretty frequent basis also not getting in over your head as an individual particularly for compliance officer. It's a it's a very challenging job but You know they have to be task and they have to have adequate resources and staffing to effectively. Carry out their duties. They individuals have to ensure that there's effective employee training so that employees really understand the money laundering risks. And in the M Y soffer suffer bank Enforcement Action to required really extensive training not only for employees a whole to understand money laundering in general but for it to be tailored to their specific jobs. Another way to minimize individual liability is to raise internal awareness of external the external regulatory environment. Which kind of goes along with training maintaining communication with regulators on a regular basis The example of Robbo Bank where the The individual was did not did not disclose this audit report is is a prime example. Instances where red flags are identified documented? Documenting them escalating them and notifying the proper chain of command and as you saw an M. Y. Saffir Bank Enforcement Action Boards of directors need to exercise actual oversight of management. Not just act as mere rubberstamps so I think the the biggest takeaway of of this is that you know. Individuals in these compliance roles. They must follow up on problems. They can't turn a blind eye to them and they also can't repeat mistakes. Thanks Mary now Peter. You teased a second ago. Another aspect of the Daniel Weiss consent order and what it can tell us about the use of third party compliance consultants in this area by financial institutions. What can we learn in that regard? Yes thanks Chris. Oh so that is you know as we've been chatting a an unusual aspect of this In in the theme of the notice charge is is that the OCC continuing soft from the bank the auto firms report in a instead The former general counsel according to the government knowingly willfully made a false statements regarding the banks possession of the report and also of course made substantive assertions regarding the bank's compliance with the bank secrecy. Act Contra the contents of the report and that's really the heart of the the government's claim in this enforcement case so you know. Certainly one can understand the motivations of the government assuming the allegations are true It is still nonetheless a little serving that the government is going to focus its enforcement case on a alleged failure to turn over a third party report who was hired of course. Ironically here's another irony to enhance compliance Remember the bank hired this person To look into presumably in good faith into the concerns that have been raised by the chief compliance officer. So you know. You can certainly envision scenarios where they can to extremes can have consequences for financial institutions and the consultants in for that matter lawyers. Who are in their orbit. You can envision again is kind of catch twenty two situation with potentially perverse compliance consequences Complaints consequences you know. Some institutions may be hesitant to hire an outside consultant in. And by the way. Just a footnote you have to do. Independent auditing under the bank secrecy. Act that is that is a hiller that I mentioned of anti money laundering so I don't WanNa get confused on this point. I WanNa talk about you. Know perhaps additional compliance advisors. Or perhaps the I would say ferocity with which one engages a consultant To kind of dig into your your systems so you could see how many people at some businesses now might be a little hesitant to get into hiring consultants because frankly they don't want to hear bad news and they don't WanNa generate for the government a roadmap for potential future enforcement action nonetheless having inconvenient report. It's in the file. And then of course going to be subject to request by regulators and the perspective of the OCC is than anything having to do with 'EM BSA is. There's and there's there's no such thing as is legal privilege and you know it just a comment just in case you know somebody might say well you know. That's only problem for financial institutions. Who Don't want to confront the real problems. That may be of course in certain instances but I also have to note and I don't WanNa sound you know cute here but our advisers out there who who stand business By finding series problems everywhere so so. I don't think this is just a purely theoretical concern. Now again we gotta remember there were serious problems at. Rabobank according to the DOJ Enforcement Action. You know so everything's gotTa be put in. Its proper context I don't think that you know this case means that. There's going to be appraised of horrible in every instance and just one final comment. I WANNA draw kind of an interesting comparing contrast between this at an action by the New York Department of Financial Services Against Mashreqbank Bank knows in two thousand eighteen just a quick note not going to go into details. There was an enforcement action there against the bank. The oldest largest private bank in the UA in an extra criticizes banks use of a deficient third party vendor. So the problem wasn't that they didn't disclose the audit The wasn't