Wine & Spirits Supply Chain
Stay up to date with recently issued, and previous regulatory alerts that may impact US businesses.
In March, the Biden White House released its new Executive Order laying out the U.S. Government’s first-ever policy framework for US regulation of digital assets. Still in the early stages, the regime to govern cryptocurrencies and other distributed-ledger assets are expected to be carried out by a variety of enforcement and regulatory agencies, coordinated by the White House, with the first new regulations likely coming as soon as early 2023. The stated goals of these rules will be to “Protect Consumers, Financial Stability, National Security, and Address Climate Risks.”
In summary, the US Government is intent on making US-based digital assets attractive to global markets and maintaining financial primacy by setting guardrails against fraud, prudential risk, and other perceived harms.
To date, digital assets, including cryptocurrencies have gone largely unregulated at the national level in the US but this is about to change dramatically. Under the recent Executive Order, by the end of the year, the federal government will complete a series of coordination and study efforts resulting in the assignment of standard-setting and enforcement roles (with far-reaching compliance implications for affected industries), legislative proposals to shore up agency’s enforcement authorities, and, addressing another policy realm, will engage in an initial decision on whether the U.S. will issue its own official central bank digital currency (CBDC).
These regulatory actions will move forward as crypto markets may be set to go through their most impactful year yet. Nearly all of America’s major financial institutions are now participating in, or considering entering, the markets for digital currencies. [1] Meanwhile, the fundamental shift in cryptocurrencies’ premier infrastructure is coming in the “merge” of the Ethereum network, expected later this year.
These crosscurrents will require financial institutions and asset managers to be extremely vigilant of prudential and structural risks while being open to innovative growth strategies. Furthermore, amid this constantly changing environment, institutions must re-assess operational risks from a cyber breach, fraud, corruption, and compliance with federal registration and state licensing requirements.
Sia Partners has proven experience and a detailed toolkit that can be tailored to your company’s needs:
1. FTI Consulting Crypto Report, Jan. 2022.
In response to the Russian Federation ("Russia") invasion of Ukraine, on February 21st and 23rd President Joseph R. Biden Jr. ordered the implementation of a number of sanctions-related measures targeting Russian banks, oligarchs, sovereign debt and separatist regions within Ukraine. The major economic sanctions include:
Financial institutions evaluate the potential impact of these new sanctions on their operations and dealings and carefully consider their options in light of these new restrictions. In connection with this, financial institutions should:
Sia Partners has proven experience and expertise with sanctions. Among other things, we can:
On November 8, 2021, the Financial Crimes Enforcement Network (“FinCEN”) issued an updated Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments (“Updated Advisory”) in response to an increase in ransomware attacks against critical infrastructure. It replaces an earlier advisory issued by FinCEN on October 21, 2020.
The Updated Advisory identifies new trends, typologies and indicators of ransomware payments, including the increased use of anonymity-enhanced cryptocurrencies, and associated money laundering activities. It also highlights reporting and notification requirements for ransom payments.
The Updated Advisory is the latest in a series of actions by federal agencies that are designed to encourage better reporting of ransomware attacks. FinCEN and law enforcement consider suspicious transactions involving ransomware attacks to constitute “situations involving violations that require immediate attention.”
In order to identify and immediately report any suspicious transactions associated with ransomware attacks, all financial institutions should:
Ransomware is a growing concern for the financial sector due to the fundamental role financial institutions play in the movement of virtual currency for ransom payments.
Sia Partners offers clients a cross-functional team combining banking, compliance, risk, data science, crypto, and cybersecurity expertise to assist with identifying ransomware transactions in order to file SARs in a timely manner. To learn more how we can help, contact our experts.
Throughout 2021 the U.S. Securities and Exchange Commission (SEC) sent signals that a new enforcement focus is being aimed at U.S.-listed companies’ filings and public statements regarding their climate impacts and other Environmental, Social and Governance (ESG)-related activities.
This enforcement activity comes amid expectations that SEC will soon propose heightened requirements that companies include measures of their impact on greenhouse-gas production and other metrics related to climate change risk.
In 2021 the SEC announced it would apply increased scrutiny through the agency’s Division of Enforcement, on regulatory filings and other “material” statements by companies regarding ESG issues. In particular, in March 2021, the SEC formed a new Climate and ESG Task Force. This new team of investigators is bringing to bear investigative resources including “sophisticated data analysis” on the numbers embedded in listed companies’ official filings and direct communications to sophisticated investors, as well as statements aimed at the general public. The SEC has further warned that failure to report material climate-risk metrics is increasingly likely to prompt regulators to open an investigation and seek detailed company information.
Additionally, in the coming months, the SEC is expected to begin a year-long regulatory process to establish even broader standards for public companies’ climate disclosures, signaling more pervasive challenges for climate-risk data reporting.
This means that in the near term, all listed companies regardless of sector, should invest substantial resources in a robust program to derive and document credible climate-risk data. Importantly, climate-risk metrics should be standardized for comparison with those of industry peers as well as with organizations’ own results over time. This includes receiving raw data from Enterprise Resource Planning systems and other company data systems, that should be auditable.
Sia Partners has proven experience and a detailed toolkit that can be tailored to your company’s needs:
Since February 23, 2022, in response to the invasion of Ukraine. the U.S. government has implemented a series of unprecedented escalating Sanctions targeting Russia and to a lesser extent Belarus. These actions against Russia represent some of the most comprehensive Sanctions ever imposed by the U.S. The fast-paced rollout of the Sanctions coupled with their short wind-down period, necessitate U.S. entities to take prompt action to assess potential compliance and enforcement risk.
In assessing exposure and compliance risk, financial institutions should consider:
Sia Partners has proven experience and expertise with sanctions. Among other things, we can: