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Banking Update: Separating Fact from Speculation
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03-21-23

Banking Update: Separating Fact from Speculation

In the aftermath of the collapse of three banking firms, Silvergate, Silicon Valley Bank and Signature Bank earlier in March, tensions in the banking sector continued over the past week with the shares of a number of regional banks including First Republic, PacWest Bancorp and Zions Bancorp under pressure. During the turmoil-filled week, several questions were raised about the strength of U.S. banks, whether regulators moved quickly enough, the role of VCs, and if the failures were foreseeable. Read the analysis from Bates Expert and Director Greg Kyle.

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Banking Alert: Silvergate Capital, Silicon Valley Bank, and Signature Bank
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03-13-23

Banking Alert: Silvergate Capital, Silicon Valley Bank, and Signature Bank

On Sunday, U.S. regulators seized Signature Bank, and on Friday, U.S. regulators seized the assets of Silicon Valley Bank (“SVB”). The seizure of SVB led to one of the largest bank failures in U.S. history and the largest failure of a financial institution since the 2008 financial crisis. The failure of SVB comes on the heels of Silvergate Capital announcing on Wednesday that it would voluntarily wind down operations and liquidate its bank. With three bank collapses in one week, the markets, investors, and many of our clients are understandably on edge.

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What is the Purpose of Consumer Protection Laws?
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03-10-23

What is the Purpose of Consumer Protection Laws?

Consumer protection laws are designed to protect consumers, to keep sellers honest and to protect purchases of goods from fraudulent or deceptive marketing. Consumer protection laws are enforced by the Federal Trade Commission, and businesses that fail to maintain compliance with federal consumer protection laws could face severe consequences.

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The New Jersey Digital Asset and Blockchain Technology Act:    A Better Licensing Alternative than New York?
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03-08-23

The New Jersey Digital Asset and Blockchain Technology Act:  A Better Licensing Alternative than New York?

In the coming months, the New Jersey legislature is expected to pass the Digital Asset and Blockchain Technology Act, a bill that would establish one of the broadest licensing and regulatory frameworks on digital assets in the country. The legislation is being closely watched as it offers companies a more comprehensive alternative to the current standard for the regulation of digital assets prescribed under New York law. Bates has a short summary and comparison chart.

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Spotting and Reporting Romance Scams
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02-13-23

Spotting and Reporting Romance Scams

Romance scams are a growing concern, as evidenced by The Federal Trade Commission’s report that romance fraud is one of the most costly forms of consumer fraud in the United States. Read the full article for the warning signs AML and Compliance professionals should look out for, as well as Elder Exploitation red flags and Bank Secrecy Act obligations.

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FINRA and SEC Increase Focus on Reg BI Compliance – What You Need to Know
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02-10-23

FINRA and SEC Increase Focus on Reg BI Compliance – What You Need to Know

In its latest annual report on examinations and risk monitoring, FINRA offered the regulator’s perspective on strengthening compliance programs on Reg BI and the corresponding Form CRS. FINRA included observations from its compliance reviews on each of the core duties under the two-plus-year-old rule. These areas were also the focus of an SEC Division of Examination Alert on broker-dealer compliance with Reg BI and a recent Bates webinar, cosponsored with NICE Actimize, discussing how broker-dealer firms are adapting their compliance programs in response to Reg BI. The insights offered from both the regulatory officials and the private consulting community offer perspective on what lies ahead. 

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Understanding NY DFS Rule 504
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02-06-23

Understanding NY DFS Rule 504

Are you a regulated financial institution that operates in New York? If so, it is important to familiarize yourself with the New York State's Department of Financial Services (DFS) Rule 504. The rule was put into place in 2017 and requires companies to establish anti-money laundering (AML) programs that meet the DFS’s specific and strict requirements, and to certify compliance with the regulation annually to the DFS. Bates has the details in this new article.

