The False Claims Act in 2024: A Government Enforcement Update
This past year, the False Claims Act (FCA) continued to be a key tool for the Justice Department and whistleblowers to bring suits against companies, including those in the financial services sector. The Justice Department secured 558 FCA settlements and judgments and collected $2.9 billion in fiscal year 2024. Whistleblowers were responsible for 979 qui tam suits — a record number — and collected over $400 million for filing actions to expose fraud and false claims. With a constant focus on FCA enforcement, the risk to corporations of huge financial penalties under the FCA remains. Companies in the financial services sector must continue to take the necessary steps to prevent FCA violations and be particularly mindful of potential whistleblowers who stand to have significant paydays in the event of a successful FCA claim. To keep you apprised of the current enforcement trends and the status of the law, Bradley’s Government Enforcement & Investigations Practice Group is pleased to present the False Claims Act: 2024 Year in Review, our 13th annual review of significant FCA cases, developments, and trends.
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Regulation Round Up: January 2025
Welcome to the Regulation Round Up, a regular bulletin highlighting the latest developments in UK and EU financial services regulation.
Key developments in January 2025:
31 January
UK Listing Rules: The FCA published a consultation paper (CP25/2) on further changes to the public offers and admissions to trading regime and to the UK Listing Rules.
Cryptoassets: The European Securities and Markets Authority (“ESMA”) published a supervisory briefing on best practices relating to the authorisation of cryptoasset service providers under the Regulation on markets in cryptoassets ((EU) 2023/1114) (“MiCA”).
FCA Handbook: The Financial Conduct Authority (“FCA”) published Handbook Notice 126, which sets out changes to the FCA Handbook made by the FCA board on 30 January 2025.
Public Offer Platforms: The FCA published a consultation paper on further proposals for firms operating public offer platforms (CP25/3).
30 January
FCA Regulation Round-Up: The FCA published its regulation round-up for January 2025, which covers, among other things, the launch of “My FCA” in spring 2025 and changes to FCA data collection.
29 January
EU Competitiveness: The European Commission published a communication on a Competitiveness Compass for the EU (COM(2025) 30). Please refer to our dedicated article on this topic here.
EMIR 3: ESMA published a speech given by Klaus Löber, Chair of the ESMA CCP Supervisory Committee, that sets out ESMA’s approach to the mandates assigned to it by Regulation (EU) 2024/2987 (“EMIR 3”).
28 January
EMIR 3: The European Systemic Risk Board published its response to ESMA’s consultation paper on the conditions of the active account requirement under EMIR 3.
ESG: The FCA published its adaptation report, which provides an overview of the climate change adaptation challenges faced by financial services firms.
27 January
Artificial Intelligence: The Global Financial Innovation Network published a report setting out key insights on the use of consumer-facing AI in global financial services and the implications for global financial innovation.
DORA: The Joint Committee of the European Supervisory Authorities (“ESAs”) published the terms of reference for the EU-SCICF Forum established under the Regulation on digital operational resilience for the financial sector ((EU) 2022/2554) (“DORA”).
24 January
Cryptoassets: ESMA published an opinion on draft regulatory technical standards specifying certain requirements in relation to conflicts of interest for cryptoasset service providers under MiCA.
MiFIR: The European Commission adopted a Delegated Regulation (C(2025) 417 final) (here) supplementing the Markets in Financial Instruments Regulation (600/2014) (“MiFIR”) as regards OTC derivatives identifying reference data to be used for the purposes of the transparency requirements laid down in Articles 8a(2), 10 and 21.
ESG: The EU Platform on Sustainable Finance published a report providing advice to the European Commission on the development and assessment of corporate transition plans.
23 January
Financial Stability Board: The Financial Stability Board published its work programme for 2025.
20 January
Motor Finance: The FCA published its proposed summary grounds of intervention in support of its application under Rule 26 of the Supreme Court Rules 2009 to intervene in the Supreme Court motor finance appeals.
Motor Finance: The FCA published its response to a letter from the House of Lords Financial Services Regulation Committee relating to the Court of Appeal judgment on motor finance commissions.
Cryptoassets: ESMA published a statement on the provision of certain cryptoasset services in relation to asset-referenced tokens and electronic money tokens that are non-compliant under MiCA.
17 January
DORA: The ESAs published a joint report (JC 2024 108) on the feasibility of further centralisation of reporting of major ICT-related incidents by financial entities, as required by Article 21 of DORA.
Basel 3.1: The Prudential Regulation Authority published a press release announcing that, in consultation with HM Treasury, it delayed the UK implementation of the Basel 3.1 reforms to 1 January 2027.
16 January
Cryptoassets: The European Banking Authority and ESMA published a joint report (EBA/Rep/2025/01 / ESMA75-453128700-1391) on recent developments in cryptoassets under MiCA.
14 January
FMSB’s Workplan: The Financial Markets Standards Board (“FMSB”) published its workplan for 2025.
FSMA: The Financial Services and Markets Act 2000 (Designated Activities) (Supervision and Enforcement) Regulations 2025 (SI 2025/22) were published, together with an explanatory memorandum. The amendments allow the FCA to supervise, investigate and enforce the requirements of the designated activities regime.
Sanctions: HM Treasury and the Office of Financial Sanctions Implementation published a memorandum of understanding with the US Office of Foreign Assets Control.
13 January
BMR: The European Parliament published the provisionally agreed text (PE767.863v01-00) of the proposed Regulation amending the Benchmarks Regulation ((EU) 2016/1011) (“BMR”) as regards the scope of the rules for benchmarks, the use in the Union of benchmarks provided by an administrator located in a third country and certain reporting requirements (2023/0379(COD)).
