United States

CSBS releases action items to improve regulation of nonbank financial services companies

On February 14, 2019, the Conference of State Bank Supervisors (“CSBS”) announced several actions that it would be taking to modernize and harmonize state licensing, regulation, and supervision of non-depository financial institutions, including mortgage lenders, money services businesses, and consumer finance companies.… Continue Reading

US strengthens economic sanctions on Venezuela

By Kathleen Scott (US) on February 16, 2019 Posted in Enforcement, General, Regulation and compliance, United States

On January 28, 2019, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) added Petróleos de Venezuela, S.A., Venezuela’s state-owned oil company and a primary source of the country’s income and foreign currency, to its list of Specially Designated Nationals and Blocked Persons (the “SDN List”). Norton Rose Fulbright has prepared a … Continue Reading

Commissioner Peirce warns the SEC not to cast Howey’s net too wide

By Andrew Lom (US) and Rachael Browndorf (US) on February 15, 2019 Posted in Fintech, General, Regulation and compliance, Securities, United States

On February 8, 2019, SEC Commissioner Hester Peirce delivered a speech at the symposium ”Protecting the Public While Fostering Innovation and Entrepreneurship: First Principles for Optimal Regulation.” Her remarks, entitled “Regulation: A View from Inside the Machine,” provide insight into how SEC regulators currently view certain technological innovations and how they interpret and apply the … Continue Reading

CFTC divisions issue their 2019 examination priorities

By Joseph Williams (US) and Lillian A. Cardona (US) on February 13, 2019 Posted in Commodities & Derivatives, General, Regulation and compliance, United States

For the first time, the US Commodity Futures Trading Commission’s (“CFTC”) Division of Market Oversight (“DMO”), Division of Swap Dealer and Intermediary Oversight, and Division of Clearing and Risk published Examination Priorities for the year. While the CFTC has historically published its Rules Enforcement Review of specific commodity exchanges with notes as to areas for … Continue Reading

Sanctions and Supply Chains: e.l.f. Cosmetics, Inc. pays nearly USD 1 million to settle North Korea sanctions violations

By David Harris (UK), Jeffrey Cottle and Edward Malcolm (UK) on February 8, 2019 Posted in Enforcement, United States

A US-based cosmetics company, e.l.f. Cosmetics, Inc. (ELF), has reached a USD 996,080 settlement with the US Office of Foreign Assets Control (OFAC) for importing 156 shipments of false eyelash kits containing materials sourced from North Korea in apparent violation of the North Korea Sanctions Regulations. The materials were supplied by two of ELF’s China-based … Continue Reading

Mandatory stay provisions in qualified financial contracts

By Kathleen Scott (US) on February 7, 2019 Posted in Banking, Commodities & Derivatives, Dodd-Frank, General, Regulation and compliance, United States

Companies are being, or have been, approached by US banks and/or their affiliates with which they have derivatives contracts or other qualified financial contracts (QFCs) and asked to amend those agreements to cover a situation where the bank or its affiliates might be put into a receivership situation. The reason why they are getting these … Continue Reading

Broker-dealers can continue to rely on investment advisers for customer KYC requirements

By Kathleen Scott (US) on February 5, 2019 Posted in Asset management, Brokers and Intermediaries, Enforcement, General, Money laundering, Regulation and compliance, United States

In a December 12, 2018, letter to a US trade association with members that include broker-dealers in securities (“broker-dealers”), the US Securities and Exchange Commission (“SEC”) extended its no-action relief to broker-dealers who wish to rely on investment advisers to perform the broker-dealer’s obligations under US federal anti-money laundering (“AML”) customer identification program and beneficial … Continue Reading

FINRA to examine member firms’ digital assets activities for compliance with securities laws

By Lillian A. Cardona (US) on January 24, 2019 Posted in Brokers and Intermediaries, Fintech, General, Regulation and compliance, United States

On January 22, 2019, the Financial Industry Regulatory Authority (“FINRA”) released its 2019 Risk Monitoring and Examination Priorities Letter (Regulatory Notice No. 18-20) in which it identifies topics FINRA will focus on in the coming year. FINRA indicates that this year the securities self-regulatory organization will review “firms’ activities through its membership and examination process … Continue Reading

