Tips from the ToolboxSponsored by: Banker's Toolbox Do you have an impending BSA/AML exam approaching?If you have an upcoming BSA/AML exam, you need to make sure you check your cheat sheet. One of the biggest things BSA officers worry about during their exams is what the examiners are going to ask them. Fortunately, the examiners' questions are already outlined for you in Appendix H of the FFIEC manual. Spend some time reading through the questions before your exam to ensure you are fully prepared to confidently answer the examiners' questions. To learn three more tips to help you deal with an approaching exam
September 17, 2014
Kingpin Act designations announced
Treasury has announced the designation of eight Colombian nationals, identified as underbosses for the criminal group La Oficina de Envigado (La Oficina) based in Medellín, Colombia, under the Foreign Narcotics Kingpin Designation Act (Kingpin Act). As a result of this action, all assets of those designated today that are based in the United States or are in control of U.S. persons are frozen, and U.S. persons are generally prohibited from engaging in transactions with them. Information regarding the designations has been posted in a BOL OFAC Update.
CFPB sues college over private loan program
The CFPB has announced on its Blog and in a news release that it has filed a complaint against the for-profit college chain Corinthian Colleges, Inc. Director Cordray commented on the announcement in a press call. The Bureau alleges that the company induced tens of thousands of students to take out private loans to cover expensive tuition costs by advertising bogus job prospects and career services and used illegal debt collection tactics to strong-arm students into paying back those loans while still in school. A Special Notice was published for current and former students of the college.
Settlement Administrator to contact National City Bank borrowers
The Consumer Financial Protection Bureau has posted a notice to African-American and Hispanic borrowers of National City Bank who were charged higher prices on their mortgage loans than similarly-situated white borrowers between 2002 and 2008. The National City Consent Order Administrator will locate and send checks to minority borrowers who were overcharged. Over the next two weeks, the Administrator will mail packages to all eligible borrowers asking them to participate in the settlement. Participation in the program is free and eligible borrowers can submit a participation form by mail, e-mail or fax. The notice was also posted in Spanish. Borrowers who have questions can check the National City Consent Order Administrator website, which includes a Q&A and contact information.
CFPB Tell Your Story—Predatory auto loans
The Bureau has posted an article relating the story of a father of a serviceman about an auto loan program which utilized deceptive marketing and lending practices to target servicemembers. The story, which was reported to the Bureau under its "Tell Your Story" initiative, resulted in an investigation and an enforcement action against selected auto lenders.
July TIC data
Treasury has released the Treasury International Capital (TIC) data for July 2014. The sum total in July of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC inflow of $57.7 billion. Of this, net foreign private inflows were $84.9 billion, and net foreign official outflows were $27.1 billion.
September 16, 2014
US Bank settles HUD discrimination charge
The Department of Housing and Urban Development has announced an agreement with U.S. Bank National Association, U.S. Bank subsidiary Red Sky Risk Services, LLC (formerly known as USB Lending Support Services, LLC), and one of U.S. Bank's loan officers, resolving allegations that they refused to refinance the mortgage of a Native American couple in Belcourt, North Dakota, because their property is located on a reservation. Under the terms of the agreement, U.S. Bank agreed to pay the couple's U.S. Bank credit card balance in the amount of $11,489.56, and to approve their application for a home mortgage refinance loan at the same interest rate and under other terms and conditions for which they originally applied.
Changes to RRB ACH benefit payments
Treasury and FRB Services have circulated a notice that, effective September 25, 2014, Treasury's Bureau of the Fiscal Service will begin processing Railroad Retirement Board (RRB) benefit payments at its Kansas City Financial Center under Disbursing Officer (DO) symbol 310. Currently, RRB payments are issued under the Philadelphia Financial Center DO symbol 303. The notice includes important information about changes to other key fields in the ACH records for RRB payments.
The September 15, 2014, issue of FedFlash has been posted by FRB Services. This month's articles include information on:
Holiday currency (we are so not ready for this!)
Update on the Next Generation VPN Solution initiative
New FedReceipts RTNs
Check adjustments tips
This weekend's Check Services operations freeze
NCUA releases new guide and videos
A new guide, "How to Start a Federal Credit Union," and two videos on protecting seniors from financial abuse have been released by NCUA. The videos, posted on the NCUA YouTube channel, are:
Scams Targeting Seniors (running time 4:04)—a dramatization of how an unwary consumer could become the victim of a typical scam
CFPB Access to Checking Accounts forum
A forum will be held by the Consumer Financial Protection Bureau in Washington, DC, on October 8, 2014, from 8:30 a.m. to 2:00 p.m. The forum will discuss how checking account screening policies and practices impact consumers. The event will inform the dialogue around how the screening system works and how to improve the availability of information and products for consumers. This event is open to the public, but a reservation is required to attend.
Lew issues Lehman Brothers anniversary statement
Treasury Secretary Lew has issued a statement on the sixth anniversary of the Lehman Brothers' bankruptcy filing, the largest in U.S. history.
Industrial Production and Capacity Utilization Report
The Federal Reserve has released the August 2014 G.17 Industrial Production and Capacity Utilization Report. The index of industrial production edged down 0.1 percent in August, and the index for manufacturing output decreased 0.4 percent; the declines were the first for each index since January. The gains in July for both indexes were revised downward.
September 15, 2014
Ukraine-related sanctions and lists updates
The Department of the Treasury has announced expanded sanctions within the Russian financial services, energy, and defense or related materiel sectors. Treasury also announced the issuance of two new Ukraine-related General Licenses. In addition, the names of seven entities were added and seven existing entries were changed on the SSI List and the names of five entities were added to the SDN List. More information been posted in a BOL OFAC Update.
Mortgage lender pays $35,000 for loan denial
The Housing and Urban Affairs Department has announced that FirstBank Mortgage Partners, a Jackson, Tennessee-based mortgage lender, will pay $35,000 to settle allegations that it violated the Fair Housing Act when it denied a mortgage loan to a couple because one applicant was on maternity leave. The complaint was filed with HUD by a married couple who alleged that after FirstBank had approved their application and scheduled its closing, the lender learned that the wife was on maternity leave and notified the couple within 24 hours of the scheduled closing that the loan was denied. The couple alleged that they then lost the opportunity to buy a home in Virginia and also lost their current housing.
Mortgage lead generator settles deceptive ad charges
The Federal Trade Commission has announced that a court order has been issued requiring Intermundo Media, LLC, an Internet-based operation that finds potential borrowers for mortgage refinancing lenders, to pay a $500,000 civil penalty to settle charges it deceived consumers with ads that falsely claimed they could refinance their mortgages for free. The FTC complaint charged Intermundo Media with violating the Federal Trade Commission Act, the Mortgage Acts and Practices Advertising Rule ("MAP" Rule) and Regulation N, and the Truth in Lending Act and Regulation Z. Under the terms of the settlement, in addition to paying the $500,000 civil penalty, Intermundo Media is prohibited from:
misrepresenting the terms and conditions of any financial product or service, and any term or condition of a mortgage credit product;
disclosing, selling, or transferring the consumer data obtained through the Delta Prime Refinance lead generation service; and
violating the FTC Act, the MAP Rule and Regulation N, and the Truth in Lending Act and Regulation Z.
HSBC pays $550M to settle with Fannie and Freddie
The Federal Housing Finance Agency, as conservator of Fannie Mae and Freddie Mac, has announced a settlement of $550 million with HSBC North America Holdings Inc., related companies and specifically named individuals (HSBC). The settlement resolves claims in the lawsuit FHFA v. HSBC North America Holdings Inc., et al. (S.D.N.Y.), alleging violations of federal, Virginia and District of Columbia securities laws in connection with private-label mortgage-backed securities purchased by Fannie Mae and Freddie Mac during 2005-2007. Under the agreement, HSBC will pay $374 million to Freddie Mac and $176 million to Fannie Mae.
The OCC has announced it will host two workshops in Cleveland on October 28–29, 2014, for directors of national community banks and federal savings associations. The Credit Risk and Risk Assessment workshops are limited to the first 35 registrants. Registration and information is available on the OCC's site.
NCUA Boot Camp registration
A reminder has been posted by the NCUA that it is not too late to register for the final Leadership Book Camps to be held in Chicago and Philadelphia on September 20, 2014. Topics covered during the Boot Camps include:
Protecting Your Credit Union from Employment-Practices Lawsuits
FTC comments on CFPB request on mobile financial services
The Federal Trade Commission staff has responded to the CFPB's June 12, 2014, request for information (RFI) regarding the use of mobile financial services by consumers and its potential for improving the financial lives of economically vulnerable consumers.
Final rule: large nonbank international money transfer providers
A CFPB news release has announced approval of a final rule that allows it to supervise certain nonbank international money transfer providers for the first time. The rule, first proposed in January 2014, brings new oversight to approximately 25 larger nonbank international money transfer providers. A Fact Sheet on the rule was also released.
September 12, 2014
Flood CMPs for two Ohio banks
The Federal Reserve Board has issued civil money penalties for violations of the National Flood Act against Portage Community Bank, Revenna, Ohio, ($4,640) and Settlers Bank, Marietta, Ohio, ($35,310). Information on the CMP orders has been posted to BOL's Flood Penalties Watch page.
FinCEN Advisory on human smuggling and trafficking red flags
FinCEN Advisory 2014-A008 has been issued. The Advisory alerts financial institutions to the need for recognizing "red flags" that may indicate financial activity related to human smuggling or human trafficking. In addition to identifying such signals or symptoms, the advisory provides common terms that financial institutions may use when filing SARs reporting activity related to these crimes.
Kingpin Act designations
Treasury has announced the designation of three Mexican attorneys and one company as Specially Designated Narcotics Traffickers (SDNTs) pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act) because of their links to major drug traffickers Rafael Caro Quintero and Juan Jose Esparragoza Moreno (a.k.a. "El Azul"). As a result of this action, all assets of those designated that are based in the United States or are in control of U.S. persons are frozen, and U.S. persons are generally prohibited from engaging in transactions with them. Information regarding the designations has been posted in a BOL OFAC Update. Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals could face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.
SEC charges Delaware BHC with fraud
The Securities and Exchange Commission has announced the filing of accounting and disclosure fraud charges and the granting of an order against a Delaware-based bank holding company for failing to report the true volume of its loans at least 90 days past due as they substantially increased in number during a financial crisis. Wilmington Trust Company, Wilmington, Delaware, which was acquired by M&T Bank in May 2011, has agreed to pay $18.5 million in disgorgement (surrendering of profits) and prejudgment interest to settle the SEC's charges.
FTC issues final rule changes
The Federal Trade Commission has approved final amendments to the Mail or Telephone Order Merchandise Rule. The Rule, issued in 1975, requires mail and phone-based sellers to have a reasonable basis to expect that they can ship within any advertised time frame, or within 30 days. It also requires that, when the promised shipping time cannot be met, the seller must obtain the buyer's consent to a shipping delay or refund payment for the unshipped merchandise. The significant changes:
clarify that the Rule covers orders placed over the Internet, and change the name of the Rule to the Mail, Internet, or Telephone Order Merchandise Rule;
revise the Rule to allow sellers to provide refunds and refund notices to buyers by any means that is at least as fast and reliable as first-class mail;
clarify sellers' obligations when buyers use payment methods not spelled out in the Rule, such as debit cards or prepaid gift cards; and
require that refunds be made within seven working days for purchases that were made using third-party credit, such as Visa or MasterCard cards. For credit sales where the seller is the creditor (such as merchants using their own store charge cards) the refund deadline would remain one billing cycle.
The changes will become effective December 8, 2014. Financial institutions will need to take the changes into account when dealing with customer claims relating to account charges involving such purchases.
NCUA and AARP promote financial literacy
The NCUA has announced it will team with AARP to work on a series of initiatives aimed at promoting financial education and outreach, helping consumers achieve financial security and increasing access to responsible and affordable financial services.
NCUA board meeting agenda
The agenda for the September 18, 2014, meeting of the NCUA Board of Directors has been posted.
September 11, 2014
Volcker Rule FAQs
The Federal Reserve Board has released Volcker Rule FAQs. The Board indicated it is working closely with the other agencies charged with implementing the requirements of the Volcker Rule (section 13 of the Bank Holding Company Act), including the OCC, the FDIC, the SEC, and the Commodity Futures Trading Commission. While the frequently asked questions apply to banking entities for which the Board has jurisdiction under section 13 of the BHC Act, they have been developed by staffs of the several Agencies, and substantively identical versions will appear on the public websites of each Agency.
