foreign banking organizations

On January 1, 2021, the United States Congress enacted the Anti-Money Laundering Act of 2020 (the “AMLA”), as part of the National Defense Authorization Act (the “Act”).  The AMLA includes extensive and fundamental reforms to anti-money laundering (“AML”) laws in the United States, including the Bank Secrecy Act (“BSA”).

In a previous client alert,

On March 6, 2019, the Federal Reserve issued a final rule to exempt from the qualitative component of the Comprehensive Capital Analysis and Review (“CCAR”) exercise large firms that have participated in CCAR for four consecutive years and have passed the final year’s qualitative component without objection.  The final rule serves to provide an immediate exemption for all domestic bank holding companies currently subject to CCAR, and to phase out the qualitative objection for U.S. intermediate holding companies of foreign banks (“IHCs”).

Continue Reading Federal Reserve Eliminates CCAR’s Qualitative Objection for Most Firms

On December 7, 2017, the Federal Reserve announced that it will eliminate the use of the Strength of Support Assessment (or “SOSA” rating) as a supervisory tool.  The SOSA rating measures the extent to which a foreign banking organization (“FBO”) is in a position to provide support to its U.S. branches, agencies, and subsidiary banks, by assessing internal and external factors such as home country risk.  The Federal Reserve currently uses the SOSA rating solely to calculate an FBO’s net debit cap for purposes of daylight overdraft capacity at a Federal Reserve Bank and to determine an FBO’s eligibility for discount window loans.  Accordingly, on December 11, 2017, the Federal Reserve issued a proposal to amend its Payments System Risk Policy to eliminate reliance on an FBO’s SOSA rating to calculating its net debit cap.  The proposal would also eliminate reliance on an FBO’s status as a financial holding company (“FHC”) to determine its net debit cap.

Continue Reading Federal Reserve Eliminates SOSA Rating and Proposes New Standards for FBO Daylight Overdraft Capacity