that they ignore the audit or the consultants work rather. They just hired a consultant. Who in the eyes of the regulator wasn't very good? Nobody was trying to hide anything. Apparently each have apparently didn't do a good enough job when he was looking at the transaction. Tring so that's just yet another angle Where regulators can maybe go after financial institutions? Was more going on in that case. Of course that's just one example but I thought that that also was a young. That's that's a fairly aggressive. Move BY REGULATOR. But it also tells us if you're a bank or another financial institution yet can't just hire anyone and then rely on whatever they say ultimately it's up to the board and ultimately the institution itself is responsible for keeping its house in order. Thanks Peter and it's probably evident to our audience and certainly is to me that this is a very highly specialized and very complicated area. But one that also carries very significant. Risks for banks Mary if if our audience is interested in sort of keeping up to speed on current developments with regard to money laundering and BSA. Is there a resource for them that you could point them too Yes so Ballard. Spahr has a very active Log on all issues money laundering There's a large group of Ballard spahr attorneys. Who Work on it. I'd say there's at least one new post a week if not more and we also occasionally have guest speakers who are excuse me guest writers who contribute And so if anyone is interested in learning more about money laundering in general or for example the M wha for bank consent order which I Recently blocked about They can go to. Www DOT money laundering news dot COM. And you can also subscribe through Ballard. Spahr thanks very much and Mary and Peter. I want to thank both of you for sharing your expertise in this very important area with our audience today and thanks to everybody for tuning in today be sure. Visit our website Ballard SPAHR DOT COM. Where you can subscribe to this podcast and Apple podcast. Google play spotify or your favorite podcast platform and don't forget to check out. Our BLOGS CONSUMER FINANCE MONITOR DOT COM and money laundering news dot com for the insights into financial institution. Matters that we just talked about. If you have any questions or suggestions for the show please email us at podcast at Ballard SPAHR DOT com and stay tuned each Thursday for a great new episode of Our podcast. Thank you all for listening..
"occ" Discussed on Consumer Finance Monitor
"We'll all this talk about the board of directors. Mary makes me think of something that Peter. Sort of ominously reference in his opening comments in the podcast and that is the prospect of potential individualize ability. Peter how does that factor into this conversation? Yes thanks Chris It definitely is an important factor. And although instances of the OCC or other banking regulators pursuing individuals have not been commonplace I think there is a perception that they are on. A relatively speaking uptick and Mary talked a lot about what the board in that bank is going to be required to do but there there definitely is kind of a tension. Shall we say that can arise between specific individuals in the institution? They serve particularly when they are radically in compliance function. So I WANNA I wanNA chat from moment about a particular enforcement action and then I wanna just Kinda step back and talk about the general considerations regarding potential individual liability in the AM L. space. And how they kind of factor into his case so last year and again. We're just because folks may be thinking there's a lot in the media right now about a high profile of C. C. Enforcement Action regarding certain individuals. Were not going to be talking about that. We're GONNA be picking out some other examples so last year The OCC issued a pretty extraordinary announcement regarding the decision of the former bank. General Counselor of rebel BAC which is based I believe in the Netherlands In which he entered into consumer but the so in the consent order he agreed to a couple of things He agreed to be barred from the banking industry. Which is in in these matters. You'll fairly standard and then pay a fifty thousand dollar from so a consent order itself at again. This is fairly standard if the language is relatively junior It's really you gotta go to the notice of charges issued by the OCC that led up to the consent order. Ns more interesting document in kind walks through what the allegations are now. I just want to step back for a moment and remind people that rebel bank itself also into hot water. It actually ended up in. I think this is important agreeing to a criminal penalty of a three hundred sixty million dollars over its alleged violations and a there was a lot going on. I am not going to Belabor the details of that but The the allegations in a very high level was that there is broad scheme. Cross the bank so not just one person many people to permit look the other way if you will. According to the government and then conceal transactions that were involved in international drug trafficking. So you know the backdrop of this is that there's a pretty serious case brought by the Department of Justice against the institution so then you know what