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OFAC sanctions network for financially contributing to the Supreme Leader of Iran
On November 18, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions against “a key patronage network for the Supreme Leader of Iran” (Foundation)—a conglomerate of roughly 160 holdings in key sectors of Iran’s economy, including finance, energy, construction, and mining—along with Iran’s Minister of Intelligence and Security. The Foundation is being designated pursuant to Executive Order (E.O.) 13876, which also targets the Supreme Leader of Iran, the Iranian Supreme Leader’s Office (SLO), as well as their affiliates. According to OFAC, the Foundation, among other things, allegedly transferred large amounts of money to the SLO and made financial contributions to candidates for Iran’s presidential election. The Foundation also allegedly “maintains control of its economic empire through a network of holding companies touching nearly every sector of the Iranian economy.” Seven of these companies have also been designated, “along with dozens of their owned-or-controlled subordinate entities, as well as a number of “independent” Foundation owned-or-controlled subsidiaries and their owned-or-controlled subordinate companies.” The Iranian Minister of Intelligence and Security is being designated pursuant to E.O. 13553 for “having acted or purported to act for or on behalf of, directly or indirectly, the [Ministry of Intelligence and Security],” which plays “a key role in the Iranian regime’s brutal human rights abuses against the Iranian people.”
As a result, all property and interests in property belonging to, or owned by, the designated persons subject to U.S. jurisdiction are blocked, and U.S. persons are also generally prohibited from engaging in transactions with them. OFAC further warned foreign financial institutions that knowingly facilitating significant transactions or providing significant support to the designated persons may subject them to U.S. correspondent account or payable-through account sanctions.
Trump to nominate Brooks as Comptroller
On November 17, President Trump announced his intention to nominate Brian P. Brooks as Comptroller of the Currency. Brooks has been serving as acting Comptroller since the end of May 2020. Prior to serving as acting Comptroller, Brooks served as Senior Deputy Comptroller and Chief Operating Officer of the OCC. Prior to joining the OCC, Brooks was Chief Legal Officer of a digital currency exchange, and prior to that, he served as Executive Vice President, General Counsel, and Corporate Secretary of Fannie Mae. In a statement, Brooks called the intent to nominate a “great honor” and stated he “will work ceaselessly to ensure the agency continues to fulfill its critical mission.”
Maryland AG obtains $2.6 million in student debt relief
On November 16, the Maryland attorney general announced that it obtained over $2.6 million in debt relief from a third-party debt buyer for approximately 1,200 former students of a defunct Maryland-based for-profit college. In its press release, the AG alleged that the for-profit college offered “low-quality programs at a price significantly higher than comparable programs at Maryland’s public institutions.” According to the AG, due to the college’s high tuition, students had little choice but to take out loans issued by the college itself. After the college permanently closed, a court-appointed receiver sold the rights to collect the loans to a third-party debt buyer. The AG took the position that, because the college abruptly closed and failed to provide its students with the services promised, the loans should have been canceled rather than sold. To resolve the dispute, the AG and the third-party debt buyer entered into a settlement. Under the terms of the settlement, the third-party debt buyer agreed to cease collection on any of the outstanding loans and to refund approximately 75 percent of the payments collected from the students after it bought the loan portfolio. Furthermore, the debt buyer agreed to remove trade lines relating to the loans from the student’s credit reports.
NYDFS announces cybersecurity toolkit for small businesses
On November 17, NYDFS announced a partnership with a non-profit company to provide a free cybersecurity toolkit to small businesses, including those in the financial services sector. The toolkit is intended to help small businesses strengthen their cybersecurity and to protect themselves and their customers from growing cyber threats. Operational tools and educational resources covered in the toolkit address “identifying hardware and software, updating defenses against cyber threats, strengthening passwords and multi-factor authentication, backing up and recovering data, and protecting email systems.” NYDFS’ partnership with the company also includes the development of a set of sample policies based on cybersecurity best practices to help small businesses install necessary governance and procedures. The sample policies include, among other things, a risk assessment and a sample third-party service provider policy. NYDFS advises small businesses to “review the tools and sample policies and to adapt them to their specific business risks and operations, including to comply with any applicable state and federal laws.”
OFAC issues amended Venezuela-related general license
On November 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela General License (GL) 8G, “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for the Limited Maintenance of Essential Operations in Venezuela or the Wind Down of Operations in Venezuela for Certain Entities.” GL 8G supersedes GL 8F and extends the expiration date for certain authorizations through June 3, 2021 that would otherwise be prohibited under Executive Orders 13850, 13857, or 13884.
Visit here for additional InfoBytes coverage of actions related to Venezuela.
