How Regulatory Policies Will Shift

In just two years, CFIUS issued 𝟯𝘅 𝗺𝗼𝗿𝗲 𝗽𝗲𝗻𝗮𝗹𝘁𝗶𝗲𝘀 and 𝗶𝗺𝗽𝗼𝘀𝗲𝗱 𝗳𝗶𝗻𝗲𝘀 𝟰𝟬𝘅 𝗹𝗮𝗿𝗴𝗲𝗿 than it its entire combined 50-year history. With new regulations on the horizon, these numbers are set to climb even higher. 𝗞𝗲𝘆 𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀 𝗳𝗿𝗼𝗺 𝗡𝗲𝘄 𝗖𝗙𝗜𝗨𝗦 𝗥𝘂𝗹𝗲𝘀: 1️⃣ Maximum Penalties: Increasing from $250k to $5M per violation 2️⃣ Expanded Powers: CFIUS now has enhanced subpoena authority to assess national security risks, even before an official filing is submitted 3️⃣ Timelines: Companies must meet tighter deadlines for responding to CFIUS inquiries 4️⃣ Expanded Scope: Supply chain risks now under mandatory review 5️⃣ Strategic Focus: CFIUS gains new authority to review real estate purchases near military sites, with focus on transactions involving "foreign adversaries" 6️⃣ Bipartisan Trend: The Biden order builds on Trump-era overhaul, showing bipartisan commitment & signaling a higher bar for cross-border deals 𝗣𝗿𝗮𝗰𝘁𝗶𝗰𝗮𝗹 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀: From my own experience, CFIUS is already influencing venture capital: • Side letters can now feature limited information rights and even rescission-like rights tied to CFIUS outcomes. • Emerging managers are now including CFIUS-specific provisions (NVCA) in their LPAs to preemptively address these regulatory shifts. 🔑 𝗕𝗼𝘁𝘁𝗼𝗺 𝗟𝗶𝗻𝗲: CFIUS is transforming from a passive overseer into a more proactive enforcement agency.

From my expertise working inside the FDA and alongside CBP, I can tell you this — what just happened isn’t a trade adjustment, it’s a regulatory upheaval. New import taxes are being introduced under the guise of fairness, but they’re about to trigger a domino effect that affects everyone moving products across borders — especially those regulated by federal agencies. Costs won’t just rise. Risk will. Businesses operating in highly controlled industries will now face a triple-threat: 🔸 Unpredictable border interventions 🔸 Shifting agency priorities 🔸 Higher stakes for even minor missteps I’ve seen this kind of pressure play out from the inside. It’s not just about what you bring into the country — it’s about whether your business is built to survive these shifts. If you're responsible for compliance, legal strategy, or product movement — especially in food, supplements, drugs, devices, cosmetics, or even pet goods — now’s the time to act, not react. #TradePolicy #RegulatoryStrategy #FDACompliance #TariffImpact #USImports #GlobalTrade #CBPEnforcement #SupplyChainRisks #ExecutiveLeadership #LegalStrategy #FoodLaw #PharmaCompliance #MedicalDeviceRegulations #PetIndustryRegulations #CrossBorderTrade #ProductSafety #RiskMitigation #ThoughtLeadership #USDA #LinkedInCreators

