Weekly RoundUp April 21, 2022

FinCEN Issues Advisory For Financial Institutions to Look Out for Kleptocracy and Foreign Corrupt Activity

Editor's Note

In This Issue. The Financial Crimes Enforcement Network (FinCEN) is urging financial institutions to focus their efforts on detecting the proceeds of foreign public corruption; the Financial Industry Regulatory Authority (FINRA) issued a proposal to amend Rule 2360 to increase position and exercise limits on options held by certain exchange-traded funds (ETFs); and the U.S. Securities and Exchange Commission (SEC) has proposed amendments that would require domestic and foreign companies to include certain climate-related information in registration statements and periodic reports. These developments are discussed in more detail below.

Editor's Note
Editor's Note
Editor's Note

Regulatory Developments

FinCEN Issues Advisory For Financial Institutions to Look Out for Kleptocracy and Foreign Corrupt Activity

On April 14, FinCEN issued an advisory and press release on kleptocracy and foreign public corruption, urging financial institutions to focus their efforts on detecting the proceeds of foreign public corruption.

The advisory provides typologies and potential indicators of kleptocracy and other forms of foreign public corruption, including bribery, embezzlement, extortion and the misappropriation of public assets. It also highlights financial red flag indicators to assist financial institutions in preventing, detecting and reporting suspicious transactions associated with kleptocracy and foreign public corruption.

Additionally, the Treasury Department last month launched the Kleptocracy Asset Recovery Rewards Program, which offers rewards for information leading to seizure, restraint or forfeiture of assets linked to foreign government corruption.

“Financial institutions play a crucial role in identifying corrupt activity and associated money laundering on the part of foreign public officials and should remain vigilant and promptly report suspicious financial activity.”
FinCEN Acting Director Himamauli Das 

FINRA Proposes Amendment to Rule 2360 (Options)

On April 8, FINRA issued a proposal to amend Rule 2360 to increase the position and exercise limits for over-the-counter options (conventional options) on certain ETFs.

In proposing the position limit increases, FINRA considered the liquidity of the underlying ETFs, the value of the underlying securities or index components and relevant marketplace, the share and option volume for the underlying ETFs, and, where applicable, the availability or comparison of economically equivalent products to options on the Underlying ETFs.  FINRA is proposing to amend Rule 2360 to align FINRA's position limits for conventional options with the position limit for standardized options.

SEC Proposes Sweeping New Climate-Related Disclosure Rules

The SEC has proposed amendments that would require domestic and foreign companies to include certain climate-related information in registration statements and periodic reports. Like the recently-proposed cybersecurity amendments, but unlike many SEC rulemaking actions in recent years, the proposed climate-related disclosure amendments would require companies to adhere to prescribed disclosure topics and formats, rather than allowing companies to determine what disclosure would be relevant to investors and are a sharp departure from the SEC’s long-standing approach to climate-related disclosure.

Read the client alert to learn more about the proposed amendments.

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Editors
Nicole Griffin
Samantha M. Kirby
William McCurdy

Contributors
Ahmed Abdelhamid
Jiabao (Eva) Xu