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Greater standardization of the CDD/EDD process used for respondents.
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Potential reform or restructuring the U.S. AML regime.
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Roles, regulations, and supervision of non-bank financial services and technology providers.
FinCEN Customer Due Diligence (CDD) Rule Compliance with FinCEN’s final customer due diligence (CDD) rule became mandatory on May 11, 2018. BAFT provided members resources and reference materials to facilitate their implementation of policies, procedures, and controls to comply with the regulation, and continues to collect questions from members on the final rule and FAQs guidance for future dialogue with FinCEN.
Sanctions Issues Over the past year, there have been multiple changes and additions to the sanctions regulations issued by the U.S. Treasury Department’s Office of Foreign Asset Control (“OFAC”). In collaboration with other industry associations, BAFT has been meeting regularly to discuss potential unintended consequences of the imposition of new regulations and changes to current ones. We expressed industry concerns over potential misinterpretations of OFAC’s advisory regarding deceptive shipping practices being used to evade North Korea sanctions. BAFT and The Clearing House (TCH) obtained clarification from OFAC that the advisory was written as an alert for the trade finance community where certain practices may create significant sanctions risk for financial institutions, buyers and sellers, and parties in the shipping industry including insurers, flag registries, and shipping companies. More recently BAFT worked with TCH, SIFMA, ABA, UK Finance and our membership to address the potential conflicts of law issues that may arise from the snap back of OFAC’s Iran sanctions and the European Union’s formal process to update the 1996 EU Blocking Regulation (the “Blocking Statute”) to include certain US sanctions on Iran. We continue to collaborate closely with our US and EU partners to address the issues.
Payments Remittance Transfers Together with several other trade associations, BAFT submitted a comment letter on the remittance rule to the Bureau of Consumer Financial Protection (the Bureau) in response to the Bureau’s notice and request for information (“RFI”) regarding its review of its rules. In the letter, the associations urged the CFPB to exclude transfers that are outside the commonly understood scope of remittances; preserve depository institutions’ ability to estimate fees and exchange rates after the July 21, 2020 “sunset date” of the temporary exception, provide more flexibility and reduce redundancies with respect to disclosures; and modify the error resolution provisions. The Bureau recently informed the associations that it is seriously considering our requests. BAFT will notify members about any action the Bureau takes regarding the rule, whether prompted by the industry letter or the Bureau’s independent assessment of the rule due October 2018.
U.S. Faster Payments The U.S. Federal Reserve System dissolved the Faster Payments Task Force in the summer of 2017 following publication of the final report, The U.S. Path to Faster Payments. One recommendation of the final report was to form an Interim Collaborative Working Group (ICWG) to: •
develop an initial faster payments governance framework incorporating public commentary
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establish the framework and membership
The ICWG, after changing its name to the Governance Framework Formation Team (GFFT) to better align with its mission, published its operating vision for the U.S. Faster Payments Council and requested stakeholder feedback through an online survey. BAFT’s response suggested various revisions to the proposed structure and decisionmaking processes of the council. BAFT will continue to follow and to keep members informed regarding the development of the U.S. Faster Payments Council.
2018 BAFT ANNUAL REVIEW
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