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Michael Nonaka advises banks, financial services providers, and non-bank companies on a broad range of compliance, enforcement, transactional, and legislative matters. He has worked extensively with federal and state banking agencies and with other federal agencies authorized to regulate financial services. Mr. Nonaka also is co-chair of the firm’s Fintech Initiative and works with a number of banks, lending companies, money transmitters, payments firms, technology companies, and service providers on innovative technologies such as big data, blockchain and related technologies, bitcoin and other virtual currencies, same day payments, and online lending.
Mr. Nonaka has significant experience advising clients on issues arising under financial services legislation such as the Dodd-Frank Wall Street Reform and Consumer Protection Act. He has advised clients on, among other areas in Dodd-Frank, regulation as a systemically important financial institution, resolution planning, the Federal Deposit Insurance Corporation’s orderly liquidation authority under Title II, and the scope of the Consumer Financial Protection Bureau’s authority.
Mr. Nonaka also has advised a number of clients on compliance with TILA, ECOA, TISA, HMDA, FCRA, EFTA, GLBA, FDCPA, CRA, BSA, USA PATRIOT Act, FTC Act, Reg. K, Reg. O, Reg. W, Reg. Y, state money transmitter laws, state licensed lender laws, state unclaimed property laws, state prepaid access laws, and other federal and state laws and regulations.
- Representation of General Electric and Synchrony Financial in connection with exchange offer to complete the separation of Synchrony from GE and in connection with Federal Reserve Board application process and approval required for the separation of Synchrony from GE.
- Representation of several Fortune 500 companies on big data, blockchain, and other fintech solutions.
- Representation of Synchrony Financial (GE Capital’s North American retail finance business) in connection with its approximately $2.95 billion initial public offering and related $3.6 billion debt offering.
- Representation of WSFS Financial Corporation in acquisitions of First Wyoming Financial Corporation, Alliance Bancorp, Inc. of Pennsylvania, and Penn Liberty Financial Corp.
- Representation of Cole Taylor Bank in investigation and consent cease & desist/civil money penalty order with the Federal Reserve Board and the Illinois state banking authority to resolve claims alleging unfair and deceptive practices related to a student deposit product offered in connection with a former counterparty deemed to be an “institution-affiliated party.”
- Representation of Wells Fargo in connection with a Federal Reserve Board investigation and consent order with respect to alleged falsification of customer income and customer steering by Wells Fargo Financial sales personnel in the origination of consumer mortgage loans.
- Representation of General Motors in congressional hearings and requests for government funding.
- Representation of Freddie Mac in connection with establishment of Federal government conservatorship.
- Representation of Citigroup, Inc. and Citibank, NA, in connection with negotiation and implementation of OCC and Federal Reserve Board consent orders relating to consumer mortgage servicing and foreclosure activities.
- Representation of banks and non-banks on anti-money laundering compliance matters.
- Representation of Arlon Capital Partners LP in connection with investments in Grandpoint Capital, Inc. and Carlile Bancshares, Inc.
- Representation of national banks, savings associations, and other depository institutions in de novo and merger applications before the Office of the Comptroller of the Currency, Office of Thrift Supervision, Federal Deposit Insurance Corporation, and Federal Reserve.
Pro Bono
- Represent City First Enterprises and City First Bank of D.C., N.A. on bank regulation and corporate governance matters.
- Represented indigent Florida inmate in post-conviction proceedings in state and federal courts.
- Assisted the Washington Lawyers Committee in drafting and introducing legislation in the District of Columbia to reform certain aspects of the District’s parole and sentencing laws.
Memberships and Affiliations
- American Bar Association, Banking Law Committee
If OCC Charter Case Is Dismissed, State Regulators Will Likely Sue Again, Say Fintech Attorneys
August 3, 2017, Corporate Counsel Magazine
Michael Nonaka is quoted in a Corporate Counsel Magazine article regarding the Office of the Comptroller's argument that it cannot be sued over its plans for a special purpose national bank charter. According to Nonaka, "it's a fair assumption" the Conference of State Bank Supervisors would continue to pursue litigation against the OCC if the case is thrown out, ...