Court stays PPP and EIDL borrower disclosure
On November 13, the U.S. District Court for the District of Columbia temporarily stayed the U.S. Small Business Administration's (SBA) mandatory release of the names, addresses, and precise loan amounts of all Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) borrowers until the court rules on the motion to stay filed by the SBA. As previously covered by InfoBytes, the court ordered the SBA to supplement their July disclosure and release the “names, addresses, and precise loan amounts of all individuals and entities that obtained PPP and EIDL COVID-related loans by November 19, 2020,” concluding that the SBA’s claimed Freedom of Information Act (FOIA) exemptions do not cover the requested information disclosures. The SBA moved to stay the order to “preserve [the] SBA’s right to appeal and to avoid irreparable harm to [the] SBA and to privacy and business confidentiality interests of the millions of individuals and businesses….” The SBA requested the order be stayed until December 7 or pending appeal, if filed by that date. In response, the court issued a minute order, granting a temporary stay until it rules on the motion.
OCC’s final rule amends licensing requirements
On November 16, the OCC announced a final rule to update and clarify certain licensing policies and procedures for national banks and federal savings associations. (See also Bulletin 2020-100.) The final rule makes various changes to 12 CFR Part 5, “Rules, Policies, and Procedures for Corporate Activities,” to eliminate unnecessary requirements consistent with safe, sound, and fair operation of the federal banking system. The OCC originally proposed the changes in March (covered by InfoBytes here). The final rule’s changes will, among other things, (i) allow national and federal savings associations to follow the procedures applicable to state banks or state savings associations for certain business combinations; (ii) expand operating subsidiary notice and expedited review processes to include activities that are substantively the same as activities previously approved by the OCC; (iii) allow non-controlling investments and pass-through investments in non-OCC supervised entities and permit certain other investments without a filing; (iv) create procedures for citizenship and residency waivers for national bank directors; (v) redefine “troubled condition” in relation to director and senior executive officer changes “to specify that an enforcement action must require the national bank or savings association to improve its financial condition for it to be considered in ‘troubled condition’ solely as a result of the enforcement action”; and (vi) add chief risk officer to the list of positions for which a bank in troubled condition must provide notice when making a personnel change. The final rule will take effect January 1, 2021, with certain exceptions that becomes effective upon publication in the Federal Register.
CFPB, Colorado AG to host innovation office hours
On November 16, the CFPB and Colorado attorney general announced that they will host joint, virtual office hours on December 2, as part of the American Consumer Financial Innovation Network (covered by InfoBytes here). The office hours will provide innovators the opportunity to discuss issues related to financial technology, innovative products or services, and other matters related to financial innovation. Those interested need to request a virtual session by November 23 and should include details on what they would like to discuss at the meeting.
FDIC announces disaster relief for Puerto Rico
On November 16, the FDIC issued FIL-105-2020 to provide regulatory relief to financial institutions and help facilitate recovery in areas of Puerto Rico affected by severe storms and flooding starting on September 13. The guidance notes that the FDIC will consider the unusual circumstances faced by institutions affected by the hurricane. The guidance suggests that institutions work with impacted borrowers to, among other things: (i) extend repayment terms; (ii) restructure existing loans; or (iii) ease terms for new loans to those affected by the severe weather, provided the measures are “done in a manner consistent with sound banking practices.” Additionally, the FDIC notes that institutions may receive Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery. The FDIC states it will also consider relief from certain reporting and publishing requirements.
SEC charges bank execs over sales-compensation practices
On November 13, the SEC announced charges against a national bank’s former CEO and Chairman, as well as against the former head of the national bank’s community bank (community bank) for their roles in allegedly misleading investors in connection with the bank’s incentive compensation sales program. As previously covered by InfoBytes, in connection with the same misconduct, the SEC announced a Cease and Desist order with the bank for allegedly violating the antifraud provisions of the Securities Exchange Act of 1934. The bank agreed to cease and desist from committing any future violations of the antifraud provisions and to a civil penalty of $500 million.
According to the complaint filed in the U.S. District Court for Northern District of California against the former head of the community bank, from mid-2014 through mid-2016, the former head publicly endorsed the bank’s incentive compensation program as a measurement of the bank’s success, when in reality, the metrics were allegedly inflated by unused and unauthorized accounts. Moreover, the complaint alleges that the former head signed sub-certifications that attested to the accuracy of the bank’s public disclosures, when she “knew or was reckless in not knowing” that the incentive compensation program depicted in the disclosures were materially false or misleading. The complaint seeks a permanent injunction, disgorgement, and civil penalties.
Additionally, the SEC issued a cease and desist order against the bank’s former CEO and Chairman, alleging that in 2015 and 2016 he certified statements filed with the SEC regarding the community bank’s incentive compensation program, after being put on notice that the bank was misleading the public about the program. The order issues a $2.5 million civil penalty against the former CEO and Chairman.