Weekly RoundUp
April 18, 2024

CFPB Updates Supervision Designation Procedures

In this Issue. The Consumer Financial Protection Bureau (CFPB) updated their supervision designation procedures; the CFPB and European Commission continued their dialogue on areas of shared focus in consumer finance; principal financial authorities of the US, UK, and EU plan to meet for a coordination exercise on cross-border resolution planning; and the Financial Crimes Enforcement Network (FinCEN) issued a Notice on the use of counterfeit US passport cards to perpetrate identity theft and fraud schemes at financial institutions. These and other developments are discussed in more detail below.

Regulatory Developments

CFPB Updates Supervision Designation Procedures
On April 16, the CFPB issued a procedural rule to streamline its process for designating nonbank covered persons for supervision and to conform to a recent organizational change within the CFPB. The new rule clarifies that a consent agreement does not constitute an admission by the nonbank respondent and allows the CFPB to determine the period of time that a person will be subject to its supervision on a case-by-case basis, rather than the standard two-year period that is currently in place. 

CFPB and European Commission Continue Dialogue Regarding Areas of Shared Focus in Consumer Finance
Since the CFPB’s July 2023 announcement of the beginning of a dialogue between the CFPB and the European Commission on key consumer financial protection issues, the two agencies convened three meetings of subject matter experts and senior staff to discuss shared priority areas. On April 11, Director Chopra and Commissioner Reynders issued a joint statement highlighting the similarities between the US and EU consumer finance markets and summarizing their three meetings, which included discussion of Buy Now, Pay Later products and over-indebtedness, digital payments access and fraud, Big Tech’s role in consumer finance, and artificial intelligence. The CFPB and the European Commission agreed to continue their discussion on these topics and other shared priorities in annual principal-level meetings and bi-annual staff level meetings.

Principals of US, European Banking Union, and UK Financial Authorities To Meet for Regular Coordination Exercise on Cross-Border Resolution Planning
On April 20, the FDIC will host the principal financial authorities of the US, UK, and European Banking Union for a coordination exercise on cross-border resolution planning. The trilateral principal exercise is part of a series of regular exercises dating back to 2014 to “enhance understanding of each jurisdiction’s resolution regime for global systemically important banks, and promote confidence in and commitment to the orderly resolution of [global systemically important banks].”

Participating governmental and intergovernmental agencies include: the Department of the Treasury, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, the FDIC, the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the CFPB, and the Commodity Futures Trading Commission, from the US; the Single Resolution Board, the European Commission, and the European Central Bank, from the European Banking Union; and His Majesty’s Treasury and the Bank of England, from the UK.

Enforcement Developments

FinCEN Issues Notice on the Use of Counterfeit US Passport Cards to Perpetrate Identity Theft and Fraud Schemes at Financial Institutions
On April 15, FinCEN issued a Notice to financial institutions highlighting the increased prevalence of counterfeit US Passport cards. According to the Notice, these cards are less familiar than other forms of ID to financial institutions and cheaper to counterfeit than passport books, making them an ideal method to impersonate account holders. The Notice highlights several red flags that institutions should be aware of, including a missing holographic seal, the customer’s lack of knowledge of basic account information, and the sudden withdrawal of large sums of money. Finally, the Notice reminds financial institutions of their obligation to file a Suspicious Activity Report if they know, suspect, or have reason to suspect that a transaction involves illegal funds or is made for an unlawful purpose.

“The Diplomatic Security Service remains committed to protecting the American people and financial institutions from those seeking to perpetrate financial crimes by exploiting Department of State-issued identification documents.”

‒ Greg Batman, Deputy Assistant Director, Office of Investigations

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