happens to the individuals. Well in in the matter that we're talking about which again involves the the former general counsel with the allegations are as that there was a new chief compliance officer and this is a tale that may sound familiar to folks Across enforcement actions. A new chief compliance officer came into the bank and in her view Adelphi serious deficiencies in the AM L. Pori okay. She communicated those two bank. Management Management disagreed so then the SEC began in examination of the bank in shortly thereafter in partly in response to these concerns raised by the chief compliance officer the bank contracted with an audit firm to provide not surprisingly an independent renaissance movement of the bank's name L. K. So far so good okay. So let's talk about this audit report that they that they performed so allegedly defining of the report corroborated the concerns of the chief compliance officer That the program is deficient several ways. Now later and here's another familiar tale The chief compliance officer actually turned into a whistleblower in gave the audit of firms report to the OCC and at that point the OCC responded by zooming. It's examination of the banks in compliance program. But of course now had been. They were armed with this report that had been given to them up by punitive whistle blower. So you know long story short. According to the notice of charges the bank responded to now CICI letter in here we get into good communications regarding potential deficiency as follows in Beira. My phosa says the governance version so the bank didn't disclose the existence of the audit report or acknowledges findings and of course the. Sec was happy about that because in the view of the OCC the report corroborated its view of the banks programs in instead thanks response which was drafted in part by a former general counsel disputed. The assise preliminary conclusions. Now there's other things going on In the notice of charges and again you know this is all against the backdrop of this young larger enforcement action against the Bank itself. But I think that that's a pretty extraordinary theory for no. Cc Enforcement Action. One concern understand their perspective that they were misled. But the heart of this notice of charge which of course led to an industry bar and a substantial fine really comes down to the fact That a internal audit report. How was not a turned over Which is maybe you know the more demonstrable error here End Of course. There was a difference of opinion in terms of whether or not it accurately portrayed problems in the in the banks. Am L. Program. Now you know another thing is this is the general counsel now. Of course banks and lawyers have to be honest with everyone Particularly the regulators But I don't think it's totally uncommon Four Channel Council to basically view their role as trying to you know Protect their institution in maintain privilege. Now this audit is not not a privilege document But it is. It is a fairly unusual Enforcement Action I'm not aware of anything that's precisely Quite as focused on whether or not report was or was not provided. And obviously it's A. It's a wake-up call To folks at financial institutions in terms of when they're dealing with the regulator and it also gets into an issue that we're gonNA chat about just a little bit at the tail end of this Regarding what it means for consultants and auditors a financial institutions when they're looking at in L. deficiencies at the final thing. I just WanNa know is that this was an unusual theory but I think that what we can see in cases in whether it be amount or anything else when you have this tension between the individual compliance officers lawyers in the institution as whole now. They're here. The compliance officer actually turned into a whistle blower Compliance officers of course at the tip of the spear of any institution testing for potential red flags. And here's the pickle that can they can get eh. So if you're deemed to be willfully ignorant of compliance failures. Well that can lead the liability. The flip side is the pursuit in investigation of Knowledge in then justly to plain old fashioned straight up clear knowledge which of course to nothing lead the liability. It can lead also Concerns over this can lead to tensions with the institution it can lead to the compliance officers creating for example overly defensive memo's file conversely it can lead to boards inappropriately ignoring or underplaying the messages that are being sent by the compliance officers regarding problems at the institution. In you know the upshot is that you can just see how this is going to create a conflict within the institution and it is ironic that in many of these actions certainly not all the that are actually. The target of the government's enforcement action are the compliance officers. Thanks a LOT PETER. So Mary turning to You. What are sort of the the basic takeaway for individuals who work in financial institutions about things to do to protect themselves in other words? What are the factors that we should consider as making it more likely for an individual to be targeted in one of these enforcement actions? And how does that inform us about how we should behave when we worked for a financial institution?.