FTC Pass it ON campaign
The Federal Trade Commission's newest education campaign, "Pass it ON," encourages older adults to help raise awareness about fraud by talking to their families, friends, and neighbors about avoiding common scams. Pass it ON involves identity theft, paying too much for bills, and scams involving imposters, fundraising, prizes and lotteries, and health care. It offers short and direct reminders of the signs of scams, suggests tools to start a conversation, and encourages older consumers to pass the information on. The campaign is based on the concept that older people are part of the solution to the problem, not just the victims of scammers. Fact sheets, bookmarks, word games, presentations, and a new video that describes how consumers can start a conversation about spotting fraud are available. The site is also available in Spanish.
Former bank exec pleads guilty
The Department of Justice has announced that a former senior vice president and chief credit officer of TierOne Bank, Lincoln, Nebraska, has pleaded guilty to conspiring to commit securities fraud, wire fraud and making false entries in a bank's books and records, as well as one count of making false statements. According to a criminal information filed with his plea agreement, from at least 2009 to April 2010, the officer and others falsely inflated the value of TierOne's loan and real estate portfolios in its required reports to the SEC and the OTS. TierOne filed for bankruptcy shortly after the bank was shut down by the OTS in June 2010.
Treasury to sell additional First Bancorp. stock
The Department of the Treasury has announced that it would continue to wind down its investment in First BanCorp. by selling additional shares of common stock through its first pre-defined written trading plan. Treasury currently holds 19,680,441 shares, or approximately 9.2 percent of First BanCorp. common stock.
FTC Consumer Information blog
The Federal Trade Commission has posted an article on its Consumer Information blog titled "Data breaches, credit freezes, and identity theft... oh my!" The article responds to recent news of a large-scale data breach at Home Depot, and questions from consumers about credit freezes (also called security freezes). Also included are advice on account monitoring, checking free credit reports, and awareness of phishing scams.
September 10, 2014
FEMA to suspend communities
The Federal Emergency Management Agency has published a final rule in today's Federal Register identifying communities in Alabama, Illinois, Indiana, Michigan, and Virginia where the sale of flood insurance has been authorized under the National Flood Insurance Program (NFIP) that are scheduled for suspension on October 2, 2014, for noncompliance with the floodplain management requirements of the program.
Bureau updates resources for TILA-RESPA rule
The Consumer Financial Protection Bureau has updated its Small Entity Compliance Guide for the TILA-RESPA Integrated Disclosure rule, and its Guide to the Loan Estimate and Closing Disclosure forms. It has also added an illustrative TILA RESPA Integration disclosure timeline example, which was mentioned in the recent Outlook Live webinar on the rule. A link to each of these documents is on the Bureau's TILA-RESPA Integrated Disclosure rule implementation page. The archive of the Federal Reserve System's Outlook Live webinar is also available for playback. The media player for the recording allows users to pause and restart the recording to facilitate note taking. In a related announcement, the Federal Reserve and the Bureau have scheduled the third in their Outlook Live series of webinars for Wednesday, October 1, 2014 at 2:00 p.m. EDT, and opened the registration page for that session.
FTC action shuts down robocall scheme
At the request of the FTC, a federal district court in New York has barred the operators of an illegal robocall scheme from falsely telling consumers they could obtain refunds from the Federal Trade Commission on their behalf. In its complaint, the FTC charged that the operators of The Cuban Exchange Inc "spoofed" the FTC's own toll-free number on consumers' caller ID and misled more than 13,000 people into believing the operation could help get refunds from the Commission. According to the FTC, the claims were a ruse, known as "imposter fraud," that was designed to trick consumers into providing their personal information and bank account numbers. The operation also did business as CrediSure America and MyiPad.us. The Federal District Court entered a final default judgment and order for permanent injunction, which permanently bars The Cuban Exchange and its principal, Suhaylee Riviera, from making misrepresentations in connection with the marketing or sale of any goods or services. Among other things, the order prohibits defendants from claiming an affiliation with, or endorsement by, the FTC, or claiming that they can obtain refunds from the Commission on behalf of consumers. The judgment also bars the defendants from making illegal robocalls and calling consumers whose phone numbers are on the Do Not Call Registry. Finally, the judgment permanently shuts down the websites that were used in the scheme, including ftcrefund.com, and prohibits defendants from starting any new website that advertises an ability to provide government refund services.
Delaware firm settles with OFAC
Treasury has announced that Zulutrade, Inc. a Delaware-incorporated entity registered with the Commodities Futures Trading Commission, has agreed to pay $200,000 to settle potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations, the Sudanese Sanctions Regulations, and Executive Order 13582 of August 17, 2011, "Blocking Property of the Government of Syria and Prohibiting Certain Transactions With Respect to Syria."
Cease and desist order issued
The Federal Reserve Board has issued a Cease and Desist Order to a Pennsylvania bank and its holding company. The Order requires the holding company to submit a written plan to strengthen its compliance risk management program with regard to services that it performs for its subsidiary banks regarding compliance with the BSA/AML requirements, retain an independent third party to review its BSA/AML compliance program, submit a revised firm-wide BSA/AML program to the FRB, and revise its customer due diligence program and its program regarding suspicious activity monitoring and reporting.
Annual exemption threshold adjustments
The Federal Reserve and Consumer Financial Protection Bureau have jointly announced the annual adjustment in the dollar thresholds in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) for exempt consumer credit and lease transactions. The adjustments to the thresholds reflect the annual percentage increase in the consumer price index as of June 1, 2014, and will take effect on January 1, 2015. Although the Dodd-Frank Act generally transferred rulemaking authority under the Truth in Lending Act and the Consumer Leasing Act to the CFPB, the Federal Reserve Board retains authority to issue rules for certain motor vehicle dealers. Therefore, the agencies are issuing these adjustments jointly. BankersOnline has updated its Read-A-Reg pages for CFPB Regulations M and Z.
Regulators testify on Dodd-Frank implementation
Comptroller Curry made an oral statement and presented written testimony; Chairman Gruenberg presented written testimony; and Director Cordray presented written testimony yesterday on the implementation of the provisions of the Dodd-Frank Act before the Senate Committee on Banking, Housing and Urban Affairs.
Second Quarter State Profiles released
The FDIC has released the released the Second Quarter 2014 State Profiles, a quarterly data sheet summation of banking and economic conditions in each state.
NCUA Quarterly Map Review
The NCUA has issued its Quarterly U.S. Map Review for the Second Quarter 2014, which tracks performance indicators for federally insured credit unions in the 50 states and the District of Columbia. The review shows two key state-level economic indicators: unemployment rates and home price changes.
Bureau Blog articles
The CFPB Blog features a timely article with tips on what a consumer can do if a credit or debt card may be or has been hacked. A second article relates how the CFPB helped an individual successfully dispute an alleged debt that he did not owe.
September 9, 2014
Agencies propose updates to CRA Q&A
The Federal Reserve Board, FDIC and OCC have announced their notice of proposed revisions to the "Interagency Questions and Answers Regarding Community Reinvestment." The proposed new and revised questions and answers:
address alternative systems for delivering retail banking services;
add examples of innovative or flexible lending practices;
address community development-related issues by:
clarifying guidance on economic development;
providing examples of community development loans and activities that are considered to revitalize or stabilize an underserved nonmetropolitan middle-income geography; and
clarifying how community development services are evaluated; and
offer guidance on how examiners evaluate the responsiveness and innovativeness of an institution's loans, qualified investments, and community development services.
Lew on the economy
In a presentation at the Urban Institute, Treasury Secretary Lew discussed the economy and strategies to promote growth and reduce unemployment. He noted a second quarter gain in GDP and job growth over the past 54 months. He remarked, "One important strategy is business tax reform." The Secretary concluded, "Tax policy has serious consequences, and it highlights the important choices we face as a nation: That is, whether we have the resources to make the investments that will make our economy more competitive. Whether we make it possible for more businesses to grow, innovate, and hire. And whether we make sure everyone has a fair shot at success."
Consumer credit report released
The Federal Reserve has released the July 2014 G.19 Consumer Credit Report. Consumer credit increased at a seasonally adjusted annual rate of 9¾ percent. Revolving credit increased at an annual rate of 7½ percent, while nonrevolving credit increased at an annual rate of 10½ percent.
Payment Cards Center releases papers
The Federal Reserve Bank of Philadelphia has announced that two new papers are available on its Payment Cards Center site:
Iowa credit union shuttered
The NCUA has announced the closing of Louden Depot Community Credit Union, Fairfield, Iowa, and the assumption of most of its members, assets, and loans by Community 1st Credit Union of Ottumwa, Iowa. Louden Depot Community Credit Union is the seventh federally insured credit union to be liquidated in 2014.
Investment advisor sentenced in money laundering case
The U.S. Department of Justice has announced the sentencing of Joshua Vandyk, an investment advisor, to 30 months in prison for conspiring to launder monetary instruments. According to plea agreements with Vandyk and two Canadian citizens indicted as co-conspirators, the trio conspired to conceal and disguise the nature, location, source, ownership and control of property believed to be the proceeds of bank fraud, specifically $2 million, and assisted undercover law enforcement agents posing as U.S. clients in laundering purported criminal proceeds through an offshore structure designed to conceal the true identity of the proceeds' owners.
September 5, 2014
The FDIC has released the ratings received by state nonmember banks recently evaluated for compliance with the Community Reinvestment Act. Of the 82 banks examined, seven received an outstanding rating, and 75 received a satisfactory rating.
Fed to conduct series of TDF operations
The Federal Reserve has announced plans to conduct a series of eight consecutive 7-day term deposit operations through its Term Deposit Facility (TDF). Term deposits in this series will incorporate an early withdrawal feature that will allow depository institutions to obtain a return of funds prior to the maturity date, subject to an early withdrawal penalty. An overview, step-by step guides and an FAQ are found on the Federal Reserve's Term Deposit Facility Resource Center page.
Federal Reserve Financial Services has posted a new edition of FedFocus. The issue features these articles:
Payment study reveals substantial changes in composition of noncash payments
CFPB proposes new financial coaching program
A Notice and Request For Comment (NRC) has been published [79 FR 52638] in the Federal Register by the CFPB concerning the proposed launch of a financial coaching project to provide direct financial coaching services to transitioning veterans and economically vulnerable consumers nationwide. The Bureau plans to collect information to evaluate the effectiveness of the program and is requesting comments on the necessity for the collection, the accuracy of its estimated burden of collection, ways to enhance the process, and ways to minimize the burden of collection. The comment period ends November 3, 2014.
Payment system improvements research completed
The Financial Services Policy Committee of the Conference of Presidents of the Federal Reserve System has announced the completion of a program of research and input gathering designed to inform an initiative to improve the speed, efficiency and security of the U.S. payment system. A summary of those efforts and stakeholder input can be found at FedPaymentsImprovement.org.
Treasury birthday party
Secretary Lew delivered an address at an event organized by the Treasury Historical Association to honor the 225th anniversary of the establishment of the Department of the Treasury by Congress.
September 4, 2014
Mortgage fraud using straw buyers
The Department of Justice has announced that a Michigan man has been sentenced to 18 months in prison and the payment of almost $200,000 in restitution to a bank and Fannie Mae for his participation in a conspiracy to commit bank fraud. The scheme involved the purchase of homes for approximately $5,000 to $40,000 each and the recruiting of straw buyers to submit fraudulent loan applications for home mortgages in exchange for a fee.
Citigroup in OFAC settlement
Treasury has announced that Citigroup Inc. (Citigroup) has agreed to remit $217,841 to settle potential civil liability for eight apparent violations of the Iranian Transactions and Sanctions Regulations, the Weapons of Mass Destruction Proliferators Sanctions Regulations, the Foreign Narcotics Kingpin Sanctions Regulations, or the Global Terrorism Sanctions Regulations. Employees of Citigroup Trade Services Malaysia (Citi Penang) failed to review or screen the bills of lading, certificates of origin, or shipment advice involving the shipment of goods to Iran. In a separate series of four funds transfers to entities listed on the SDL List, Citibank's interdiction software did not identify references to sanctioned parties in payment instructions and the payments were processed straight through without manual intervention. OFAC determined that Citigroup voluntarily self-disclosed the four apparent violations processed by Citi Penang, but did not voluntarily self-disclose the apparent violations processed by Citibank. OFAC also determined that the apparent violations constitute a non-egregious case. The base penalty amount for the apparent violations was $484,091, but the settlement amount reflects consideration of mitigating factors.
Comments requested on revised swap margin proposal
The Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, the Farm Credit Administration, and the Federal Housing Finance Agency have jointly announced they are seeking comment on a revised proposed rule that would establish margin requirements for swap dealers, major swap participants, security-based swap dealers, and major security-based swap participants as required by the Dodd-Frank Act. The proposed rule would establish minimum requirements for the exchange of initial and variation margin between covered swap entities and their counterparties to non-cleared swaps and non-cleared security-based swaps. Comments will be due within 60 days of publication of the proposal in the Federal Register.
