FinCEN Issues Final Rule to Postpone Effective Date of Investment Adviser Rule to 2028

On December 31, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) adopted a final rule (the Final Rule) delaying the effective date of the Anti-Money Laundering/Countering the Financing of Terrorism Program and Suspicious Activity Report Filing Requirements for Registered Investment Advisers and Exempt Reporting Advisers (IA AML Rule) from January 1, 2026 until January 1, 2028.

FinCEN assessed that delaying the effective date provides a number of advantages, including providing FinCEN an opportunity to review the IA AML Rule and ensure it is effectively tailored to the diverse business models and risk profiles of types of firms within the investment adviser sector. The delay also provides investment advisers more time to come into compliance with the rule upon the revised effective date.

Commenters had previously noted that, based on the proposing release, the IA AML Rule requirements were intended to dovetail with the proposed customer identification program rule (the CIP Rule) requirements. The IA AML Rule may be tweaked in furtherance of meeting this goal, and the timing of its implementation may be coordinated with the CIP Rule’s adoption.

On January 12, the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) withdrew a 2023 “Joint Statement on Fair Lending and Credit Opportunities for Noncitizen Borrowers under the Equal Credit Opportunity Act” (the Statement). The Statement had cautioned creditor policies related to an applicant’s immigration or citizenship status could, in certain circumstances, run afoul of the prohibition of discrimination on the basis of protected classes, including race and national origin, under the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B. In the notice announcing withdrawal of the Statement, the CFPB and DOJ observed that Regulation B permits creditor consideration of ‘‘any information obtained, so long as the information is not used to discriminate against an applicant on a prohibited basis” and also noted that the Official Interpretations to Regulation B clarify that a creditor ‘‘may consider the applicant’s immigration status or status as a permanent resident of the United States, and any additional information that may be necessary to ascertain the creditor’s rights and remedies regarding repayment.’’ The CFPB and DOJ also stated that they are withdrawing the Statement to “correct any ... misimpression” that “ECOA ... imposes limitations on the consideration of immigration or citizenship status when evaluating an application for credit.”

On December 30, the Office of the Comptroller of the Currency (OCC) published in the Federal Register a notice of proposed rulemaking to codify the authority of national banks and Federal savings associations to establish and maintain real estate lending escrow accounts. The proposed rule would clarify that the terms and conditions of such accounts, including (a) the investment of escrowed funds, (b) whether and to what extent interest or other compensation is paid on such funds, and (c) whether related fees may be assessed, are all matters of business judgment to be exercised consistent with safe and sound banking principles.

In another December 30 notice of proposed rulemaking, the OCC proposed a formal preemption determination that the National Bank Act preempts state laws that require mortgage investing institutions, including national banks, to pay prescribed interest on escrow account balances or that otherwise limit national banks’ discretion with respect to such accounts.

Comments on both proposed rulemakings must be received by January 29.

On January 12, the OCC published in the Federal Register a notice of proposed rulemaking that would modify the OCC’s regulations to clarify the authority of national banks limited to the operations of trust companies and activities related thereto (e.g., national trust banks) to engage in non-fiduciary activities in addition to their fiduciary activities. The OCC’s current regulations provide that a special purpose bank that conducts activities other than fiduciary activities must conduct at least one of three core banking functions consisting of receiving deposits, paying checks, or lending money. The proposed rule would instead provide that this requirement applies to special purpose banks that conduct activities “other than the operations of a trust company and activities related thereto.” According to the OCC, this modification is intended to resolve confusion about the OCC’s authority to charter national banks and better align the OCC’s regulations with the authorizing statute, 12 U.S.C. § 27(a). The OCC also notes that the modification is not intended as an expansion or contraction of the OCC’s authority to charter national trust banks. Comments must be received on or before February 11.

On December 23, the Board of Governors of the Federal Reserve System (Federal Reserve) published in the Federal Register a request for comment on proposed special-purpose “Payment Accounts” that institutions that are eligible for Federal Reserve accounts or services under the Federal Reserve Act could request and use to clear and settle payment activity. “Payment Accounts” would differ from existing “Master Accounts” by having overnight balance limits, no interest on balances, no access to Federal Reserve credit, and access only to certain payment services without overdraft services. “Payment Accounts” would be functional only in connection with the Fedwire Funds Service, National Settlement Service, FedNow Service, and Fedwire Securities Service for Free Transfers. Due to the lower risk profile and limited functionality associated with “Payment Accounts,” the Federal Reserve expects that requests for these accounts to generally receive streamlined review, allowing eligible institutions to avoid the waiting periods and review processes associated with obtaining a “Master Account.” Comments must be received by February 6.

On December 31, the Federal Deposit Insurance Corporation (FDIC) issued an update on the insured depository institution resolution planning requirements (the IDI Rule) applicable to large FDIC-insured banks with $50 billion or more in total assets. The FDIC indicated that it intends to propose amendments to the IDI Rule to formalize its revised supervisory approach, which prioritizes information necessary to support a rapid, low-cost resolution under the Federal Deposit Insurance Act and waives requirements that are speculative or of limited supervisory value. The proposed amendments are also expected to address overlap between the IDI Rule and resolution planning requirements under Title I of the Dodd-Frank Act. In addition, the FDIC outlined plans to conduct capabilities testing in 2026 to assess covered institutions’ ability to timely provide critical information needed to facilitate an orderly resolution.

On January 7, the Federal Reserve and FDIC published in the Federal Register their annual update to asset-size thresholds for small banks and intermediate small banks under the Community Reinvestment Act regulations. A “small bank” will now mean a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.649 billion, and an “intermediate small bank” will mean a small bank with assets of at least $412 million as of December 31 of both the prior calendar years and less than $1.649 billion as of December 31 of either of the prior two calendar years. These asset-size thresholds are in effect from January 7 through December 31.

On January 7, the CFPB issued a final rule amending the official commentary that interprets the requirements of Regulation C, which implements the Home Mortgage Disclosure Act, so as to increase the asset-size exemption threshold for banks, savings associations, and credit unions from $58 million to $59 million. Entities with assets of $59 million or less as of December 31, 2025 are exempt from Regulation C’s data collecting requirements in 2026. The increased asset-size exemption threshold became effective on January 7.

On January 7, the CFPB published a final rule amending Regulation Z, which implements the Truth in Lending Act, to increase the exemption threshold from $2.717 billion to $2.785 billion on the requirement for creditors to establish an escrow account for certain first-lien higher-priced mortgage loans. Creditors with assets of less than $2.785 billion as of December 31, 2025, are exempt, if certain other requirements of Regulation Z also are met, from establishing escrow accounts for higher-priced mortgage loans in 2026. Certain lenders are also exempt from this requirement if they extend no more than 2,000 first-lien covered transactions during the preceding calendar year and the transactions had total assets below the Regulation Z threshold.

This final rule also increased the asset size threshold for the Regulation Z higher-priced mortgage loan (HPML) escrow account exemption applicable to certain insured depository institutions and insured credit unions, from $12.179 billion to $12.485 billion. Under the rule, institutions that had total assets of $12.485 billion or less on December 31, 2025, qualify for this escrow-account exemption for any covered loan consummated in 2026, and – solely for purposes of the HPML escrow requirement – for loans secured by a first lien on a consumer’s principal dwelling consummated in 2027, provided the application was received before April 1, 2027.

These new thresholds became effective on January 7.