"occ" Discussed on Consumer Finance Monitor
"Google play or wherever you get your podcasts now. Today I'm joined by two very special guests. Peter Hardy and Mary trainer both in our white collar and litigation groups and our Philadelphia Office. And we're going to be about recent. Occ Enforcement Actions Involving Bank Secrecy Act anti money laundering issues. Peter and Mary. Welcome to today's podcast. And thank you for joining us. Thank you for having us so Peter. Let's set the stage before we start talking about any specific recent. Occ actions what are some of the general issues that the OCC will look at in terms of Bsa Am L. Compliance? Yeah thank you press and thanks everyone for tuning here today. So the office. The control currencies authorized to take enforcement actions against a couple of different institutions national banks of course Federally Chartered Savings Associations and their subsidiaries also federal branches and agencies of foreign banks and also affiliates of the institutions as defined but importantly that includes individuals officers directors employees in sometimes even controlling stockholders agents. So today we're GONNA focus on to ammo enforcement. Actions Anna Related forsman actions We are not going to discuss everything that's been going on. In terms of Elsie enforcement. Actions Are we can pick out two examples. One of them is an institution and the other one is an individual now in general pressing kind of keeping with your introductory question so the el-sisi puts out a lot of material and a lot of information in one of the things that they've said in bulletin is that not surprisingly in terms of violations of the bank. Secrecy Act in anti money laundering policies. One of the things that they definitely look at is that results in repeated or uncrowded. Bsa compliance problems and. That's probably the number one issue. And if you get to that there is a statute that requires the OCC to issue a season desist order now just looking at the BSA from moment in general you know outside of the CC. In by the way a lot of the stuff that Marion Ira GonNa talk about today. We're doing it through the prism of Assisi enforcement actions but in many ways what we're GonNa talk about can be really applicable to any sort of regular some terms of the Bank Secrecy. Act AND WE'RE GONNA keep it very high level here. There's five basic pillars of any anti money laundering compliance policy for financial institution in those five pillars are as following in united. Here these issues. Come up as we get into the details of these enforcement. Actions Development of internal policies procedures related controls designation of a compliance officer. Who obviously needs to now? What he or. She is doing thorough and ongoing training program independent review compliance and lastly in in most recently ongoing a CD or a customer due-diligence and this gets into the beneficial ownership will now looking at those five pillars in kind of back to some of the O. C. C.'s very raw communications guidance. Another thing that they absolutely stress is clear communication between the OCC in management of course but importantly the board and this is consistent with your general concepts for BSA examinations across the Board in government BSA AM L. It's nation manual states that the board is ultimately responsible for ensuring BSA compliance in a compliance officer has sufficient authority in resources. So here she can do her job or his job. And then finally and then. I'm going to step back in general whether it be the BSA or any sort of banking violation the OCC has issued guidance in procedures manual stating that. There's a presumption in favor of formal bank enforcement action. When anyone of a couple things happen. Of course these needs to happen to a sufficient degree And who not surprised to hear that they include significant insider abuse you dirty insider that there is systemic or significant violations of the laws or regulations against systemic. Getting back to that concept of repeat or uncorrected violations that the board again young. We're GONNA BE REPEATING CERTAIN themes here management have disregarded or refused or failed to correct deficiencies have been previously identified in. This of course includes failure. Correct 'em are as or matters requiring attention which have been brought up in correspondence from the FCC TO THE BANK. So that's kind of being general of seeing forsman As well as through prison of the bank secrecy yet. Yeah thanks Peter. That's really helpful and particularly for me. Who doesn't know much about any money laundering and probably for a number of members of our audience to thank you for that Mary there was a recent OSCE consent. Order called M Y Safra Bank. Can you tell the audience a little bit about that consent? Order and what lessons are in that consent order for financial institutions. Sure Chris so in its consent order against M Y SAFRA BANK THOSE E signals it's enhanced scrutiny of virtual currencies and the money laundering risks that Bay specifically pose the consent were also provided a blueprint of sorts regarding what it expects in a robust compliance program and so this consent order arose from 'em. White Saffir banks decision to accept a variety of high risk digital digital asset customers also called DAC's without implementing. The necessary aml controls. Interestingly the OCC did not impose monetary penalty against the bank but they instead demanded that the bank implement and maintain a remarkably broad array of costly extremely prescriptive measures to strengthen its aimal program and also notably those specifically tasked task the Bank Directors with implementing overseeing and reporting on these required measures. So taking a step back for a minute. I just want to briefly talk. About virtual currency and the money laundering issues opposes. Recently money launderers have increasingly turned to virtual currency to conceal the origins of illegally obtained proceeds. Now there are several features of virtual currency coupled with their global reach that make particularly