Agencies Launch Digital Identity Tech Sprint

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REGULATORY DEVELOPMENTS

FDIC, FDITECH AND FINCEN LAUNCH DIGITAL IDENTITY TECH SPRINT

On January 11, the FDIC, FDITECH, and FinCEN announced the opening of registration in the coming weeks for a Tech Sprint to develop scalable, cost-efficient and risk-based solutions for financial institutions, particularly community banks and regulators, to help measure the effectiveness of digital identity proofing – the process used to collect, validate and verify information about a person – of individuals opening a new account in a remote banking environment (i.e., not in person).

Interested participants will have approximately two weeks from the opening of registration to submit applications. Participants will be grouped into teams to work together over approximately three weeks and be invited to participate in a virtual “Demo Day” to present their work to a panel of experts. Team presentations will be published, and teams will be eligible for non-monetary prizes based on several forthcoming criteria.

FINCEN REQUESTS COMMENTS ON RENEWAL OF THE OMB CONTROL NUMBER FOR REPORTS OF TRANSACTIONS WITH FOREIGN FINANCIAL AGENCIES

On January 11, FinCEN published in the Federal Register a 60-day notice to invite comments on the proposed renewal, without change, of the currently approved information collection found in existing Bank Secrecy Act (BSA) regulations requiring reports of transactions with foreign financial agencies (FFA) (31 CFR 1010.360). Currently, the BSA authorizes the Secretary of the Treasury, as appropriate, to promulgate regulations requiring specified financial institutions to file reports with FinCEN about specified transactions with designated foreign financial agencies.

FinCEN did not propose changes to the information collection itself. Instead, FinCEN proposed for review and comment a renewal of the estimate of the traditional annual Paper Reduction Act (PRA) hourly burden and a methodology to estimate the hourly burden and the cost of a future estimate of a supplemental annual PRA burden that includes the burden and cost per financial institution, per FFA request of complying with forward and backward-looking reporting requirements. The notice requests feedback from industry on or before March 14, 2022.

FEDERAL RESERVE BOARD ANNOUNCES DESIGNATION OF THE CHAIRS AND DEPUTY CHAIRS OF THE 12 FEDERAL RESERVE BANKS FOR 2022

On January 5, the Federal Reserve announced the Chairs and Deputy Chairs of the 12 Federal Reserve Banks for 2022. Each Reserve Bank has a nine-member board; the Board of Governors in Washington DC appoints three of the directors of each Reserve Bank and designates one appointee as Chair and a second appointee as Deputy Chair.

In addition to the announcement of the new Chairs and Deputy Chairs, the Federal Reserve provided additional insight into their efforts for increasing the overall diversity of the of the Reserve Bank, including branch boards of directors. In relation to these efforts, the Federal Reserve updated its website to include information pertaining to gender, race and ethnicity of the boards of directors. The Federal Reserve provided that similar information will be published in the forthcoming weeks regarding demographics of the various branch’s board of directors and the sectors represented by them.

“What is a scalable, cost-efficient, risk-based solution to measure the effectiveness of digital identity proofing to ensure that individuals who remotely (i.e., not in person) present themselves for financial activities are who they claim to be?”
– The FDIC and FinCEN to Tech Sprint participants

SEC PROPOSES ACCELERATED AND ENHANCED SHARE REPURCHASE REPORTING

On November 18, the SEC proposed amendments to Rules 17a-4 and 18a-6 under the Securities Exchange Act of 1934 related to recordkeeping requirements for broker-dealers and certain security-based swap (SBS) entities. The industry could see a swift timeline in 2022 for SEC adoption of the proposed changes. In the meantime, broker-dealers, SBS entities and recordkeeping vendors should consider how this proposal could affect their recordkeeping systems and related practices, including internal and external data and information security.

Read the client alert to learn more about the proposed changes and their implications.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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