10 January
Artificial Intelligence: The UK Government published its response to the House of Commons Science, Innovation and Technology Committee report on the governance of AI.
9 January
Collective Investment Schemes: The Financial Services and Markets Act 2000 (Collective Investment Schemes) (Amendment) Order 2025 (SI 2025/17) was published, together with an explanatory memorandum. The amendments clarify that arrangements for qualifying cryptoasset staking do not amount to a collective investment scheme.
8 January
EU Taxonomy: The EU Platform on Sustainable Finance published a draft report and a call for feedback on activities and technical screening criteria to be updated or included in the EU taxonomy. Please refer to our dedicated article on this topic here.
3 January
Consolidate Tape: ESMA published a press release launching the first selection for the consolidated tape provider for bonds.
Sulaiman Malik & Michael Singh contributed to this article.
Breaking: Treasury Secretary Bessent Heads Consumer Financial Protection Bureau, Immediately Orders Freeze of CFPB Activities
On Saturday, February 1, 2025, it was announced that President Donald Trump had removed Rohit Chopra as director of the Consumer Financial Protection Bureau (CFPB). In a statement from the CFPB on February 3, 2025, recently confirmed Treasury Secretary Scott Bessent is now the acting director for the CFPB.
Following the news of Bessent’s role at the CFPB, multiple sources have reported that Bessent has ordered CFPB staff to cease all rulemaking, litigation, enforcement, and communications. The halt of activities includes suspending effective dates for all final rules that have not taken effect and to not approve or issue proposed or final rules or guidance. CFPB lawyers were instructed to request continuations for active litigation matters, and staff are not to commence or settle any enforcement actions. The instructions to CFPB staff do not seem to address supervisory activities, so, presumably, the CFPB will continue exercising its supervision authority; however, without enforcement power, supervisory activities may nonetheless be paused as a result.
What Should Financial Institutions Expect?
While former-director Chopra’s exit has long been expected after the reelection of President Trump, tapping the Treasury Secretary to take the role, even if temporarily, and the immediate halt of CFPB activities has created unprecedented uncertainty for the CFPB and the financial services industry. It is unclear how long the halt to the CFPB activities may last or what the future of the CFPB holds.
However, it is important for financial institutions to continue to comply with all applicable laws and regulations and to remember that many requirements enforced by the CFPB may also be enforced by other governmental authorities. For example, the CFPB promulgated Regulation B to enforce the Equal Credit Opportunity Act (ECOA). However, supervised banks and credit unions still have compliance obligations under the ECOA, which will be enforced by their prudential regulator (i.e., the Office of the Comptroller of Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, or the National Credit Union Association). The Federal Trade Commission (FTC) is responsible for ECOA enforcement for most non-bank financial institutions including retailers, finance companies, and other creditors that are not exclusively supervised by another agency. Finally, the Department of Justice (DOJ) may bring suit under the ECOA where there is a pattern or practice of discrimination.
In addition to the ongoing compliance obligations noted above, we expect to see more action from state regulators in the financial services space. In recent years, state regulators have been active in both regulation and enforcement, particularly related to credit products, payments, and data brokers. However, we expect to see even more consumer protection action at the state level following the CFPB’s report for Strengthening State-Level Consumer Protections (“the Report”), which was issued just days before the new Trump administration took office. Notably, and in an unprecedented move by the CFPB, the Report contains specific language recommendations for CFPB-type consumer protections that state legislatures are encouraged to incorporate into state statutes.
We Need to Keep a Real Estate Purchase in Australia Confidential. Can This Be Done?
Ours is an age of identity fraud, data breaches, public registers, and political and media interest in the ownership of Australian real estate.
Take a moment to consider the real estate-related data that can be readily accessed through a land titles office and online property platforms or even purchased for a relatively modest sum.
While steps are being taken to put in place a framework for the creation of a register of the beneficial ownership of ASX-listed entities, Australia does not have a general register of information as to the beneficial ownership of land.
Unsurprisingly, there are many legitimate reasons why a buyer or seller of real estate in Australia may want to either keep a transaction, their identity or the key commercial terms private and confidential or to manage when this information becomes known.
These reasons could include the following:
A risk that the identity of the buyer may inflate the seller’s price expectations.
A risk that the identity of the buyer may produce an adverse reaction from neighbours.
A plan to acquire multiple parcels of land, in the same location, from different entities where confidentiality is an imperative.
A desire to avoid a person’s financial capacity being subject to media scrutiny.
A desire to not be included in the various Australian and global lists of wealthy individuals and families for reasons of privacy or personal security.
A past history between the buyer and the seller that could make the transaction more difficult to complete.
There is no silver bullet or simple solution that will guarantee anonymity, but there are steps that can be taken to minimise the information that makes its way into the public domain. The suggestions below will not guarantee anonymity, but if a level of confidentiality or anonymity is required, then the below list will give you the best chance of achieving that objective.
Make Your Expectations Clear
It cannot be assumed that all parties to a transaction and advisors have the same objectives or priorities in relation to confidentiality. Communicate and emphasise your requirements. Be specific and provide examples of what can and cannot be done.
Use Confidentiality Agreements
Confidentiality agreements at any early stage of discussions are an effective step to both securing confidentiality and setting expectations for the parties involved. To protect against unwanted disclosure, parties should clearly define the information or categories of information to be protected and the scope of each party’s nondisclosure obligations. Confidentiality obligations should be included in a terms sheet/heads of agreement (and expressed to be binding), even if the balance of the document is expressed to be nonbinding.
