June 13, 2018

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Senate Agriculture Committee Chairman Pat Roberts (R-Kan.) and Ranking Member Debbie Stabenow (D-Mich.) released the bipartisan Agriculture Improvement Act of 2018-the Senate version of the next farm bill.

The legislation would renew federal crop insurance and agricultural subsidies. Unlike the House version that was voted down last month, the Senate bill leaves out new work requirements for food stamp recipients, which cost Democratic votes.

The committee is scheduled to begin marking up the legislation at 9:30 a.m. (Eastern time) today. Meanwhile, the House is expected to revisit its version of the farm bill later this month.
74 Email Scammers Targeted in Coordinated Effort 
Federal agencies announced 74 arrests in a coordinated effort to disrupt business email compromise schemes designed to intercept and hijack wire transfers.  Dubbed "Operation Wire Wire," the campaign by the departments of Justice, Homeland Security and Treasury, the U.S. Postal Inspection Service and other partners led to the arrest of 42 individuals in the United States and 29 in Nigeria. Federal authorities seized nearly $2.4 million and disrupted and recovered approximately $14 million in fraudulent wire transfers.
Business email compromise scams - a sophisticated type of fraud which has grown more prevalent in recent years - often targeting employees with access to company finances through email and involve fraudulent requests for wire transfers or other payments, or the transfer of personally identifiable information.
Federal banking agencies are issuing a revised policy on interagency cooperation in enforcement action that reflects present-day practice at the respective agencies. The new policy calls for each agency to notify any other prudential regulator "at the earliest practicable date" should the enforcement action involve the interests of the other agency.
"If it is determined that one or more other [federal banking agencies] have an interest in the enforcement action, the FBA proposing the enforcement action should notify the other FBA(s)," the new statement says. "Notification should be provided at the earlier of the FBA's written notification to the federally insured depository institution, depository institution holding company, non-bank affiliate, or institution-affiliated party against which the FBA is considering an enforcement action or when the appropriate responsible agency official, or group of officials, determines that formal enforcement action is expected to be taken."
The policy statement replaces a 1997 statement that required formal written notice. In a statement rescinding that notice, the agencies noted that the earlier statement does not reflect today's prevalence of electronic communication and that the new statement reflects the agencies' existing practices.
The Policy  >> 
Banks Encouraged to Offer Responsible Small-Dollar Loans  
The Office of the Comptroller of the Currency released a bulletin encouraging banks to offer responsible short-term, small-dollar installment loans to help meet the credit needs of consumers.

The bulletin says banks should develop these programs consistent with sound risk-management practices and align them with their overall business plans.

In a statement, ICBA said it appreciates the OCC's recognition that community banks can serve an important role in providing consumers with these loans.

"Community banks pride themselves on having close relationships with their customers and being able to provide an affordable product that accommodates their short-term financial needs. The OCC's guidance acknowledges the value of small-dollar lending," ICBA President and CEO Rebeca Romero Rainey said.
The Bulletin  >> 
Banks Trusted Over Retailers at Checkout 
Voters trust financial institutions more than retailers to develop new payment technologies and protect their personal information during the checkout process, according to a new survey.

The Morning Consult survey found that four in five voters agree that retailers should provide a range of payment options at the register and share in the fees that make electronic payments possible.

Released by the Electronic Payments Coalition the survey also found that retailers have seen a 15 percent drop in voter trust when it comes to payment technology innovation since November 2017.
The Survey  >> 
Solution to Cryptocurrency Regulation: Networked Supervision 
by John Ryan, CSBS President and CEO 
I recently joined a panel of federal regulators at the North American Securities Administrators Association (NASAA) Fintech Forum to discuss how cryptocurrency fits within our financial regulatory structure. During that discussion, I described how state regulators take an activities-based approach to regulation and why regulatory coordination and collaboration are imperative. 
Digital currencies and other cryptoassets that use blockchain technology are relatively new concepts in a rapidly evolving space. This is a challenge for regulators as we work to understand new and emerging cases while maintaining a focus on customer protections and assuring the transactions are legal, enforceable and secure.  
This is definitely a work in progress - one to which states are focused and committed. State regulators are working with each other and with other  regulators to learn about this industry and to explore supervisory issues and approached. And as the industry matures and we continue our work, one thing is clear. We need a networked system of supervision to regulate the diverse financial activities undertaken with virtual currencies.  
For state regulators, the timeless test of supervision is to look at the activity - not the technology. From a state regulator's perspective, taking, holding and sending customer funds in the form of cryptocurrencies is subject to state money transmission laws and oversight. 
However, distributed ledger technology can form the basis for other financial services and products, including securities, derivatives and commodities, that are subject to oversight by state securities regulators as well as the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission.  
That means we need to work together more than ever to form a network of supervision - states coordinating with each other and with federal regulators - to think creatively about fulfilling our responsibilities as regulators and supporting innovation.   
Let me describe how states have worked to address these issues in a coordinated manner. In our financial system, state regulators are the primary regulator for a diverse world of nonbank financial companies, including certain crypto companies. For our state regulator members, CSBS is a vehicle to further the understanding and shaping of regulatory approaches to emerging payments. We are the conduit for state regulators to develop collective policy and action.  
Virtual currency was one of the first issues our Emerging Payments and Innovation Task Force looked at when it formed in 2014. We engaged with a broad range of external stakeholders and drew on our own experience as regulators, ultimately concluding that activities involving third-party control of virtual currency on behalf of a consumer should be subject to state licensure and supervision.   
As tool for regulators and for industry, our Task Force developed a Model Regulatory Framework for state-licensed virtual currency activities, spelling out some of the key regulatory requirements that should apply to cover safety and soundness, consumer protection, cybersecurity, regular examinations and BSA requirements.  
Last month, CSBS announced a sweeping, comprehensive cybersecurity program to train both nonbank and bank examiners. In addition, CSBS's board has prioritized coordinated cybersecurity supervision and exam standards for non-bank entities.  
Learn More  >> 

September 18th and 19th
The Compliance Event of the year!
Brought to you by the Arkansas Community Bankers and
 Bankers Assurance.
Holiday Inn - Airport Convention Center 
November 8, 2018
ACB Annual Management & Directors Conference
Holiday Inn - Crowne Plaza - Little Rock