The Cure May Be Worse Than the Disease: #DOGE, the #Trump Administration, and the Dismantling of the #CFPB In its relentless pursuit of dismantling the administrative state, DOGE has killed the Consumer Financial Protection Bureau. But in their zeal to eliminate what they see as bureaucratic overreach, they may have unknowingly unleashed a more formidable regulatory force: State AGs. But they won’t be coming in an orderly, uniform way. Instead, state-driven enforcement may prove far more unpredictable, aggressive, and costly for the financial firms that once sought clarity from a single federal regulator. At the heart of this shift lies Section 1042 of the CFPA, which empowers state AGs to enforce federal consumer protection laws. And with the CFPB out of the way, state AGs have the authority and motivation to fill the void. A more sophisticated approach—one that acknowledged political realities—would have been to keep the CFPB intact and shape its enforcement priorities and rulemaking to align with a deregulatory vision. Then the administration could control the narrative, ensuring that consumer protection remained under federal guidance while minimizing what it saw as regulatory overreach. Instead, we'll have balkanized enforcement, where financial firms, #fintechs, and #crypto companies face disparate, conflicting state-level interpretations of federal law. This patchwork approach will stymie innovation as companies struggle to comply with 50 different sets of priorities and legal interpretations. Firms may end up spending more time navigating legal uncertainty than delivering new products and services. Another unintended consequence is the disappearance of the billions of dollars historically returned to consumers through enforcement actions. Ironically, it is Red states—where consumer protection laws are often weaker and AGs less inclined to take aggressive action—that will feel this loss most acutely. Consumers in those states will no longer benefit from centralized enforcement efforts against predatory lenders, abusive debt collectors, or deceptive banking practices. Legal recourse will become a privilege enjoyed mainly by residents of Blue states, where AGs are likely to take a more active role in CFPB-style enforcement. For all the populist rhetoric about making America great again, this move is not about empowering the average American. It is about removing obstacles for billionaires and corporations to operate without oversight. It is a feature, not a bug, of the administration’s broader goal: to eviscerate regulatory agencies without considering the downstream consequences. In doing so, the administration has created an unpredictable future where fintechs and crypto firms face greater uncertainty, increased compliance costs, and an inconsistent legal landscape. In the end, the Trump administration may find that the cure was far worse than the disease.

In Washington, the tendency is to focus on headlines.  But the real impact of policy shifts often lies in the ripple effects. A lesson from 30 years of policy analysis:  Direct changes grab attention. Secondary effects determine outcomes. When building scenario plans for policy shifts, smart organizations look three layers deep: Layer 1: Direct Impact • New regulations • Tax changes • Compliance requirements Layer 2: Market Response ̐• Supplier reactions • Customer behavior shifts • Competitor repositioning Layer 3: Industry Evolution • Supply chain restructuring • Innovation incentives • Partnership dynamics Take financial regulation:  While everyone focuses on immediate compliance costs, the real transformation often comes from how the market adapts – creating new opportunities for those who planned ahead. Key to remember: The organizations that thrive through policy transitions aren't just preparing for change. They're positioning themselves to capitalize on the second and third-order effects that others miss.

Interesting developments out of the IRS that will certainly impact corporate finance teams. The IRS just proposed new regulations that could reshape how companies execute tax-free spin-offs. While they provide some much-needed clarity, they also introduce new compliance burdens that could make these corporate transactions more complex and costly. Key takeaways from my perspective and points that might be important for CFOs, tax leaders, and dealmakers: • Debt-for-equity exchanges get a lifeline. The IRS reversed course on some past restrictions, allowing more flexibility for companies to use Spinco stock to pay down debt. But a new 30-day holding rule for intermediaries could complicate M&A transactions and increase costs. • Stricter rules on boot purges. The IRS is tightening restrictions on how companies can use cash proceeds in spin-offs, limiting options like stock buybacks and dividends as part of the deal structure. • Tougher scrutiny on retained spinco stock. If the parent company holds onto Spinco shares post-spin, it’s now presumed to be tax-motivated unless strict conditions are met—requiring a clear business rationale, a disposal plan, and restrictions on shared leadership or business ties. • More compliance red tape. Companies will need to submit a formal Plan of Reorganization to the IRS detailing every step of the transaction, adding significant new regulatory and tax reporting requirements. The bottom line is that the IRS is pushing for more oversight on corporate finance transactions, but these changes could make tax-free spin-offs harder to execute. While the rules aren’t final yet, they’re already shaping IRS private letter rulings and will almost certainly influence deal structuring strategies. Are these changes a step toward better transparency, or just more regulatory hurdles for businesses? #Finance #Business #CorporateFinance #MergersAndAcquisitions #Tax #TaxPolicy #TaxStrategy #IRS #Policy #CapitalMarkets #FinanceLeadership #RegulatoryCompliance https://lnkd.in/eazc9Rzv