attractive for money launderers. These include the anonymity of trading virtual currency because of the limited identification and verification of participants the ease of cross-border transfers and the lack of clear regulations that applied virtual currency and. I want to turn briefly to some of the systemic issues. that The OCC found with M. Y. Saffir Bank so in the OCC's examination of the bank. It found that from November twenty sixteen to February twenty nineteen. The bank opened accounts for especially high risk customers. Dac's comprised of crypto currency related. Money Service businesses That's kind of mouthful that's also called. They're also called. Msp's these customers ranged from digital currency exchangers digital currency AGM operators crypto arbitrage trading accounts and blockchain developers incubators. These new customers many of whom did business in and out of high risk jurisdictions significantly increase the bank's risk profile for example these DA season MSP's substantially increased volume of the bank's domestic wires international wires and cross-border ACH transactions notably however the big did not sufficiently assess the Mon- money laundering risks posed by these new clients and so as a result the bank did not implement adequate controls inadequate monitoring to address increase risks and prevent money laundering ultimately as. We'll discuss more in this podcast. This consent order underscores sees expectations for banking higher risk clients namely that banks significantly overhaul their am. L. Programs Sumeria. It seems like the OCC identified a number of things that went wrong in connection with M. Y. Saffir Bank. But if I'm working another bank or I own my own bank which I'd really like to do someday. What would my lessons be? What would I take away be from this consent order in terms of looking at my own operations from a BSA AM l? Standpoint well board of directors really need to take note of this order in this consent. Order though see emphasized that the bank's board of directors bears the primary responsibility for ensuring and in fact proactively verifying that the The bank complies with myriad costly compliance requirements. These requirements demanded of the bank are numerous and extremely prescriptive and frankly it would take me over an hour to describe them in sufficient detail but but at a high level. These requirements include I appointing a three-person compliance committee to meet monthly. This committee is tasked with overseeing the bank's compliance with the SEC's consent order taking minutes of each meeting and submitting written progress reports to the bank sport of directors. Second writing and here into a strategic plan for the bank to set forth among other things its desired overall.
Leadership of 'French Oscars' resigns amid Polanski controversy
"App controversy at France's equivalent to the Oscars let's go to Paris and CBS's Alain cop the entire board of the French Cesar academy has resigned following backlash over twelve nominations for a film by Roman Polanski hundreds of actors and filmmakers of cold for change in the leadership complaining that women are sidelined and criticizing the academy's president who previously suggested Polanski leads the festival jury women's groups have condemned the OCC how to me support for Polanski still wanted in the US for unlawful sex with a thirteen year old
Victims In Kobe Bryant Crash Have Now All Been Identified
"Well there were nine people in total who died in yesterday's helicopter crash outside of LA and some of those on board had ties to New England as we hear from WBZ's Madison Rogers learning more about the nine victims in Sunday's helicopter crash in California that killed NBA legend Kobe Bryant and his thirteen year old daughter three of the other victims were former Cape Cod summer league baseball coach John Altobelli his wife Kerry and his daughter a list saya ultimately was head coach of the Brewster white caps from twenty twelve to twenty fourteen the white caps weeded out Sunday night that their heartbroken and shocked Altobelli also coached at orange coast college in California for twenty seven years hundreds of people gathered on the OCC field and remembrance Sunday
"occ" Discussed on WCBM 680 AM
"The OCC WCDMA Baltimore and WCDMA superiority in space I'm Pam who sell fox news that's the goal of president trump who signed a spending plan that pumps more money into the Pentagon and creates a space force the browser twenty national defense authorization act is about making sure our war fighters tools resources and equipment you need to fight and win all the time the president at joint base Andrews yesterday its headquarters won't be announced until next year with Huntsville Alabama and Colorado springs vying for the honor and increased federal funding two billion dollars over the next five years and sixteen thousand personnel mostly pulled from the Air Force which already has an Air Force space command in Colorado socks is Jennifer Griffin the military sees the space force as an affirmation of the need to more effectively organize for the defense of U. S. interest in space as China and Russia ramp up efforts to develop technology that could allow them to disrupt US satellites privacy advocates don't like it a pilot program that'll put surveillance planes in the skies over Baltimore next year as a way of helping law enforcement fight violent crime David Roach is with the ACLU equivalent of having a police officer follow you every time you walk out the door of your house the program will focus on murder shootings and robberies footage from the program will not be used in police misconduct cases heading out to the shopping mall expect plenty of company today is known as super Saturday and retailers are predicted to ring up record sales with around one hundred forty eight million consumers expected to participate according to the national retail federation that's fox's Hillary bar ski along with deep discounts many retailers are extending store hours today's sales could top thirty four billion dollars America's listening.
