To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Financial Services industry over the past week:

Federal Activities

State Activities

Federal Activities:

• On June 5, the Securities and Exchange Commission (SEC) has commenced its biennial collection of Diversity Self-Assessment Submissions from regulated entities. Engaging in a self-assessment provides an opportunity for organizations to closely review their diversity and inclusion policies and practices for any strengths, opportunities, risks, and vulnerabilities. For more information, click here.
• On June 5, the SEC’s Division of Examinations published a risk alert to help broker-dealers prepare for an examination. The risk alert provides information on what the division staff may consider when selecting firms to examine and areas of focus for the examination. It also provides the types of information, including documents, that staff may initially request during an examination of a broker-dealer, and includes a sample initial information request list. For more information, click here.
• On June 5, the Consumer Financial Protection Bureau (CFPB) finalized a rule outlining the qualifications to become a recognized industry standard setting body, which can issue standards that companies can use to help them comply with the CFPB’s upcoming Personal Financial Data Rights Rule. The rule identifies the attributes that standard setting bodies must demonstrate in order to be recognized by the CFPB. The rule also includes a step-by-step guide for how standard setters can apply for recognition and how the CFPB will evaluate applications. For more information, click here.
• On June 4, the CFPB issued its Consumer Financial Protection Circular 2024-3 regarding unlawful and unenforceable contract terms and conditions. For more information, click here.
• On June 4, U.S. Under Secretary for Domestic Finance and Chair of the Financial Stability Board Standing Committee on Assessment of Vulnerabilities Nellie Liang, issued remarks at the Organisation for Economic Co-operation and Development (OECD) – FSB Roundtable on Artificial Intelligence in Finance. For more information, click here.
• On June 4, the Financial Industry Regulatory Authority’s (FINRA) Investor Education Foundation (FINRA Foundation) released a new report, “The machines are coming (with personal finance information). Do we trust them?”. The report and its findings are based on an experimental study involving more than 1,000 adults in the U.S. who were asked about the trustworthiness of hypothetical artificial intelligence (AI)-generated financial information versus information provided by a financial professional. The study focused on four topics: homeownership, projected stock and bond performance, portfolio allocation, and savings and debt information. For more information, click here.
• On June 3, the CFPB finalized a rule to establish a registry to detect and deter corporate offenders that have broken consumer laws and are subject to federal, state, or local government or court orders. The registry will also help the CFPB to identify repeat offenders and recidivism trends. The new registry is part of the CFPB’s ongoing focus on holding lawbreaking companies accountable and stopping corporate recidivism. For more information, click here.
• On June 3, the US Department of Justice announced the unsealing of an Indictment charging WEIDONG GUAN, aka “Bill Guan,” the chief financial officer of a multinational media company, Epoch Times, with participating in a transnational scheme to launder at least approximately $67 million of illegally obtained funds to benefit himself and the media company. For more information, click here.
• On May 31, the Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (OCC) jointly issued updated host state loan-to-deposit ratios that are used to evaluate compliance with the Riegle-Neal Interstate Banking and Branching Efficiency Act. Each respective host state loan-to-deposit ratio shows the ratio of total loans in a state to total deposits in the state for all banks that have that state as their home state. These ratios replace those issued in May 2023. For more information, click here.
• On May 31, Ginnie Mae issued an update to its digital Collateral Program Guide. For more information, click here.
• On May 30, two Estonian nationals, Sergei Potapenko and Ivan Turõgin, were extradited to the U.S. to face charges related to their involvement in a $575 million cryptocurrency Ponzi scheme. The duo allegedly induced victims to purchase contracts for a share of virtual currency mined by their supposed cryptocurrency mining service, HashFlare. However, HashFlare allegedly lacked the mining equipment it claimed to have and engaged in less than 1% of the Bitcoin mining activity it promised. Potapenko and Turõgin are also accused of raising at least $25 million for a company called Polybius, which never formed a bank or paid any dividends as promised. The defendants face charges of conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering. For more information, click here.
• On May 29, the Department of Veterans Affairs (VA) announced a targeted foreclosure moratorium on VA-guaranteed loans, which will give servicers time to implement the Veterans Affairs Servicing Purchase (VASP) program. Servicers can implement the VASP program beginning May 31, and the VA expects servicers to fully implement VASP no later than October 1. For more information, click here.
• On May 23, the Joint Chiefs of Global Tax Enforcement (J5) (consisting of tax agencies from Australia, the Netherlands, the UK, Canada, and the U.S.) issued an advisory to financial institutions, outlining five risk indicators associated with cryptocurrency assets that may signal illicit activities such as money laundering and tax evasion. The advisory, titled “Crypto Assets Risk Indicators,” was developed by a specialized team of cyber experts from each J5 member country. It emphasized the importance of detecting cryptocurrency asset layering, monitoring high-risk counterparties and geographic locations, and practicing know your customer (KYC) techniques. The J5 urged financial institutions to prioritize these risk indicators to enhance their ability to detect and report potential criminal activities. For more information, click here.

