KPMG Spotlights Q2 Regulatory Response to Key Risks

2022 has been a busy year for regulatory actions and financial services. KPMG has monitored the supervisory activity revealed by government agencies through rulemakings, speeches, guidance, and examination priorities, and recently published their mid-year regulatory recap.

According to KPMG, "The agendas put forth by the regulators and their areas of supervisory focus have largely been maintained in 2022 (for example: climate, cyber), on top of event- and market-driven issuances (for example: sanctions, crypto)."

Three main regulatory themes emerged in Q2 2022:

— Customer/Investor Protections

— Climate/Environmental Justice

— Crypto and Digital Assets

Among the Q2 regulatory highlights:

ESG Fund disclosure rule.  In May, the SEC proposed amendments to rules and disclosure forms to promote consistent, comparable, and reliable information for investors around how funds and advisers incorporate ESG factors into their investment practices, products, and advisory services.

KPMG notes, "The SEC is seeking to mitigate potential 'greenwashing' by placing increased accountability on investment advisors to disclose, in sufficient detail, the investment process consistent with the name of a fund and investors’ expectations."

Joint Community Reinvestment Act Proposal. The Federal Reserve Board, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation issued a joint Notice of Proposed Rulemaking to “strengthen and modernize” the regulations implementing the Community Reinvestment Act of 1977.

As KPMG observed, "The CRA proposal recognizes the changes in the banking industry, such as the expanded role of mobile and online banking, while also reflecting the Administration’s ESG-related priorities regarding equity and inclusion and climate-related risks."

Regulator statements on risk and regulation of crypto and digital assets. In May, the SEC, CFTC, and Treasury each issued statements on furthering crypto and digital assets regulation highlighting the need for responsible innovation, consumer protections, and fair competition.

"Regulators are responding to the President’s executive order directing a coordinated and comprehensive approach to digital asset policy," notes KPMG. "They are emphasizing the need for responsible innovation that takes into consideration consumer protections and fair competition, noting an “urgent need” to mitigate risks and supervise the use crypto and digital assets."

Read more in KPMG's mid-year regulatory reflections and review the Q2 2022 Regulatory Recap chart below. You can also subscribe to KPMG's regulatory alerts.