U.S Department of the Treasury

Treasury Releases Proposed Regulations for CFIUS Reforms under FIRMMA

 

On September 17, the U.S. Department of the Treasury proposed regulations to implement provisions of the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). Among other things, the proposed rules would provide the Committee on Foreign Investments in the United States (CFIUS) the ability to review non-controlling investments involving critical infrastructure and sensitive data, mandate certain filings by foreign government-affiliated investors, and codify certain exceptions and exclusions to CFIUS’s jurisdiction. A separate proposal would expand CFIUS’s jurisdiction to certain real estate transactions. Comments on each of the proposed rulemakings are due by October 17. Release. NPR (General). NPR (Real Estate).

Treasury and USTR Finalize Bilateral Agreement with the UK on Prudential Measures Regarding Insurance and Reinsurance

 

On December 11, the U.S. Department of the Treasury (“Treasury“) and the Office of the U.S. Trade Representative (“USTR“) announced their intent to sign the Bilateral Agreement between the United States of America and the United Kingdom on Prudential Measures Regarding Insurance and Reinsurance (“the U.S.-UK Covered Agreement“). Release.

Treasury Issues Proposed Rule on Charitable Contributions and State and Local Tax Credits

 

On August 23, 2018, the U.S. Department of the Treasury proposed a “rule on the federal income tax treatment of payments and property transfers under state and local tax credit programs [that] would prevent charitable contributions from being used to circumvent the new limitation on state and local tax deductions.” The proposed rule is not expected to affect the majority of taxpayers (because of the significant increase to the standard deduction under the new federal tax system). Press Release.

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.

Treasury Announces Key Regulations and Legislation to Counter Money Laundering and Corruption, Combat Tax Evasion

On May 5, 2016, the U.S. Department of the Treasury announced several actions to strengthen financial transparency.  Treasury announced a Customer Due Diligence (CDD) Final Rule, proposed Beneficial Ownership legislation and proposed regulations related to foreign-owned, single-member limited liability companies (LLCs).

CDD Final Rule

The CDD Final Rule adds a new requirement that financial institutions – including banks, brokers or dealers in securities, mutual funds, futures commission merchants, and introducing brokers in commodities – collect and verify the personal information of the beneficial owners who own, control, and profit from companies when those companies open accounts.  The Final Rule also amends existing Bank Secrecy Act (BSA) regulations to clarify and strengthen obligations of these entities.

Specifically, the rule contains three core requirements: (1) identifying and verifying the identity of the beneficial owners of companies opening accounts; (2) understanding the nature and purpose of customer relationships to develop customer risk profiles; and (3) conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.  With respect to the new requirement to obtain beneficial ownership information, financial institutions will have to identify and verify the identity of any individual who owns 25 percent or more of a legal entity, and an individual who controls the legal entity.  The final rule extends the proposed implementation period from one year to two years, expands the list of exemptions and makes use of a standardized beneficial ownership form optional as long as a financial institution collects the required information.

Beneficial Ownership Legislation

Treasury announced it is sending beneficial ownership legislation to Congress.  As part of the legislation, companies formed within the United States would be required to file beneficial ownership information with the Treasury Department, and face penalties for failure to comply.

Foreign-Owned Single-Member LLC Proposed Regulations

Treasury also announced proposed regulations to require foreign-owned “disregarded entities,” including foreign-owned single-member limited liability companies (LLCs), to obtain an employer identification number (EIN) with the IRS.

Treasury Issues Proposed Rules to Enhance Financial Transparency

On July 30, the Financial Crimes Enforcement Network of the U.S Department of the Treasury proposed rules under the Bank Secrecy Act to clarify and strengthen customer due diligence requirements for banks and other financial institutions (including brokers or dealers in securities, mutual funds, futures commission merchants and introducing brokers in commodities) in an effort to help prevent the use of anonymous companies to engage in or launder the proceeds of illegal activity in the U.S. financial sector.  Comments must be submitted within 60 days of the proposal’s publication in the Federal Register.  ReleaseNotice of Proposed Rulemaking.