Edge Development Group Pty Ltd v Jack Road Investments Pty Ltd (as trustee for Jack Road Investments Unit Trust) [2019] VSCA 91 considered whether a signed letter constituted a binding contract for the sale of land. One of the relevant issues in this case was whether the confidentiality obligations outlined in a confidentiality deed poll were effective in requiring the parties to keep confidential information—specifically, the terms of the proposed land sale—until either a written agreement terminated the deed or the confidential information became generally available to the public. Ultimately, the court determined that the confidentiality obligations were part of ongoing negotiations, noting that the purpose of the confidentiality deed poll was to prevent a third-party bidder from learning the commercial terms of the transaction, particularly the price.
Engage a Real Estate Agent to Act for the Buyer
The use of a buyer’s agent partly removes the buyer from the transaction. It becomes unnecessary for the buyer to engage directly with the seller or the selling agent.
Appoint an Agent to Enter into the Contract
A person (the agent) can enter into an agreement to acquire real estate on behalf of another person (the principal). For example, the buyer could be “Mr Smith as agent.”
It is not essential that the agent discloses to the seller that the agent is acting on behalf of an undisclosed principal. However, caution is necessary to ensure that such arrangements do not contravene any warranties or representations made in the contract.
There should be a separate written agreement between the principal and their agent in relation to the appointment to act as agent and the scope of the rights and obligations of the principal and the agent. This document is also needed to make clear to the revenue and taxing authorities the capacity in which the agent (named buyer) was acting.
When adopting an agent/principal structure, the identity of the principal becomes known when the transfer of land form is created, because the principal is named on the transfer form. This means the seller will come to know the identity of the actual buyer before completion.
Duty advice must be taken when using an agency structure to ensure a “double duty” liability is not accidentally triggered.
The Use of a Bare Trustee
A bare trust is an arrangement where one person (the trustee) holds assets, such as real estate, on behalf of another person (the beneficiary). The trustee has no interest in the real estate and must follow the directions of the beneficiary in relation to the assets of the trust and must transfer the real estate to the beneficiary when requested to do so or sell the real estate to a third party if directed by the beneficiary to do so. Because the trustee has no beneficial interest in the real estate, there is usually no duty on the transfer of the real estate from the trustee to the beneficiary.
As explained by the High Court of Australia in CGU Insurance Limited v One.Tel Limited (in liq) [2010] HCA 26 at [36], the trustee of a bare trust has no active duties to perform other than those which exist by virtue of the office of the trustee, with the result that the property awaits transfer to the beneficiaries or awaits some other disposition at their discretion.1
A bare trust can be a useful mechanism for ensuring privacy and maintaining the anonymity of the beneficiary. If real estate is purchased by a trustee of a bare trust, the identity of the beneficiary is not disclosed and does not become public. The bare trustee contracts to buy the real estate and takes title to the real estate at settlement/completion.
A bare trust structure is one arrangement by which a professional trustee, lawyer, accountant, real estate agent or other advisor may acquire real estate and hold that real estate (usually on a temporary basis) on behalf of another person.
Use of an AFSL or Custodian
An Australian Financial Services Licensee (AFSL) or a custodian structure may also provide useful mechanisms in maintaining the confidentiality of a real estate buyer’s identity. An AFSL is a license granted by the Australian Securities and Investments Commission that is necessary for any business dealing in financial products, including managed investment schemes. An AFSL holder may operate a managed investment scheme, which can involve holding property and making investment decisions on behalf of investors.
A custodian structure, on the other hand, involves appointing a custodian to hold legal title to a property on behalf of a managed investment scheme or other entity. The custodian’s primary role is to safeguard and administer the property, ensuring it is held separately from the custodian’s own assets and appropriately accounted for. This structure can be particularly useful for preserving the confidentiality of the real estate buyer’s identity, as the custodian holds the legal title while the beneficial ownership remains with the investors or the managed investment scheme.2
The Name, Ownership or Structure of the Buyer
Simple matters such as the name of the buyer, the shareholder(s) and the directors can readily enable the buyer to be identified.
It can assist with the maintenance of confidentiality to use professional advisors as directors of an entity (either permanently or for a discrete period of time).
Off-Market Transactions
On-market transactions are often associated with a significant sales and marketing campaign. These campaigns generate interest in both the real estate itself and the identity of the buyer. In contrast, off-market transactions are conducted with greater discretion and do not result in the creation of the same volumes of information, data and market interest as on market campaigns.
Include a Confidentiality Obligation in the Transaction Documents
A confidentiality obligation in real estate transaction documents generally requires that certain information shared between the parties remain confidential and is not disclosed to third parties. Some of the pertinent questions which need to be addressed include the following:
Does the transaction document include an obligation to maintain confidentiality?
What is the extent of the confidentiality obligation?
Are the parties required to ensure that their respective advisors also maintain confidentiality?
Are media announcements permitted?
Does the wording of any media announcement need to be mutually agreed upon?
Can the selling agent retain details of the transaction to use in valuation reports and comparable transactions analysis?
It is not uncommon for high-value real estate transactions to be recorded using the “industry standard terms and conditions.” For example, in Western Australia the general conditions for the sale of land contain no obligations in relation to privacy, confidentiality or media statements.
It is important to check that the transaction document expressly address confidentiality.
Back-to-Back Transactions and Inadvertent Disclosures
A back-to-back transaction arises where there are two sale and purchase contracts concerning the same property in place at about the same time, as follows:
One contract between the seller and Buyer 1 at a purchase price of AU$X.
A second contract between Buyer 1 (as seller) and Buyer 2 at a purchase price greater than AU$X.
Usually, the following is true:
The seller is unaware of the second contract.
Buyer 1 will be anxious to ensure that the seller does not become aware of the second contract.