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NYDFS Guidance on Digital Asset Custody – What It Is and How to Comply
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02-02-23

NYDFS Guidance on Digital Asset Custody – What It Is and How to Comply

On January 23, 2023, the New York Department of Financial Services (NYDFS) issued new guidance on regulated entities which custody digital assets, registered either under its BitLicense regime or as limited purpose trust companies. The guidance is intended to offer clarity in regard to NYDFS’s expectations for regulated entities—their custody procedures, processes, practices, and controls over customer digital assets. Bates has the details in this new article from Senior Consultant John Ashley, CIPP/US, CCRS, CRCMP.

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FINRA 2023 Exam and Risk Monitoring Report with Bates Chart and Summary – Prioritizing the Priorities
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01-24-23

FINRA 2023 Exam and Risk Monitoring Report with Bates Chart and Summary – Prioritizing the Priorities

Issued on January 10, 2023, the comprehensive report from FINRA’s regulatory operations covers 24 topics addressing issues that "remain perennially important, with updates to reflect evolving risks, industry trends and findings from FINRA’s recent oversight activities." In this article, Bates summarizes FINRA’s continuing and emerging examination priorities. Our annual chart offers insight into how newly observed risks have added to and affected those priorities year over year.

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New York Sets Guidance for Approval of Virtual Currency Activities
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01-13-23

New York Sets Guidance for Approval of Virtual Currency Activities

All New York banking organizations—and all New York licensed branches and agencies of foreign banking organizations—must get approval from the New York State Department of Financial Services prior to engaging in virtual currency-related activity. The NYDFS clarified its expectations on that requirement in an industry guidance letter dated December 15, 2022. Bates has the details in a new article.

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What Banks Should Consider When Accepting Crypto Customers
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01-11-23

What Banks Should Consider When Accepting Crypto Customers

Banks are quickly realizing that it’s time to embrace crypto customers. With the rise of digital banking, more people are choosing to store their funds in cryptocurrencies, and banks need to be able to accept these customers as part of their services. Here, we look at the important considerations that banks should make as they begin to accept cryptocurrency customers. 

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Are You Doing Enough to Supervise Your Options Accounts?
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01-04-23

Are You Doing Enough to Supervise Your Options Accounts?

Beginning in August 2021, FINRA examined firms to assess the sufficiency of their practices and controls over options accounts. FINRA just issued an update based on the results, including new guidance on what they want you to consider in order to enhance your supervision and revise your compliance programs.

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SEC to IAs: Take ESG Compliance Very Seriously
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12-13-22

SEC to IAs: Take ESG Compliance Very Seriously

The SEC recently held a National Seminar on compliance for investment advisers and investment company senior officers. Of the many important panels at the day-long seminar, one was devoted to the SEC’s expectations on investment adviser compliance with ESG requirements. A week later, on November 22, 2022, the regulator announced a $4 million settlement with a large investment adviser for ESG-related compliance failures. Read our new article with takeaways from the seminar, which covered SEC exam concerns, an ESG disclosure proposal update, recent enforcement activity, and a CCO’s advice on ESG compliance.

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SEC FY2022 Enforcement Division Report: Regulator Raises Penalties to Increase Deterrence
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12-02-22

SEC FY2022 Enforcement Division Report: Regulator Raises Penalties to Increase Deterrence

In its annual report of legal actions taken in FY2022 (ending September 30), the SEC noted its “robust enforcement” efforts to “impose penalties designed to deter future violations, establish accountability from major institutions, and order tailored undertakings that provide potential roadmaps for compliance by other firms.” The numbers bear out just how robust SEC enforcement efforts have been. In this article, Bates takes a look at the details in the new report.

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On Our Radar: Crypto Regulatory and Enforcement Roundup
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11-21-22

On Our Radar: Crypto Regulatory and Enforcement Roundup

Regulatory and enforcement activity has been brisk since nine federal agencies issued a “Comprehensive Framework for Responsible Development of Digital Assets” in response to President Biden’s Executive Order to collaborate on a “whole of government approach.” 

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