Financial Crimes Enforcement Network (FinCEN)

FinCEN Issues Advisory on Human Rights Abuses Enabled by Corrupt Senior Foreign Political Figures and Their Financial Facilitators

The Financial Crimes Enforcement Network (FinCEN) issued an advisory to U.S. financial institutions, warning of the connection between corrupt senior foreign political figures and their enabling of human rights abuses.

The use of financial facilitators is one way that corrupt senior foreign political figures

By gaining access to the U.S. and international financial systems through the use of financial institutions, corrupt senior foreign political figures are able to move or hide illicit proceeds while evading U.S. and global sanctions.

They directly or indirectly participate in human rights abuses, devastating citizens, societies, and economic development.

U.S. financial institutions that hold the accounts of these corrupt figures expose themselves to great risks, whether it is directly or indirectly via banking relationships.

Financial institutions, under the Bank Secrecy Act, are obligated to report suspected illicit activity by these facilitators.

 

The Federal Reserve

Federal Reserve Board releases results of supervisory bank stress tests

The Federal Reserve found that the largest bank holding companies in the U.S. are poised to lend to the nation’s households and businesses in case of a severe global recession.

In their supervisory stress test, one of eight since 2009, they found that under the most severe scenario losses would total in $578 billion for 35 of the participating banks with U.S. unemployment rising to 10 percent.

The Federal Reserve cited a few factors that affected the post-stress capital ratios:

  • Credit card balances are higher
  • Recent tax code changes
  • The elimination of some beneficial tax treatments

Roughly 80 percent of all banking assets operating in the U.S. are owned by the 35 firms who were tested.

 

The Office of the Comptroller of the Currency (OCC)

OCC Reports First Quarter 2018 Bank Trading Revenue

The Office of the Comptroller of the Currency (OCC) reported trading revenue of U.S. commercial banks and federal savings associations of $8.2 billion in the first quarter of 2018.

The report shows that the first quarter of 2018 was 62.8 percent higher than the fourth quarter in 2017, that’s an increase of $3.2 billion, and compared to the first quarter in 2017, it was an increase of 15 percent.

While four large banks held 89.8 percent of the total banking industry notional amount of derivatives, a total of 1,357 insured U.S. commercial banks and savings associations held derivatives at the end of the first quarter 2018.

Derivative contracts remained concentrated in interest rate products, which represented 76.3 percent of total derivative notional amounts.

The percentage of centrally cleared derivatives transactions increased slightly to 39.8 percent in the first quarter 2018.

  

The Department of Justice

FTC and DOJ Approve Procedural Changes to HSR Form Instructions

The Federal Trade Commission, with the concurrence of the Antitrust Division of the U.S. Department of Justice, has approved amendments to the Hart-Scott-Rodino Premerger Notification Rules.

The instructions for filling out the form used by companies to report a proposed merger, acquisition, or similar transaction under the Hart-Scott-Rodino Antitrust Improvements Act have also been changed.

To review the potential of any anticompetitive impact of these proposed transaction the FTC and the Antitrust Division of the DOJ created the Premerger Notification and Report Form, also referred to as the HSR Form.

The amendments have been introduced to clarify some language used in the Rules and the instructions and enable the use of email for specific instances, such as in granting early termination.

Enacted by Congress in 1976, the Hart-Scott-Rodino Antitrust Improvements Act gives the federal government the opportunity to investigate and challenge mergers that are likely to harm consumers before injury occurs.

 

Other Regulatory Bodies

U.S. Commodity Futures Trading Commission

CTFC Orders JPMorgan Chase Bank, N.A. to Pay $65 Million Penalty for Attempted Manipulation of U.S. Dollar ISDAFIX Benchmark Swap Rates

The Commodity Futures Trading Commission (CFTC) settled charges against JPMorgan Chase Bank, N.A. (JPMC) for attempted manipulation of the ISDAFIX benchmark and required JPMC to pay a $65 million civil monetary penalty.

Over a five-year period, beginning in January 2007 through January 2012, JPMC made false reports and attempted to manipulate the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX).

It is a leading global benchmark referenced in a range of interest rate products, to benefit its derivatives positions, including positions involving cash-settled options on interest rate swaps.

The CFTC found that certain JPMC traders understood and employed two primary means in their attempts to manipulate USD ISDAFIX rates:

  1. trading attempted manipulation
  2. submission attempted manipulation