July 2024 Regulatory Update: Fintech Banking Risks, AML Reform, and Major Enforcement Actions

In this episode we review the major financial regulatory and supervisory developments that shaped July 2024 across banking regulators, consumer finance authorities, sanctions officials, and market supervisors. The discussion highlights a month marked by coordinated interagency actions addressing bank partnerships with fintech firms, modernization of anti money laundering programs, mortgage valuation standards, and significant enforcement activity across the banking sector.We begin with banking supervision and prudential policy developments. The episode examines a joint statement from federal banking agencies addressing risks tied to third party deposit arrangements and bank partnerships with fintech platforms. We also discuss a request for information seeking industry input on how banking products are distributed through third party relationships, reflecting increased regulatory focus on operational risk, consumer protection, and deposit stability within these models.The conversation then turns to regulatory initiatives affecting deposit structure and bank governance. Topics include a request for information aimed at improving regulatory data on uninsured deposits and a proposed rule revising brokered deposit regulations in response to lessons from recent bank failures. Additional developments include proposals affecting industrial bank oversight and changes to the regulatory framework governing acquisitions that trigger review under the Change in Bank Control Act.The episode also explores updates affecting mortgage lending and consumer finance oversight. These include new interagency guidance on reconsiderations of value in residential real estate appraisals, new quality control standards for automated valuation models used in mortgage lending, and supervisory findings highlighting consumer harm in areas such as loan servicing, deposit account management, and debt collection practices.Next we examine enforcement developments across the financial sector. The discussion covers a major enforcement action against a large bank tied to data governance and risk management deficiencies, enforcement actions related to anti money laundering program failures, and a consumer protection case involving deposit account practices and auto lending conduct.The episode also reviews rulemaking initiatives and policy proposals affecting consumer finance products. These include proposals aimed at reducing avoidable foreclosures, rulemaking addressing paycheck advance products often marketed as earned wage access, and guidance addressing whistleblower protections and confidentiality agreements under federal consumer protection law.Financial crime and sanctions developments form another major theme. The episode discusses a proposed rule designed to modernize anti money laundering and counter terrorism financing programs across financial institutions and sanctions actions targeting a cyber group involved in attacks on critical infrastructure and financial systems.Finally, the episode examines broader regulatory coordination across federal agencies, including updates related to Community Reinvestment Act geographic designations, mortgage lending data releases, and credit union regulatory activity.Together these developments illustrate how July 2024 brought coordinated regulatory attention to fintech partnerships, consumer finance practices, financial crime compliance, and supervisory governance across the U.S. financial system.