Liquidity coverage ratio finalized
Federal banking regulators (FRB, FDIC, and OCC) have announced the finalizing of a rule to strengthen the liquidity position of large financial institutions. The rule will create a standardized minimum liquidity requirement for large and internationally active banking organizations. Each institution will be required to hold high quality, liquid assets (HQLA) such as central bank reserves and government and corporate debt that can be converted easily and quickly into cash in an amount equal to or greater than its projected cash outflows minus its projected cash inflows during a 30-day stress period. The ratio of the firm's liquid assets to its projected net cash outflow is its "liquidity coverage ratio," or LCR. Affected U.S. firms will be required to be fully compliant with the rule by January 1, 2017.
Supplementary leverage ratio rule adopted
The FRB, FDIC and OCC also announced the adoption of a final rule modifying the definition of the denominator of the supplementary leverage ratio in a manner consistent with recent changes agreed to by the Basel Committee on Banking Supervision. The revisions to the supplementary leverage ratio will apply to all banking organizations subject to the advanced approaches risk-based capital rule. Certain disclosures under the rule will be required starting in the first quarter of 2015; the minimum supplementary leverage ratio requirement using the revised calculations will be effective January 1, 2018.
Bureau Advisory Board to meet
The CFPB has issued an invitation to a meeting of its Consumer Advisory Board in Washington, D.C. on September 11, 2014, from 10:30 am to 3:30 pm. Details are available in the meeting agenda and an event flyer.
CFPB warning on 0% interest credit cards
The Consumer Financial Protection Bureau has posted an article alerting consumers about ways they may be required to pay interest on a 0% interest credit card. The article cautions consumers that marketing materials may not always provide clear and prominent information about how promotional balance offers may eliminate or suspend an account's grace period provision. The Bureau also posted its new Bulletin 2014-02, which warns card issuers of the risk of engaging in deceptive and/or abusive acts and practices in connection with solicitations offering a promotional APR involving, among other things, convenience checks, deferred interest/promotional interest rate purchases, and balance transfers.
FCA proposes regulatory capital requirement revisions
The Farm Credit Administration has published [79 FR 52813] a request for comments on a proposed rule that would revise FCA's regulatory capital requirements for Farm Credit System institutions. Comments on the proposal are due by January 2, 2015.
NMLS enhancements and updates
The NMLS has announced October 6, 2014, as the target date for the implementation of numerous general enhancements and system maintenance updates.
The Federal Reserve has released the September 3, 2014, issue of the Beige Book.
September 3, 2014
Changes to FHLB membership requirements proposed
The Federal Housing Finance Agency (FHFA) has announced a proposed rule that would revise the requirements for financial institutions to apply for and retain membership in one of the 12 Federal Home Loan Banks (Banks). The proposal would revise FHFA's existing Bank membership regulation to ensure that members maintain a commitment to housing finance and that only eligible entities can gain access to Bank advances and the benefits of membership.
Board lists pending litigation
The Federal Reserve Board has posted a list of pending cases involving the Board of Governors. The list does not include lawsuits against the Federal Reserve Banks that do not name the Board of Governors as a party.
August Foreign Exchange Rates report
The G.5 Foreign Exchange Rates report for August 2014 has been released by the Federal Reserve.
Large banks risk guidelines
The Office of the Comptroller of the Currency has announced its publication of final guidelines to strengthen the governance and risk management practices of large financial institutions. The guidelines apply to insured national banks, insured federal savings associations, and insured federal branches of foreign banks with $50 billion or more in average total consolidated assets. The guidelines also apply to an OCC-regulated institution with less than $50 billion in average total consolidated assets if that institution's parent company controls at least one other covered institution.
NCUA merger webinar
The NCUA will host a free webinar, "Merger Best Practices," on Wednesday, September 17, 2014, at 2 p.m. ET. The topics will include:
when to consider merging,
merger structure and negotiations,
cardinal characteristics of a credit union heading towards merger, and
how to maximize benefits for credit union members and staff.
Online registration is now available for the webinar, which will be closed-captioned and may be viewed online approximately three weeks following the live event.
CU loan growth
An NCUA news release has been issued to announce that the improving economy in the second quarter of 2014 resulted in the highest year-over-year loan growth since 2006 for federally insured credit unions, as lending increased in all categories. The Second Quarter 2014 Call Report data reported:
outstanding loans up 9.8% in past year;
longer investment share remains elevated;
membership passes 98 million;
return on average assets and net worth up;
assets continue to rise;
delinquency and charge-off ratios steady; and
bankruptcy losses declined.
September 2, 2014
FDIC enforcement actions
The FDIC has publicized a list of 39 orders for administrative enforcement actions taken against banks and individuals in July (and one from June). Included was a $15,000 civil money penalty (CMP) against a Tennessee bank for violations of the UDAP provisions of the Federal Trade Commission Act relating to prepayment penalties on residential mortgage loans. Also included was a $20,000 CMP against a Georgia bank for UDAP violations related to failures to disclose cash advance fees on its credit cards and violations related to its ID Theft add-on product. Another Georgia bank was assessed a $10,000 CMP for UDAP violations for failing to disclose that consumers could opt out of its ID Theft add-on product. And an Iowa bank was assessed $2,420 for Flood Act violations, details of which will be added to the BOL Flood Penalties Watch page.
Treasury has announced the targeting of a diverse set of entities and individuals under various Iran-related sanctions programs, targeting Iran's missile and nuclear programs, sanctions evasion efforts, and support for terrorism. The Department of State also announced additional actions under its authorities.
As a result of this action, U.S. persons are now generally prohibited from engaging in transactions with the designated parties and all property and interests in property under U.S. jurisdiction in which the designees have an interest are blocked. Information regarding the actions has been posted in a BOL OFAC Update.
TALF report delivered to Congress
The Federal Reserve Board has filed with Congress an update on the outstanding Federal Reserve loans authorized under the Term Asset-Backed Securities Loan Facility (TALF).
Fourth quarter CRA exam schedules
The OCC and the FDIC have issued their respective fourth quarter 2014 CRA evaluation schedules.
NCUA prohibition orders issued
The NCUA has announced the issuance of three orders prohibiting individuals from participating in the affairs of any federally insured financial institution. Copies of the orders are available online.
August 29, 2014
Bureau's HMDA proposal published
The CFPB's previously announced proposal to amend its Home Mortgage Disclosure regulation (Regulation C, 12 CFR Part 1003) was published [79 FR 51731] in this morning's Federal Register. The proposal would add several new reporting requirements (under HMDA amendments made by section 1094 of the Dodd-Frank Act), clarify several existing requirements, and make changes to institutional and transactional coverage under Regulation C. With publication, the two-month comment period on the proposal has opened, and it will end on October 29, 2014.
OCC revises EFTA booklet OCC Bulletin 2014-43 has been issued to announce the revision of the "Electronic Fund Transfer Act" booklet of the Comptroller's Handbook, replacing a booklet issued in October 2011. The revised booklet provides updated guidance to examiners and bankers relevant to recent changes made to Regulation E regarding remittance transfers.
Field hearing on auto finance
The CFPB has announced it will hold a field hearing on auto finance on Thursday, September 18, at 11 a.m. EDT in Indianapolis, Indiana. The Bureau often uses its field hearings to announce significant actions related to the topic of the hearings.
$125K CMP for NJ MSB
The Financial Crimes Enforcement Center (FinCEN) has announced it has imposed a $125,000 civil money penalty on BPI, Inc., a New Jersey money services business, for willful and repeated BSA violations. BPI had been cited in 2005 and 2006 for violations, and showed no improvement in 2011. The deficiencies involved internal controls, independent testing and training. Before 2011, BPI had never filed a SAR. The MSB's employees also failed to obtain or verify required identification, or accepted expired ID documents. BPI ceased its MSB operations in 2014.
Treasury posts FSAP review documents
Treasury has announced the availability on its website of key documents for the 2015 U.S. Financial Sector Assessment Program (FSAP) review. The FSAP is a joint IMF-World Bank program that began in 1999 following the financial crisis in Asia. The FSAP provides an integrated analysis of financial stability and development issues, and generally includes financial sector analysis, stress testing, and an assessment of the observance and implementation of international standards and codes. The first set of documents includes financial sector "self-assessments," which review U.S. observance and compliance with three international standards and core principles:
Core Principles for Effective Banking Supervision issued by the Basel Committee on Banking Supervision;
Insurance Core Principles issued by the International Association of Insurance Supervisors; and
Objectives and Principles of Securities Regulation issued by the International Organization of Securities Commissions
G.20 Finance Companies report
The Federal Reserve has released the June 2014 G.20 Finance Companies Owned and Managed Receivables Outstanding and Auto Loans: Terms of Credit Report.
FDIC Quarterly Banking Profile
The FDIC has announced the publication of the Second Quarter 2014 issue of its Quarterly Banking Profile. Chairman Gruenberg issued a statement prior to the release of the report. FDIC insured commercial banks and savings institutions reported aggregate net income of $40.2 billion in the second quarter of 2014, up $2.0 billion (5.3 percent) from earnings of $38.2 billion reported a year earlier. The increase in earnings was mainly attributable to a $1.9 billion (22.4 percent) decline in loan-loss provisions and a $1.5 billion (1.4 percent) decline in noninterest expenses. Approximately 57.5 percent of the reporting institutions had year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable during the second quarter fell to 6.8 percent from 8.4 percent.
FinCEN ruling on application of MSB regulations
FinCEN has released a ruling, FIN-2014-R009, responding to a letter seeking an administrative ruling about a company's possible status as a money services business under the Bank Secrecy Act. The company is currently engaged in two types of activities:
acting as an ISO, soliciting merchants to offer them the credit and debit card processing services of two counterparties, under a marketing and sponsorship agreement
acting separately as a payment processor for merchant credit and debit card transactions and automatic clearing house ("ACH") transfers.
FinCEN determined that the company would not be considered an MSB. The ruling is specific to the company and the facts included in the company's ruling request.
OCC Orlando workshop
The Office of the Comptroller of the Currency will host a workshop in Orlando, Florida, October 6–8, 2014, for directors of national community banks and federal savings associations. "Mastering the Basics: A Director's Challenge" provides practical information on the roles and responsibilities of board participation.
August 28, 2014
Bank settles with OFAC
OFAC has announced that Branch Banking & Trust Company, Winston-Salem, North Carolina, has agreed to pay $19,125 to settle potential civil liability for one apparent violation of the Sudanese Sanctions Regulations.
SEC Adopts NRSRO credit rating agency reform rules
The SEC has adopted new requirements for credit rating agencies to enhance governance, protect against conflicts of interest, and increase transparency. The new rules are designed to improve the quality of credit ratings and increase credit rating agency accountability. The changes, which implement 14 rulemaking requirements under the Dodd-Frank Act, apply to credit rating agencies registered with the Commission as nationally recognized statistical rating organizations (NRSROs). A fact sheet and highlights of the amendments and new rules were included in the text of the Commission's press release.
Counter Terrorism and Kingpin Act designations
Treasury has announced it has targeted the leadership and financial networks of Lashkar-e-Tayyiba (LT) by designating Muhammad Iqbal and Asma Money Exchangers as Specially Designated Global Terrorists (SDGTs) pursuant to Executive Order (E.O.) 13224. Iqbal and Asma Money Exchangers are being designated for providing financial, material, or technological support to, or financial or other services to or in support of, LT, a terrorist organization based in Pakistan. Asma Money Exchangers is also designated for being owned or controlled by Iqbal. As a result of this action, all property and interests in the United States or in the possession or control of U.S. persons in which Iqbal and Asma Money Exchangers have an interest are blocked, and U.S. persons are prohibited from engaging in transactions with them. Information regarding the designations has been posted in a BOL OFAC Update.
Federal Reserve Board meeting notice
The Federal Reserve has issued a notice that an open meeting of the Board of Governors will be held at 10:30 a.m. on Wednesday, September 3, 2014. On the agenda are:
Final Rulemaking: U.S. Liquidity Coverage Ratio
Proposed Rulemaking: Margin Requirements on Non-Cleared Swaps
OFAC updates Ukraine-related sanctions FAQs
Treasury's Office of Foreign Assets Control has issued updated FAQs regarding Ukraine-related sanctions.
The Summer 2014 issue of FDIC Consumer News features tips on preparing financially for disability or death, plus basic strategies for helping family members or others who are facing a personal hardship. The edition also reports on enhancements to the FDIC webpages explaining deposit insurance, tips for rebounding from a bad credit history, and basics on new credit and debit cards that contain a computer chip for added security.