US Federal and State legislators propose exempting certain digital tokens from securities laws

By Andrew Lom (US) and Rachael Browndorf (US) on January 10, 2019 Posted in Fintech, General, Regulation and compliance, Securities, United States

On January 4, 2019, two Colorado senators introduced the “Colorado Digital Token Act,” a bill seeking to exempt digital tokens and cryptocurrencies from certain Colorado state securities laws. In filing the Colorado Digital Token Act, the senators proposed that digital tokens with a “primarily consumptive purpose” that are not marketed to be used for “speculative … Continue Reading

Personal jurisdiction in the age of blockchain

By Kathleen Scott (US) on January 10, 2019 Posted in Fintech, General, United States

As commercial activity increasingly intertwines with applications of blockchain technology with participants around the world, courts have had to grapple with the personal jurisdiction implications of such arrangements. Will participants in these blockchain applications based outside the United States find themselves subject to U.S. jurisdiction when disputes arise, based on how they have conducted their … Continue Reading

Transition period under New York cybersecurity regulation ends March 1, 2019

By Susan Ross (US), Kathleen Scott (US) and Tristan Coughlin* (US) on January 7, 2019 Posted in Banking, Enforcement, Fintech, Regulation and compliance, United States

The two-year transitional period under the New York State Department of Financial Services (“DFS”) Cybersecurity Regulation, 23 NYCRR 500 (the “Regulation”), will expire on March 1, 2019, with the final remaining requirement becoming effective. Entities covered by the Regulation that utilize third party service providers, which include not only banks and insurers, but also other … Continue Reading

Impact of partial US government shutdown on federal financial regulatory agencies

By Lillian A. Cardona (US) on January 5, 2019 Posted in Banking, Brokers and Intermediaries, Commodities & Derivatives, Energy, General, Regulation and compliance, Securities, United States

As a result of the United States Congress not adopting an appropriations bill or a continuing resolution to fund specific government departments, agencies or functions, certain federal agencies are currently subject to a partial government shutdown. Below is an overview of how the partial federal government shutdown is affecting financial or other major regulatory agencies: … Continue Reading

Federal Reserve Board proposes risk-based prudential standards

By Kathleen Scott (US) on December 19, 2018 Posted in Banking, Dodd-Frank, General, Regulation and compliance, United States

On November 29, 2018, the Federal Reserve Board published for public comment a Notice of Proposed Rulemaking that would reorganize the current prudential standards regulatory framework for US banking organizations deemed to be of systemic risk into four separate categories to reflect their risk profiles.… Continue Reading

New bipartisan bills aim to regulate and promote blockchain and cryptocurrencies

By Kathleen Scott (US) on December 19, 2018 Posted in Fintech, Regulation and compliance, United States

Legislation has been introduced in the US House of Representatives directed at regulating virtual currency. In a post from the Norton Rose Fulbright Project Finance blog available, Deanne Barrow analyzes the bills. Readers interested in learning more about cryptocurrency can sign up for updates on our FinTech law and regulation page.… Continue Reading

CFTC seeks public comment on crypto-asset mechanics and markets

By Lillian A. Cardona (US) on December 17, 2018 Posted in Commodities & Derivatives, Fintech, General, Regulation and compliance, United States

The Commodity Futures Trading Commission (“CFTC”) published a Request for input on December 17, 2018, seeking public comment and feedback on a set of twenty-five (25) questions to better inform the CFTC’s understanding of the technology, mechanics, and markets for virtual currencies beyond Bitcoin. … Continue Reading

Banking agencies and FinCEN encourage innovative efforts by banks to combat money laundering and terrorist financing

By Kathleen Scott (US) on December 14, 2018 Posted in Banking, Enforcement, Fintech, General, Money laundering, Regulation and compliance, United States

On December 3, 2018, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Financial Crimes Enforcement Network (“FinCEN”), (collectively, the “Agencies”) issued a joint statement (“Joint Statement”) urging banks to consider, evaluate and potentially implement … Continue Reading

US economic sanctions also affect non-US companies

By Stephen McNabb (US), Paul Sumilas (US), Kim Caine (US) and Kathleen Scott (US) on December 10, 2018 Posted in Enforcement, General, Regulation and compliance, United States