If the seller becomes aware of the second contract, the seller may refuse to complete the first contract or renegotiate the price.
Care must be taken to ensure that the following occurs:
There is strict compliance with laws, including those in relation to misleading and deceptive conduct.
There is strict compliance with duties to government agencies.
Parties are properly briefed as to the transaction and the necessity of confidentiality.
Ordinary actions as part of the settlement process do not inadvertently breach confidentiality (subject to the first two bullet points above).
Due diligence by Buyer 2 may need to be limited and is undertaken in a discrete manner (subject to the first two bullet points above).
Timing for Lodgement of the Transfer of Land Form at the Land Titles Office
There is no general legal requirement to lodge the transfer of land form at the relevant land tiles office immediately following settlement/completion. Of course, there is usually a contractual obligation to do so.
There are a number of sound legal reasons why a buyer should proceed to quickly lodge the transfer of land form at the relevant land tiles office.
But a buyer and seller can do the following:
Agree that the buyer has a longer period of time after settlement/completion within which to lodge the transfer of land form at the relevant land tiles office.
Take steps to protect the buyer’s position, given the purchase price has been paid, until the transfer of land form is lodged.
Until the transfer is registered, the change of ownership will not become public and the seller will still appear to be the owner of the property.
Name Redaction at the Land Titles Office
All Australia states operate a searchable public register of information in relation to real estate transactions and land ownership.
For example, in Western Australia the Transfer of Land Act 1893 does not provide for the redaction of parts of registered instruments for commercial or other considerations. However, Landgate (the Western Australian land registry) does offer name suppression in limited circumstances. Name suppression is generally available only to people who can prove they are at risk of harm should their details be easily discoverable. Such individuals may include high-profile figures or high net-worth individuals who face security threats.
In New South Wales (NSW), the Real Property Act 1900 similarly does not allow for the automatic suppression of names from the land title register for privacy or commercial reasons. However, name suppression may be granted in specific circumstances, and NSW Land Registry Services may suppress personal information from its public registers in response to a direction from the Office of the Registrar General. Such circumstances would be limited to situations where an individual faces significant risk to personal well-being or safety.
Understand the Personality of Your Counterparty
An agreement in relation to confidentiality is of limited value if the counterparty is unlikely to adhere to it. Knowledge of the counterparty can be a powerful tool to preserve your confidentiality.
If you buy from an unsuitable seller or sell to an unsuitable buyer, agreements as to confidentiality and privacy obligations may be of limited value. Due diligence of the counterparty is a vital aspect of all land transactions.
How are Disputes to be Resolved?
Australian court processes are relatively public. Preserving confidentiality in the event of a dispute over a land sale and purchase agreement is more likely if the parties are required to resolve any disputes by confidential arbitration or confidential mediation followed by confidential arbitration. But for confidential arbitration to apply, a suitable clause needs to be included in the sale and purchase agreement.
For example, in Inghams Enterprises Pty Ltd v Hannigan [2020] NSWCA 82, the dispute resolution clause in the deed required the parties to first attempt to resolve their dispute through confidential mediation. If mediation was abandoned, the matter would then be automatically referred to confidential arbitration. The arbitration was to take place at a location chosen to maintain confidentiality, and the decision of the arbitrator(s) was to be binding and specifically enforceable.
Anti-Avoidance
In Australia, buyers of real estate have a raft of obligations to state and federal government agencies. These obligations must be strictly complied with, and the matters identified in this article are not a way of avoiding these obligations. For example, foreign investment approvals must be obtained when required and foreign ownership disclosures must still be made.
Also, taxing and revenue authorities can share information.
The matters raised in this article are designed to assist with maintaining privacy and confidentiality to the extent possible. It is important to note however that the techniques outlined in this article may not always preserve confidentiality.
1 Heydon & Leeming, Jacobs’ Law of Trusts in Australia (2006 ed) [3.15].
2 Trust Company of Australia Ltd v Commissioner of State Revenue [2003] HCA 23 at [97]-[98]; Spangaro v Corporate Investment Australia Funds Management Ltd [2003] FCA 1025 at [1]; Wellington Capital Ltd v Australian Securities and Investments Commission [2014] HCA 43 at [14].
Even Passive Trusts?!? Maryland Extends Mortgage Lender Licensure Requirements to Holders of Residential Mortgage Loans
The Maryland Office of Financial Regulation (OFR) issued new guidance and emergency regulations extending mortgage lender licensure requirements to include acquirers and assignees of residential mortgage loans on Maryland properties. This guidance stems from the Maryland Appellate Court’s decision in Estate of Brown v. Ward (April 2024), extending the licensing obligations—previously understood to apply to brokers, originating lenders and servicers—to all parties who acquire or are assigned Maryland mortgage loans. The OFR explicitly states those parties include “mortgage trusts, including passive trusts,” unless expressly exempted.
The new guidance took effect immediately when released on January 10, 2025, but the OFR has indicated that enforcement actions will be suspended until April 10, 2025, allowing time for acquirers and assignees (and, yes, even passive trusts) to apply for the necessary licenses “without undue burden.”
Formal Guidance and Emergency Regulations
While the OFR had not previously interpreted Maryland’s Mortgage Lender Law to apply to assignees of mortgage loans, this new guidance, and the emergency regulations introduced to implement this guidance, “clarify” that licensing requirements now extend to assignees and mortgage trusts (yes, that’s right, even passive trusts). As background, the OFR indicates this clarification recognizes the reasoning in Estate of Brown, where the Court determined that an assignee of a HELOC subject to the open-end credit grantor (OPEC) provisions required a mortgage lender license based on (1) the inclusion of assignees in the definition of credit grantor under the OPEC scheme and (2) the common law principle “that an assignee inherits the rights and obligations of the original lender, including the duty to be licensed under Maryland law.”