Banks were built for stability, but what if the next competitive edge is adaptability? I think back over my 25 years in financial services and regulation has defined the shape of financial institutions. Charters were moats. Compliance was like armor. Innovation? Mostly a workaround. I can't believe that model will hold out for much longer. I think we witnessing something like a regulatory re-architecture, a shift from gatekeeping to platform design. These are the signals that get me thinking - Open Banking has turned data into a customer right, not a bank asset. - Real time payment systems are removing friction that was once hardwired into clearing. - Digital asset policy is moving fast from avoidance to integration. - Advisory rules are blurring lines between custody, planning, and execution. I don't think of this as deregulation. It’s like modularization. Regulation is gonna become code. Compliance will be composable. And really banks are no longer gonna be endpoints. They're nodes. If you keep pulling this thread, then logically it will change the business model. The old logic of vertical control is giving way to a kind of horizontal value creation. We moving from “own the whole stack” to “orchestrate the best stack.” From “protect the perimeter” to “interact through APIs.” For incumbent banks, there will be a moment of truth. Do you treat this shift as compliance to manage? Or as infrastructure to build on? In this new architecture, trust is still everything. But it looks very different now. Trust is transparency. Trust is interoperability. Trust is the ability to change without breaking the system. Would love to chat with bankers and founders who are feeling this!

🤔 What Trump's Second Term Could Mean for Fintech, Banking and Crypto Compliance There's a lot of speculation about how a second Trump term could reshape compliance. Having worked on compliance software at both Coinbase (during Trump's presidency) and Brex (during Biden's presidency), I've been thinking about what this means for our industry. Here's my perspective on what's likely to change and how companies should prepare. 🎯 Three Key Changes to Watch - Crypto Regulation Shift: The biggest change might be in crypto oversight. Trump's recent pro-crypto statements and criticism of banks suggest we could see crypto regulation move from the SEC to the CFTC. This would fundamentally change how crypto companies approach compliance. - Banking Innovation: Traditional banks might find more freedom to innovate, particularly in crypto services. The rumored federal Bitcoin reserve could accelerate institutional adoption. However, banks will need robust compliance frameworks to manage the associated risks. - State vs Federal Tension: While federal regulations might relax, state-level oversight - especially in places like New York and California - will likely remain strict. Companies will need sophisticated compliance programs that can handle this regulatory patchwork. 🔄 The Compliance Paradox Despite Trump's deregulatory reputation, his first term actually saw record levels of OFAC enforcement actions. This highlights an interesting paradox: while broad financial regulations might ease, specific enforcement areas - especially around international money flows - could intensify. Why? Trump's America First could translate into heightened scrutiny of cross-border transactions, particularly with countries like China. Banks and fintechs might find themselves navigating fewer rules overall but facing more intense scrutiny in specific areas. 💡 What This Means for Compliance Teams Having built compliance technology strategies from scratch, I think the key to navigating this changing landscape will be flexibility. Here's what compliance teams should focus on: - Build adaptable compliance frameworks that can quickly adjust to regulatory changes - Invest in technology that can handle multi-jurisdictional requirements - Maintain strong state-level compliance even if federal rules relax - Develop robust international transaction monitoring capabilities 🤔 Looking Ahead The reality is, we're entering uncharted territory. The next few years could see the biggest shake-up in financial compliance since Dodd-Frank. Companies that build strong, adaptable compliance programs now will be best positioned to thrive in this new environment. Want to learn more? Check out our blog post below or listen to the podcast via the link below. We discuss Trump's second term and what it means for fintechs, banking and crypto in our latest episode of Compliance Accelerated. https://lnkd.in/gjDbdGCk