American Regulators Playing FinTech Catch-Up
June 15, 2017, Law360
Michael Nonaka is quoted in a Law360 article examining how U.S. regulators are fostering fintech innovation. According to Nonaka, the CFTC and FINRA initiatives are important steps to get the agencies up to speed on fintech issues. “It’s certainly a step forward, it’s a step in the right direction for the regulators to be able to do new initiatives that will ...
May 31, 2017, The National Law Journal
Michael Nonaka is quoted by The National Law Journal in an article regarding the likelihood that the U.S. will introduce a regulatory sandbox for fintech companies to test new products and business models without regulatory consequences. According to Nonaka, there is "great value" in a sandbox for entrepreneurs, but "in order for a sandbox to work, you have to ...
Proposed Restrictions on Mexican Remittances Could Hinder Fintechs, Probably Not Banks
May 11, 2017, Forbes
Michael Nonaka is quoted in a Forbes article regarding the prospect of President Trump's taxing remittances for a Mexico border wall, and the possibility of an increase in the use of digital currencies as a result. In discussing banks and payment companies' experience in this field, Nonaka indicates that these institutions have taken the proposed rules in ...
April 24, 2017, Covington Alert
On April 19, 2017, the House Financial Services Committee (the “Committee”) released a new “discussion draft” of the Financial CHOICE Act, its comprehensive regulatory reform bill (“CHOICE Act 2.0”). The Committee released the first version of the bill (“CHOICE Act 1.0”) in June 2016.
March 6, 2017, Covington Alert
Following up on the Consumer Financial Protection Bureau’s (the “Bureau,” or “CFPB”) monthly complaint report highlighting credit reporting issues (and particularly issues with accuracy and disputes), on March 2, 2017, the CFPB issued a special edition of its Supervisory Highlights bulletin focusing on consumer reporting issues, highlighting those same concerns. Director Cordray also issued remarks relating to these issues the same day during the Bureau’s Community Advisory Board meeting. The Bureau sees that it has a unique role to play, as the only federal regulator that can supervise the credit reporting market from end-to-end, and believes that its involvement has brought about substantial changes over the last five years. Now, the Bureau is placing a renewed emphasis on accuracy and dispute resolution in the credit reporting space that deserves the industry’s attention and focus.
Trump Unlikely To Ease AML Burden, Say Experts
February 22, 2017, Payments Compliance
Michael Nonaka is quoted in a Payments Compliance article regarding financial crime regulation under President Trump amid Dodd-Frank reforms. According to Nonaka, “The conversation around deregulation hasn’t touched on anti-money laundering and terrorist financing compliance and enforcement.” The “strong nexus with law enforcement and border protection,” is why ...
February 21, 2017
In September 2016, the Office of the Comptroller of the Currency issued final guidance for recovery planning, requiring OCC-regulated banking organizations with average total consolidated assets of $50 billion or more to develop recovery plans. Covered banks with at least $750 billion in assets are required to comply by July 1, 2017; covered banks with at least $100 billion and less than $750 billion are required to comply by January 1, 2018; and covered banks with at least $50 billion and less than $100 billion are required to comply by July 1, 2018.
Covington and Ernst & Young LLP have developed this practical guide to help covered banks get started with recovery planning and preparing their inaugural plans for review by the OCC in 2017 and 2018.
February 6, 2017, Harvard Law School Forum on Corporate Governance and Financial Regulation
February 3, 2017, Covington Alert
Throughout his campaign, President Donald Trump promised to curtail financial regulations, particularly those promulgated under the Dodd-Frank Act. President Trump argued frequently that the regulations issued under the act have proven overly burdensome and, among other things, limited job growth. This afternoon, the President took his first formal step in implementing his deregulatory agenda. He signed an executive order that will set in motion a comprehensive review of all financial regulatory requirements—including but not limited to those resulting from Dodd-Frank—and he issued a memorandum to the U.S. Department of Labor (DOL) ordering a 180-day postponement of its “fiduciary rule” and directing an analysis of whether the rule should be rescinded or revised.
