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The Morning Risk Report: Treasury Wants Banks to Loop in Foreign Affiliates on Suspicious Transactions
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Good morning. The U.S. Treasury Department’s Financial Crimes Enforcement Network has proposed a new rule that would allow banks to share so-called suspicious activity reports more readily with foreign affiliates.
The proposed rule, which FinCEN announced Monday, would create a pilot program to allow banks to share SARs with foreign branches and affiliates, a bid to improve financial institutions’ ability to counter money laundering. The new program was mandated under the Anti-Money Laundering Act, which came into force in January 2021, Risk & Compliance Journal's Richard Vanderford reports.
[Continued below...]
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SARs are a key tool for institutions and government agencies to counter money laundering, though they remain subject to a host of rules meant to ensure their confidentiality.
Under previous guidance, banks with U.S. operations were allowed to share SARs only with their foreign head offices, controlling companies or affiliates that also filed SARs—foreign bank branches weren’t included on that green list.
Financial institutions have wanted to be able to share SARs, said Satish Kini, chair of the banking group at law firm Debevoise & Plimpton LLP.
“Institutions have been seeking to do this as a means of better managing their anti-money-laundering risks globally,” Mr. Kini said. “It will facilitate more ready risk management because folks [abroad] will know that a SAR has been filed in the United States.”
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From Risk & Compliance Journal
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Countries fail to counter corruption, antigraft group says. Many countries around the world have stalled in their efforts to improve their image regarding the amount of corruption within their borders, Transparency International said Tuesday.
The findings, part of an annual survey by the Berlin-based advocacy group, arrive amid a push by President Biden to make anticorruption a central pillar of his administration’s national security agenda.
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SEC Chairman Gary Gensler said, ‘The economic cost of cyberattacks is estimated to be at least in the billions, and possibly in the trillions, of dollars.’
PHOTO: JUSTIN T. GELLERSON FOR THE WALL STREET JOURNAL
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SEC looks to bolster market’s cyber defenses. The Securities and Exchange Commission is exploring ways to improve cybersecurity in capital markets, including by extending compliance obligations to companies that currently don’t have to meet them, Chairman Gary Gensler said Monday.
“The economic cost of cyberattacks is estimated to be at least in the billions, and possibly in the trillions, of dollars,” Mr. Gensler said in a virtual speech at the Northwestern Pritzker School of Law’s annual Securities Regulation Institute conference. “We at the SEC are working to improve the overall cybersecurity posture and resiliency of the financial sector.”
Mr. Gensler said the agency is considering extending a rule known as Regulation Systems Compliance and Integrity, or Reg SCI, to large financial firms it doesn’t currently cover, such as market makers and broker-dealers.
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Google deceived users about location tracking, states allege. Alphabet Inc.’s Google deceived consumers by recording their location even after users tried to turn off the company’s tracking on their smartphones and web browsers, according to lawsuits by Washington, D.C., and three other states.
Celebrity lawyer Michael Avenatti’s fraud trial kicks off. The third federal trial of Michael Avenatti began Monday, with prosecutors arguing the disgraced celebrity lawyer stole nearly $300,000 from his former client Stormy Daniels and Mr. Avenatti’s defense team portraying the case as a fee dispute.
Tesla countersues JPMorgan in fight over warrants. Tesla Inc. countersued JPMorgan Chase & Co. on Monday, intensifying a dispute over the payout for a bond sale the bank helped arrange in 2014.
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Investor Kyle Bass: PHOTO: BLOOMBERG NEWS
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Convictions at real-estate firm are a win for investor. A federal jury found four executives of Texas real-estate lender United Development Funding guilty of fraud. The verdict was a vindication for hedge-fund investor Kyle Bass, who made millions wagering against the company but faced a lawsuit and a government investigation.
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Stocks rocket back to finish higher after deep slump. Major U.S stock indexes closed higher on Monday after a steep drop in morning trading was followed by an extraordinary late-afternoon rebound.
By the end of the trading day, the Dow Jones Industrial Average had gained 99.13 points, or 0.3%, to close at 34364.50, after a deficit of more than 1,100 points at midday. The Dow has never before closed positive after being down at least 1,000 points.
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Pentagon places thousands of troops on standby in standoff with Russia. The U.S. military has ordered up to 8,500 U.S. troops on standby to potentially deploy to Eastern Europe amid heightened tensions over Russia’s presence near Ukraine’s border, in what amounts to an escalation toward U.S. military involvement, U.S. officials said.
The “prepare to deploy orders” were issued to troops stationed at several U.S.-based installations, the officials said, but the troops haven’t been technically activated to deploy to the region, Pentagon press secretary John Kirby said Monday. The troops and their families were being notified on Monday, he said.
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Omicron slows the global economy. Rising infection rates driven by the faster-spreading Omicron variant of Covid-19 led to a U.S. and global economic slowdown as the year got under way, surveys of purchasing managers said.
The pullback was particularly pronounced in the U.S., where both the services and manufacturing sectors reported slower growth, according to surveys by data firm IHS Markit conducted in the first weeks of January and released on Monday.
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Trian’s Nelson Peltz.
PHOTO: PATRICK T. FALLON/BLOOMBERG NEWS
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Unilever plans job cuts as activist investor takes stake. Unilever PLC plans to cut thousands of jobs as part of a reorganization aimed at speeding up its decision making, according to a person familiar with the matter, a move that comes as the Ben & Jerry’s owner looks for ways to jump-start growth. The Wall Street Journal and others reported over the weekend that Nelson Peltz’s Trian Fund Management LP had acquired a stake in Unilever.
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Mir Zaman, right, who owns a convenience store in Muzaffarabad, transfers mobile data to customer Sheikh Imran. PHOTO: SAIYNA BASHIR FOR THE WALL STREET JOURNAL
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Facebook promised poor countries free internet. People got charged anyway. Facebook says it’s helping millions of the world’s poorest people get online through apps and services that allow them to use internet data free. Internal company documents show that many of these people end up being charged in amounts that collectively add up to an estimated millions of dollars a month.
To attract new users, Facebook made deals with cellular carriers in countries including Pakistan, Indonesia and the Philippines to let low-income people use a limited version of Facebook and browse some other websites without data charges. Many of the users have inexpensive cellphone plans that cost just a few dollars a month, often prepaid, for phone service and a small amount of internet data.
Because of software problems at Facebook, which it has known about and failed to correct for months, people using the apps in free mode are getting unexpectedly charged by local cellular carriers for using data. In many cases they only discover this when their prepaid plans are drained of funds.
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