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Cuban Assets Control Regulations Updated

September 28, 2015 – Back in January of this year, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the U.S. Department of Commerce amended the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR)related to Cuba. These changes were intended to further “engage and empower the Cuban people by easing sanctions related to travel, telecommunications, and internet-based services, business operations in Cuba, and remittances.” The Amendments were finally published last Monday (September 21, 2015).

What does this mean for the Cuban people?

For the past fifty or so years, the CACR and the EAR has served as the principal mechanism through which the United States embargo against Cuba has been enforced. With the relaxation (although not the lifting) of these regulations, Cuba will hopefully benefit from the increased ease with which U.S. citizens may enter the country.

Moreover, American businesses are now permitted to export telephones, computers, and Internet technology to Cuba and to send supplies to private Cuban firms, which will hopefully result in drastically improved technological services in the country.

The opening of the American embassy in Havana is yet another step for the countries to normalize relations, which many believe will push the Cuban government to adopt policies that will help the Cuban people.

Sources

“Major Changes to Cuban Assets Control and Export Regulations Create New Opportunities for Trade.” Blank Rome LLP. Blank Rome LLP, 21 January 2015. Web. 28 September 2015.

Scism, Chelsea. “US to Open Embassy in Cuba. What That Means.” The Daily Signal. The Daily Signal, 1 July 2015. Web. 28 September 2015.

 

IRA Rollovers and the One-Per-Year Rule

September 16, 2015 – Under federal law, you can only conduct one IRA-to-IRA rollover per year. If you try to exceed this limit, it is considered a distribution, which is subject to significant taxes and penalties. In the past, this has meant that taxpayers cannot roll over the same IRA within a year, but the IRS allows a 60-day rollover once a year from separate IRAs. Essentially, if someone has four different IRAs, that person could initiate four rollovers in the same year.

However, the U.S. Tax Court recently ruled that this is wrong, and that the one-year-period rule applies to a person’s aggregate IRAs. The IRS said it would begin enforcing this interpretation of the rule January of this year, and only for roll-overs made in 2015 and thereafter.

The one year period is not a calendar year it is once every 365 days. If you took money from another IRA this year and paid it back within 60 days you cannot do another 60-day rollover until 12 months have passed since the distribution.

One way to circumvent this issue is to move funds with a direct trustee-to-trustee transfer. As long as funds are moved directly to a second institution rather than paid to the consumer first, the disbursement is not considered a rollover.

Sources

Nicholson, Holly. “Money matters: Understanding changes to the 60-day rollover rule for IRAs.” The News & Observer. NewsObserver.com, 22 August 2015. Web. 11 September 2015.

UK Bank Announces Bitcoin Acceptance

September 15, 2015 – When many people hear the term “Bitcoin,” the mind immediately conjures images of the dark underbelly of the Internet, rife with drug dealers, hackers, smugglers, and money launderers.

But, as a New York Times article points out, the “innovations that helped turn Bitcoin into the most popular virtual currency are now being viewed as a potentially enormous disruptive force” for many industries.

The flame of interest around Bitcoin flared up late last month when Barclays, one of Britain’s largest high-street banks, announced that it would help charities accept Bitcoin payments. This would make the bank the first to support the currency, setting a precedent for banks and other financial institutions to follow.

For some time, banks have been exploring the uses of Bitcoin, trying to determine the possibilities behind digital currency and its underlying blockchain technology. Many financial institutions are discussing how Bitcoin can be used to change foreign currency trading, speed up and lower the cost of consumer payments, and more.

Opponents of the blockchain, a technology that validates transactions made in Bitcoin, believe that Bitcoin could potentially strip financial institutions of their control over the flow of money. 

Meanwhile, the cryptocurrency seems to be gaining steam in parts of the world where users don’t often have bank accounts but typically have smartphones and want to shop online, such as developing nations including India, Russia, Brazil, and Indonesia.

It remains to be seen if Bitcoins can become a viable global digital currency trusted by the mainstream financial communities and industries. This first foray by a serious player perhaps signals the “beginning of the beginning” of that transition.

Sources

Popper, Nathaniel. “Bitcoin Technology Piques Interest on Wall St.” The New York Times. The New York Times, 28 August 2015. Web. 9 September 2015.