The New CRA Interagency Q&As from July 2016
December 15, 2016, Mortgage Bankers Association CRA Lending Workshop
December 11, 2016, Harvard Law School Forum on Corporate Governance and Financial Regulation
December 5, 2016, Covington Alert
On December 2, 2016, Comptroller of the Currency Thomas J. Curry announced that the Office of the Comptroller of the Currency (“OCC”) would move forward with issuing special purpose national bank charters to financial technology (“fintech”) companies. The OCC released a whitepaper1 outlining its authority to issue charters to fintech companies, its approach to supervising fintech companies, and its process for evaluating charter applications. The OCC is requesting public comment on the whitepaper by January 15, 2017.
October 20, 2016, Covington Alert
On October 19, 2016, the Board of Governors of the Federal Reserve System (Federal Reserve), Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) (collectively the “Agencies”) released a joint Advance Notice of Proposed Rulemaking (ANPR) requesting public comment on enhanced cybersecurity standards that would apply to certain large, interconnected financial entities (“covered entities”) as well as the third parties that provide services (“covered services”) to such entities.
Current Issues in Fintech Regulation
September 16, 2016, Columbia Law School Center for Israeli Legal Studies Fintech Conference
Legal Developments in Marketplace Lending
September 9, 2016, PLI Marketplace Lending and Crowdfunding
September 2016, The Review of Banking & Financial Services
U.S. Watchdog Seeks Revival Of Prepaid AML Rules
August 25, 2016, PaymentsCompliance
Michael Nonaka is quoted in a PaymentsCompliance article regarding FinCEN’s renewed efforts to reissue anti-laundering (AML) controls on prepaid cards after abandoning original proposals two years earlier. According to Nonaka, “There are all these controls and existing tracking mechanisms that apply to cross-border movements of cash, but these aren't in place ...
July 28, 2016, Covington Alert
Today, the Consumer Financial Protection Bureau (“CFPB”) issued its outline of proposals under consideration for a debt collection rulemaking that would govern third-party debt collection activities of debt collection agencies, debt buyers, collection law firms, and loan servicers. Release of this outline of proposals signals the start of the Small Business Regulatory Enforcement Fairness Act (“SBREFA”) process. Under the SBREFA process, the CFPB must hold a Small Business Review Panel to discuss this outline of proposals and consider the potential impacts on small business entities before issuing a proposed rule. In other contexts, such as the CFPB’s proposed payday and small dollar lending rule, more than one year elapsed between the Small Business Review Panel and the issuance of a proposed rule.
June 13, 2016, Covington Alert
The Federal Reserve has recently sent non-compliance notices to U.S. issuers of foreign-currency denominated bonds that are sold abroad (“foreign bonds”), including Euro bonds, for failure to submit Treasury International Capital (TIC) Form SLT. Although the final instructions for Form SLT were promulgated in February 2011, this filing requirement has come as a surprise to many U.S. corporate issuers.
May 10, 2016, Covington Alert
On May 5, 2016, the Financial Crimes Enforcement Network (“FinCEN”) issued its long-awaited final rule on beneficial ownership with respect to customer due diligence requirements. The final rule requires covered financial institutions to adopt due diligence procedures to identify and verify a legal entity customer’s beneficial owner(s) at the time a new account is opened.
May 9, 2016, The Wall Street Journal
Mr. Nonaka was quoted in the article that discussed the rollout of the Treasury Department’s customer due diligence rule and related anti-corruption plan.
May 5, 2016, Data Guidance
Michael Nonaka is quoted in this Data Guidance article regarding the Payment Card Industry Security Standards Council’s latest version of its data security standard. According to Nonaka, "PCI DSS version 3.2 does not reflect sweeping changes to the requirements in prior versions, but it is indicative of the data security priorities being expressed by card ...
