- Top Lines
The Biden Administration issued its Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (EO). The EO issues directives to over twenty federal agencies to monitor the risks of artificial intelligence (AI) and develop new use cases for AI while aiming to protect workers and consumers.
The Office of Management and Budget released draft guidelines for federal agencies to implement the EO. The guidance directs agencies to designate chief AI officers to coordinate their respective department activities; expand reporting on how agencies use AI; establish internal mechanisms to coordinate with existing officials; and publish the agencies’ plans to comply with the guidance.
Separately, G7 leaders agreed on International Guiding Principles on Artificial Intelligence (AI) and a voluntary Code of Conduct for AI developers under the Hiroshima AI process. The European Commission issued a statement welcoming the agreement.
- Midweek Update
The Financial Action Task Force (FATF), the global standard-setting body for anti-money laundering and countering the financing of terrorism (AML/CFT), advanced numerous initiatives intended to strengthen global anti-money laundering and counter-terrorist financing standards. FATF members adopted revisions to its asset recovery standards and its report on how terrorist groups, like Hamas, use crowdfunding techniques to raise money for their attacks, among other things. Specifically, the crowdfunding report discusses the four main methods terrorists and violent extremists use to raise funds through crowdfunding: abuse of humanitarian, charitable, and non-profit causes; dedicated crowdfunding platforms or websites; social media platforms and messaging apps; and virtual assets, which includes the use of privacy coins and anonymity enhancing services such as tumblers and mixers.
On Friday, November 3, Secretary of the Treasury Janet Yellen will preside over a meeting of the Financial Stability Oversight Council (Council). The meeting will consist of an executive session and a public session. The preliminary agenda for the executive session includes commercial real estate market developments; an update on the Inter-Agency Working Group on Treasury Market Surveillance; the Council’s 2023 annual report; and the Council’s analytic framework for financial stability risk identification, assessment, and response and the Council’s interpretive guidance on nonbank financial company determinations. The preliminary agenda for the public session includes the Council’s analytic framework for financial stability risk identification, assessment, and response and the Council’s interpretive guidance on nonbank financial company determinations.
The Department of the Treasury’s (Treasury) Federal Insurance Office (FIO) provided public notice of its intent to proceed with its first-ever data collection from insurers to assess climate-related financial risk to consumers across the United States.
The U.S. Government Accountability Office (GAO) published a report on the applicability of the Congressional Review Act to the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin No. 121 (SAB 121). SAB 121 provides interpretive guidance regarding how covered entities should account for and disclose their custodial obligations to safeguard cryptoassets held for their platform users. The GAO found that the SEC did not submit a report pursuant to the Congressional Review Act (CRA) to Congress or the Comptroller General on SAB 121 before its publication.
Rep. Patrick McHenry (R-NC), Chair of the House Financial Services Committee, and Sen. Cynthia Lummis (R-WY) released a statement applauding the GAO’s determination.
The Consumer Financial Protection Bureau (CFPB) published a blog post on three protections the CFPB is working to secure for servicemembers. The blog post discusses how “many credit card companies have not adopted the straightforward fixes that could help ensure that servicemembers get interest rate relief” to which they may be entitled under the Servicemembers Civil Relief Act; protecting servicemembers from military allotment system abuses where some lenders are evading these protections; and protecting servicemembers from identity theft.
The CFPB published its proposed rule to establish 12 CFR part 1033, to implement section 1033 of the Consumer Financial Protection Act of 2010 (CFPA), in the Federal Register. Simultaneously, the Bureau released a Fast Facts summary of the proposed rule, highlighting key provisions including definitions, covered entities, and compliance deadlines, among other things. Comments are due by December 29, 2023.
The SEC charged SafeMoon LLC, its founder Kyle Nagy, SafeMoon US LLC, and the companies’ Chief Executive Officer, John Karony, and Chief Technology Officer, Thomas Smith, for allegedly perpetrating a fraudulent scheme through the unregistered sale of the crypto asset security, SafeMoon. According to the SEC’s complaint, the Defendants wiped out billions in market capitalization, withdrew crypto assets worth more than $200 million from the project, and misappropriated investor funds for personal use.
The Office of the Comptroller of the Currency (OCC) published the revised interagency examination procedures for the Telephone Consumer Protection Act (TCPA). The OCC, Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) have revised the interagency examination procedures to reflect amendments to the TCPA that became effective on October 25, 2021.
The Financial Industry Regulatory Authority (FINRA) released a report entitled Quantum Computing and the Implications for the Securities Industry. The research examines how the emerging technology that relies on quantum mechanics to perform complex calculations could significantly alter the securities industry in the future. The report also looks at potential cybersecurity threats and regulatory considerations regarding the technology.
Senator JD Vance (R-OH) led all Republican members of the Senate Banking Committee in sending a letter to Attorney General Merrick Garland and CFPB Director Rohit Chopra urging them to reconsider their October 12 joint statement on lending discrimination against “noncitizen borrowers.”
Rep. Maxine Waters released a statement applauding the Biden Administration’s latest Department of Labor (DOL) “Retirement Security” rule proposal.
- ICYMI
Consumer Financial Protection Bureau (CFPB) Enforcement Director Eric Halperin delivered remarks at the NCLC Consumer Rights Litigation Conference. Director Halperin discussed the CFPB’s enforcement work to date, challenges of the surveillance economy, opaque algorithms and automated decision making, and predatory lending and abusiveness.
Need to catch up on what happened last week? Check out our End of Week Wrap Up here.