Governance, Risk & Compliance
Federal agents hope documents and electronic data seized during raids on the Los Angeles fashion district last month and cash-transaction reports that businesses in the zone are now required to file will help clarify how Mexico’s drug cartels are using international trade to launder money, law enforcement sources say.
The ability to generate new intelligence from documents and human sources may well dictate – at least in the short term – the degree to which U.S. authorities can effectively combat Mexican cartels by hitting them in their pocketbooks. (more…)
The Federal Insurance Office (FIO), tasked in 2010 by Congress under the Dodd-Frank Wall Street Reform and Consumer Protection Act to monitor all aspects of the insurance sector, released its second annual report on the state of the industry. The verdict: U.S. insurers have shown financial “resilience,” especially when compared to the economic crisis in 2007 which nearly took down insurance giant AIG.
The numbers reinforce the FIO’s analysis. Net premiums in 2013 for property and casualty (P/C) insurers were at a healthy $481 billion, compared to $583 billion for life and health (L/H) insurers. Performances from separate accounts, lower catastrophe losses, market value increases (insurance stocks have outperformed the S&P 500 in recent years), and book value increases (both P/C and L/H insurers are now valued at a premium to their actual asset values) have all contributed to the industry recovery.
Former MoneyGram compliance chief facing potential record fine regarded as anti-laundering innovator
In the late 1990s former MoneyGram International Inc executive Thomas Haider was a compliance leader pushing the money transfer industry to do more to fight financial crime, convincing his and other firms to voluntarily police transactions for illicit activity and report to authorities, a former official with the Treasury Department’s anti-money laundering bureau says.
A decade and a half later, six years after Haider left his post as MoneyGram’s compliance chief, Treasury’s Financial Crimes Enforcement Network (FinCEN) has threatened him with an unprecedented, multi-million dollar civil penalty. It has said he is personally liable for the money transfer giant’s failures to do what was required under the Bank Secrecy Act (BSA), the U.S. anti-money laundering (AML) law, to keep criminals out of the U.S. financial system during the mid-to-late 2000s, sources say. (more…)
A process of “derisking” is underway by financial firms exiting sectors that represent compliance landmines, bankers said on Tuesday, but a top U.S. sanctions enforcer said that is sometimes just the right move.
“It is not at all uncommon for me to hear that a compliance overhaul was done and certain customers, certain lines of activity were deemed too risky to persist. That may be exactly the right response to a situation where the risk outweighs the benefit,” said Adam Szubin, director of the U.S. Treasury’s Office of Foreign Assets Control (OFAC), the lead agency for the enforcement of U.S. financial sanctions. (more…)
New rules governing swap dealers and the requirements for dedicated chief compliance officers are now more than a year in effect, and a new review of the so-called “annual reports” that dealers must submit to the Commodities Futures Trading Commission suggest there are still lingering questions over the roles and responsibilities of CCOs, particularly for non-U.S. dealers.
The review, published by the law firm Wilmer Hale , found that as of May 31, 2014, 105 entities were provisionally registered as swap dealers, and therefore subject to the CFTC’s CCO rule, which came into force in December 2012. The study noted that of the total population, 53 were located in the United States, with the rest in other jurisdictions, including the European Union, Canada, Australia, Hong Kong, Japan, Mexico, Singapore, and Switzerland. (more…)
Large banks may have to make small modifications to their asset mix, raise more equity and ramp up their operational systems in response to federal agencies’finalized rule on liquidity coverage ratio (LCR) . It is the first quantitative U.S. regulatory standard for defining liquidity and establishing a minimum level of liquidity, and is part of the enhanced prudential standard rules of the Dodd-Frank Act.
This rule put forth by three federal agencies concurrently –the Federal Reserve Bank, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC)– is one of the two creations of Basel Committee on Banking Supervision on liquidity metrics, and flows from its revised liquidity framework. (more…)
A new U.S. Drug Enforcement Administration (DEA) rule is rescheduling hydrocodone combination products (HCPs) under the Controlled Substances Act (CSA). HCPs are widely prescribed painkillers, like Vicodin and Norco, containing both hydrocodone and certain amounts of other substances, such as acetaminophen or aspirin. The rule reschedules HCPs from Schedule III to the more restrictive Schedule II in an effort to curb prescription drug abuse.
In a sanction that can serve as a wake-up to the financial industry, Verizon Communications last week agreed to pay $7.4 million to end an investigation that found it failed to tell two million new customers about their privacy rights before using their information for marketing purposes, the Federal Communications Commission said.
The privacy probe highlights the vigilance that must be paid to consumer privacy rights to meet regulators’ requirements. Although the financial industry mostly answers to different regulators, it too is subject to laws and regulations protecting the privacy of its customers. (more…)
Roughly 1,000 law enforcement agents poured into the Fashion District in downtown Los Angeles Wednesday morning to raid shops and arrest nine people suspected of using businesses to launder large sums of cash generated by drug trafficking and other illicit activity, the U.S. Justice Department said. The money laundering problem in the area has prompted authorities to request a formal designation subjecting it to greater enforcement scrutiny. (more…)