FDIC Board meeting notice
A notice of the September 3, 2014, meeting of the FDIC Board of Directors has been posted. The discussion agenda includes:
memorandum and resolution re: the Liquidity Coverage Ratio Final Rule
memorandum and resolution re: Regulatory Capital Rules: Regulatory Capital, Revisions to the Supplementary Leverage Ratio
The meeting will be webcast live and subsequently made available on demand approximately one week after the event.
August 27, 2014
Agencies join to protect student veterans
The Consumer Financial Protection Bureau has posted an article announcing an agreement among the CFPB and the Departments of Veterans Affairs, Defense, and Education to better protect servicemembers, veterans, and their family members who are attending college. The agencies agreed to:
Have a point of contact for sharing information
Share complaints about schools
Alert each other of suspected fraud, deception, or misleading practices
Notify each other of any agency action that could lead to a college's loss of eligibility, a suspension of enrollment, or a termination of license
CFPB publishes report on financial wellness at work
The CFPB has announced its publication of "Financial Wellness at Work," a report to promote financial wellness in the workplace. The report contains case studies that are designed to educate employers about practices that can improve employees' financial health and increase worker productivity.
FRB payment systems quarterly data
The Federal Reserve has released second quarter 2014 data for:
Discount rates meetings minutes
The minutes of the Federal Reserve Board discount rates meetings on July 14 and July 28, 2014, have been released.
OCC risk workshops in Dallas
The OCC will host two workshops in Dallas at the Embassy Suites Dallas-Park Central, September 30 and October 1, for directors of national community banks and federal savings associations. Participants in the Credit Risk and Risk Assessment workshops will receive a pre-workshop reading package and course materials, and assorted supervisory publications. Each workshop is limited to the first 35 registrants.
Regulation AA proposal published
The Federal Reserve Board's previously-announced proposal to repeal its Regulation AA (12 CFR Part 227) has been published [79 FR 51115] in this morning's Federal Register, and the comment period is now open, through October 27, 2014.
August 26, 2014
FHA publishes mortgage amendments
The Federal Housing Administration has published two final rules in today's Federal Register to bring FHA mortgage regulations into alignment with the January 2014 Dodd-Frank Act Regulation Z changes made by the CFPB:
The first [79 FR 50838] revises FHA's single family ARM program to align FHA interest rate adjustment and notification regulations with the Regulation Z requirements in section 1026.20(c). The Regulation Z change includes a temporary accommodation for the FHA program that expires January 10, 2015, the effective date of the FHA program change.
The second [79 FR 50835] will end the previously-permitted practice of charging a mortgagor interest through the end of the month in which the mortgage is being paid off. The new rule allows mortgagees to charge interest only through the date the mortgage is paid, thus avoiding a conflict with strict new limitations on prepayment penalties in Regulation Z. The amendment is effective January 21, 2015.
NCUA may issue CMPs for late call reports
The NCUA has reported that 75 credit unions are facing potential civil money penalties (CMPs) for filing late second quarter Call Reports. The NCUA is reviewing the cases to determine whether any of the late filers have mitigating circumstances that warrant a waiver of penalties. The agency expects to notify late filers in September of the penalties, determined by three factors: size of the credit union, lateness in filing the Call Report and history of violations.
CFPB seeks $7M for illegal debt-settlement fees
The Consumer Financial Protection Bureau (CFPB) has announced it has filed a complaint in federal district court against Global Client Solutions, a debt-settlement payment processor, for allegedly helping other companies collect tens of millions of dollars in illegal upfront fees from consumers. The Bureau has asked the court to approve a consent order that would require the company and its two owners to halt all illegal activities and to pay over $6 million in relief to consumers as well as a $1 million civil penalty.
Cybersecurity simulation exercise announced
Federal Reserve Financial Services has announced the
Financial Services Information Sharing and Analysis Center (FS-ISAC) will host its free annual cybersecurity simulation exercise to help financial institutions assess their readiness in the event of a cyber attack. Participants may choose from two identical sessions on September 9–10 or September 16–17, 2014.
Final rule issued amending Remittance Transfers Rule
The CFPB has announced it has finalized revisions to the remittance transfers rule intended to preserve the rule's new consumer protections while providing federally insured institutions, such as banks and credit unions, with additional time to provide exact disclosures in certain cases. The amendments:
extend from July 21, 2015, to July 21, 2020, the sunset date on the temporary exception in § 1005.32(a) that allows insured institutions to provide estimates of certain costs in connection with foreign remittance transfers sent from a consumer's insured account
clarify that U.S. military installations abroad are located in a State for purposes of the rule
make clear that whether a transfer from an account is for personal, family, or household purposes may be determine by ascertaining the primary purpose of the account (particularly helpful for sole proprietorship accounts)
clarify that faxes are considered writings for the purposes of the rule's disclosure requirements
add language that permits oral completion and disclosures after receiving a remittance inquiry in writing
further clarify two of the rule's error resolution provisions
The CFPB also released a revised version of its compliance guide to reflect the changes.
Fed proposes repeal of Regulation AA
The Federal Reserve Board has issued a press release requesting comment on a proposal to repeal Regulation AA (Unfair or Deceptive Acts or Practices). The Dodd-Frank Act voided the Board's authority to write rules that address unfair or deceptive acts or practices, which are contained in Regulation AA. In coordination with the proposal, Interagency Guidance was issued by federal financial regulators clarifying the repeal of the credit practices rules applicable to banks, savings associations, and federal credit unions is not a determination that the prohibited practices contained in those rules are permissible. The OCC issued Bulletin 2014-42 and FDIC released FIL-44-2014 to further explain the purpose of the Interagency Guidance.
FTC files complaint against debt relief scam
The Federal Trade Commission has filed a complaint asking a federal court to shut down a scam that targeted financially distressed Americans by pitching a phony debt relief and credit repair program, and by falsely claiming the program was provided and funded by the federal government and endorsed by President Obama. According to the complaint, scammers would ask consumers for details of their outstanding debt, including account numbers, and then arrange bogus electronic payments that gave consumers the impression their debts were in fact being paid. The scammers would then tell consumers to pay the "service charge," typically through money transfer services such as Western Union or MoneyGram. Once consumers paid the charge, the scammers would reverse the payments made to consumers' bills, leaving consumers without the promised debt relief or improvements to their credit scores or limits.
al-Qaida counter terrorism designations
Treasury has announced it has imposed sanctions on two key financiers of the al-Qaida-linked terrorist organization Al Nusrah Front (ANF) and al-Qaida, in support of United National Security Council Resolution 2170 (UNSCR 2170), adopted on August 15, 2014. As a result of this designation, any assets these individuals may have under U.S. jurisdiction are frozen, and U.S. persons are generally prohibited from doing business with them. Under the U.N. resolution, the designees have also been added to the al-Qaida sanctions list and are subject to the associated international sanctions and travel ban. Information regarding the designations has been posted in a BOL OFAC Update.
Goldman Sachs pays $3.15 billion to settle FHFA claim
The Federal Housing Finance Agency (FHFA), as conservator of Fannie Mae and Freddie Mac, has announced a $3.15 billion settlement with Goldman Sachs, related companies and certain named individuals regarding claims alleging violations of federal and state securities laws in connection with private-label mortgage-backed securities (PLS) purchased by Fannie Mae and Freddie Mac between 2005 and 2007. Goldman Sachs will pay approximately $2.15 billion to Freddie Mac and approximately $1 billion to Fannie Mae.
Yellen on labor market dynamics and monetary policy
In a presentation at the Federal Reserve Bank of Kansas City Economic Symposium, Federal Reserve Board Chair Yellen discussed the labor market recovery and monetary policy.
Communities to be suspended from NFIP
The Federal Emergency Management Agency has published two final rules in today's Federal Register to announce its suspension of communities from the National Flood Insurance Program due to noncompliance with flood plain management requirements of the program. The suspensions are scheduled as follows:
Effective September 17, 2014, [79 FR 50561] listed communities in Indiana, Texas and Wisconsin
Effective September 26, 2014, [79 FR 50556] listed communities in California, Florida, Kentucky, Pennsylvania and Texas
August 22, 2014
Bank of America settlement announced
After weeks of media anticipation and speculation, the Justice Department announced Thursday that it had reached a $16.65 billion settlement with Bank of America Corporation — the largest civil settlement with a single entity in American history — to resolve federal and state claims against Bank of America and its former and current subsidiaries, including Countrywide Financial Corporation and Merrill Lynch. As part of this global resolution, the bank has agreed to pay a $5 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and provide $7 billion in relief to struggling homeowners, including funds that will help defray tax liability as a result of mortgage modification, forbearance or forgiveness. The settlement does not release individuals from civil charges, nor does it absolve Bank of America, its current or former subsidiaries and affiliates or any individuals from potential criminal prosecution. The settlement also resolves various claims by the SEC, the states of California, Delaware, Illinois, Maryland and New York, and the Commonwealth of Kentucky.
FDIC announces its B of A settlement
The Federal Deposit Insurance Corporation has announced that, as part of the $16.65 billion global settlement announced Thursday by the Justice Department, the FDIC reached an agreement with Bank of America and several of its subsidiaries for a payment of $1.031 billion to settle claims by the FDIC as receiver for 26 failed banks.
CFBP mortgage eClosing pilot participants announced
The CFPB has announced the selection of participants for its mortgage eClosing pilot program. The three-month pilot will begin later this year, and will explore how the increased use of technology during the mortgage closing process could affect consumer understanding and engagement and save time and money for consumers, lenders, and other market participants. The eClosing pilot is part of the CFPB's "Know Before You Owe" mortgage initiative, which is designed to improve the home-buying experience for consumers. For more information, see the eClosing Pilot Guidelines.
Counter terrorism designations
Treasury has announced it has targeted the financial and leadership networks of the Taliban by designating one entity and two individuals as Specially Designated Global Terrorists (SDGTs) pursuant to Executive Order (E.O.) 13224. The Pakistan-based hawala, Haji Basir and Zarjmil Company (Basir Zarjmil Hawala), and, its owner, Haji Abdul Basir, are being designated for providing financial services or other support to the Taliban. In addition, Taliban commander Qari Rahmat is being designated for acting for or on behalf of the Taliban. All property and interests in the United States or in the possession or control of U.S. persons in which these individuals and entity have an interest are blocked, and U.S. persons are prohibited from engaging in transactions with them. Information regarding the designations has been posted in a BOL OFAC Update.
NMLS enhancements scheduled
NMLS Consumer Access will be unavailable from Saturday, August 23 at 8:00 p.m. ET until 5:00 a.m. ET on Sunday, August 24. The system will be down for the addition of system enhancements.
August 21, 2014
Auto finance company pays $2.75 million fine
The Consumer Financial Protection Bureau has announced its issuance of a Consent Order against an auto finance company that distorted consumer credit records for years. Texas-based First Investors Financial Services Group Inc., which lends primarily to subprime borrowers, failed to fix known flaws in a computer system that was providing inaccurate information to credit reporting agencies. This potentially harmed tens of thousands of its customers. Under the Consent Order, First Investors will pay a $2.75 million fine, fix its errors, and change its business practices.
More OFAC SDN List changes
OFAC has announced the designation of the Los Valles drug trafficking organization in Honduras and Honduran national Miguel Arnulfo Valle Valle as significant foreign narcotics traffickers under the Kingpin Act. OFAC also targeted Luis Alonso and Jose Reynerio Valle Valle, who materially assist and act for and on behalf of their brother Miguel Arnulfo Valle Valle and the Los Valles drug trafficking organization. Treasury also sanctioned four Honduran businesses tied to the Valle Valle brothers. The actions announced yesterday prohibit U.S. persons from conducting financial or commercial transactions with the designees, and also freezes any assets they may have under U.S. jurisdiction. OFAC also posted a number of removals from and one change to its SDN List. Information regarding the designations and removals has been posted in a BOL OFAC Update.
Treasury guarantees $325 million in economic development bonds
A Treasury Department press release has announced the guarantee of $325 million in new bonds to help support economic development opportunities in low-income and underserved communities across the country. The funding, provided through the Community Development Financial Institutions (CDFI) Bond Guarantee Program, is designed to help CDFIs fill a financing gap in underserved areas by providing long-term, fixed rate capital.
The minutes of the July 29–30, 2014, meeting of the Federal Open Market Committee (FOMC) have been released by the Federal Reserve Board.
