Financial Services Spotlight

January 2017 Developments

Posted by Roy Andersen on Jan 31, 2017 12:00:00 PM


A Donald Trump effect was apparent with the January 26th Federal Register-- it was one of the shortest Federal Register volumes seen in some time—even the pre-holiday Registers sport more pages.  The CFPB published a rule requiring incentive programs for sales of consumer products be subject to extraordinary controls adapted to such sales campaigns.  These would be in addition to and perhaps duplicative of the requirements of primary federal regulators. 

Incentive Sales Programs

On January 18, 2017, the CFPB published a compliance bulletin regarding incentive programs and how to prevent consumer harm.  This Bulletin compiles guidance the CFPB has already given in other contexts and highlights examples from the CFPB's supervisory and enforcement experience in which incentives contributed to substantial consumer harm. It also describes compliance management steps that supervised entities should take to mitigate risks posed by incentives. Such programs may create incentives for employees or service providers to pursue overly aggressive marketing, sales, servicing, or collections tactics. The CFPB expects supervised entities that choose to utilize incentives to institute effective controls for the risks these programs may pose to consumers, including oversight of both employees and service providers involved in these programs.  The Bureau's supervisory experience has found that an effective supervisory program commonly has the following components:

 Board of directors and management oversight;

 Compliance program, which includes:

     Policies and procedures;


     Monitoring and corrective action;

     Consumer complaint management program; and

     Independent compliance audit.

This Compliance Bulletin is a non-binding general statement of policy articulating considerations relevant to the Bureau's exercise of its supervisory and enforcement authority.  See the Consumer Bulletin at:

Sudan Sanctions

On January 17, 2017, OFAC published its final rule lifting all the sanctions that apply to Sudan and unblocking any property of the Government of Sudan.  OFAC is issuing this general license in connection with ongoing U.S.-Sudan bilateral engagement and in response to positive developments in the country over the past six months related to bilateral cooperation, the ending of internal hostilities, regional cooperation, and improvements with other provisions of 31 CFR chapter V including those parts related to terrorism, the proliferation of weapons of mass destruction, or narcotics trafficking, or other applicable provisions of law, including any requirements of agencies other than OFAC.  See the final rule at:

Recordkeeping at Commodities Firms

On January 19, 2017, the CFPB published a proposed rule to amend the recordkeeping requirements.  The proposed amendments would permit record keepers use advances in information technology as a means to reduce costs associated with the retention and production of paper and electronic records and to decrease the risks of cyber security threats, while maintaining necessary safeguards to ensure the integrity, availability, and accessibility of records required to be kept.  Most information is produced and stored electronically on complex systems tailored to the needs of a given record keeper. These advances in information technology may have rendered certain technical elements of the CFTC’s rules obsolete or outdated.

See the proposed rule at:

Holding Company Liquidity Loss Absorbing Capacity and Debt Levels

On January 24, 2017, the Fed published its final rule regarding holding companies of GSIBs to maintain outstanding a minimum amount of loss-absorbing instruments, including a minimum amount of unsecured long-term debt. In addition, the final rule prescribes certain additional buffers, the breach of which would result in limitations on the capital distributions and discretionary bonus payments of a covered BHC. The final rule applies similar requirements to the top-tier U.S. intermediate holding company of a global systemically important foreign banking organization with $50 billion or more in U.S. non-branch assets.  In October 2015, the Board invited public comment on a notice of proposed rulemaking (proposal) to require the largest domestic and foreign banks operating in the United States to maintain a minimum amount of total loss-absorbing capacity (TLAC), consisting of a minimum amount of long-term debt (LTD) and tier 1 capital.  The TLAC and LTD requirements in the proposal had two overall objectives: Improving the resiliency of these companies and improving their resolvability in the event of their failure or material financial distress.  See the final rule at:


Swap Data Access Rules

On January 25, 2017, the CFTC published its proposed rule regarding amendments to the Commission's regulations relating to access to swap data held by Swap Data Repositories. The proposed amendments would implement pertinent provisions of the certain legislation and make associated changes to the Commission's regulations governing the grant of access to swap data to certain foreign and domestic authorities.  One of the sticking points was foreign privacy law limiting the ability of foreign regulators to indemnify Swap Data Repositories.  Because the indemnity requirement was removed, the proposed rule could be adopted. it is critical for regulators to be able to share information, subject to appropriate confidentiality and other protections. The rule will make it easier for other regulators, both domestic and foreign, to gain access to swap data repository (SDR) swap data. See the proposal at:



Topics: OFAC, CFPB, CFTC, Sudan Sanctions, Incentive Sales Programs, Loss Absorbing Capacity

About the Spotlight

The Financial Services Spotlight examines the regulatory and technology developments impacting banks, asset managers and other financial services providers—where challenges meet opportunities.


Meet the Authors

Roy C. Andersen, of counsel in Sullivan & Worcester's New York office, is a member of the Corporate Department. Mr. Andersen focuses on bank regulatory and compliance matters, including international banks and their branches and agencies in New York.

Joel Telpner, partner in the firm's New York office, is a seasoned advisor, strategist and problem solver. Mr. Telpner brings more than 30 years of legal experience in a career that includes time as an AmLaw 100 partner, the former U.S. general counsel of a global financial institution, and a venture capitalist. He is recognized for his ability to deftly manage complex financial transactions, especially those involving sophisticated structured finance and derivatives matters and has an extensive and unique combination of transactional and regulatory experience.

Subscribe to the Spotlight

Recent Posts

Posts by Topic

see all