Anti-Laundering: The ABCs of Federal GTOs
April 12, 2016, Law.com
Michael Nonaka is quoted in this law.com article describing the federal government’s use of geographic targeting orders to combat money laundering and terrorist financing in the real estate sector. According to Nonaka, “real estate transactions have been a focus of FinCEN for a long time…We’re likely to see this continue for quite some time.”
Compliance Lessons from Geographic Targeting Orders
April 11, 2016, ACAMS AML & Financial Crimes Conference (21st Annual)
What Business Lawyers Need to Know about Privacy Law
April 9, 2016, American Bar Association: Cyberspace Law Committee 2016 Spring Meeting
Money Services Businesses: Licensing Requirements in Canada and the U.S.
April 8, 2016, American Bar Association: Consumer Financial Services Committee 2016 Spring Meeting
April 1, 2016, Covington Alert
Yesterday, the Office of the Comptroller of the Currency issued a whitepaper, Supporting Responsible Innovation in the Federal Banking System: An OCC Perspective, that introduces the agency’s principles for facilitating and regulating “responsible innovation” in the federal banking system, particularly in financial technology or “fintech.” The whitepaper primarily contemplates reforms to the manner in which the agency evaluates new product proposals from banks, as well as banks’ involvement with new technology providers. It does not address some of the critical structural limitations imposed on banks, such as activity restrictions, and it does not broach the broader question of whether new types of regulation ought to apply to new technological methods for delivering financial services, whether or not delivered by banks. Nevertheless, the whitepaper signals the beginning of a longer and broader undertaking by the OCC, banks, other financial regulators, and other market participants to develop a framework for approaching financial innovation.
March 2016, E-Commerce Law and Policy
February 8, 2016, BNA's Banking Daily
January 4, 2016, The National Law Review
October 15, 2015, Covington Alert
Covington Promotes Nine New Partners
October 1, 2015
WASHINGTON, DC, October 1, 2015 - Covington has elected nine of its lawyers to partnership. “We are delighted to welcome our new partners, who exemplify the spirit and substance of Covington,” said Timothy Hester, chair of the firm’s management committee. “This partnership class reflects our focus on the firm’s core practice strengths. We are confident that ...
Big Data and Compliance
June 2015, 2015 American Bankers Association Regulatory Compliance Conference
Covington Advises Public Pension Capital on Partnership with Kramer Van Kirk Credit Strategies
May 15, 2015
WASHINGTON, DC, May 15, 2015 — Covington represented Public Pension Capital, LLC in the formation of a strategic partnership with and investment in Kramer Van Kirk Credit Strategies LP, a Chicago-based manager of collateralized loan obligations with more than $4 billion in assets under management. Public Pension Capital also acquired a stake in KVK Technology ...
September 22, 2014, BankDirector.com
April 30, 2014, BankDirector.com
February 24, 2014, Covington E-Alert
2014, Regulation of Foreign Banks and Affiliates in the United States
2014, Regulation of Foreign Banks and Affiliates in the United States
December 11, 2013, Covington E-Alert
February 14, 2013, Covington Advisory
When the Sky is Falling, Don’t Be Chicken Little
May 10, 2012, Bank Director
October 11, 2011, Covington Advisory
October 11, 2011, Covington Advisory
December 14, 2010, Covington E-Alert
Covington Advises Financial Federal Corporation on $738M Merger with People’s United Financial
2/22/2010
NEW YORK, February 22, 2010 — Financial Federal Corporation and People’s United Financial, Inc. have completed the merger of Financial Federal with People’s United in a transaction valued at approximately $738 million. Covington & Burling LLP advised Financial Federal on the transaction. Financial Federal is a financial services company providing collateralized ...
June 29, 2009, Covington E-Alert
Anti-Money Laundering Compliance
June 2009, New Jersey Bankers Association Compliance Seminar
September 23, 2008, Covington E-Alert
June 12, 2008, Covington E-Alert
February 4, 2008, Financial Services Law 360
- Legal 500 US, Technology: Data Protection and Privacy (2016)