Tag Archives: Patrick Fuller

Recent Government Bank Failure Reports Point to Increased Regulation and Examination Scrutiny

Editor’s Note: The NYU School of Law Program on Corporate Compliance and Enforcement (PCCE) is watching the recent banking crisis and failures of Silicon Valley Bank, Signature Bank, and First Republic Bank. In this post, lawyers at Cleary Gottlieb Steen & Hamilton LLP analyze the reports released by the Federal Reserve, the FDIC, and GAO, and the NYDFS.

by Derek Bush, Hugh C. Conroy, Jr., Patrick Fuller, Lauren E. Semrad, Julia A. Knight, Megan Lindgren, Rishi Kumar, and Abby Shamray

Photos of the authors

From top left to right: Derek Bush, Hugh C. Conroy, Jr., Patrick Fuller, and Lauren E. Semrad.
From bottom left to right: Julia A. Knight, Megan Lindgren, and Rishi Kumar.
(Photos courtesy of Cleary Gottlieb Steen & Hamilton LLP)

In late April, several banking regulators and the Government Accountability Office released reports analyzing factors that contributed to the failures of Silicon Valley Bank and Signature Bank, while at the same time suggesting areas of forthcoming supervisory focus and regulatory change.[1] The “FRB Report,” led by Federal Reserve Board (“FRB”) Vice Chair for Supervision Michael Barr, analyzes the supervision and failure of SVB Financial Group and Silicon Valley Bank (together, “SVB”).[2] The “FDIC Report,” led by the Federal Deposit Insurance Corporation’s (“FDIC”) Chief Risk Officer, and the “NYDFS Report,” led by the New York Department of Financial Services (“NYDFS”) Office of General Counsel, examine the supervision and failure of Signature Bank.[3] The “GAO Report” focuses on how the responsible bank regulatory agencies regulated and supervised SVB and Signature Bank, and how the agencies responded to the March 2023 turmoil.[4]

These reports offer a detailed look into the bank supervisory process and provide important insights into regulatory and supervisory changes that may be on the horizon. In this post, we summarize our expectations for potential regulatory and supervisory developments.

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AML Regulators Clarify Diligence Requirements for Politically Exposed Persons

by Katherine Mooney Carroll, Paul Marquardt, Patrick Fuller, and Graham Bannon

On August 21, the Financial Crimes Enforcement Network (FinCEN), together with the federal banking agencies[1] (the “Agencies”), released a statement (PDF: 220 KB) (“Statement”) to clarify banks’ customer due diligence (“CDD”) obligations for politically exposed persons (“PEPs”). The Statement affirms that (i) there is no regulatory requirement, and no supervisory expectation, for banks’ Bank Secrecy Act (BSA) / anti-money laundering (“AML”) programs to include “unique, additional due diligence steps” for customers who are PEPs and (ii) there is no regulatory requirement for banks to screen customers and their beneficial owners for PEPs. Instead, the Statement confirms that PEP customers should be subject to the same risk-based approach to CDD that applies to any other customer, but that PEP status (and screening for PEPs) may be a factor in developing a customer risk profile and assessing money laundering risk. It also reminds banks of the continued U.S. national security and law enforcement interest in detecting and combating public corruption and other criminality involving PEPs.

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