The OFR’s guidance, however, goes further than the Estate of Brown decision. The OFR extends the Estate of Brown rationale to require a license under either the Maryland Mortgage Lender Law or the Installment Loan Law for any entity acquiring or assigned any mortgage loan.
Additionally, the emergency regulations make minor adjustments to accommodate the licensing of passive trusts:
Principal Officer Requirements: The regulations clarify that for passive trusts, the principal officer (who must have at least three years of experience in the mortgage business) can be the trustee, or if the trustee is an entity, an individual deemed a principal officer of the trustee under the criteria of the existing regulation.
Net Worth Requirements for Passive Trusts: Passive trusts can meet the net worth requirement by providing evidence that they hold or will hold sufficient assets to satisfy the requirement within 90 days of licensure, if the trust’s only assets are mortgage loans that it has not yet acquired.
Estate of Brown v. Ward
In Estate of Brown, the Court ruled that a consumer could use a defense against foreclosure because the assignee of the related HELOC was not licensed under the Maryland Credit Grantor provisions. The Court determined that the assignee—despite not originating the loan—was still required to be licensed to take advantage of the streamlined foreclosure process available to licensed entities.
The Court’s reasoning relied heavily on the statutory definition of “credit grantor” under Maryland law, which was amended to make a “correction” in 1990 to, among other things, include assignees in this definition. The court interpreted this to mean that the licensure requirement – which applies to a credit grantor that “makes” a loan – applies to assignees, in line with the principle that an assignee generally takes on the same rights and obligations as the assignor. This interpretation relied on the Court’s decision in Nationstar Mortgage LLC v. Kemp (2021), which concluded that assignees were subject to statutory usury and fee provisions applicable to “licensees” because assignees inherit the same responsibilities under the law as the original lender. The Estate of Brown decision extended this rationale to hold that because assignees succeed to the same rights and obligations as the assignor there was no indication that the legislature intended to exclude assignees from the licensure provisions.
Next Steps for Acquirers or Assignees of Maryland Mortgage Loans
For those involved in transactions involving Maryland mortgage loans (we’re looking at you sponsors securitizing Maryland mortgage loans), your immediate first step should be to carefully review your activities to determine whether licensure is required and if any exemptions apply. The importance of this first step was emphasized through the OFR’s January 31 bulletin which confirmed that “neither the [Estate of Brown] decision, nor OFR Guidance, overrides the[] statutory exemptions and exclusions” included in the licensure schemes (one of which exists for GSEs and trusts created by GSEs).
Key steps to consider include:
Identify the acquirer or assignee of the loan: Is it a statutory trust, limited liability company or corporation that is a separate legal entity or a common law trust that is not?
Check for applicable exemptions: While no express exemption for trusts is provided, ask if any other exemptions could apply to the trust in your structure.
Determine how the loan is being assigned: In the case of a trust, is the acquisition or assignment structured to transfer title to loan to the trust itself or to a trustee on behalf of a trust?
Assess how title is being recorded: In the case of a trust, is title being recorded in the name of the trust or in the name of the trustee (which is the more typical approach)?
Working through these steps will help determine if the acquirer or assignee is within the scope of the OFR’s guidance and emergency regulations and/or whether an exemption may apply.
With less than 50 business days between now and when the OFR may pursue enforcement actions on April 10, 2025, those who currently hold or may in the future acquire or be assigned Maryland mortgage loans and those who sponsor mortgage trusts or other entities to do so should strongly consider preparing for licensure. That may mean the following:
Register for the Nationwide Multistate Licensing System (NMLS): Maryland license applications must be submitted through the Nationwide Multistate Licensing System (NMLS), and an NMLS account is required.
Determine the “principal officer” to be identified on the license application: A principal officer with at least three years of mortgage lending experience must be designated.
Engage in discussions with your trustees if you have a mortgage trust and determine the “principal officer” may be the trustee or a principal officer of the trustee: Coordination with the trustees of mortgage trust (yes, including passive trusts) will be critical to navigating the licensure requirements and related application, especially if you determine that the principal officer will be an employee of the trustee.
Ensure compliance with net worth requirements: Passive trusts must be able to satisfy the statutory net worth requirement by providing evident of the assets that will be held within 90 days of licensure.
While we are actively participating in the preparation of a legislative proposal intended to further clarify Maryland’s mortgage lender licensure laws in a way that does not unduly impair the secondary trading and the securitization of Maryland mortgage loans, the legislative process can be unpredictable. Start now, rather than passively waiting for April 10, 2025 to arrive. As always, Hunton stands ready to help you navigate these and other regulatory challenges.
Federal Grant Funding: A Thaw in the Freeze?
Last week was a roller coaster ride for health care providers and other recipients of federal grant funding. Here’s a quick recap of everything that’s happened since our last e-alert:
OMB Memo Rescinded – On January 29, the OMB issued a rescission of the memorandum (M-25-13) that contained the agency directive to review federal grant programs and the corresponding funding pause (the “OMB Memo”). Providers and other outside observers could be forgiven for making the assumption that this would be the end of the story for the time being.
The Story Continues – Shortly after the OMB rescinded the OMB Memo, communication from the White House, including posts on X from the Press Secretary, indicated that the rescission applied to the OMB Memo only and that the White House still intended to freeze federal funds and enforce the Executive Orders.
Normalcy? Returns– Thursday evening into Friday morning, Medicaid agencies reported irregularities in accessing funding portals and drawing down federal funds. We have heard from providers that access to their 330 PHS grant funds has been restored. At the same time, we have reports that some agencies (such as the National Science Foundation) are still reviewing grant programs for compliance with the Trump Administration’s Executive Orders. For now, however, the status quo for grant funding seems largely to have been preserved.
