Financial Services Weekly Roundup
FDIC Board of Directors Issues a Final Rule Pursuant to Special Assessment
On November 16, the FDIC Board of Directors approved a final rule to implement a special assessment to recover the loss to the Deposit Insurance Fund (DIF) associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. The FDIC estimates that of the total cost of the failures of Silicon Valley Bank and Signature Bank, approximately $16.3 billion was attributable to the protection of uninsured depositors. The rule will permit the FDIC to collect a special assessment at an annual rate of 13.4 basis points beginning with the first quarterly assessment period of 2024 (i.e., January 1 through March 31, 2024) with an invoice payment date of June 28, 2024, and will continue to collect special assessments for an anticipated total of eight quarterly assessment periods. The base for the special assessment is equal to an insured depository institution’s (IDI’s) estimated uninsured deposits for the December 31, 2022, reporting period, adjusted to exclude the first $5 billion in estimated uninsured deposits from the IDI, or at the banking organization level for IDIs that are part of a holding company with one or more subsidiary IDIs. It is estimated that a total of 114 banking organizations will be subject to the special assessment, and no banking organizations with total assets under $5 billion will pay the special assessment.
“The final rule applies the special assessment to the types of banking organizations that benefitted most from the protection of uninsured depositors, while ensuring equitable, transparent, and consistent treatment based on amounts of uninsured deposits.”
‒ Martin J. Gruenberg, Chairman, FDIC
Corporate Transparency Act (CTA) Compliance Update: Beneficial Ownership Information Reporting Deadline Extension for Reporting Companies Created or Registered in 2024
On November 29, FinCEN amended its BOI reporting rule to extend the filing deadline for initial BOI reports to 90 calendar days for reporting companies formed or registered on or after January 1, 2024, and before January 1, 2025. Reporting companies formed or registered on or after January 1, 2025 will have 30 calendar days to file their initial BOI reports. See the Goodwin Corporate Transparency Act Knowledge Center for more information and CTA compliance resources.
FDIC Announces Extension of Comment Period on Long-Term Debt Proposed Rule
On November 22, the FDIC announced an extension of comment period deadline for the federal bank regulatory agencies’ proposed rule on long-term debt from November 30, 2023, to January 16, 2024. The proposed rule, published in the Federal Register in September 2023, is applicable to certain large depository institution holding companies, US intermediate holding companies of foreign banking organizations and insured depository institutions (collectively, the “covered institutions”) and requires such covered institutions to maintain outstanding a minimum amount of long-term debt. The purpose of the proposed rule is to provide the covered institutions with financial stability and to reduce the risk of loss to uninsured depositors in the case of a failure. Additional information on the proposed rule can be found here.
Federal Reserve Announces Pricing For Payment Services the Federal Reserve Banks Provide to Banks and Credit Unions
On November 17, the Federal Reserve announced pricing for payment services that the Federal Reserve Banks (Reserve Banks) provide to banks and credit unions, such as the clearing of checks, automated clearing house (ACH) transactions, and wholesale payment and settlement services, which will go into effect January 2, 2024. The Federal Reserve is required by law to establish fees to recover the costs, including imputed costs, of providing payment services over the long run. The Reserve Banks will maintain the prior year's fee schedule for the FedNow Service, inclusive of discounts. The entire 2024 fee schedule is here, and will also be published on FRBservices.org.
Litigation and Enforcement Developments
FinCEN Announces Largest Settlement in US Treasury Department History with Virtual Asset Exchange for Violations of US Anti-Money Laundering Laws
On November 22, the US Department of the Treasury announced the largest settlements in history of $3.4 billion with virtual currency exchange Binance for violations of US anti-money laundering and sanctions laws. Through FinCEN and the Office of Foreign Assets Control (OFAC), the Department of the Treasury settled with Binance over claims of violation of the Bank Secrecy Act and multiple sanctions programs, including failure to implement programs to prevent and report suspicious transactions with terrorists and matching trades between US users and those in sanctioned jurisdictions. In addition to monetary penalties, the settlement with FinCEN imposes a five-year monitorship, requires significant compliance undertakings, including a complete exit from the United States, and requires Binance to identify and report to FinCEN suspicious transactions that it processed and willfully failed to report. The OFAC settlement agreement requires Binance and its senior management to commit to implementing a range of compliance measures and internal controls.
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