December 13, 2023

The Federal Reserve issued a Federal Open Market Committee (FOMC) statement. The Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. 

Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) plan to introduce a “discrete” stablecoin bill. Sen. Lummis stated that the goal is to “craft a bill that is bipartisan and bicameral,” and that the role of Fed supervision over state-chartered stablecoin firms as a major focus.

The Office of Information and Regulatory Affairs within the Office of Management and Budget published the Biden Administration’s Fall 2023 Unified Agenda of Regulatory and Deregulatory Actions.

The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) named Jimmy Kirby as its Deputy Director. Mr. Kirby previously served as FinCEN’s Acting Deputy Director. Prior to that, he served as Associate Director of FinCEN’s Research and Analysis Division (formerly FinCEN’s Intelligence Division) as well as FinCEN’s Chief Counsel.

The Office of the Comptroller of the Currency (OCC) published its 2023 Annual Report. The OCC Annual Report provides Congress with an overview of the condition of the federal banking system, discusses the OCC’s strategic priorities and initiatives, and shares the agency’s financial management and condition. The Report summarizes the OCC’s actions regarding a number topics including Basel III implementation, bank mergers, third-party partnerships with fintechs, financial inclusion, digital assets, and climate-related financial risk.

The Special Committee of the Federal Deposit Insurance Corporation (FDIC) Board of Directors established to oversee an independent third-party review of the agency’s workplace culture issued a statement that they have appointed the law firm of Cleary Gottlieb Steen & Hamilton LLP to conduct an independent review into allegations of sexual harassment and interpersonal misconduct, as well as issues relating to the workplace culture at the FDIC.

Director Jonathan McKernan of the FDIC Board of Directors delivered remarks at the International Swaps and Derivatives Association (ISDA) Conference Trading Book Capital: Basel III Implementation. Director McKernan stated that the endgame proposal amounts to a “big leap of faith in the Basel Committee” and posed the question of whether U.S. banking regulators could get a better outcome by adopting a phased approach that punts on the underdeveloped aspects of the endgame reforms pending further data collection, analysis, and debate, while proceeding with implementation of the less contested aspects.

The Securities and Exchange Commission (SEC) approved the 2024 budget of the Public Company Accounting Oversight Board (PCAOB) and the related annual accounting support fee. The 2024 PCAOB budget totals $384.7 million, and the accounting support fee totals $358.8 million, of which $331.0 million will be assessed on public company issuers and $27.8 million will be assessed on registered broker-dealers.

Read SEC Chair Gary Gensler’s statement here.
Read PCAOB Chair Erica Williams’ statement here.

The SEC adopted rule changes to enhance risk management practices for central counterparties in the U.S. Treasury market and facilitate additional clearing of U.S. Treasury securities transactions. The rule changes update the membership standards required of covered clearing agencies for the U.S. Treasury market with respect to a member’s clearance and settlement of specified secondary market transactions. Additional rule changes are designed to reduce the risks faced by a clearing agency and incentivize and facilitate additional central clearing in the U.S. Treasury market.

H.R. 5524, the Foreign Affiliates Sharing Pilot Program Extension Act, and H.R. 5119, the Protect Small Business and Prevent Illicit Financial Activity Act, passed the house under suspension of the rules. H.R. 5524 would change the effective date of an anti-money laundering pilot program to three years after the date that the Secretary initiates the program in order to give the Financial Crimes Enforcement Network (FinCEN) sufficient time to implement the pilot program. H.R. 5119 adjusts the Corporate Transparency Act’s (CTA) beneficial ownership reporting company filing deadlines to provide small businesses with additional time to file.

Senator Elizabeth Warren (D-MA) announced that five new Senators have joined her bipartisan Digital Asset Anti-Money Laundering Act as Cosponsors. Senators Raphael Warnock (D-GA), Laphonza Butler (D-CA), Chris Van Hollen (D-MD), all members of the Senate Banking, Housing, and Urban Affairs Committee, and Senators John Hickenlooper (D-CO) and Ben Ray Luján (D-NM) joined the bill as cosponsors. The bill targets illicit uses of crypto assets for money laundering and financing terrorism. The bill now has 19 cosponsors: 16 Democrats, 2 Republicans, and 1 Independent.

The Senate Committee on Banking, Housing, and Urban Affairs held an oversight hearing of Wall Street firms. Read our summary here.

The California Department of Financial Protection and Innovation (DFPI) published information on the Digital Financial Assets Law which will come into effect on January 1, 2024, and will require kiosk operators to (1) provide a list of its kiosk locations to the Department of Financial Protection and Innovation (Department), (2) comply with daily transaction limits, and (3) provide receipts to customers with specified information for any transaction made at the operator’s kiosks. The DFPI also is seeking public comment on topics related to the DFAL license application, licensure requirements, and stablecoin approval. The Commissioner invites interested parties to submit comments by Jan. 12, 2024.

Senators Mark Warner (D-VA), Mitt Romney (R-UT), Mike Rounds (R-SD), and Jack Reed (D-RI) introduced the Terrorist Financing Prevention Act of 2023. The bill expands the Treasury Department’s (Treasury) authorities to impose sanctions on foreign financial institutions and foreign digital asset transaction facilitators that knowingly facilitate transactions for foreign terrorist organizations and others. It also amends the Bank Secrecy Act (BSA) by authorizing the Treasury Secretary to prohibit or impose conditions on certain transmittals of funds. The bill concludes by authorizing appropriations needed to carry out the Act. This legislation comes one week after the Treasury wrote to Congress seeking new sanctions tools to target digital asset platforms that facilitate payments to terrorist groups and closing legal and regulatory gaps for financial institutions and off-shore platforms with respect to BSA and sanctions authorities. Read the text of the bill here.

The Office of the Comptroller of the Currency (OCC) published their Semiannual Risk Perspective for Fall 2023, which reports the key issues facing the federal banking system. The OCC reported that the overall strength of the federal banking system remains sound. The OCC expects banks to remain diligent and adhere to prudent risk management practices across all risk areas. Banks should continue to guard against complacency to ensure they maintain the ability to withstand potential future economic challenges. The OCC also highlighted credit, market, operational, and compliance risks, as the key risk themes in the report. 

Need to catch up on what happened earlier this week? Check out our December 8th End of Week Wrap Up here