FinReg Round-Up Vol. 5, No. 3

As the end of the year approaches and the Biden administration winds down, a trio of government agencies has issued new guidance for the financial services industry: The Financial Crimes Enforcement Network (FinCEN) introduced a toolkit to help small businesses comply with its new beneficial ownership reporting requirements, the Office of the Comptroller of the Currency (OCC) updated its bank merger regulations and issued a related policy statement, and the Federal Deposit Insurance Corporation (FDIC) similarly issued a policy statement intended to clarify its process for reviewing and approving proposed bank mergers.

FinCEN Launches Beneficial Ownership Reporting Toolkit for Small Businesses

As part of its ongoing campaign to educate small-business owners about new beneficial ownership reporting requirements, FinCEN has introduced an outreach and education toolkit. The toolkit includes general background on the reporting requirements; templates for newsletters, websites and emails; and sample social media posts and images. The content was created to help private, public and nonprofit organizations disseminate and encourage compliance with the reporting guideline requirements. 

The Corporate Transparency Act (CTA), enacted in 2021, mandates that many small businesses inform the federal government about the individuals who own or control the companies. Under the reporting requirements, small businesses subject to the CTA that existed prior to 2024 have until Jan. 1, 2025, to file a report through FinCEN’s E-Filing System, while companies created or registered in 2024 must file within 90 days of receiving the creation or registration notice. A company must file only one report unless it needs to update or correct information.

At present, however, the need to comply with the beneficial ownership requirements is on hold, and the future of the CTA remains unclear. At least two federal lawsuits have been filed to halt implementation of the CTA, and a Texas court issued a nationwide injunction barring FinCEN from enforcing CTA and  staying the Jan. 1, 2025, due date for ownership filings.

OCC Updates Bank Merger Act Regulations and Issues a Policy Statement Clarifying Review Principles

The OCC approved a final rule updating its Bank Merger Act (BMA) regulations for business combinations involving national banks and federal savings associations, as well as adding a policy statement as an appendix to the regulations.

In the final rule, the OCC removes provisions that allowed for expedited review and the use of streamlined applications in connection with certain national bank and federal savings association business combinations. The accompanying statement is intended to clarify the principles the OCC uses in reviewing proposed bank merger transactions, including indicators for applications more likely to withstand scrutiny and receive expeditious approval as well as indicators for applications that raise supervisory or regulatory concerns that may need to be resolved before OCC approval. The policy statement also looks at the OCC’s consideration of statutory factors, including financial stability, managerial and financial resources, and convenience and needs of the community to be served.

FDIC Finalizes Policy Statement on Bank Merger Transactions and Evaluations

The FDIC also issued a final Statement of Policy intended to clarify how bank merger applications subject to FDIC approval are evaluated.

The final Statement of Policy sets out the principles that guide the FDIC’s consideration of the statutory factors under the BMA, including the merger’s competitive effects on loans as well as deposits, the resulting financial risk, and the ability of the combined institution to meet the needs of the community to be served. The FDIC will also apply increased scrutiny to any transactions resulting in an institution with $100 billion or more in total assets, and intends to hold public hearings for mergers resulting in an institution with more than $50 billion in total assets.

It’s unclear whether the OCC regulations and policy statement and the FDIC policy statement will remain in place under the incoming, unified Republican government. Policy statements are distinct from regulations and can be withdrawn or updated without a public notice and comment period. Furthermore, in accordance with the Congressional Review Act, regulations finalized this close to the start of a new Congress are subject to disapproval and withdrawal via a joint resolution of Congress.