The Legal Battle Continues – A coalition of Democratic Attorneys General filed a lawsuit in Rhode Island earlier this week to oppose the OMB Memo and associated funding freeze.1 The judge in that case held a hearing to determine whether the legal challenge was moot, given the rescission of the OMB Memo. Citing communication from the press secretary, Judge McConnell indicated a willingness to still enter some kind of protective order related to the actions underlying the OMB Memo, even if the OMB Memo itself had been rescinded. Late afternoon on January 31, Judge McConnell issued a temporary restraining order in this case, which will last through a hearing and decision on the states’ motion for a preliminary injunction.2 On the morning of February 3, the DOJ responded with a notice of compliance outlining the Administration’s response to the TRO.
What Now? – Whatever the final legal outcome from the Rhode Island case, it seems clear that the Executive Branch is intent on reviewing federal grant programs for compliance with its policy directives. We know, based on OMB’s rescinded Memo, the initial list of programs on the Administration’s radar. Subject to any final disposition in the AG suit, we expect additional action in the coming weeks and months with respect to these programs, and providers should be aware of the potential impact on their organizations up to and including the inability to access funds previously appropriated and awarded.
Attached to this e-alert is an Excel tool that identifies the grant programs identified in OMB’s rescinded Memo. Providers and other grant recipients should use this tool to inventory their current grant funding streams, assess organizational risk moving forward and make plans in the event of future disruption.
[1] A copy of the states’ request for a temporary restraining order is available here: https://ag.ny.gov/sites/default/files/court-filings/new-york-et-al-v-trump-et-al-complaint-2025.pdf.
[2] A copy of the preliminary injunction is available here: https://storage.courtlistener.com/recap/gov.uscourts.rid.58912/gov.uscourts.rid.58912.50.0_2.pdf.
Grant Review Tool
DOJ Compliance Notice
Rohit Chopra Out, Scott Bessent In (Temporarily) at the CFPB
In a familiar move, President Donald Trump has designated the current head of another executive agency, this time newly sworn in Secretary of the Department of the Treasury Scott Bessent to simultaneously lead the Consumer Financial Protection Bureau (CFPB) in an acting capacity. The move was announced via a short press release issued by the CFPB on February 3, 2025, but importantly notes that Trump made the decision on January 31, 2025.
Reports first began circulating on Saturday, February 1, 2025, that the now-former director of the CFPB, Rohit Chopra, had been fired by Trump. Chopra confirmed his departure from the agency in a letter that he posted online later that day.
Bessent will be the third acting director in the CFPB’s short history, and the second acting CFPB director to simultaneously serve as the head of multiple federal agencies. In 2017, when then-director Richard Cordray resigned, Trump tapped Mick Mulvaney, who was also serving as the director of the Office of Management and Budget (OMB), to serve as the acting director of the CFPB. Then, in 2021 when Kathleen Kraninger resigned as the CFPB’s director, Dave Uejio was designated by President Joe Biden to serve as the CFPB’s acting director.
The Federal Vacancies Reform Act of 1998 governs the president of the United States’ ability to designate who may serve in an acting capacity when there is a vacancy at the top of an executive agency, a role that requires a presidential appointment and Senate confirmation. In addition to specifying who the president may tap to serve in such a role until a new director is confirmed, the law also limits how long a person may serve in an acting capacity. As a starting point, the Vacancies Reform Act specifies that the “first assistant to the office” becomes the acting director when there is a vacancy in the director role. However, the president has the authority to override the default rule by designating someone else to serve in an acting capacity. Specifically, the president can nominate someone who either (1) is serving in another role that required the president’s appointment and Senate confirmation, or (2) is currently working in the agency with the vacancy so long as the person worked at the agency for 90 days or more within the prior year.
In the present case, Trump chose to place Treasury Secretary Bessent into the role of acting director of the CFPB, which appears consistent with the Vacancies Reform Act because Bessent was previously confirmed by the Senate and sworn in as treasury secretary on January 28, 2025. Otherwise, it appears likely that Zixta Martinez, the CFPB’s deputy director, would have been the acting director by default pursuant to the Vacancies Reform Act.
Moving forward, the Vacancies Reform Act dictates that someone serving in an acting capacity as the head of an executive agency may only do so for up to 210 days, though the limit can be extended once someone else is nominated, as well as if a first or second nomination is rejected, withdrawn or returned by the Senate. This is where the January 31, 2025, date in the CFPB’s press release likely becomes important. It signifies that, subject to whether someone else is nominated in the interim, Bessent may serve as the acting director of the CFPB until August 29, 2025.
We will continue to track developments with the CFPB and its leadership, and the impacts of those developments, moving forward.
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Fraud Section’s 2024 Year in Review Shows Enforcement Uptick
The Fraud Section of the U.S. Department of Justice’s Criminal Division published its Year in Review last month, which showed an uptick for white collar enforcement in foreign corruption, financial and health care fraud. The enforcement affected a range of industries including telecommunications, defense contracting, software services, aviation, consulting, and financial services. Below we highlight the enforcement trends and identify our key takeaways for 2025.
Foreign Corruption
DOJ resolved eight criminal corporate cases and entered into one declination pursuant to its Corporate Enforcement and Voluntary Self-Disclosure Policy (“CEP”). The schemes involved bribery of officials in Latin America, Africa, the Middle East, and South and East Asia and over $1.1 billion on criminal fines and disgorgement. One of the matters included the first coordinated resolution with Ecuador and the third with South Africa. Four trials involving individuals charged with FCPA violations were held this year.