Comptroller's Handbook updated
OCC Bulletin 2014-41 has been issued to announce the replacement of the "Merchant Processing" booklet of the Comptroller's Handbook. The new booklet includes updated guidance on
selection of third-party organizations and due diligence
technology service providers
on-site inspections, audits, and attestation engagements, including the "Statement on Standards for Attestation Engagement" (SSAE 16) and the "International Standard on Assurance Engagements" (ISAE 3402)
data security standards in the payment card industry for merchants and processors
member alert to control high-risk merchants (MATCH) list
Bank Secrecy Act/Anti-Money Laundering compliance programs and appropriate policies, procedures, and processes to monitor and identify unusual activity
appropriate capital for merchant processing activities
BSA violations bar casino official from financial industry
FinCEN has announced an agreement with George Que, the former VIP Services Manager at the Tinian Dynasty Hotel & Casino in the Northern Mariana Islands, to permanently bar him from working in financial institutions as a result of his willful violations of the Bank Secrecy Act (BSA). Mr. Que also agreed to pay a $5,000 civil money penalty (CMP) for the violations.
NCUA board meeting video
A video of the July 2014 meeting of the NCUA Board has been posted. It is available for registered "attendees" only.
August 20, 2014
CFPB mortgage servicing transfers bulletin
A CFPB news release and Bulletin 2014-01 outline expectations for mortgage servicers that transfer loans. The Bulletin includes information on how mortgage servicers should pay special attention to new rules protecting consumers applying for loss mitigation help or trial modifications. The Bulletin replaces CFPB Bulletin 2013-01 (Mortgage Servicing), and includes:
examples of general transfer-related policies and procedures that CFPB examiners may consider in evaluating whether servicers have satisfied Regulation X requirements effective since January 2014
an FAQ on the applicability of revised Regulation X to servicing transfers
a description of other Federal consumer financial protection laws applicable to servicing transfers and an explanation of potential consequences of failing to adhere to obligations under the law
a notice informing servicers with substantial servicing transfers that the CFPB will, in some cases, require them to submit informational plans for managing the related risks to consumers.
July residential housing report
HUD and the Census Bureau have released the July 2014 new residential housing report. The number of building permits, housing starts, and housing completions were all above those for June 2014.
Counter terrorism designation
Treasury has announced the designation of an entity as an SDGT and added its name to the SDN List. Information concerning the entity has been posted in a BOL OFAC Update.
Commercial loans/leases charge-offs
The Federal Reserve has released the Second Quarter 2014 Charge-Off and Delinquency Rates on Loans and Leases at Commercial Banks Report.
Analysis of 2013 CRA data
A press release has been issued by the OCC, FDIC, and Federal Reserve as members of the FFIEC, announcing the availability of the findings from their analysis of the Nationwide Summary Statistics for 2013 Community Reinvestment Act Data Fact Sheet.
August NCUA Report
The NCUA has posted online the August 2014 issue of The NCUA Report.
August 19, 2014
OFAC Counter Terrorism designations
Two individuals have been designated and added to the OFAC SDN List with the SDGT identifier. Information regarding the individuals has been posted on the BOL OFAC Update Page.
Former banker charged with insider trading
The Securities and Exchange Commission has announced the filing of a complaint in Federal District Court charging a former Massachusetts bank executive and his friend with insider trading in advance of the bank's acquisition of another financial institution. The SEC alleges that the banker, then a senior vice president at Eastern Bank, learned through his job responsibilities that his employer was planning to acquire Wainwright Bank & Trust Company. He tipped a fellow golfer, who purchased Wainwright stock. After the public announcement of the acquisition caused Wainwright's stock price to increase nearly 100 percent, the friend sold all of his shares during the next few months for nearly $300,000 in illicit profits.
Bureau explains benefits of 'My Social Security Account'
A CFPB Blog article explains how consumers can create an online account with the Social Security Administration to access their personal Social Security information, including earnings records and estimated benefits. A Social Security webpage has been created to provide information to help those who create an account plan for their future and protect their finances with:
Estimates of monthly retirement and disability benefits, including how much more they could get if the delay delay retirement
Estimates of monthly survivors' benefits for a spouse and children
Essential information needed to create a retirement budget, make decisions about other financial resources, and even decide if delaying retirement is the right choice
CFPB announces assistance for parents to teach children
The Bureau has also blogged that the agency is working with the FDIC to collect and share resources to help parents teach their children about money and how to manage it.
Cordray discusses community banks
In prepared remarks delivered to the Association of Military Banks of America, Director Cordray discussed the importance of community banks and the role they play in the lives of servicemembers and their families.
OCC ramps up SCRA focus
Also at the Military Banks workshop yesterday, OCC Deputy Comptroller for Compliance Policy Grovetta Gardineer remarked that the OCC has stepped up its focus on SCRA compliance during examinations of its supervised banks and savings associations, to require evaluation of SCRA compliance during every supervisory cycle. The OCC took this action, she said, because the cost of compliance failures in that area, for both the bank and affected servicemembers, is too important not to get regular attention.
OCC enforcement actions
The OCC has released new enforcement actions recently taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. Among those orders was one Order for a $4,000 Civil Money Penalty against a Wisconsin bank for violations of the notice requirements under the National Flood Insurance Program. Details on that notice will be posted to the BankersOnline Flood Penalties Watch page.
Additional guidance for resolution plans
The Federal Reserve and FDIC have announced additional guidance to firms that in December will be filing resolution plans for the second time. Each plan must describe the company's strategy for rapid and orderly resolution under the U.S. Bankruptcy Code in the event of material financial distress or failure of the company. One hundred seventeen U.S. bank holding companies with less than $100 billion in total nonbank assets and foreign-based firms with less than $100 billion in U.S. nonbank assets were required to file their initial resolution plans with the agencies in December 2013. Following review of the initial resolution plans, the agencies are providing each firm with guidance, clarification and direction for their second resolution plans based on the relative size and scope of each firm's U.S. operations. The second plans are due to the agencies on or before December 31, 2014.
The August 15, 2014, issue of FedFlash has been posted by the Federal Reserve. It includes a reminder that updated Fedline security token driver software has been shipped, and articles on new check products and pricing, check presentment notifications, new FedReceipts RTNs, and the upcoming Check Services operations freeze.
CFPB shuts down SCRA fee scam
A news release from the Consumer Financial Protection Bureau has announced the execution of a Consent Order that puts an end to a servicemember fee scam run by USA Discounters, Ltd., a company that operates a chain of retail stores near military bases and offers financing for purchases. The company tricked thousands of servicemembers into paying fees for legal protections servicemembers already had and for certain services that the company failed to provide. The CFPB has obtained more than $350,000 in refunds for servicemembers harmed by this scam, and USA Discounters will pay an additional $50,000 civil penalty.
Annual Reg Z threshold adjustments published
The CFPB has published in today's Federal Register [79 FR 48015] a final rule reviewing and adjusting certain dollar amounts for provisions of Regulation Z under the Credit Card Accountability Responsibility and Disclosure Act of 2009 Act (CARD Act), the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
The minimum interest charge disclosure thresholds under the CARD Act will remain unchanged in 2015.
The adjusted dollar amount for the penalty fees safe harbor under the CARD Act in 2015 is $27 for a first late payment and $38 for each subsequent violation within the following six months.
For HOEPA loans, the adjusted total loan amount threshold is $20,391, effective January 1, 2015.
The adjusted statutory fee trigger for HOPEA loans is $1,020, effective January 1, 2015.
Effective January 1, 2015, for the purpose of creditor's determination of a consumer's ability to repay a transaction secured by a dwelling, a covered transaction is not a qualified mortgage unless the transaction's total points and fees do not exceed
3 percent of the total loan amount for a loan greater than or equal to $101,953
$3,059 for a loan amount greater than or equal to $61,172 but less than $101,953
5 percent of the total loan amount for a loan greater than or equal to $20,391 but less than $61,172
$1,020 for a loan amount greater than or equal to $12,744 but less than $20,391
8 percent of the total loan amount for a loan amount less than $12,744
NCUA recovers $5.4M from CU fraud prosecution
The prosecution by the U.S. Attorney's Office of a fraud which led to the liquidation of a New York credit union has resulted in a nearly $5.4M recovery for the NCUA. The prosecution followed the 2011 liquidation of BCT Federal Credit Union of Binghamton, New York. Laura Conarton and her son, Scott Lonzinski, both of Susquehanna County, Pennsylvania, pleaded guilty in U.S. District Court to bank/financial institution fraud by providing false documents to the credit union in order to obtain approximately $14 million in loans. The $5,391,641 recovery followed the seizure of bank accounts and property and will be returned to the Share Insurance Fund.
Written Agreement with Louisiana bank
The Federal Reserve Board has announced the execution of a Written Agreement with the Bank of Gueydan, Gueydan, Louisiana, requiring the development of a consumer compliance risk management program.
The NCUA has announced the closing of IBEW Local 816 Federal Credit Union, Paducah, Kentucky, and the purchase and assumption of the failed CU's shares and a majority of its loans by C-Plant Federal Credit Union, also located in Paducah.
August 14, 2014
Fair lending analysis of credit cards
The Payment Cards Center hosted by the Federal Reserve Bank of Philadelphia has posted a new discussion paper, Fair Lending Analysis of Credit Cards, which discusses some of the key fair lending risks that can arise in various stages of the marketing, acquisition, and management of credit card accounts, and the analysis that can be employed to manage such risks.
Mortgage company pays $104,000 to settle discrimination claim
HUD has announced that Freedom Mortgage Corporation, a national residential mortgage lender based in Mt. Laurel, New Jersey, has agreed to pay $104,000 to settle allegations that it discriminated against loan applicants with disabilities by requiring them to provide medical or other documentation regarding their disabilities.
Treasury issues Deepwater Horizon RESTORE Act rule
Treasury has announced the pending publication in the Federal Register of an Interim Final Rule to help further the recovery of communities affected by the Deepwater Horizon oil spill. Grant programs for Alabama, Florida, Louisiana, Mississippi, and Texas were established by the Resources and Ecosystem Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States (RESTORE) Act. The rule will be published tomorrow, and will be effective 60 days later (October 14, 2014). Comments on the interim final rule will be accepted until September 15.
OCC Pittsburgh workshop for directors
The Office of the Comptroller of the Currency will host a workshop in Pittsburgh on September 15–17 for directors of national community banks and federal savings associations. "Mastering the Basics: A Director's Challenge" provides practical information on the roles and responsibilities of board participation. Discussion topics include:
OCC structure and communication channels for directors
Roles of the board and management
Board committees and best practices
Significant board activities, including compensation and succession planning
CAMELS, specialty ratings, and composite ratings
Report of Examination: your blueprint for action
Managing risk with board reports
August 13, 2014
Amerisave to pay $19.3M for bait-and-switch scheme
The Consumer Financial Protection Bureau has announced its issuance of a Consent Order requiring Amerisave Mortgage Corporation, its affiliate, Novo Appraisal Management Company, and the owner of both companies, Patrick Markert, to provide $14.8 million in refunds to harmed consumers and pay a $4.5 million penalty for engaging in a deceptive bait-and-switch mortgage-lending scheme. The Bureau found that Amerisave lured consumers by advertising misleading interest rates, locked them in with costly up-front fees, failed to honor its advertised rates, and then illegally overcharged them for "third-party" services which were actually paid to its affiliate. Patrick Markert, as an individual, will pay an additional $1.5 million penalty.
July Housing Scorecard
HUD has released the July 2014 Housing Scorecard, a comprehensive report on the nation's housing market. The latest data show progress among key indicators, including a rebound in the sale of existing homes and the continuing downward trend of foreclosure starts and completions.
Comptroller's Handbook revision OCC Bulletin 2014-40 announces the OCC's issuance of the "Lease Financing" booklet of the Comptroller's Handbook, to replace a similarly titled booklet issued in January 1998. This booklet also replaces section 219, "Leasing Activities," issued in June 1999 as part of the Office of Thrift Supervision's Examination Handbook for the examination of federal savings associations.
FinCEN Director addresses Mid-Atlantic AML Conference
In a speech at the 2014 Mid-Atlantic AML Conference, FinCEN Director Jennifer Shasky Calvery discussed some of the challenges facing financial institutions, including:
implementing a risk-based approach to money laundering
instances of "de-risking," where money services businesses (MSBs) are losing access to banking services because of perceived risks with this category of customer and concerns about regulatory scrutiny
the provision of financial services to marijuana-related businesses in states where such business is legal under state law
The Director also addressed the importance of BSA reporting, particularly SARs, in law enforcement investigations at both the federal and state levels, and new measures to address ongoing concerns about the lack of transparency in the movement of cash across the U.S./Mexico border by armored car services and other common carriers of currency.
Guilty plea in mortgage fraud scheme
The Department of Justice reports that Wasseem Shamoun has pleaded guilty to charges of conspiracy to commit bank fraud relating to a mortgage loan scheme in which Shamoun and six other individuals were involved from 2006–2008. The scheme involved the obtaining of mortgage loans with fraudulent information and the use of straw buyers.
