iFINRA Amends Rule Protecting Seniors from Financial Exploitation
FINRA adopted amendments to Rule 2165 ("Financial Exploitation of Specified Adults"). As previously covered, the amendments will allow member firms to (1) place a hold on securities transactions where there is a reasonable belief of financial exploitation and (2) extend a temporary hold on a disbursement or transaction for an additional 30 business days beyond the 25-business-day period if a member firm has reported the matter to a state regulator or agency, or a court of competent jurisdiction.
FINRA stated that the amendments will allow member firms to place a hold on transactions, rather than just on disbursements, and will provide state authorities with enough time to conduct thorough investigations of potential fraud.
The amendments will become effective on March 17, 2022.
FinCEN Offers Guidance to Victims of Cyber-Enabled Financial Crime
In a new fact sheet, FinCEN described how its Rapid Response Program ("RRP") "helps victims and their financial institutions recover funds stolen as the result of certain cyber-enabled financial crime schemes, including business e-mail compromise." FinCEN provided a flowchart detailing the complaint process to activate the RRP including the type of information to provide to law enforcement. The fact sheet also includes guidance for financial institutions filing suspicious activity reports in connection with victims' use of the RRP.
FinCEN explained that the RRP is a partnership that includes FinCEN, U.S. law enforcement and foreign partners that serve as financial intelligence units ("FIU") in their respective jurisdictions. FinCEN said it uses its authority to share information and collaborate with foreign authorities to block fraudulent transactions, freeze funds, and stop and recall payments. The RRP has been used in 70 jurisdictions, has recovered more than $1.1 billion and has the capacity to expand to 90 additional jurisdictions through FIU channels.
CFTC Staff Grants "Limited Purpose" Swap Dealer Relief from Certain Disclosure Requirements
The CFTC Market Participants Division provided relief to a "limited purpose" swap dealer ("SD") from public financial disclosure requirements under CFTC Rule 23.105(i)(1) and (2) ("Public disclosure and nonpublic treatment of reports").
CFTC staff concluded:
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the SD was only an ancillary business unit of a larger privately held commercial agricultural business that was not otherwise required to disclose financial information publicly;
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the SD was predominantly used to accommodate agricultural customers because an "average of 90-95% of swap exposures were to non-financial commercial end-users"; and
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if forced to comply, the SD's parent company would need to either create a standalone subsidiary for the SD - which it determined to be economically impracticable - or limit its presence in the hedging commodity markets.
The relief is conditional on the SD (i) maintaining a limited purpose swap dealer designation, (ii) filing unaudited monthly financial reports and NFA-audited annual financial reports to the CFTC, (iii) disclosing on its website that it maintains two times the minimum regulatory capital requirement and (iv) providing five-year lookback financial information to all existing and potential swap dealing counterparties.