"occ" Discussed on KCRW
"Dictionary says the preferred pronunciation is controller but not using the preferred pronunciation seems to be a habit at the occ here's how the current head of the agency joseph adding sets at the office of the comptroller of the currency and jesse stiller the occ historian for twenty seven years he says whenever he talked to the guy in charge i would always call him mr comptroller were others as i don't know but there were some who made a point to this starting as far back has nineteen o six when teddy roosevelt tried to change the spelling and pronunciation to controller but stiller says roosevelt ran into stiff opposition the title meant a lot to people these days the occ is lucky if people even know what it is and what it does it regulates banks banks also have controllers the con tiara l e r kind i decided to put the word to the test on the street right outside the occ i asked about twenty people how to pronounce the word in question all but three of them came back with this comptroller that was management analyst salomon sa gun rowe who had a question for me determines house bill is that the president or is no not the president catherine connor martin at the oxford english dictionary says the strange spelling which led to their weird pronunciation goes way back in the fifteenth through eighteenth centuries our modern english word count as in one two three was sometimes spelled c o m p t hunter martin says the dictionary does list comptroller as a secondary pronunciation but it could move into first place if enough people pronounce a word a certain way then over time that becomes the established and correct pronunciation so ultimately we're in comp i mean control in washington i'm nancy marshall genzer for marketplace.
"occ" Discussed on Opening Arguments
"Yeah that would guess kick that would come out when elizabeth warren in her consumer financial protection bureau do that to us we're like wow that got us that hurt will change our behaviour but a publicly held company there is a layer of separation right that then that those funds come out of something that you know nobody you and i own opening arguments medial sc nobody owns wells fargo right like at the ownership is distributed across you know billions of of portfolios so that's kind of the the the case against fines let's also talk about the magnitude of the fines that were imposed and they were a billion dollars in fines in particular a one billion dollar fine imposed by the cf pb but that is offset by credit of five hundred million dollars for five hundred million dollars in fines payable to the department of the treasury to the occ to the office of the comptroller of the currency so such a billion and that second one but there's a credit back so they have to pay a billion dollars in fines can wells fargo pay a billion dollars in fines and the answer is yes wells fargo can could pay a billion dollars in fines and in fact what they did was restated after after this came out they announced that they were going to restate their 2017 income and downgraded by eight hundred million dollars which is then gonna be the net cost of to them of having to pay this there couple of ways to think about what a billion dollars means to wells fargo i'm gonna start with the crazy liberal side that you know you and i to which you and i are sympathetic and that is the trump tax bill directly benefited wells fargo in the following at least the following two ways number one it allowed them to engage in a one time right down of three point nine billion dollars in.
Inspectors from the Organisation for Prohibition of Chemical Weapons to begin work in Syria
"Desmond's new project the vision lab is the first national database collecting vixen records from around the country also kentucky reviews john heinz first album of new songs and thirteen years that's on fresh air first news live from npr news in washington i'm jack speer the organization for the prohibition of chemical weapons says its inspectors will begin work in syria on saturday the watchdog group could provide the first confirmation of whether chemical agents were used against syrian rebels last weekend more from npr's david welna the opcw chemical weapons inspectors are traveling to syria at the invitation of that country's government which insists it did not carry out a chemical weapons tack and the damascus suburb of douma in an appearance before congress defense secretary jim mattis said he believed there was such an attack and the occ w could provide the evidence we will not know who did it they can only say that they found evidence or did not and at each day goes biogenetics a non persistent gas so it becomes more and more difficult to confirm it medicine sister that no decision has yet been made about how to respond to the suspected chemical weapons attack david welna npr news washington cia heading secretary of state designate mike palm pale was on capitol hill today for confirmation hearings before a senate committee palm peyot agreeing with a democratic lawmaker who said it would be quote catastrophic if the us were to initiate an attack against north korea and going on to say despite public comments about his hawkish nece he believes in measured response story is i'm hawk i'm hardliner you know i i read that and there's no one as you just heard in what i described there's no one who served in uniform who understands the value of display missy and the terror and tragedy that is war like someone who served in uniform it's the last resort it must always be so pompeo whoever also said he could foresee a situation where the us might have to move past diplomacy for example of north korean leader kim jong un were to directly threaten the.