In late 2023, the DOJ created the Criminal Division’s International Corporate Anti-Bribery (“ICAB”) initiative aimed to grow the Department’s foreign law enforcement partnerships. Several prosecutors serve as regional ICAB representatives and DOJ has stated that ICAB members helped bring several of this year’s global FCPA resolutions.
Securities, Commodities & Cryptocurrency Enforcement
DOJ’s Market Integrity and Major Frauds Unit resolved three corporate matters and one CEP declination involving over $200 million in criminal penalties. The unit also charged 75 individuals. The schemes involved alleged abuses of 10b5-1 trading plans, insider trading in the equities and commodities market, the largest cryptocurrency nonfungible-token scheme, and the first cryptocurrency open-market manipulation case.
Federal Procurement & Program Fraud
DOJ’s Market Integrity and Major Frauds Unit also investigated and prosecuted fraud in federal procurement and programs. In 2024, DOJ also reached two corporate resolutions with major defense contractors for defective and fraudulent pricing, diversion of federal program funding, and counterfeit electronic parts used by the U.S. military in sensitive defense applications.
Health Care Fraud
DOJ charged 147 individuals for alleged scheme involving more than $3.26 billion in false and fraudulent claims. The Health Care Fraud Unit currently has strike force teams in 26 cities across the nation. Data analytics continues to be a major investigation predicate. The unit’s Data Analytics Team completed 3,229 data requests and 151 proactive investigative referrals. The schemes involved cardio genetic testing, amniotic wound grafts, controlled substance wholesalers, addiction treatment facilities, misbranded medication, laboratory testing, durable medical equipment, and telemedicine.
According to DOJ, telemedicine fraud schemes have “exploded” over the last five years and the Department has responded with seven nationwide enforcement actions. Pharmaceutical distributors also remain an area of focus with ten executives, sales representative, and brokers charged in October 2024 in four federal districts. DOJ also expanded its Sober Homes initiative to combat fraudulent addiction and rehabilitation schemes that targeted Native Americans in Arizona. The initiative has resulted in the over $1.2 billion in alleged false billings for fraudulent tests and treatments for drug and/or alcohol addiction. The Fraud Section has partnered with the U.S. Attorney’s Office for the District of Arizona in this initiative.
False Claims Act
Although not a criminal statute, the False Claims Act is another tool used to combat federal procurement, federal program, and health care fraud. 2024 was a record year for False Claims Act settlements, which exceeded $2.9 billion. The government and whistleblowers were party to 558 settlements and judgments, the second highest total after last year’s record of 566 recoveries, and whistleblowers filed 979 qui tam lawsuits, the highest number in a single year. Settlements and judgments since 1986 exceed $78 billion.
Takeaways
As we look back at the enforcement trends from 2024, there are several key takeaways to consider for the year ahead:
Data Analytics continues to be a mainstay tool for proactive detection and leads in foreign corruption, health care, and financial fraud enforcement. The Fraud Section’s data analytics team identifies outliers, trends, and patterns in federal health care benefit program billing, market activity against public filing disclosures, and even analyzes data compiled in public sources for foreign corruption matters.
Whistleblower and Voluntary Self-Disclosure Programs appear to be working. We previously wrote about each of these programs here and here. According to DOJ, the programs have resulted in 180 tips on new or existing investigations. Companies should implement a robust internal reporting system that allows employees to report potential misconduct comfortably and confidentially. Effectively responding to internal complaints can deter whistleblowers from bypassing the company’s reporting system and provides the company with a documented response to present to the DOJ if necessary.
Foreign Corruption enforcement will continue to expand its international footprint. 2024 resolutions included companies based in China, Germany, Brazil, Spain, Australia, Switzerland, and South Africa. Look to even more enforcement in 2025 with enhanced tools like the Foreign Extortion Prevention Act, the Criminal Division’s International Corporate Anti-Bribery initiative, and the Administration’s renewed focus on Latin America.
Health Care Fraud enforcement provides an average return on investment of $73.04 per $1 spent and over $3 billion in projected savings. Telemedicine, genetic testing, pharmaceutical distributors, and durable medical equipment will remain areas of enforcement focus.
Cryptocurrency remains in focus as the market continues to be fertile ground of market manipulation and schemes that exploit decentralized finance and automated trading. Enforcement will likely continue to include domestic and international laundering of crypto-fraud proceeds.
A copy of the full Year in Review report may be found here.
European Commission’s Competitiveness Compass – Is It the Roadmap for Simplification of EU Sustainability Regulations?
On 29 January 2025, the European Commission published a communication on its Competitiveness Compass for the EU (COM(2025) 30). The Competitiveness Compass outlines the European Commission’s proposed initiatives for the next five years as part of its aim to support the EU’s competitiveness and to promote economic growth. In particular, the Competitiveness Compass sets out the European Commission’s key projects to address the following three ‘‘transformational imperatives’’ to support with EU competitiveness (as identified in the European Commission’s Competitiveness report prepared by Mario Draghi in 2024):
closing the innovation gap;
encouraging decarbonisation and competitiveness; and
reducing the EU’s excessive dependencies and increasing security.
One of the ways in which the European Commission seeks to address these three pillars is through simplification of the EU’s current complex regulatory policies. The European Commission’s key project to achieve this simplification is the introduction of its first simplification omnibus package, which will be published on 26 February 2025 (‘‘Omnibus Simplification Package’’). The Omnibus Simplification Package is expected to, among other things, introduce simplification measures for sustainable finance reporting, sustainability due diligence and the sustainable finance taxonomy by simplifying the following sustainability regulations:
Corporate Sustainability Reporting Directive (‘‘CSRD’’);
Corporate Sustainability Due Diligence Directive (‘‘CS3D’’); and
Green Taxonomy Regulation (‘‘Taxonomy Regulation’’).