State Activities:

• On June 10, New Jersey introduced a groundbreaking bill aimed at redefining the regulatory framework for digital assets. The proposed legislation seeks to classify cryptocurrencies sold to institutional investors as securities, subjecting them to New Jersey’s Uniform Securities Law (1967). This move could set a precedent for other states. New Jersey, already a hub for cryptocurrency integration, especially in the online gaming sector, is now focusing on major market players like banks, hedge funds, and mutual funds. The bill empowers the New Jersey Bureau of Securities to adopt rules and regulations, ensuring compliance and promoting market stability. This development is part of a broader trend of state-level crypto regulation across the U.S. For more information, click here.
• On June 6, Texas Attorney General Ken Paxton launched an investigation into several car manufacturers, following reports that the manufacturers have been surreptitiously collecting mass data about drivers from their vehicles and then selling the data to third parties. Such third parties reportedly include insurance providers. Paxton is investigating violations of the state’s consumer protection laws and has ordered the manufacturers and purported third-party recipients of the data to produce certain documents related to their consumer disclosure practices pertaining to data collection. For more information, click here.
• On June 3, Colorado Governor Jared Polis signed HB 1328, related to continuation of the state’s regulation of money transmitters. The bill will also implement certain recommendations provided by the Connecticut Department of Regulatory Agencies in its 2023 sunset review. The bill extends the state’s regulation of money transmitters through September 1, 2030, which was originally set to expire in September of this year. Additionally, among other things, the bill increases the penalty for a licensee’s refusal to allow examination from $100 to $1000 for each day the refusal continues. The bill also increases the penalty for a licensee’s failure to submit required statement or report from $200 to $750 for each day of delinquency. For more information, click here.
• On June 3, New Jersey Attorney General Matthew J. Platkin, in connection with the state’s Division on Civil Rights, announced a proposed rule that describes and clarifies the prohibitions against disparate impact discrimination under the state’s Law Against Discrimination (LAD). The LAD prohibits both discriminatory conduct aimed at members of a protected class and policies, and procedures that negatively impact the members of a protected class. The proposed rule, if adopted, would provide a clear standard for disparate impact discrimination and set forth clear burdens of proof in disparate impact claims related to employment, housing, financial lending, contract, and place of public accommodation. The comment period for the proposed rule will end August 2. For more information, click here.
• On May 30, Connecticut Governor Ned Lamont signed SB123. The bill prohibits individuals from knowingly causing others to incur coerced debt and outlines civil liabilities for violators, including the coerced debt amount and potential attorney fees. The act requires claimants to suspend collection activities on debts identified as coerced by the debtor, pending a review. Debtors must provide specific information and documentation, including a description of the circumstances, an attested statement, and supporting documents like police reports or statements from qualified professionals. The claimant must conduct a good faith review within 10 days, suspending collection efforts for at least 60 days or until the review is complete. If the debt is determined to be coerced, the claimant must cease collection activities and notify credit rating agencies to delete negative information. If the debt is not deemed coerced, collection activities may resume after notifying the debtor. The act tolls the statute of limitations during the review period and limits the debtor to one request per debt. It does not require courts to refund payments already made on coerced debts and preserves other legal rights and defenses for both debtors and claimants. For more information, click here.
• On May 28, Lamont signed SB 283, amending the state’s Emergency Mortgage Assistance Program. Among other things, the bill will allow the state’s Housing Finance Authority (authority) to, upon approving a homeowner for mortgage assistance payment, issue such emergency payments monthly, as a lump sum of payment, or as a combination of both. The emergency assistance payments, however issued, are not to exceed five years’ worth of payments. The bill also increases the ratio (housing expense to aggregate family income) that limits the amount a homeowner must repay the authority on a monthly basis. The bill’s provisions will take effect October 1. For more information, click here.
• Georgia Governor Brian Kemp recently signed HB 1053, which prohibits governmental agencies from using central bank digital currency as payment. The bill also prohibits such agencies’ from participating in testing the use of such currency. The bill will take effect July 1. For more information, click here.