"occ" Discussed on P&L With Pimm Fox and Lisa Abramowicz
"Community bank while if you want to start your own community bank you have to satisfy the chartering requirements uh that you have a reasonable prospect for success you have a good management team you of a business plan the occ has to have confidence in you to grant that charter but then uh most of the times in this country also will need to go get fdic insurance that's a separate application to the fdic and if you wanna have of any sort of controlling investor have your company you need to become a bank holding company and get permission for that from the from the federal reserve bore given the fact that the sec oversees the monetary supply what's your take on bitcoin and a half these cryptocurrencies that are getting increasingly popular well look i think there is a lot of interest in this and i would say my my agency only dealt with a very small part of this i think we're seeing a certain securities issues come into into play here where the sec maybe take the lead was the treasury department because of you note any type of any terrorism type of or or money laundering concerns but generally i am i believe that people should be able to order their affairs in a way that makes the most sense for them and if there's a certain unit of value that they wish to base their transactions on uh then you know they should be free to do that but they need to be fully aware of the risks that may come from that and just to come full circle when we were talking about finn tech charterers at which firm do you think is sorta of most positioned to engage in more bank like i activities that we should pay attention to we'll look i think to me the big challenge was finding a firm i think in my own view i was open to granting such a charter but there wasn't necessarily a good match at the time of during my tenure of a company that was willing to adhere to sort of bank like restricts.
"occ" Discussed on Knowledge@Wharton
"Uh mortgagelending and things like that that would be part of a national bank system when there were challenges to doing that through stateowned a statechartered entities in that was the case that when ultimately to the supreme court that i litigated and they sided with the banks and the occ in a in a five to three ruling so ultimately that regulation at that time became mood because it could be done through a statechartered entity and i think what we're seeing now is the regulation itself says that the business of banking means one of three things taking deposits or making loans or paying checks and i think the the dispute is whether deposits always have to be taken and i think why i feel very confident is that congress itself in 1994 when they allowed interstate banking actually define the business of banking undertaken new interstate branches as one of the three so wasn't conjunctiva it was just jump death and so i think that makes perfect sense for us as an agency in 2002 2003 to adopt that uh as the basis of interpretation of the business of banking for purposes of a special purpose charter and i think it will serve us well in the future if we decide to grant one of those to a financial technology company that doesn't take us most of the attention fact has been on the prospect of this new charter although as i understand it nobody's actually gotten the charter yet uh but it's not the only option you can offer authentic firm your.
"occ" Discussed on FinTech Insider
"And then last year we held a big forum for about four hundred individuals to talk about innovation in financial services and and where things were heading makes complete sense by phone i think would it be really interesting to me is this a lot of outreach though that you mentioned can you give me a for instance of something affin tickled by anc might come to you about so they have a new initiative on the not sure what the you'll see see might thing cold they have a new initiative on than not sure if they are all within the jurisdiction of the occ like would that be this sort of thing i would come to you and what sort of help might you'd be able to give pointing towards the right documentation may be guidance in terms of of how suit to fit within a regulation it is not the type of thing that you would you would be sort of able to offer for a bank or if untucked had a new initiative yes that that would be an example of of some of the uh what we call technical assistance that that we offer another situation particularly for finn tax is sometimes they are they just are not clear what the regulatory process he is here in the us and we're happy this sat down with them and explain the process here in the us and where the occ fits in we also can connect a tech with other regulators that may have purview over their products or services or questions that perhaps are not within our jurisdiction but may be in the jurisdiction of other agencies to this makes a lot of a century both if i'm a relatively small or mediumsized for took on looking to either expunged out of my home state in the us or expand into the us from one of the country i might go talk to your cells to understand how do i navigate about regulatory environment instead of you traditionally on might have done some research on modifying some some some external council but actually having a direct relationship with the regulator if there's an outreach program can be very helpful to hear from them directly is that a fair statement.
"occ" Discussed on FinTech Insider
"Sure with respect to outreach the occ really is a strong proponent of outreach we've had a number of outreach mechanisms and approaches for many many years with the banks that we regulate what we discovered when we were doing our research is that there really wasn't of formal channel four nine banks or in this case finn tax to reach out to those he sees so we built that formal channeled through the office of innovation a finn tax and banks can reach out the office to meet with us regarding any questions that they have to share what they're doing with respect to innovation and also to really have an opportunity to to learn from the occ see about what we think about certain issues so that that became sort of innovative from our perspective to make sure that we had that channel and then in addition to that we've added some components to our outreach program on including of something that we call office hours the these are oneonone meetings that companies and banks can s can set up and have conversations with the office of innovation they're candid conversations are outside of the supervisory process and on the folks that sign up for those office hours they set the agenda so it's really what they wanna talk to the occ about we're also looking at smother outreach mechanisms including something we call listening sessions which would be small groups of a wry a variety of stakeholders to talk about different types of issues that are occurring in the in the industry.