In our first "Weekend Reading" article of 2025, Cameron Lawrence, Starling's Director of Research, highlights several key trends that we at Starling believe will drive global regulatory, risk management, and audit sector priorities over the coming year: softening regulation and dismantling bureaucracy; accelerated innovation and technology adoption; auditor scrutiny; and the growth of non-bank financial institutions. In recent months, we have observed that new political realities are shifting the financial sector regulatory agenda globally, upending the priorities that have been emphasized for the past 15 years. Over the course of 2024, as many economies stagnated and economic outcomes worsened (whether real or perceived), voters issued a mandate for change. Hoping to turn headwinds into tailwinds, political leaders are now asserting new policy narratives and establishing new socio-economic “cultural configurations.” As such, we have argued, the post-Financial Crisis mantra of "safety and soundness" has been overshadowed by today’s demands for "growth and competitiveness.”  As we enter 2025, the financial sector finds itself at a critical juncture. Political mandates for growth and competitiveness are reshaping regulatory priorities, even as concerns about systemic risk persist. The rapid pace of technological change demands innovation from both firms and regulators alike. Meanwhile, cultural challenges continue to drive misconduct and operational failures across sectors. The path forward requires abandoning the false choice between growth and stability. Instead, as we've long argued at Starling, attention to culture risk governance and supervision offers a way to achieve both aims.

The new wave of tariffs and regulations is set to reshape the U.S. consumer landscape, impacting pricing, supply chains, and business operations. As these policies take effect, retailers and consumer brands must rethink their strategies to stay ahead. First, what’s changing? >> New tariffs on China, Mexico, and Canada (Mexico and China tariffs are deferred to 3/4) will drive higher import costs, especially on raw materials and finished goods. >> Regulatory shifts are increasing compliance expectations, adding complexity for retailers managing cross-border supply chains. >> Labor market volatility due to immigration policy changes may raise wage pressures and impact frontline workforce availability. So how will this affect the U.S. Consumer? >> Higher tariffs mean higher prices. We have already seen consumer sentiment dip this past month, the first decline in consumer sentiment we have seen in 6 months. >> Supply chain disruptions may lead to delays, product shortages, and stockouts in key categories like apparel, electronics, and fast fashion. >> Retailers may adjust pricing models, exploring dynamic pricing, promotions, and alternative sourcing to remain competitive. What can retailers & brands do in this uncertain and dynamic market? >> Optimize supply chains, including diversify sourcing, nearshore production, and assess tariff exposure. >> Balance cost & pricing strategies to identify opportunities to absorb costs without sacrificing margin or customer loyalty. >> Enhance compliance frameworks to streamline reporting, audit readiness, and regulatory adherence to avoid penalties. >> Leverage technology towards more automation, AI-driven forecasting, and dynamic inventory management. etc. As the regulatory landscape continues to evolve, retailers who act now to fortify their operations and enhance agility will emerge stronger. Please reach out if you’d like to discuss further. #Retail #ConsumerTrends

🚨 Financial Crime Regulation in 2025: Why Financial Institutions Must Modernize 🚨 2025 brings heightened scrutiny and significant regulatory shifts in financial crime compliance. Risk, Compliance, Governance and Model Risk Management (MRM) teams must stay ahead of these critical developments: 🔹 Stronger Sanctions Enforcement Regulators are intensifying oversight. Institutions must upgrade sanctions screening tools to address increasingly complex geopolitical risks. 🔹 Anti-Money Laundering (AML) and Know Your Customer (KYC) Innovation New regulations emphasize tailored, risk-based compliance approaches using AI and digital technologies. These facilitate real-time transaction monitoring and streamline customer onboarding. 🔹 Increased Crypto Regulation Enhanced controls for cryptocurrencies and digital assets are becoming mandatory, significantly impacting crypto exchanges and digital finance platforms. 🔹 Advanced Compliance Technology AI, blockchain, and RegTech solutions are increasingly vital for reducing compliance costs and proactively identifying and managing risks. Financial institutions—particularly compliance, risk management, and IT departments—must proactively address growing regulatory complexity, rising compliance costs, and escalating cybersecurity risks. Proactive steps today enhance risk management effectiveness and compliance readiness tomorrow. How is your institution addressing those challenges in 2025? #FinancialCrime #RegTech #AI #Compliance #ModelRiskManagement #MRM #RiskManagement #AML #KYC