Cloud Strategies Showing Upward Trend Even While Encryption Still a Risk

September 14, 2015 –Cybersecurity is a hot topic in today’s intricately interconnected virtual world, especially in the financial sector where the risk of information and identity theft is still high and can be dangerous.

A CNN writer noted that while state and federal laws are meant to act in the interest of public safety, an emerging technology poses a “serious threat” – that is to say, newer and more advanced methods of encryption protect user privacy in such a way that law enforcement is prevented from accessing the content, even in times of extreme need for the good of the individual, company, or nation at large.

The technology industry and many Americans have an absolute right to absolute privacy, but many argue that if technology firms build encryption systems where only they retain access, law enforcement should also be able to follow the appropriate legal process to obtain the suspected “bad actors’ records.”

Even though encryption is still spoken of as a risky business, the cloud strategies of financial firms appear to be rapidly maturing, according to a new report published by CipherCloud in July. The report states that financial firms have an increased confidence in cloud technologies, showing that 100% of respondents said they put certain personally identifiable information (PII) in the cloud, while 40% of organizations polled say that for the most sensitive information, they use tokenization and strong encryption. Tokenization typically uses randomly-generated codebooks to encode the data. These strategies demonstrate a clear trend to improve security as the sensitivity of data increases.

With more and more organizations using the cloud to store sensitive information, one of the main issues they face is data security compliance, as the risks of non-compliance are well-known: CipherCloud points out that analysts estimate total cloud spending will reach $28 billion in 2018, making cloud service providers a prime target for hackers.

Edcomm Group Banker’s Academy helps financial institutions and other organizations to navigate the ins and outs of cybersecurity news and trends. We offer popular and expansive course offerings on related topics and subjects such as risk management, common fraud schemes, information security, and cybersecurity.

Sources

Bourne, James. “New report shows finance sector becoming more comfortable with cloud adoption.” CloudTech. TechForge, 30 July 2015. Web. 31 August 2015.

Rogers, Mike. “Encryption a growing threat to security.” CNN. Cable News Network, 1 August 2015. Web. 31 August 2015.

Wheatley, Mike. “Financial firms’ cloud strategies ‘rapidly maturing.’” SiliconAngle. SiliconAngle, 4 August 2015. Web. 31 August 2015.

Commercial Cybersecurity Falls to FTC Amidst Growing Information Security Concerns

September 11, 2015 – According to an August 2015 survey issued by the Federal Reserve Banks of Atlanta, Boston, Dallas, Minneapolis, and Richmond, mobile banking has begun to outpace consumer adoption of the technology, while a March 2015 report from the Federal Reserve notes that about 52% of smartphone users use mobile banking and other apps to help them budget and track their money. Many banks, credit unions, and related financial institutions have continued to up their mobile offerings, driven by the need to attract and retain customers while competing with other services and institutions. Indeed, earlier in the summer several reports cropped up concerned with bank closings due to a general migration over to mobile and online banking.

The concern over the security of using our mobile phones for transactions where our personal identifying information is flying through the cloud has been mounting in recent years.

Indeed, according to a study conducted by MarketResearch.com, global cybersecurity is forecasted to jump from $106.32 billion in 2015 to $170.21 billion by 2020. With the hacks on Ashley Madison and Established Men still fresh on our minds, and the Target and WalMart hacks not far behind them, it’s no wonder that many companies and financial institutions are nervous.

Interestingly enough, late last month, an appellate court affirmed the Federal Trade Commission (FTC)'s role in “policing the cybersecurity of commercial companies, a role some have argued is an overreach of the regulator's authority.” As the costs of cybersecurity rise and the number of people using cloud-based and related technologies rise with it, many see the affirmation of the FTC’s governance as a step in the right direction. Others disagree, citing government oversight as an egregiously interloping regulator.

According to a Federal Times article, the FTC “is making major decisions about what constitutes strong cybersecurity for the private sector — decisions the commissioners themselves aren't always educated about.”

Whether or not that is true remains to be seen, but either way, the fact remains: cybersecurity threats are stronger and more prevalent than ever, and continue to increase exponentially with every new piece of technology that is introduced to the unwary consumer. There needs to be a driving force behind improvement in effective cybersecurity.

Sources

Boyd, Aaron. “Should FTC regulate commercial cybersecurity?” Federal Times. Tegna Co., 25 August 2015. Web. 8 September 2015.

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