"occ" Discussed on FinTech Insider
"So the sec has been working on innovation initiatives for quite some time we really started in two thousand fifteen to understand what was happening in financial services as you are well aware there has been significant changes in the financial services landscape not only here in the us but globally and we wanted to make sure that we had an understanding of what that was and what we could do as a regulator to support what we call responsible innovation in the federal banking system so that's really where it started to just get an understanding of the landscape and from there we looked at what we could do what type of framework could we build in order to support responsible innovation and out of that came our framework which we announced in october of last year that framework has five components one is outreach and technical assistance and that is really what it says that's looking outward to the industry on and we're not just focused on banks we are focused on finn tax and other stakeholders in the industry with that outreach and technical assistance the second his training and awareness and that's looking internally to making sure that all of our staff here particularly examiners had the training and understanding of innovations that are occurring a coordination and facilitation of our decisionmaking process here at the occ research around innovation and emerging trends and finally collaborating with other regulators and in order to make sure that we're implementing that framework we set up an office of innovation which i head up and the office serves as a clearinghouse and us central point of contact within the oecd see an industry innovations in emerging trends for both the industry and mcc personnel domic's over since i've been gift skull the ability to reach out you got the ability to then teach people internally you can collaborate with other regulators you've got a really good mix can you give me an example of some of the aren't retrieved on on on maybe some of the collaboration you've done.
"occ" Discussed on FinTech Insider
"Vaas fantastic and so i guess what drew you back in vegas befall before we get to that as well what is the occ i think it's probably worth for some of our listeners just describing a little bit about what the with the osce she does who they do it full 'cause you mentioned that you up to see a lot of the law of the market baron the us but what specifically would a daytoday activity look like for the osce sure so the officer controller currency is a bureau of the united states treasury department and we are responsible for the regulation and supervision of national banks and federal so savings association's here in the us i'm sure your listeners are probably aware that at the u s we have a what's called a dual banking system so we have banks can select the type of charter that are choose the type of charter that they're interested in it can be estate charter or it can be a national charter and the occ is responsible for the supervision and regulation of national banks and in federal savings association's we would be a presidential regulator on similar to the pera in the united kingdom i ha a very useful reference for for some of our uk listeners thank you so much for that so i guess the innovation initiatives that the occ you you say you were drawn back in keep describe what the innovation initiatives the occ all i'm drew you tutu coming back into that from a post in perspective.
"occ" Discussed on WVNJ 1160 AM
"The economy and it will grant asia just provide payments and the occ when they did they had been sick bank johnson i think may recall that tony will i think they should look to the european example nestled start talking about agassi defence bank vaccine announce about this kind of why cover us have something like a pain in his jusen companies like amazon and sound can get tighter these chutian aisin's which they can hope does balances of there're appropriate aired protections of ringfencing and so on but they still has access to this week's it now no in the us you've got this unique problem of the federal vests estate system and so forth that allow them yet less crazy right the but in the real thing his we're starting to see in the koigi tilleke of banking iowa's maintain eichel cost ray right which is the ability to store value the ability to make a payment and the ability to access credit and what we're really saying with finn tech is the destruction of that utility by we're seeing the fact that were nowhere replacing that utility through new construct and and it's it's more than just a threat to universal banking i think it's really what we're doing as we rebuilding this utility based on context experience in these other things and it seemed with building this independently of that kohl banking architecture that's existed forever na mess weather wrecked light's scott the challenge kosei equally don't see how they can structure the regulations around the market to davis point um so the taking different approaches and different ideas a muscle that they're working correctly at the moment even in europe in the uk was certainly opened bank neocon it's the ability to say you can deploy special obvious santiesteban piece of code and you can rely on us to get finds the marketplace makes formal sense some singled out a whole bunch johnson rolling let's take a quick break guys and after the break we can talk a little bit more about set where we see this going over the next few years and reflect a little bit more on the two hundred episode illicit breaking banks we're gonna be back after this quick break.