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ABA Banking Journal: Appeals court reinstates beneficial ownership registry; earliest deadline to file now Jan. 13December 24, 2024
The U.S. Court of Appeals for the Fifth Circuit on Monday reinstated the enforceability of the Corporate Transparency Act and lifted the nationwide injunction issued by the district court judge earlier this month. In so doing, the court reinstated the Jan. 1, 2025, compliance deadline for most covered businesses to report their beneficial ownership information to the Financial Crimes Enforcement Network as required by the CTA. However, due to the period when the preliminary injunction was in effect, FinCEN delayed to Jan. 13 the deadline for most businesses to file their initial beneficial ownership information. Businesses created or registered on or after Dec. 3, 2025, will have an additional 21 days from their deadline to file. Deadlines for companies created or registered on or after Jan. 1, 2025, are unchanged. (Banks are exempt from filing, but many of their business clients are covered.) The lawsuit in Texas was filed by the National Federation of Independent Business and several of its members. The plaintiffs argued that the CTA exceeded Congress’ authority to regulate interstate commerce, that it violates the First Amendment by compelling speech and infringing freedom of association and that it violates the Fourth Amendment by forcing the disclosure of private information. The appeals court said the U.S. Department of Justice “made a strong showing that it is likely to succeed on the merits in defending CTA’s constitutionality,” noting that the reporting requirement fell within Congress’ broad authority under the U.S. Constitution’s Commerce Clause to regulate economic activity that would affect interstate commerce. Still exempt from the filing deadlines are members of the National Small Business Association, in which an injunction applying to its members in a separate lawsuit remains in place. The plaintiffs in the NFIB case could seek further review from the Fifth Circuit or seek relief from the U.S. Supreme Court. Several other federal courts are actively considering CTA challenges. According to recent poll data from Wolters Kluwer, as of mid-November, only about a quarter of the estimated 32.5 million covered businesses had registered. Thirty-seven percent of firms were waiting until closer to the deadline and 12% said they had insufficient resources to do the filing. Meanwhile, 9% of businesses believed they were not covered by the rule, and 32% were unsure whether the rule applied to them. CISA: 2024 Year in Review
REDUCING RISK TOGETHER: Planning for ResilienceCISA publishes customer-focused products to help organizations understand and address their current risk as well as to look further out and start planning for mid-range risks that may emerge in the next three to 30 years.ABA Banking Journal: Treasury Department releases recommendations for financial sector AI strategyDecember 19, 2024 
The Treasury Department today released a report with recommendations on potential next steps for regulators and the private sector on the use of artificial intelligence in financial services. Earlier this year, the Treasury Department sought public comments on the uses, opportunities and risks of AI in the financial sector. The American Bankers Association and 21 state bankers associations filed a joint comment letter in August in response. Many respondents said that emerging AI technologies such as generative AI are driving expanded use cases but also introducing new risks, leading firms to be cautious about deploying them broadly in customer-facing applications, according to the report. Respondents also highlighted differences in supervision for banks and nonbanks developing and deploying AI, as well as the resource gap and dependency on third-party providers for smaller financial firms. According to the report, respondents expressed support for government actions such as providing additional clarification on data privacy standards, expanding consumer protections and pursuing private-public partnerships to share information and best practices. The Treasury Department itself made several recommendations. One was to continue international and domestic collaboration among governments, regulators and the financial services sectors to promote “consistent and robust” standards for AI use. Other Treasury Department recommendations included further analysis and stakeholder engagement to explore solutions for any identified gaps in the existing regulatory frameworks; continued coordination among financial regulators to identify potential enhancements to existing risk management frameworks; information sharing between the financial services sector and government agencies to develop data standards, share risk management best practices and enhance understanding of emerging AI technologies. It also recommended financial firms prioritize their review of AI-use cases for compliance with existing laws and regulations before deployment “and that they periodically reevaluate compliance as needed.” December 3, 2024
