U.S. Treasury Department Issues White Paper on Online Marketplace Lending Industry

On May 10, 2016, the Department of the Treasury issued a white paper on online marketplace lending that maps the current market landscape, reviews industry insights and offers policy proposals for the road ahead.  Based on approximately 100 responses from online marketplace lenders, financial institutions, investors and other key industry figures, the Treasury, in consultation with the CFPB, FDIC, Federal Reserve Board, FTC, OCC, SBA and SEC, made several notable recommendations and observations.

The white paper explores policies that would expand regulatory oversight, including standardized representations and warranties in securitizations, pricing methodology standards, the implementation of a registry for tracking data on transactions and the reporting of loan-level performance, among others.  In addition, the Treasury mentions potential cybersecurity threats, anti-money laundering, the uneven protections and regulations in place for small business borrowers and the growth of the mortgage and auto loan markets as some of the emerging trends to monitor.  The Treasury is also considering the role of federal agencies in regulating these areas, including the formation of an interagency working group for online market place lending.  Press ReleaseWhite Paper.

U.S. Treasury Announces Customer Due Diligence Final Rule for Financial Institutions

On May 5, 2016, the U.S. Department of the Treasury announced a Customer Due Diligence (CDD) Final Rule that requires financial institutions to conduct certain diligence to verify personal information of beneficial owners of legal entity customers.  The final rule under the Bank Secrecy Act was published in the Federal Register on May 11, 2016 and becomes effective July 11, 2016.  Press ReleaseFinal Rule.

Banking Liaison Panel Publish Annual Report

On August 5, the Treasury published the annual report of its Banking Liaison Panel for 2012-13.  The Panel advises the Treasury about the effect of the special resolution regime (SRR) (established under the Banking Act 2009) on banks, the financial markets and those doing business with banks.

The report looks at the work that the panel will be doing for the remainder of 2013 and 2014, which concerns non-bank resolution regimes and EU legislative proposals on the Recovery and Resolution Directive (RDD) and the euro banking union.  The Panel also expects to review the findings of the second phase of the statutory review of the special administrative regime (SAR) for investment banks.  Annual Report.

Extension of FATCA Withholding Start Date and Grandfathering End Date

On July 12, Treasury and the IRS announced that they intend to amend final Treasury regulations implementing the U.S. Foreign Account Tax Compliance Act (FATCA) to provide for a six-month extension to the start of FATCA withholding and the end of the FATCA grandfathering period, from January 1, 2014 (under current regulations) to July 1, 2014, in order to allow for a more orderly implementation of FATCA.  In addition, the timelines for implementing certain FATCA account due diligence requirements and FATCA registration requirements are to be extended, and Treasury and the IRS will provide a list of jurisdictions that will be treated as having in effect an intergovernmental agreement (IGA) with the U.S.  FATCA withholding is scheduled to apply to payments of U.S. source dividends, interest and other fixed payments beginning July 1, 2014, and to payments from the disposition of property producing such payments beginning January 1, 2017.  IRS Notice 2013-43.

Extension of Loan Modification Programs

On May 30, Treasury and HUD announced an extension of the Making Home Affordable Modification Program (HAMP) through December 31, 2015.  In addition, on May 30, the FHFA announced that it has directed Fannie Mae and Freddie Mac to extend the HAMP modification program and the streamlined modification initiative through year-end 2015.  HAMP eligibility was originally scheduled to sunset in December 2013, and the streamlined modification initiative was originally expected to end in August 2015.  Treasury ReleaseFHFA Release.

Treasury and IRS FATCA Regulations

On January 17, Treasury and the IRS issued comprehensive final regulations implementing the information reporting and withholding tax provisions commonly known as the Foreign Account Tax Compliance Act (FATCA).  These regulations finalize the step-by-step process for U.S. account identification, information reporting, and withholding requirements for foreign financial institutions (FFIs), other foreign entities, and U.S. withholding agents.  Treasury Release.  FATCA Information.

Fed, Treasury Proposed Amendments to Bank Secrecy Act Definitions

On November 29, the Fed and the Financial Crimes Enforcement Network, a bureau of the Treasury, proposed amended definitions of “funds transfer” and “transmittal of funds” under the regulations implementing the Bank Secrecy Act.  The proposed amendments maintain the current scope of funds transfers and transmittals subject to the Bank Secrecy Act following amendments to the Electronic Fund Transfer Act made pursuant to the Dodd-Frank Act.  Comments must be submitted no later than January 25, 2013. Fed Release.   Fed Proposed Rule.