August 12, 2014
FinCEN BSA/AML Advisory
FinCEN has release Advisory FIN-2014-A007 as a reminder of the importance of promoting a culture of compliance to combat shortcomings in BSA/AML compliance. The Advisory highlights the importance of a strong culture to BSA/AML compliance for senior management, leadership and owner of financial institutions regardless of size or industry sector.
CFPB Advisory on virtual currencies
A Consumer Advisory responding to consumer questions about virtual currencies has been announced on the CFPB Blog and in a Bureau news release. The CFPB also announced it is now accepting complaints on virtual currency products and services. Significant consumer risk issues include:
Virtual currencies are targets for hackers who have been able to breach sophisticated security systems in order to steal funds
Virtual currencies can cost consumers more to use than credit cards or even regular cash once you take exchange rate issues into consideration
Fraudsters are taking advantage of the hype surrounding virtual currencies to cheat people with fake opportunities
If you trust a company to hold your virtual currencies and something goes wrong, that company may not offer you the kind of help you expect from your bank or debit or credit card provider.
OCC MDIAC charter renewed
The OCC has reported that it has renewed the charter of its Minority Depository Institutions Advisory Committee (MDIAC), which advises the agency on issues and opportunities facing minority depository institutions. The committee includes officers and directors of minority depository institutions and other depository institutions committed to supporting minority depository institutions of all types, sizes, operating strategies, and geographic areas.
CRA ratings released
The OCC has released the ratings received by 44 national banks and federal savings associations recently examined for compliance with CRA. Seven of the institutions listed are rated outstanding and 37 are rated satisfactory.
NCUA consulting services
The NCUA reports that 173 federally insured credit unions are being provided free consulting services in the second half of 2014 though the NCUA Office of Small Credit Union Initiatives. Consulting services are provided during a six-month semester by experienced Economic Development Specialists who offer assistance in the areas of budgeting, marketing, policy development, strategic planning, operational and regulatory areas. Credit unions eligible for the consulting program include those with total assets of less than $50 million, those that have been chartered for fewer than 10 years, those with a low-income designation, and minority depository institutions.
August 11, 2014
New Fed Payments Improvement info posted
Federal Reserve Financial Services has added new summary sheets to its FedPaymentsImprovement.org site, detailing the objectives, research observations and key takeaways from three of the Federal Reserve's research initiatives:
The studies were key to evaluating alternatives for achieving faster retail payments, enhancing cross-border payments and identifying gaps and opportunities related to payment system security. There is also a summary of the Payment Security Roundtables held in June 2014.
Fair Isaac changes credit score calculation
Fair Isaac Corp. has announced it will stop including in its FICO credit-score calculations any record of a consumer failing to pay a bill if the bill has been paid or settled with a collection agency. Less weight will also be given to unpaid medical bills that are with a collection agency. The changes occurred after discussions with lenders and the CFPB regarding boosting lending without creating more credit risk.
Counterfeit cashier's checks Alert
An Alert has been issued by the OCC concerning counterfeit cashier's checks bearing the correct routing number and name of Kleberg Bank, National Association, Kingsville, Texas. Information regarding the counterfeit checks has been posted on the BOL Alerts & Counterfeits Page.
Low-income CUs top 2,100
The NCUA has announced that 2,107 federally insured credit unions now have the low-income designation. The credit unions have 23.6 million members and $218 billion in assets. More than 70 percent of the low-income designated credit unions are also small credit unions, with assets of less than $50 million.
$800K in refund checks in the mail
The Federal Trade Commission has reported the mailing of approximately $800,000 in refund checks to 1,305 consumers who fell prey to two related mortgage relief scams. In one scheme, using the name Precision Law Center, the defendants allegedly made false promises to consumers that if they sued their lenders along with other homeowners in so-called "mass joinder" lawsuits, they could obtain favorable mortgage concessions from their lenders or stop the foreclosure process. In the other, using names such as FreeFedLoanMod.org, HouseHoldRelief.org, and MyHomeSupport.org, the defendants charged consumers for "forensic loan audits," and allegedly misrepresented that they could use the results to force lenders to give them better mortgage terms. The checks in this distribution must be cashed on or before October 7, 2014.
NCUA proposes relaxed fixed assets rule
The National Credit Union Administration has published in today's Federal Register a proposed rule [79 FR 46727] that would amend its regulation governing federal credit union (FCU) ownership of fixed assets to provide regulatory relief and to help FCUs better manage their fixed assets. The proposed rule provides greater flexibility to FCUs by removing the waiver requirement for FCUs to exceed the five percent aggregate limit on investments in fixed assets. Comments on the proposal are due by October 10, 2014.
August 8, 2014
Debt collectors pay $2M CMPs
The FTC has announced that Memphis-based debt collector Regional Adjustment Bureau has agreed to stop deceiving and harassing consumers and otherwise violating federal debt collection laws, and will pay a $1.5 million civil penalty to settle charges, while Credit Smart, LLC, a debt collection operation headquartered outside New York City, will pay $490,000 as a penalty to settle a separate FTC complaint. The FTC charged that the Regional Adjustment Bureau used unfair and deceptive collection tactics, such as repeatedly calling consumers and accusing them of owing debts that they did not owe, contacting consumers at work while knowing that their employers did not allow the calls, making unauthorized withdrawals from consumers' bank accounts, and disclosing confidential information about debtors to third parties. Credit Smart, LLC was charged with using unfair and deceptive tactics, such as leaving pre-recorded messages for consumers that pretended to offer financial relief. The messages provided a number to call, and promised to provide information about a "Tax Season Relief Program," a "stimulus relief package," or a "balance transfer program." In reality, there was no financial relief plan, and the messages were merely a ruse to get consumers on the line with debt collectors.
OFAC entry updated
OFAC has announced an existing entry on the SDN List has been updated. The details of the changes have posted in a BOL OFAC Update.
Economic health of U.S. households
The Federal Reserve has published a Report on the Economic Well-Being of U.S. Households, which provides a snapshot of the self-perceived financial and economic well-being of U.S. households and the issues they face, based on responses to the Board's 2013 Survey of Household Economics and Decisionmaking. The 100-page report covers many topics including:
Consumer Credit Report
The June 2014 G.19 Consumer Credit Report has been released by the Federal Reserve Board. Consumer credit increased at a seasonally adjusted annual rate of 7¾ percent during the second quarter. Revolving credit increased at an annual rate of 5½ percent, while non-revolving credit increased at an annual rate of 8¾ percent. Consumer credit increased at an annual rate of 6½ percent.
NCUA to host continuity planning webinar
A free webinar, "Business Continuity Planning," will be offered by the NCUA on Wednesday, August 20, at 2 p.m. ET. NCUA representatives will outline effective continuity planning and practices for credit unions, including:
communicating with members, regulators and vendors
establishing back-up and recovery sites in separate locations
restoring IT services
returning to normal operations
Online registration for this free webinar is now open. Participants will also use this link to log into the webinar. Registrants should set their browsers to allow pop-ups from this website.
Federal Reserve Financial Services has posted the August 2014 issue of FedFocus. Featured articles include:
Research studies pave the way for Payment System Improvement Roadmap
Continuing the theme: NBC Oklahoma helps its business customers help themselves
Leverage automation and risk management to grow your corporate customer revenues
The 2013 Federal Reserve Payments Study Detailed Report
On the rise: ACH transactions
The Office of the Federal Register (OFR) Blog features a helpful article for those interested in commenting on rulemaking proposals. The OFR has partnered with Regulations.gov to provide the ability to comment on a Federal Register document without leaving the FederalRegister.gov site. Previously, clicking on the "Submit a Formal Comment" link in Federal Register articles took readers to the Regulations.gov site. Now, clicking the link loads the comment form in the context of the Federal Register document. The Blog article also includes an overview of how the commenting process works.
August 7, 2014
FEMA suspending communities from NFIP
The Federal Emergency Management Agency has published in today's Federal Register a final rule [79 FR 46187] identifying communities where the sale of flood insurance has been authorized under the National Flood Insurance Program (NFIP) that are scheduled for suspension on September 3, 2014, because of noncompliance with the floodplain management requirements of the program. The listed communities are in Alabama, Indiana, Kansas, Texas, and Wisconsin.
Counter terrorism designations
Treasury has announced the imposition of sanctions on three key terrorist financiers under Executive Order (E.O.) 13224. Two of the individuals designated, Shafi Sultan Mohammed al-Ajmi and Hajjaj Fahd Hajjaj Muhammad Sahib al-'Ajmi, are Kuwait-based and support the Syria-based, al-Qaida-linked terrorist organization Al Nusrah Front (ANF); one individual, 'Abd al-Rahman Khalaf 'Ubayd Juday' al-'Anizi, is a financier and facilitator of the Islamic State of Iraq and the Levant (ISIL), previously known as al-Qaida in Iraq (AQI). Each has been designated as a Specially Designated Global Terrorist (SDGT). Information regarding the individuals has been posted in a BOL OFAC Update.
CFPB chides Big Ten schools over banking contracts
The Bureau has posted an article taking nine of the fourteen universities in the Big Ten conference to task for not making contracts with banks to market financial products to students available on partner websites. The CFPB article lists the University of Iowa as the only member of the Big Ten whose banking partner, Hills Bank & Trust Company, has posted its complete marketing contract on its website. According to the Bureau, TCF Bank, which has also posted its contracts with three Big Ten schools, has omitted some key information, such as the amount it pays the schools to have access to students for marketing bank products and services.
OFAC tech alert
OFAC has posted a technical notice to alert users that access to its sanctions list files on the file transfer protocol (FTP) server at the Government Printing Office has been discontinued. OFAC will continue to make the lists available on its own FTP server (ftp://ofacftp.treas.gov/) and on the OFAC website.
August 6, 2014
CFPB Integrated Disclosures webinar scheduled
The Consumer Financial Protection Bureau is hosting a second presentation on the TILA-RESPA Integrated Disclosures rule on the Fed's "Outlook Live" portal at 2 p.m. ET on Tuesday, August 26. This one-hour session will focus on addressing specific questions related to rule interpretation and implementation challenges that have been raised to the Bureau by creditors, mortgage brokers, settlement agents, software developers, and other stakeholders. Future sessions will continue to address specific questions and challenges. Registration for the event is now available.
Board imposes Flood Act CMP
The Federal Reserve has announced its imposition of a $6,000 Civil Money Penalty on an Iowa bank for Flood Act violations. Information has been posted to the BankersOnline Flood Penalties Watch page.
Agencies respond to large bank resolution plans
The Federal Reserve and the FDIC have announced the completion of reviews of the second round of resolution plans submitted by 11 large, complex banking organizations in 2013. Response letters have been issued to each of the banking organizations.
62 CUs garner CMPs for late call reports
The NCUA has reported that 62 credit unions have consented to the issuance of civil money penalties (CMPs) for late filing of 2014 First Quarter Call Reports. The individual penalties ranged from $150 to $20,000. The agency reported that, for various mitigating reasons, no penalties would be imposed on another 42 credit unions that filed late.
FinCEN Advisory on FATF update on AML/CFT deficiencies
Advisory FIN-2014-A006 has been issued by FinCEN on the update by the Financial Action Task Force (FATF) of its list of jurisdictions with strategic AML/CFT deficiencies. The Advisory suggests that financial institutions consider the changes disclosed in the FATF report when reviewing their obligations and risk-based approaches with respect to the jurisdictions named.
August 5, 2014
OCC guidance on sales of consumer debt OCC Bulletin 2014-37 provides guidance to national banks and federal savings associations on the application of consumer protection requirements and safe and sound banking practices to consumer debt-sale arrangements with third parties (e.g., debt buyers) who intend to pursue collection of the underlying obligations. The Bulletin advises OCC-supervised institutions about the agency's supervisory expectations for structuring debt-sale arrangements in a manner that is consistent with safety and soundness and promotes fair treatment of customers.
FDIC youth savings pilot
An FDIC press release and FIL-43-2014 have been issued to announce the launch of a pilot program to identify and highlight promising approaches to offering financial education tied to the opening of safe, low-cost savings accounts to school-aged children. The project will consist of FDIC-insured financial institutions that have entered, or intend to enter, working relationships with schools and/or non-profit organizations to help children open savings accounts in conjunction with financial education programs.
CRA ratings released
The ratings received by state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA) have released by the FDIC. Nine banks received an outstanding rating, five received a needs to improve and the remainder a satisfactory rating.
