The Securities and Exchange Commission’s (SEC) Division of Examinations (the Staff) recently issued a risk alert reminding broker-dealers (firms) of their obligations under anti-money laundering (AML) rules and regulations, in particular requirements related to monitoring for and reporting of suspicious activity (AML
Continue Reading SEC Continues Focus on Broker-Dealer Anti-Money Laundering Compliance

A recent guilty conviction, after a jury trial, shows how complex and fraught the zigzag path to marijuana legalization is in the payments space. At a time when the federal government has signaled that criminal prosecutions in states that have legalized marijuana are a low to non-existent priority, this prosecution
Continue Reading Bank Fraud for Facilitating Marijuana Transactions

Financial services regulatory reform will continue to be active in 2021, with the Biden Administration focused on activity at the intersection of financial regulation and social policy.  As we observe the changing landscape, here is the Spring Forward Edition of our reference tool, which provides context and summarizes current and
Continue Reading Davis Polk Financial Services Regulatory Reform Tool—Spring Forward Edition

Digital dollars and central bank digital currencies (CBDC) are in the spotlight, and questions abound as to the potential design, availability and functionality of a CBDC in the United States. This deck tracks U.S. congressional legislative efforts that may lead to the creation of a U.S. digital dollar,
Continue Reading Digital Dollars / Central Bank Digital Currencies

The Federal Reserve has finalized its supervisory guidance on board of directors’ effectiveness (Board Effectiveness Guidance) more than three years after it was proposed.  The final Board Effectiveness Guidance is a key milestone in the Federal Reserve’s multi-year review of the practices of boards of directors, particularly at
Continue Reading Federal Reserve Finalizes Board Effectiveness Guidance

There is a broad consensus that the MMF reforms adopted in the wake of the 2008 crisis have not fully achieved their intended aims. A report released by the President’s Working Group on Financial Markets in December 2020 concluded that, notwithstanding reforms adopted by the SEC in 2010 and 2014,
Continue Reading SEC Requests Comments on Potential Money Market Fund Reforms

A recent SEC conditional no-action position (the “No-Action Statement”) has further opened the regulatory door to trading of digital asset securities (“DAS”), by allowing certain limited purpose DAS-only broker-dealers to maintain custody of these securities on behalf of customers.  Efforts to meet the SEC staff’s prior guidance that broker-dealers generally
Continue Reading SEC Takes No-Action Position on Custody of Digital Asset Securities by Special Purpose Broker-Dealers

Today, we released our deck “The Road Ahead for Financial Regulatory Reform in a Time of Democrats in Control.” This deck describes our view of the road ahead for financial regulatory reform under a Biden Presidency, and updates the deck we published shortly after the 2020 election to reflect the
Continue Reading The Road Ahead for Financial Regulatory Reform in a Time of Democrats in Control

The Anti-Money Laundering Act of 2020 implements the most extensive revisions to anti-money laundering law since the USA PATRIOT Act of 2001. The changes will affect both traditional financial institutions and FinTechs, including a new beneficial ownership provision that requires shell companies to submit ownership information to a non-public FinCEN
Continue Reading The Anti-Money Laundering Act of 2020 – Key Takeaways

On December 28, 2020 the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) released Frequently Asked Questions (FAQs) relating to Executive Order 13959, “Addressing the Threat from the Securities Investments that Finance Communist Chinese Military Companies,” issued on November 12, 2020 (E.O.
Continue Reading OFAC Belatedly Releases FAQs Regarding Ban on Investments by U.S. Persons in Companies Linked to the Chinese Military, Leaves Key Questions Unanswered