Editor’s note — The California Department of Business Oversight (DBO) supervises, licenses and regulates a variety of financial institutions, including some real estate mortgage loan originators (MLOs) holding a Nationwide Multistate (or Mortgage) Listing System & Registry (NMLS) license. Alongside the California Department of Real Estate (DRE), the DBO shares the responsibility for overseeing MLOs depending on their license use.
The DBO publishes a monthly bulletin updating the public on the latest DBO news. Here’s a rundown of June’s most important DBO happenings.
Investment advice rules
The Securities and Exchange Commission (SEC), the federal agency responsible for protecting investors and regulating the securities market, has adopted a package of rulemakings and interpretations to increase transparency in retail investors’ relationships with investment advisers and broker-dealers. This package comes in the form of three actions:
- Regulation Best Interest, which requires broker-dealers to act in the best interest of a retail customer when making recommendations on securities;
- Form CRS Relationship Summary, which requires investment advisers and broker-dealers to provide retail investors with easy-to-understand information about the nature of their relationship; and
- two interpretations under the Investment Advisers Act of 1940, which clarify the fiduciary duty investment advisers owe their clients and the definition of an investment adviser under the Advisers Act.
This package aims to bring the legal requirements and disclosures for investment advisers and dealer-brokers in line with reasonable investor expectations without harming access to investment products and services.
Senior Safe Act
Three investor protection organizations, the SEC, North American Securities Administrators Association (NASAA) and the Financial Industry Regulatory Authority (FINRA), have released a fact sheet to raise awareness of the Senior Safe Act among broker-dealers, investment advisers and transfer agents.
The Senior Safe Act protects credit unions, depository institutions, investment advisers, broker-dealers, insurance companies, insurance agencies and transfer agents and their employees from liability in any civil or administrative proceeding when an employee reports the potential exploitation of a senior citizen to any of the aforementioned institutions. It aims to protect vulnerable investors and encourage firms to train employees to report financial exploitation.
The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department that combats financial crimes, has updated information on convertible virtual currencies (CVCs) like Bitcoin. Because of their growing popularity, money services businesses are encouraged to keep up to date on CVC regulation. FinCEN updated guidelines on applying their regulations to certain business models involving CVCs. Review FinCEN’s latest CVC guidelines here.
FinCEN has also issued an advisory to help financial institutions identify and report criminal activity involving CVCs. CVCs are increasingly used as alternatives to traditional payment methods, but because of their decentralized and anonymous natures, they have also gained traction as methods for money laundering, sanctions evasion and other unlawful financing purposes.
The advisory offers a comprehensive guide to spotting CVC abuse in your institution. Learn about the common red flags associated with this activity by reviewing the advisory on FinCEN’s website here.
New DBO website
Can’t find the DBO website? Don’t worry; it’s moved! The DBO launched a new and improved version of their website in June. The new website features a more user-friendly experience for licensees, consumers and the general public. You may need to update your bookmarks and links to reach the new site. Update your bookmarks and visit the new website at dbo.ca.gov.