FinCEN GTO and cross-border cash movement guidance
FinCEN has announced the issuance of a Geographic Targeting Order (GTO) and updated Guidance designed to greatly improve the transparency of cross-border cash movements. The GTO requires enhanced cash reporting by armored car services and other common carriers of currency at the San Ysidro and Otay Mesa Ports of Entry in California. The updated Guidance concerns the details and proper filing of Currency and Monetary Instruments Reports (CMIRs), which are filed when $10,000 or more in currency is moved across the U.S. border.
FTC complaint alleges unauthorized card charges
Seven defendants have been charged in a Federal Trade Commission complaint with illegally processing credit and debit card payments on behalf of a massive Internet scam that allegedly bilked millions of dollars from consumers by repeatedly charging them for "trial" memberships they never ordered. Three of the defendants have agreed to settle the FTC's charges. The complaint charges the defendants arranged for a deceptive operation known as I Works to obtain and maintain merchant accounts that allowed it to process more than $26 million in illegal credit and debit card payments through the Visa and MasterCard payment networks.
Federal Reserve product change
FRB Services has announced that on September 2, 2014, it will introduce a Retail Payments Premium Receiver (RPPR) Program and modify the pricing for FedReceipts Courtesy Delivery service. Institutions that are currently FedACH® premium receivers and forward and return check receivers will be automatically enrolled in the new RPPR Program and also receive the new pricing.
SEC obtains $70M judgment for stock fraud
The Securities and Exchange Commission has announced a final judgment in federal court in Tennessee requiring a Richmond, Virginia-based financial services holding company, a subsidiary brokerage firm, and their CEO to pay nearly $70 million as the outcome of a trial that found them liable for fraud. The complaint filed by the SEC against AIC Inc., Community Bankers Securities LLC, and Nicholas D. Skaltsounis alleged that they conducted an offering fraud while selling AIC promissory notes and stock to numerous investors across multiple states, many of whom were elderly or unsophisticated brokerage customers. They misrepresented and omitted material information about the investments when pitching them to investors, including the safety and risk associated with the investments, the rates of return, and how the proceeds would be used by AIC.
NCUA issues $1M in grants
The NCUA has announced it has awarded $1,051,850 in grants to low-income credit unions. The grants were awarded for the expansion of new products or services, staff and volunteer training, CDFI certification initiative, and collaboration.
In the Federal Register today
The following have been published in today's Federal Register:
FinCEN's recently-announced proposal to enhance Customer Due Diligence Requirements for Financial Institutions [79 FR 45151]. Comments must be received by October 3, 2014.
Notice of the extension of the comment period for CFPB's proposal for Disclosure of Consumer Complaint Narrative Data to September 22, 2014.
August 1, 2014
CFPB overdrafts report
The CFPB has announced the release of a report, "Data Point: Checking account overdraft," that raises concerns about the impact of opting in to overdraft (OD) services for debit card and ATM transactions. The CFPB found that:
Consumers use debit cards nearly three times more than writing checks or paying bills online
Majority of debit card overdraft fees incurred on transactions of $24 or less
More than half of consumers pay back negative balances within three days
Consumers pay high costs for overdraft "advances"
Nearly one in five opted-in consumers overdrafts more than ten times per year
Opted-in consumers pay seven times more in overdraft and NSF fees per year
The report is based on data obtained from the large financial institutions that the Bureau supervises for consumer compliance. In his remarks during a press call announcing the report, Bureau Director Richard Cordray said: "I want to take pains to note that nothing in this report implies that banks and credit unions should be precluded from offering overdraft coverage. But we need to determine whether current overdraft practices are causing the kind of consumer harm that the federal consumer protection laws are designed to prevent."
Ukraine-related updates and program tag changes
OFAC has posted a notice changing four Ukraine-related SDN listings. In addition, OFAC announced that it has converted the [UKRAINE] and [UKRAINE2] program tags on the SDN list to [UKRAINE-EO13660] and [UKRAINE-EO13661] respectively. Information regarding the changes has been posted in a BOL OFAC Update.
The Federal Reserve has issued a Prompt Corrective Action directive to a Denver, Colorado bank, requiring the bank to increase its equity or enter into an agreement to be acquired.
NCUA Board Action Bulletin
A Board Action Bulletin has been posted by the NCUA to announce the actions taken by the NCUA Board at its July 31, 2014, meeting. Among the items approved were:
A proposed rule to provide federal credit unions with regulatory relief and greater flexibility managing fixed assets by removing the waiver requirement for credit unions to exceed the 5-percent aggregate limit on fixed-asset investments
Revising NCUA's 2014 operating budget with a net reduction in overall expenditures of $1.1 million for the remainder of the year
July 31, 2014
North Korean sanctions
Treasury imposed sanctions yesterday on Chongchongang Shipping Company and Ocean Maritime Management Company, two North Korean companies that attempted to import a concealed shipment of arms and related materiel from Cuba to the Democratic People's Republic of Korea (North Korea, or DPRK) aboard the DPRK-flagged cargo vessel Chong Chon Gang in July 2013. Treasury also identified as blocked property 18 vessels in which these companies have an interest, including the Chong Chon Gang. Information regarding the designations has been posted in a BOL OFAC Update.
FinCEN proposes rules to beef up CDD requirements
FinCEN has issued a Notice of Proposed Rulemaking (NPRM) to amend existing Bank Secrecy Act (BSA) regulations to help prevent the use of anonymous companies to engage in or launder the proceeds of illegal activity in the U.S. financial sector. The proposed rule would clarify and strengthen customer due diligence obligations of banks and other financial institutions (including brokers or dealers in securities, mutual funds, futures commission merchants, and introducing brokers in commodities). The proposed amendments would add a new requirement that banks and other financial institutions know and verify the identities of the real people (also known as beneficial owners) who own, control, and profit from the companies they service. Comments will be accepted for sixty days from the date of publication of the NPRM in the Federal Register.
FOMC statement released
The Federal Reserve Board has released a statement issued by the Federal Open Market Committee after its July 30, 2014 meeting. The statement indicates:
The Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in August, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $10 billion per month rather than $15 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $15 billion per month rather than $20 billion per month.
The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability
To support continued progress toward maximum employment and price stability, the Committee reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate.
New video released in NCUA Economic Update series
The NCUA has announced the release of a new video in its Economic Update series, featuring an in-depth discussion by NCUA Chief Economist John Worth on the implications of a recovering economy on credit union balance sheets and the interest rate environment. The video can be viewed on the YouTube-NCUA channel.
CFPB toolkit for financial services program providers
The CFPB has announced the development and availability of "Your Money, Your Goals," a new field-tested toolkit for financial services programs. The toolkit can be used to inform consumers about:
Making spending decisions that help them reach their goals
Avoiding tricks and traps as they choose financial products
Ordering and fixing credit reports
Making decisions about repaying debts and taking on new debt
Keeping track of their income and bills
Deciding if they need a checking account and understanding what they need to open one
B of A assessed $1.3 billion fine
Bank of America's 2008 acquisition of Countrywide Financial continues to be costly to B of A, as a federal judge on Wednesday imposed a $1.3 billion fine for Countrywide's role in selling risky mortgages to Fannie Mae and Freddie Mac. The fine was imposed following an October 2013 jury finding that B of A was liable for Countrywide's "Hustle" program abuses in which lenders were paid bonuses based on quantity, rather than quality of the loans they originated. Federal Judge Jed Rakoff also imposed a $1 million penalty on Rebecca Mairone, a former Countrywide executive, for her role in the "Hustle" program. Additional information is available at ABC News.
July 30, 2014
Treasury and OFAC actions
The U.S. Treasury Department and OFAC have announced several actions:
the addition of three major Russian financial institutions to the Sectorial Sanctions Identifications and designation of a Russian state-owned defense technology firm pursuant to Executive Order (E.O.) 13661
the addition to the SDN List of designated members of a synthetic drug trafficking organization led by Chinese national Zhang Lei (a.k.a. Eric Chang) under the Foreign Narcotics Kingpin Designation Act (Kingpin Act)
the addition of a shipbuilding entity to the SDN List
several changes to existing SNN List designations
Information regarding the actions has been posted in a BOL OFAC Update.
G-Fee comment deadline extended
The Federal Housing Finance Agency (FHFA) has announced the extension of the deadline for its Request for Input on the guarantee fees (g-fees) that Fannie Mae and Freddie Mac charge lenders to September 8, 2014. The deadline was pushed back from August 4, 2014.
The Summer 2014 issue of Supervisory Insights has been released by the FDIC, featuring the following articles:
"Alternatives to Consultants: Meeting Regulatory Expectations with Internal Resources," which highlights tools and information available from the FDIC to assist community banks in managing their regulatory responsibilities
"Supervisory Trends: 'Matters Requiring Board Attention' Highlight Evolving Risks in Banking," which describes the MRBA categories cited most often at satisfactorily rated institutions and highlights trends in these categories since 2010
CFPB extends comment period
The CFPB has announced the extension of the deadline to September 22, 2014, for comments regarding the Bureau's proposal to give consumers the option to share the stories behind their complaints in the CFPB's public Consumer Complaint Database.
Servicemembers to get relief from predatory lender
The CFPB has announced that it and 13 state attorneys general obtained a Consent Order providing approximately $92 million in debt relief from Colfax Capital Corporation and Culver Capital, LLC, also known as "Rome Finance," for about 17,000 U.S. servicemembers and other consumers harmed by the company's predatory lending scheme. The relief comes in the form of termination of servicemembers' obligations under current Rome Finance financing agreements. Portions of the order calling for reimbursements will be suspended because Rome Finance is in bankruptcy. However, a $1 million civil penalty is to be paid under the order.
July 29, 2014
FDIC clarifies position on TPPP accounts
The FDIC has issued FIL-41-2014 to clarify its supervisory approach to institutions establishing account relationships with third-party payment processors (TPPPs). Previously issued FDIC guidance and an informational article contained lists of examples of merchant categories that had been associated by the payments industry with higher-risk activity when the guidance and article were released. The lists have led to misunderstandings regarding the FDIC's supervisory approach to TPPPs, creating the misperception that the listed examples of merchant categories were prohibited or discouraged. In fact, it is FDIC's policy that insured institutions that properly manage customer relationships are neither prohibited nor discouraged from providing services to any customer operating in compliance with applicable law.
OFAC updates Ukraine sanctions FAQs
OFAC has issued updated frequently asked questions (FAQs) regarding the Ukraine-related sanctions.
Lloyds to pay LIBOR-rigging penalty
The Department of Justice has announced that Lloyds Banking Group plc has entered into an agreement with the Department of Justice to pay an $86 million penalty for manipulation of submissions for the London InterBank Offered Rate (LIBOR), a leading global benchmark interest rate. Lloyds has also agreed to admit and accept responsibility for its misconduct, and to continue cooperating with the Department in its investigation.
New 2014 HMDA data entry software release
The FFIEC has announced that 2014 HMDA and CRA Data Entry Software Release 2 versions are available for calendar year 2014 data due March 3, 2015. NOTE: each software version is year-specific.
GAO comments on Bureau CMP fund
The Government Accountability Office has released a report on the Civil Penalty Fund Activities of the CFPB. The report recommends that the Fund Administrator document the specific factors considered in determining the amount of funding, if any, allocated to consumer education and financial literacy programs. According to the GAO release, the CFPB generally agreed with GAO's recommendation.
July 28, 2014
FDIC enforcement orders released
The FDIC has released a list of 37 orders of administrative enforcement actions taken against banks and individuals in June, 2014. Included were five removal and prohibition orders, eight section 19 orders, five civil money penalties (CMPs), one voluntary termination of insurance and several orders terminating earlier actions.
Miami bank to pay for loan ads
One of the CMP orders announced by the FDIC (see above) was for $70,000, assessed against International Finance Bank, Miami, Florida, which was found to have violated section 1026.24(a) of Regulation Z and to have engaged in deceptive and unfair acts and practices in violation of section 5 of the FTC Act, by understating available interest rates on the bank's deposit-secured loans in advertising materials, website ads and brochures.
$40K CMP for add-on UDAP violations
Also among the clutch of FDIC CMP orders was one for $40,000 imposed on First United Security Bank, Thomasville, Alabama, for deceptive and unfair acts and practices related to deposit account "add-on" ID theft insurance.
Flood violation CMP
The FDIC has imposed an $11,165 civil money penalty against a Honolulu, Hawaii institution under the Flood Disaster Protection Act. Details can be found on the BOL Flood Penalties Watch page.
Electronics firm pays $4 million for OFAC violations
OFAC has announced that Epsilon Electronics, Inc., a California company, was assessed a $4,073,000 penalty for violations of the Iranian Transactions and Sanctions Regulations in connection with sales of car audio and video equipment to a company it knew or had reason to know distributed most of its products to Iran.