Less than a month before a Jan. 1 deadline for businesses to report their beneficial owners to the Financial Crimes Enforcement Network, a federal judge in Texas has issued a preliminary injunction blocking enforcement of the requirement. The order states that covered companies nationwide do not need to comply with the Jan. 1 reporting deadline, unless the judge or a higher court reverses the order in the meantime. The lawsuit, brought by the National Federation of Independent Business and several of its members, challenged the constitutionality of the Corporate Transparency Act, the 2021 bill that established a beneficial ownership information, or BOI, registry and the requirement for businesses to report. The plaintiffs argued that the CTA exceeded Congress’s authority to regulate interstate commerce, that it violates the First Amendment by compelling speech and infringing freedom of association and that it violates the Fourth Amendment by forcing the disclosure of private information. By mid-November, as the initial Jan. 1 reporting deadline approached, only about a quarter of the estimated 32.5 million covered businesses had registered. According to newly released poll data from Wolters Kluwer, 37% of firms were waiting until closer to the deadline and 12% said they had insufficient resources to do the filing. Meanwhile, 9% of businesses believed they were not covered by the rule, and 32% were unsure whether the rule applied to them. ABA Banking Journal: Prepare your bank for the FDIC’s new signage ruleNovember 25, 2024 
The use of the FDIC logo at teller windows, on bank doors and in other places — not to mention the disclosure of “Member FDIC” in advertising — is a staple of how banks present the deposit insurance guarantee to their customers and the public. On May 1, these practices will receive a major update, and banks need to figure out how to comply. The rule changes how banks display the FDIC logo online, on apps and at branches and ATMs. It also bars the logo’s use in advertising and marketing that misrepresent deposit insurance coverage. The ambiguity in the rule’s language is a headache for banks as they work on implementation, according to Ashtyn Landen, senior director of prudential regulation at ABA. “One of the confusing terms was ‘continuously,’” Landen says. “What does it mean to have the FDIC sign continuously on your website? Does that mean when you scroll, the sign follows you down the screen? Does it mean it pops up in different places?” Take advantage of FDIC resourcesDespite the time crunch and lack of clarity, industry experts say banks must do everything they can to proactively prepare for implementation. Landen suggests rereading the rule, looking at the FDIC’s questions and answers, and attending the agency’s webinar series about rule requirements. At these webinars, the FDIC will “discuss additional questions regarding the rule” and could “clear up any confusion around what exactly is required for the website and mobile apps,” she says. The session on May 30 reviewed subparts A and B, including the major requirements and objectives, and answered common questions. The second, on July 31, discussed requirements and offered details on FDIC signage on websites — including when signage is not required — and examples of violations. (Visit the FDIC’s site to view the earlier presentation slide decks and for updates.) Not one size fits allQuestions about integrating the new rule will differ depending on the bank, according to Leslie Callaway, senior director for compliance, outreach and development at ABA and the team lead for ABA’s members-only Compliance Hotline. “The bigger banks are looking at this and have been since day one. Smaller banks that don’t have the resources are struggling a little bit more. It really depends on the size of the bank [and] the resources they have,” she says. “There’s a lot of rules around ATMs, so how many ATMs do you have? How many new ATMs are you going to have? There’s a lot of moving parts.” Since implementation challenges will vary, it’s important for banks to communicate with their examiner for help with the changes and to ensure readiness for May 1, says Therese Kieffer, specialized consulting manager at Wolters Kluwer. “Where you’ve got the non-deposit product that you’re also offering in your branch and you want to put it up on digital display, it might be worthwhile having a conversation with your examiner as to what they would recommend [in terms of appropriate disclosure] in that kind of situation,” Kieffer says. “You might want to run some of your drafts of your mobile app page or some of your designs past your examiner.”  Bank Holiday Signs Available for Member Banks |
SDBA’s Legislative Day is your opportunity to stay informed on both state and federal legislation which could impact the banking industry. This is your opportunity to actively participate in shaping the future of banking in our state. This gathering promises insightful conversations, networking, and direct engagement with key policymakers.
Breaking Into Banking 101: Commercial banking can be intimidating because of its complexity and the risk-oriented nature of the work. This course is a clear and thorough introduction to the key concepts, terminology, and processes involved in credit and lending. It doesn’t assume much prior knowledge of the topic, so it’s ideal for those in their first year in the industry. Learners will walk away with a clear understanding of their job and how their specific role fits into the bank’s overall profitability goals.
