Page 8 - April 24, 2025 Bulletin

aRTiCLeS

Executive Order Phases Out U.S. SEC Ends Court Defense of Climate
Treasury Paper Checks Disclosure Rules

Under a new executive order from President Trump, effective The Securities and Exchange Commission has voted to end its
Sept. 30, the U.S. Treasury will no longer issue paper checks for defense to several court challenges of its climate disclosure rule.
disbursements, including tax refunds, vendor payments, benefit The Biden-era rule requires companies to disclose material
payments and intergovernmental transfers.
climate-related risks, activities to mitigate or adapt to such risks,
The order also covers the use of paper checks to pay the federal and information about the board’s and management’s oversight
government “as soon as practicable, and to the extent permitted of risks and estimates of the financial effects of severe weather
by law.” In addition, it directs the Treasury Department to events. Large companies also would be required to disclose
develop a comprehensive public awareness campaign of the audited measurements of certain greenhouse gas emissions. Last
change, “including guidance on accessing and setting up digital year, the SEC paused enforcement of the rule while federal courts
payment options.” considered various legal challenges brought by states, businesses
and business groups.
The move was billed as a crackdown on waste, fraud and abuse,
as well as a step toward greater efficiency. According to the order, In a statement after its vote, SEC Acting Chairman Mark T.
“Treasury checks are 16 times more likely to be reported lost or Uyeda said the goal “is to cease the commission’s involvement
stolen, returned undeliverable, or altered than an electronic funds in the defense of the costly and unnecessarily intrusive climate
transfer.” The White House also noted the rise in check fraud change disclosure rules.”
and added that maintaining the infrastructure for paper check The Trump administration has pulled back on several climate
processing cost $657 million in 2024.
initiatives in recent months, with the Federal Reserve and Office
The order directed the treasury secretary to make exceptions “for people of the Comptroller of the Currency pulling out of international
without banking or electronic payment access, certain emergency efforts by financial institutions and regulators to address the issue.
payments, certain law enforcement activities, and other special cases
qualifying for an exception under the order or other existing law.” CFPB Will Not Enforce Small-Dollar

Read more: https://www.whitehouse.gov/presidential- Rule
actions/2025/03/modernizing-payments-to-and-from-americas-
bank-account/ The CFPB has announced that “it will not prioritize enforcement
or supervision actions” with respect to its 2017 small-dollar
FS-ISAC Issues Framework for lending rule, which was to take effect March 30. The CFPB
Increasing Fraud, Cybersecurity further advised that it is “contemplating issuing a notice of
proposed rulemaking to narrow the scope of the rule.”
Team Collaboration When issued in 2017, the rule included prescriptive underwriting

The Financial Services Information Sharing and Analysis Center provisions and payment provisions, but it now includes only
has released a report on how financial institutions can strengthen the payment provisions after the CFPB rescinded the rule’s
collaboration between their cybersecurity, fraud, financial crime underwriting provisions in 2020. The payment provisions
and anti-money laundering teams. prohibit lenders, including banks, from making a new attempt
to withdraw funds from an account after two consecutive
The document – “Leveling Up: A Cyber Fraud Prevention failed attempts without consumer consent. Significantly, those
Framework for Financial Services” – breaks down the lifecycle of provisions exempt attempted transfers by institutions that hold
a cyber-fraud attack into five phases so teams have “a common the borrower’s account and do not charge insufficient funds or
language” to share information. It also provides recommendations overdraft fees for the attempted withdrawal.
on how to effectively share fraud intel with peer firms to
strengthen the defenses of the entire financial sector. The rule also includes a complete exemption for banks and other
depository institutions that made 2,500 or fewer small-dollar
Organizations can leverage the framework’s fraud response loans in each of the current and previous years and for which
protocol to identify vulnerabilities earlier in the attack lifecycle, these loans account for no more than 10% of revenues. ABA
enhancing threat visibility and strengthening fraud controls, advocated for this provision to protect banks’ flexibility to serve
according to FS-ISAC. their customers’ small-dollar credit needs.

Read more: https://www.fsisac.com/knowledge/cyber-fraud- Relatedly, on March 7, the trade association representing payday
prevention-framework

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