The aim of these simplification measures is set out to better align the regulatory requirements with investors’ needs and to ensure the proportionality of timelines and regulatory requirements against the activities of different companies.
The Omnibus Simplification Package forms part of the European Commission’s work towards meeting its target of reducing reporting burdens by ‘‘at least 25% for all companies and at least 35% for SMEs’’. To this extent, the Competitiveness Compass and the Omnibus Simplification Package have the potential to contribute to significant change in the EU sustainability regulatory framework.
Whilst the Competitiveness Compass is not legally binding, it is very useful insight on the direction of travel for sustainability-related reporting and compliance requirements in the EU under CSRD, CS3D and the Taxonomy Regulation.
Financial Abuse and the Need for Better Financial Services Regulation
In December 2024 the Parliamentary Joint Committee on Corporations and Financial Services (the Committee) published a Report following an inquiry into how well the existing financial services regulatory framework is protecting against financial abuse. The Report highlighted a range of regulatory gaps and considered how financial institutions could better mitigate the risk of financial abuse.
Privacy
Inquiry submissions revealed that existing privacy laws prevent financial institutions from appropriately identifying, responding to and reporting financial abuse. Institutions are currently required to obtain explicit consent from customers before recording any sensitive information in their accounts. This prevents financial institutions from proactively documenting or flagging actual or suspected financial abuse thereby creating a barrier to the provision of appropriate support. It was therefore recommended that privacy legislation be revised to better allow financial institutions to respond to financial abuse cases.
Sector-Specific Reform
While it was recognised that financial institutions were making progress in the implementation of measures to identify and respond to financial abuse, the Committee highlighted the need for reform across all three sectors. The table below outlines some of the key recommendations for each sector.
Key Takeaways
The Committee’s Report has shed greater light on the urgent need to improve the existing regulatory framework to allow financial institutions to explicitly address the widespread risk of financial abuse arising in relation to financial services. To prepare for potential reform, financial institutions should consider the Committee’s recommendations and seek to proactively improve internal mechanisms designed to identify and respond to financial abuse.
*For information on ‘conduct of others’ clauses see our previous alert on general insurance policies.
Tamsyn Sharpe also contributed to this article.
CFPB Orders Remittance Company to Pay $2.5 Million for Deceptive Practices and Inaccurate Disclosures
On January 30, 2025, the CFPB issued an order against a remittance company for misleading consumers about fees and failing to provide accurate disclosures, harming consumers who relied on the company’s representations when sending money to family and friends. The Bureau alleges the company’s conduct violated of the Consumer Financial Protection Act’s (CFPA) prohibition on unfair, deceptive, or abusive acts or practices and the Electronic Fund Transfer Act’s (EFTA) fee disclosure requirements for prepaid accounts
The CFPB alleges that the company engaged in a series of deceptive practices, including:
Misleading Advertising. The company allegedly sent emails and blog posts to customers advertising lower ATM fees and free withdrawals that were not available to U.S. customers.
Inaccurate Disclosures. The CFPB alleges the company failed to accurately disclose fees for consumers funding accounts using mobile payment methods, failed to properly disclose exchange rates, and failed to make other required disclosures.
Failure to Provide Timely Refunds. The company allegedly failed to refund fees when funds were not available to the recipient by the date of availability in violation of Regulation E, 12 C.F.R. § 1005.33(c)(2)(ii).
The company will be required to pay $2.025 million to the CFPB’s victims relief fund and pay $450,000 in redress to impacted consumers.
Putting It Into Practice: It remains to be seen how a potential change in CFPB leadership will affect federal regulators’ EFTA enforcement and scrutiny. Financial institutions should nonetheless monitor these developments and review their compliance procedures related to fee disclosures and remittance.
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Fifth Circuit Strikes Down FTC’s ‘Junk Fee’ Rule for Auto Dealers
On January 24, 2025, the Fifth Circuit Court of Appeals struck down an FTC rule aimed at curbing deceptive advertising and sales practices in the auto industry. The rule, which sought to prohibit certain “junk fees” and misleading pricing tactics, was challenged by industry groups who argued that the FTC had exceeded its authority.
The FTC’s Combating Auto Retail Scams (CARS) rule (previously discussed here) required auto dealers to provide consumers with a clear and conspicuous “Offering Price” that included all required charges, with limited exceptions. It also would have prohibited several practices, including:
Bait-and-switch Advertising. Advertising a vehicle at a certain price and then not having that vehicle available when a consumer attempts to purchase it.
Failing to Disclose Key Terms in Advertisements. Key terms for which the rule required a disclosure included the total price of the vehicle, including the enumeration of all additional all fees and charges.
Charging Consumers for Add-on Products without Consent. Such add-on products included items like extended warranties, gap insurance, and paint protection.
The Fifth Circuit sided with the industry groups, vacating the FTC’s rule. The court found that the CARS rule exceeded the FTC’s authority to address “unfair or deceptive acts or practices” by regulating pricing practices that were not inherently deceptive. Additionally, the court determined that the FTC failed to provide adequate notice of the proposed rulemaking, violating procedural rules.
Putting It Into Practice: The decision to strike down the rule marks the latest development in state and federal efforts war on “junk fees” in the financial sector. While the Fifth Circuit Court determined the FTC overstepped its regulatory authority in this instance, federal and state agencies have clearly prioritized combatting “junk fees” (a trend we previously discussed here, here, and here). Companies should closely monitor this development to see if other federal circuit courts follow suit.
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