To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Financial Services industry over the past week:

Federal Activities

State Activities

Federal Activities:

• On October 19, the Consumer Financial Protection Bureau (CFPB) proposed a rule that would accelerate a shift toward open banking, where consumers would have control over data about their financial lives, and would gain new protections against companies misusing their data. The proposed Personal Financial Data Rights rule activates a dormant provision of law enacted by Congress more than a decade ago. It would jumpstart competition by forbidding financial institutions from hoarding a person’s data and by requiring companies to share data at the person’s direction with other companies offering better products. The proposed rule would allow people to break up with banks that provide bad service and would forbid companies that receive data from misusing or wrongfully monetizing the sensitive personal financial data. For more information, click here.
• On October 19, the Depository Trust and Clearing Corporation (DTCC) announced that it has acquired Securrency Inc., an enterprise-grade blockchain infrastructure company focused on tokenization. Securrency Inc. will become a fully owned subsidiary of DTCC and will operate under the name DTCC Digital Assets. For more information, click here.
• On October 19, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced a Notice of Proposed Rule Making (NPRM) that identifies international Convertible Virtual Currency Mixing (CVC mixing) as a class of transactions of primary money laundering concern. This NPRM highlights the risks posed by the extensive use of CVC mixing services by a variety of illicit actors throughout the world, and proposes a rule to increase transparency around CVC mixing to combat its use by malicious actors, including Hamas, Palestinian Islamic Jihad, and the Democratic People’s Republic of Korea (DPRK). The NPRM is a key part of Treasury’s efforts to promote transparency for CVC mixing activities. For more information, click here.
• On October 18, U.S. Senators Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kan.), and U.S. Representative Sean Casten (D-Ill.) issued a letter to the White House’s national security advisor, requesting the White House’s plan to prevent the use of crypto for financing of terrorism. For more information, click here.
• On October 18, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on six individuals associated with Hamas’ secret investment portfolio, two senior Hamas officials, and a Gaza-based virtual currency exchange and its operator. For more information, click here.
• On October 18, the Federal Deposit Insurance Corporation (FDIC) Office of Inspector General issued a report titled, “FDIC Strategies Related to Crypto-Asset Risks.” The report recommends the FDIC to (1) establish a plan with timeframes for assessing risks pertaining to crypto-related activities and (2) update and clarify the supervisory feedback process related to its review of supervised institutions’ crypto-related activities. For more information, click here.
• On October 18, the Federal Trade Commission (FTC) announced that a for- profit college has been ordered to cancel $3.4 million in student debt to resolve separate charges brought by the FTC and the state of New Jersey that said the companies lured prospective students to enroll by falsely touting their job-placement rates and that their relationships with prominent companies would lead to jobs after their graduation. The FTC also alleges that the for-profit school encouraged students to use income-share agreements to pay for the school. Among other provisions under the stipulated order, the for-profit school must request that consumer reporting agencies delete the debt from consumers’ credit reports. For more information, click here.
• On October 18, U.S. Representative Maxine Waters (D-CA), while applauding the Biden administration’s recent actions on “junk fees,” announced that House Democrats will soon be “unveiling additional legislation to more expansively address junk fees in the financial services and housing industries.” For more information, click here.
• On October 18, the FTC issued its latest report to Congress on protecting older adults, which highlights key trends based on fraud reports by older adults, and the FTC’s multipronged efforts to combat the problem through law enforcement actions, rulemaking, and outreach and education programs. Because most frauds are not reported, this figure represents only a fraction of the overall cost of fraud to older consumers, which the FTC estimates to be as high as $48 billion. The report also finds that in 2022, older adults reported significantly higher losses to investment scams, business impersonation scams, and government impersonation scams than they did in 2021. For more information, click here.
• On October 17, Federal Reserve Board Governor Michelle Bowman provided remarks on innovation in money and payments, including crypto assets, central bank digital currency, and the development of instant payments. For more information, click here.
• On October 17, while providing remarks at a Roundtable on Central Bank Digital Currency hosted by Harvard Law, Bowman voiced her concerns about the potential risks involved with integrating a central bank digital currency (CBDC) into the U.S.’ existing financial system: “If not properly designed, a CBDC could disrupt the banking system and lead to distintermediation, potentially harming consumers and businesses, and presenting broader financial stability risks.” For more information, click here.