Over the last few months, US economic sanctions have taken the front pages as the Trump Administration has reinstated certain sanctions aimed at Iran following the United States withdrawal from the Joint Comprehensive Plan of Action (“JCPOA”). While the so-called “snapback” reinstated sanctions provisions increase the risk for non-US companies, recent enforcement actions against non-US … Continue Reading

US Federal Banking Agencies issue Community Bank Leverage Ratio proposal

By Mike Keeley (US), Justin Long (US), Kathleen Scott (US) and Richard Potomac (US) on November 29, 2018 Posted in Banking, Capital adequacy, General, Regulation and compliance, United States

On November 21, 2018, the Office of the Comptroller of the Currency (the “OCC”), the Board of Governors of the Federal Reserve System (the “Board”), and the Federal Deposit Insurance Corporation (the “FDIC”) (collectively, the “Federal Banking Agencies” or the “Agencies”) jointly issued a notice of proposed rulemaking (the “NPR” or the “Proposal”) that would … Continue Reading

SEC issues statement on digital asset securities issuance, investment and trading

By Andrew Lom (US) and Rachael Browndorf (US) on November 21, 2018 Posted in Enforcement, Fintech, General, Regulation and compliance, Securities, United States

On November 16, 2018, the Securities and Exchange Commission (“SEC”) issued a statement on the application of federal securities laws to the issuance and trading of, and investment in, digital asset securities. While the statement encourages technological innovations that benefit investors and capital markets, it emphasizes that market participants must still adhere to federal securities … Continue Reading

CFTC adopts $8 billion threshold for swap dealer de minimis exception

By Lillian A. Cardona (US) on November 20, 2018 Posted in Commodities & Derivatives, General, Regulation and compliance, United States

On November 13, 2018, the CFTC published its Final Rule (Final Rule) setting its de minimis exception threshold to swap dealer registration and regulation requirements at an aggregate gross notional amount (“AGNA”) threshold of $8 billion in swap dealing activity. Under the de minimis exception as originally adopted, a person would not be deemed … Continue Reading

SEC announces first enforcement action against EtherDelta for operating an unregistered exchange for ERC20 digital tokens

By Kevin Harnisch (US), Andrew Lom (US), Rachael Browndorf (US), Christopher Cash (US) and Lillian A. Cardona (US) on November 19, 2018 Posted in Enforcement, Fintech, General, Regulation and compliance, United States

On November 8, 2018, the Securities and Exchange Commission (“SEC”) announced that it settled charges against Zachary Coburn, founder of EtherDelta, a digital token trading platform, for operating an unregistered national securities exchange. This is the SEC’s first enforcement action based on findings that a digital token trading platform operated as an unregistered national securities … Continue Reading

Iranian sanctions re-imposed and in full effect

By Kathleen Scott (US) on November 14, 2018 Posted in Banking, Enforcement, General, Money laundering, Regulation and compliance, United States

As of November 5, 2018, all of the US sanctions that were lifted or waived in connection with the Joint Comprehensive Plan of Action (JCPOA), the 2016 nuclear deal among the United States and its allies and Iran, have been re-imposed and are in full effect. As a result, non-US companies can be subject to … Continue Reading

What auditors need to know about the blockchain

By Kathleen Scott (US) on November 14, 2018 Posted in Fintech, General, United States

Yet another U.S. regulator has weighed in on the use of the blockchain. The Public Company Accounting Oversight Board (PCAOB) is a nonprofit corporation established by the U.S. Congress to oversee the audits of public companies in order to protect investors and the public interest by promoting informative, accurate and independent audit reports. The PCAOB … Continue Reading

Alibaba successful in temporarily shutting down third party using its name to sell “AlibabaCoin”

By Susan Ross (US) and Kathleen Scott (US) on November 6, 2018 Posted in Fintech, General, United States

On October 22, 2018, a U.S. federal trial court in Manhattan granted web services conglomerate Alibaba Group Holding Limited’s request for a preliminary injunction against several defendants that were offering cryptocurrency for sale, under the name “AlibabaCoin.” (Alibaba Group Holding Ltd. v. Alibabacoin Foundation, No. 18-CV-2897 (JPO) (S.D.N.Y. Oct. 22, 2018) Although neither Alibaba nor … Continue Reading