December 9, 2021

2021 Calendar of Events (All events scheduled are live and have a recorded backup online) January25 Legislative Day/Emerging Leaders (Marriott – Charleston Town Center) FebruaryTBD Law of Deposits | Jackson Kelly (Sam Bowling Conference Center)23 & 24 IRA (Basic/Advanced) | Patrice Konarik (Stonewall Resort) March2 & 3 Branch Management School | Christie Drexler (Four Points by Sheraton Charleston)10 Emerging Leaders […]

2020 was a year of challenges in many aspects of life, business, and the economy. The start of 2021 brought a close to a tumultuous year and opened the door to a year of economic recovery and hope for more normal times. In March 2020, the banking industry was rocked when the Fed funds rate was cut to zero at an unprecedented speed, and Treasury yields tumbled to all-time lows. Additionally, the massive influx of stimulus-related deposits that flowed into the banking system greatly changed the size and structure of balance sheets. As a former bank examiner, I am taking a chapter from my previous regulatory career by looking at the banking industry as it relates to the Uniform Financial Institutions Rating System and its six components, known
as CAMELS.

In October, the Office of Foreign Assets Control (OFAC) published more targeted guidance for digital asset companies related to compliance with sanctions and best practices for mitigating risks. OFAC’s virtual currency guidance is directed at the entire industry, including “technology companies, exchangers, administrators, miners, wallet providers, and users.” It aims to “help the virtual currency industry prevent exploitation by sanctioned persons and other illicit actors,” according to the press release issued with the guidance. Essentially, the guidance emphasizes that anyone subject to U.S. sanctions laws and regulations must continue to abide by them when engaging with virtual currencies.

Financial technology, or fintech, refers to the broad set of financial innovations that apply new technologies to a financial service or product. Although potential competition from fintech companies initially raised concerns for the banking industry, as consumer and regulatory demand for better technology increased, banks quickly recognized and adapted to the changing market. Today, banks have implemented fintech solutions for both back-end processes (monitoring of account activity) and consumer-facing products (applications to apply for loans and pay bills online). Many Community Bank-Fintech Partnerships, are often through their core processing service providers, to provide modern platforms and services to their customers, obtain data about their customers, provide individualized products and services, and increase security.

In the Fall 2021 issue of West Virginia Banker magazine, we discussed three issues and opportunities facing banks in the post-pandemic world, one of which was the concept of Sustainable Banking. Also called Environmental, Social, and Governance (ESG) banking, this concept sometimes is labeled “banking with a purpose.” This oversight of banks focuses on banking in a way that considers the economic, social, and environmental effects of the bank’s products and services.

To understand how U.S. consumers view cybersecurity concerns, CSI – a leading provider of fintech, regtech and cybersecurity solutions – worked with The Harris Poll to survey more than 2,000 U.S. adults aged 18 and above.

Congress passed the Corporate Transparency Act (“CTA”) on Jan. 1, 2021, as part of the National Defense Authorization Act (“NDAA”) for fiscal year 2021. The purpose of CTA is to “better enable critical national security, intelligence, and law enforcement efforts to counter money laundering, the financing of terrorism, and other illicit activity” by creating a national registry of beneficial ownership information for “reporting companies.” CTA requires every limited liability company, corporation, or similar entity to report the beneficial ownership of an entity to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) unless the entity qualifies for one of the CTA’s 24 exemptions.

In June 2021, El Salvador’s Legislative Assembly voted to become the first country to accept Bitcoin as legal tender, with Cuba following suit in August 2021. While Bitcoin is widely regarded as the premier cryptocurrency, the rise in Bitcoin’s use over the past decade has paved the way for numerous other cryptocurrencies to come to fruition. The rise in the price of Bitcoin has helped legitimize cryptocurrency in the eyes of those who once thought it was nothing more than a financial fad.

“We’ve got your data and you need to pay up if you want it back.”
Unfortunately, that message is landing in CEO inboxes increasingly often, as ransomware attacks ramp up in the U.S.