Fintech · Industry brief

California Governor Gavin Newsom signed Assembly Bill 2116 in September 2026, significantly expanding the California Financing Law to regulate commercial financing providers and brokers offering products of $500,000 or less, including merchant cash advances and factoring. The law establishes new licensing requirements effective July 1, 2028, with contract enforceability provisions beginning January 1, 2028. The Department of Financial Protection and Innovation will supervise covered providers and brokers, with authority to suspend or revoke licenses for repeated failures to consider repayment ability. Licensed providers must file annual reports with the DFPI detailing transaction volumes, amounts financed, and APR disclosures by transaction size. The legislation creates some implementation uncertainties regarding the interaction between existing exemptions and the separate licensing requirement, particularly for occasional financing transactions, which may require regulatory or legislative clarification before the effective dates.

Bank of America faced a $1.2 billion AML enforcement action on October 13, 2026, comprising a $1.2 billion civil money penalty from FinCEN, a $750 million penalty from the OCC, and an $11.6 million sanctions settlement from OFAC for willfully violating the Bank Secrecy Act through inadequate AML compliance, deficient foreign correspondent account due diligence, and failure to timely file suspicious activity reports. The enforcement action represents the third-largest Treasury penalty in history and the largest civil money penalty ever assessed by the OCC, with deficiencies involving Chinese money laundering networks and southwestern border financial activities. The OCC also identified widespread weaknesses in transaction monitoring, personnel training, internal controls and independent auditing, noting the bank's failure to address deficiencies previously identified in a December 2024 consent order (source: U.S. Department of the Treasury, FinCEN, OCC, OFAC announcements, October 2026). Federal regulators are implementing the GENIUS Act with proposed AML and sanctions compliance requirements for permitted payment stablecoin issuers. FinCEN and OFAC jointly proposed regulations on April 8, 2026, requiring stablecoin issuers to maintain effective BSA-compliant programs identifying and mitigating money laundering and terrorist financing risks. On June 18, five federal banking agencies jointly proposed customer identification program requirements, followed by an OCC proposal on June 22 establishing a supervisory framework for stablecoin issuers (source: FinCEN, OCC, Federal Reserve, FDIC, National Credit Union Administration proposed rules, April-June 2026).

The OCC released its final report on October 14 reviewing debanking practices at nine large national banks, finding they used broad, subjective "reputation risk" policies influenced by political considerations and public opinion to restrict access to financial services for disfavored industries including coal and firearms. The OCC identified inconsistent application of these policies, reliance on negative news and third-party ESG reports, and inadequate customer communications, noting that banks later adopted industry-specific restrictions under pressure from state fair access laws. The OCC has eliminated reputation risk from its supervisory framework and incorporated debanking considerations into licensing filings and Community Reinvestment Act examinations, with plans for further rulemaking to prevent discrimination based on political or religious beliefs and to address pretextual Bank Secrecy Act enforcement. The CFPB announced the same day that it will investigate whether the nine banks in the OCC report and others complied with federal consumer financial protection laws, evaluating compliance with the Equal Credit Opportunity Act, Fair Credit Reporting Act, and the prohibition on unfair, deceptive, or abusive acts or practices, extending scrutiny beyond the nine OCC-examined banks to a broader set of institutions.