• On October 17, the U.S. Department of Treasury announced that it is considering extending the comment period for its proposed regulations concerning the sale of digital assets. For more information about the proposed regulations, click here.
• On October 17, the Bank of International Settlements (BIS) issued a guidance proposal titled, “Disclosure of Cryptoasset Exposures.” According to the document, if the Basel Committee agrees to the proposal by January 31, 2024, starting January 1, 2025, applicable banks will be required to “disclose qualitative information on their activities related to cryptoassets and quantitative information on exposures to cryptoassets and the related capital and liquidity requirements.” For more information, click here.
• On October 16, the Securities and Exchange Commission’s (SEC) Division of Examinations released its 2024 exam priorities, detailing the agency’s primary focus areas for investment advisers, investment companies, broker-dealers, transfer agents, municipal advisers, securities-based swap dealers, clearing agencies, and other self-regulatory organizations. Notably, the SEC disclosed that it has “established specialized teams within [its] different examination programs … to better address emerging issues and risks associated with crypto assets, financial technology, such as artificial intelligence, and cybersecurity, among more.” For more information, click here.
• On October 16, U.S. Senator Tim Scott (R-SC) announced that he and a group of seven Banking Committee Republicans are calling on the Federal Housing Finance Agency (FHFA) to implement reforms to credit scoring models that will expand homeownership opportunities for creditworthy borrowers and make scores more predictive. The group’s letter to the FHFA references the bipartisan Credit Score Competition Act, specifically Section 310, which established requirements for use of third-party credit scoring models, allowing for the inclusion of alternative data sources like rent, utility, and telecom bill payments. The senators argue that including this alternative data into scoring models will “expand homeownership opportunities for creditworthy borrowers and make scores more predictive.” For more information, click here.
• On October 16, the U.S. Department of Housing and Urban Development, through the Federal Housing Administration (FHA), announced a new policy which allows lenders to count income from small units of housing built inside, attached to, or on the same property as a primary residence (Accessory Dwelling Units (ADU)) when underwriting a mortgage. This change allows for the inclusion of rental income from the ADU in the borrower’s qualifying income, and would allow more borrowers to qualify for FHA financing for properties with ADUs, including 203(k) rehabilitation mortgages. ADUs can be rented out to tenants, thereby adding to the supply of housing in a community. In addition, this new policy will enable more first-time homebuyers, seniors, and inter-generational families to leverage the power of ADUs to enhance the generational wealth building potential of homeownership. The announcement supports the Biden-Harris Administration’s Housing Supply Action Plan and reinforces the importance the administration places on addressing the nation’s affordable housing challenges and increasing access to homeownership. For more information, click here.
• On October 13, the FTC announced, via an updated press release from 2021, that the three national credit reporting agencies have permanently extended a program that lets you check your credit report at each of the agencies once a week free of cost. For more information, click here.
• On October 13, the Conference of State Bank Supervisors announced the Nationwide Multistate Licensing System & Registry will be enhanced to include the new Mortgage Call Report (MCR) Form Version 6 (FV6). “Please know that after thorough consideration of industry concerns with the implementation schedule (noted below), we wish to confirm there will be no change to our existing implementation plans, and your company will be required to collect appropriate data for transactions on and after January 1, 2024.” The release is scheduled for March 16, 2024, ahead of the MCR Quarter 1 filing period. For more information, click here.

State Activities:

• On October 18, New York AG Letitia James secured $350,000 from a Long Island-based home health care company, Personal Touch Holding Corporation, for allegedly failing to protect New Yorkers’ personal information and health care data, and employing data security procedures, which made it vulnerable to a ransomware attack that compromised the personal and medical information of approximately 316,845 New Yorkers. Personal Touch has agreed to pay $350,000 in penalties to New York, update and improve their cybersecurity infrastructure, and offer free credit monitoring and identity theft services to affected individuals. In addition, James secured $100,000 from an insurance software vendor for compromising Personal Touch employees’ data. For more information, click here.
• On October 18, Arizona AG Kris Mayes announced that a grand jury has indicted the owners and billers of A Better You Wellness Center, LLC, a Phoenix-based behavioral health facility. According to the press release, government records revealed that the company had billed Arizona’s Health Care Cost Containment System and the American Indian Health Program for more than $115 million in behavioral health services between December 2021 and February 2023. It is alleged that a portion of these bills for services were fraudulent in nature. For more information, click here.