Sun Trust $160M settlement order
The Federal Reserve Board has released the order related to the previously announced monetary sanctions against SunTrust Banks, Inc., and certain of its subsidiaries for unsafe and unsound practices in residential mortgage loan servicing and processing. The Board reached an agreement in principle with SunTrust for monetary sanctions totaling $160 million on October 10, 2013 and reported in the October 11, 2013, BOL Top Stories.
Chicago bank closed
The FDIC has announced the OCC's closing of GreenChoice Bank,fsb, Chicago, Illinois, and an agreement with Providence Bank, LLC, South Holland, Illinois, to assume all of the deposits of the failed bank. GreenChoice Bank, fsb is the fourteenth FDIC-insured institution to fail in 2014, and the fourth in Illinois.
Communities to be suspended from Flood program
FEMA has published a final rule [79 FR 43668] in this morning's Federal Register to identify communities in California, Florida, Montana, Texas and Virginia where the sale of flood insurance has been authorized under the National Flood Insurance Program (NFIP) that are scheduled for suspension on August 18, 2014, because of noncompliance with the floodplain management requirements of the program.
Preventing employee dishonesty and fraud
The NCUA has released the first three episodes of "Deterring, Preventing and Detecting Employee Dishonesty," a new seven-part online YouTube series on fraud prevention. The first three episodes provide an overview of the series and outline the importance of maintaining a policy on employee fraud and conducting surprise cash counts. In the coming weeks, the remaining four episodes, addressing separation of duties, employee and family member accounts, file maintenance transactions and vault cash, will be released.
Citigroup unit to pay $5M to settle SEC charges
The SEC has announced a $5 million settlement with a Citigroup business unit to settle charges it operated an alternative trading system (ATS) which failed to protect the confidential trading data of its subscribers. The settlement included a $2.85 million penalty that is the SEC's largest to date against an ATS.
NCUA Board to meet
The agenda for the July 31, 2014, meeting of the NCUA Board has been posted.
July 25, 2014
B of A in $16.6 million OFAC settlement The U.S Department of the Treasury's Office of Foreign Assets Control (OFAC) has announced a $16,562,700 settlement with Bank of America, N.A. (B of A) to settle potential liability for apparent violations of OFAC's Kingpin Act regulations, Narcotics Trafficking Sanctions Regulations, and Reporting, Procedures and Penalties Regulations. The B of A settlement resolves OFAC's investigation into transactions that the bank processed and accounts the bank maintained on behalf of individuals with multiple or multi-part last names on the SDN List. Between September 2005 and March 2009, B of A processed 208 transactions totaling approximately $91,192 on behalf of, and failed to properly block five accounts owned by, 10 individuals whom OFAC had previously added to its SDN List. Because OFAC determined that B of A did not voluntarily self-disclose the violations, and 79 of the transactions constitute an egregious case, OFAC said that the base penalty amount for all of B of A's violations exceeded $83 million. According to OFAC, the bank failed for more than two years to adequately address a known deficiency in its OFAC screening tool. Certain mitigating factors, however, resulted in the reduced settlement amount.
Bureau floats HMDA Reg proposals
The Consumer Financial Protection Bureau has announced proposed changes to Regulation C (12 CFR Part 1003), which implements the Home Mortgage Disclosure Act. The proposal is intended to provide better information about residential mortgage credit by expanding the list of data that financial institutions are required to provide, including new information that could help identify potential discriminatory lending practices. It is also expected to provide additional information to help regulators monitor access to credit. Additional changes in the proposal would—
Standardize the reporting threshold and provide a de minimis exception to reporting requirements, and eliminate reporting of some home improvement loans
Align reporting requirements with industry data standards
Improve the electronic reporting process
Improve data access
The proposed rule will be open for public comment through October 22, 2014.
Puerto Rican company pays $27K for OFAC violations
OFAC has announced that a Puerto Rican corporation has agreed to pay $27,000 to settle potential civil liability for six apparent violations of the Narcotics Trafficking Sanctions Regulations. The corporation made six purchases (totaling $344,016) of frozen passion fruit juice/pulp from a Specially Designated Narcotics Trafficker. OFAC determined the corporation did not voluntarily self-disclose the apparent violations, but the apparent violations constitute a non-egregious case. The total base penalty amount for the apparent violations was $600,000.
Lew discusses financial crisis and rural America
In remarks at the Rural Opportunity Investment Conference, Treasury Secretary Lew noted the economy is making progress after the worst financial crisis since the Great Depression. He said: "We know that when farmers are having a good year, when ranchers are increasing their productivity, when rural manufacturers are reaching new markets, it benefits our entire economy. And rural America—which is responsible for one out of every 12 jobs in our country—is helping animate our economic recovery." He also commented: "If we want to strengthen rural communities, build our manufacturing base in the rural economy, and drive rural exports, we are going to have to do more on infrastructure. That means making sure we have sound roads, bridges, and railroads, and modern airports, power grids and Internet connections."
Federal Reserve payments study
The Federal Reserve has announced the release of the 192-page 2013 Federal Reserve Payments Study Detailed Report, which provides:
new information on the payments landscape including updated results on the intensity of card use by consumers and businesses
further discussion of previously released information on third-party payments fraud
new estimates of over-the-counter cash withdrawals and deposits at bank branches and wire transfers made by businesses and consumers
discussion of emerging and alternative payments likely to replace traditional payments such as cash and checks
NMLS system maintenance scheduled this weekend
The NMLS has announced that enhancements will be made to its system, and consumer access will be unavailable from 9 p.m. ET, Friday, July 25th until Saturday afternoon, July 26th and from 8 to 10 p.m. ET Saturday evening.
July 24, 2014
Kingpin Act designations
Treasury has announced that it has designated 17 leaders and criminal associates of the violent Colombian drug trafficking organization Los Urabenos as specially designated narcotics traffickers (SDNTs) pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). Treasury also designated six businesses in Colombia associated with members of Los Urabenos. As a result of these action, all assets of those designated that are based in the United States or in control by U.S. persons are frozen, and U.S. persons are generally prohibited from engaging in transactions with them. Information regarding the designations has been posted in a BOL OFAC Update.
Agencies take action to halt mortgage schemes
The Federal Trade Commission, the Consumer Financial Protection Bureau and various state agencies have announced actions taken against six mortgage relief operations, charging that defendants preyed on distressed homeowners by misrepresenting that they typically could lower homeowners' mortgage payments and interest rates or prevent foreclosure, and illegally charging advance fees. The actions were part of Operation Mis-Modification, a joint federal and state enforcement sweep conducted with the CFPB. The defendants were charged with violating the Federal Trade Commission Act and the Mortgage Assistance Relief Services (MARS) Rule (CFPB Regulation O, 12 CFR Part 1015), which bans mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable. The CFPB also issued a Consumer Advisory about foreclosure relief scams or bogus legal help.
OFAC releases additional formats for SSI List
OFAC has released additional file formats for the Sectoral Sanctions Identification (SSI) List. The SSI List will be available in the same file formats as the SDN and FSE Lists, and the layout of names on the SSI List will be identical to the layout of names on the SDN List. In addition, SSI List data files will follow existing SDN List data standards. Information regarding the SSI List has been added to the OFAC Frequently Asked Questions (FAQs).
NCUA plans regulatory relief actions
In a presentation at the National Association of Federal Credit Union's Annual Conference, Chairman Matz indicated credit unions will have greater flexibility and be able to offer better services to members under a series of planned regulatory relief changes. New relief proposals include eliminating the fixed-assets cap, modernizing member business lending and updating appraisal provisions. Changes to current regulations previously announced include facilitating associational fields of membership, expanding investment authorities and removing redundancy in appraisals.
Treasury Fiscal Service updates its ACH rules
Treasury's Bureau of the Fiscal Service has published a final rule [79 FR 42974] to amend its regulation governing the use of the Automated Clearing House (ACH) network by Federal agencies ("Federal Government Participation in the Automated Clearing House," 12 CFR Part 210). The changes include amendments set forth in NACHA's 2010, 2011, 2012, and 2013 Operating Rules books. The changes made by the Fiscal Service, which will become effective August 25, 2014, are routine updates, with minimal impact on financial institutions receiving ACH entries from Treasury.
July 23, 2014
Flood violation CMP
The Federal Reserve Board has announced it has imposed a $15,785 civil money penalty (CMP) against State Bank, New Hampton, Iowa for violations of Regulation H provisions that implement the National Flood Insurance Act. Information on the order has been posted on the BOL Flood Penalties Watch page.
Texter settles with FTC
The Federal Trade Commission has announced that a text message spammer and his company have agreed to settle charges that they were responsible for sending millions of unwanted messages to consumers across the country, falsely promising "free" $1,000 gift cards for major retailers like Walmart, Target and Best Buy. Sensitive personal information was collected from consumers who were lured to the scammers' website. The settlement includes a monetary judgment of $2,863,000, most of which is suspended due to the defendants' inability to pay more than $26,100. The scammer and the company are permanently banned from sending unwanted or unsolicited commercial text messages or assisting others in doing so.
The July 2014 NCUA Report has been posted, including these and other articles:
NCUA Board Proposes Allowing Credit Unions to Securitize Their Own Assets
Board Actions: Proposed Appraisal Rule and Final Voluntary Liquidation Rule Cut Red Tape
Understanding the Basics of an Information Security Policy
NCUA Can Help Consumers Improve Their Personal Finance Knowledge
NCUA Unveils New Resources for Interest Rate Risk and Consumer Compliance
Understanding the Civil Money Penalty Process for Late Filers
Agencies Issue Guidance for Home Equity Lines of Credit
FDIC assessment proposal published
The FDIC's proposal to amend its assessment rules [see our July 16 Top Stories] has been published in today's Federal Register, with a comment period ending September 22, 2014.
Groups urge longer comment period on Bureau complaints proposal
Five financial services groups have asked the CFPB to extend the 30-day comment period attached to its proposal to allow consumers to permit public access to narratives in complaints filed with the Bureau. According to an article on The Hill, a letter signed by the Financial Services Roundtable, American Bankers Association, Consumer Bankers Association, the Clearing House, and the U.S. Chamber of Commerce asked the CFPB to extend its comment period to 90 days because the proposal "raises many serious legal and practical issues." The Bureau's notice of its proposed policy statement [see our July 17 Top Stories] was published in today's Federal Register. It currently carries a comment due date of August 22, 2014.
Guidance on characteristics of mutual savings associations
The OCC has announced that it has issued OCC Bulletin 2014-35, "Mutual Federal Savings Associations: Characteristics and Supervisory Considerations." The bulletin describes the unique characteristics of mutual federal savings associations and the considerations the OCC factors into its risk-based supervision process. The guidance
describes the mutual governance structure and mutual members' rights
outlines mutuals' traditional operations
highlights supervisory considerations in rating mutuals for each component of the Uniform Financial Institutions Rating System (more commonly referred to as CAMELS, or capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk)
July 22, 2014
Bureau accepting prepaid card complaints
The Consumer Financial Protection Bureau has announced that it has added prepaid cards, such as gift cards, benefit cards and general purpose reloadable cards, to the list of financial service services and products concerning which it accepts consumer complaints. The Bureau also opened its complaint database to consumer reports of dissatisfaction with debt settlement services, credit repair services, and pawn and title loans.
FRB makes prepaid card report to Congress
The Federal Reserve has issued its annual report to the Congress on the use of general-use prepaid cards in federal, state, and local government-administered payment programs and on the interchange fees and cardholder fees charged with respect to the use of those cards.
exploring how this segment of the financial services industry has changed over time
how minority depository institutions (MDIs) have performed financially
the extent to which MDIs have achieved their mission in serving the needs of their communities
The report also describes MDIs and FDIC-insured community development financial institutions (CDFIs) and where such institutions are located. A discussion of the study will be on the agenda of the next meeting of the Advisory Committee on Community Banking (July 23, 2014), which will be open to the public. A webcast of the meeting will be available on the FDIC's website.
Guidance to S-corporation institutions FDIC FIL-40-2014 has been issued with guidance clarifying how the FDIC will evaluate requests from S-corporation banks or savings associations to pay dividends to shareholders to cover taxes on their pass-through share of the institution's earnings, when these dividends would otherwise not be permitted under the capital conservation buffer requirements in the Basel III rule. In a related press release, the FDIC indicates that, absent significant safety-and-soundness concerns about the requesting bank, it will generally would expect to approve exception requests by well-rated S-corporation banks that are limited to the payment of dividends to cover shareholders' taxes on their portion of an S-corporation's earnings.
outlines its strategy and what has been done over the past year to enhance financial literacy and capability
describes the tools and information provided to consumers to help navigate financial choices
explains collaboration with organizations that reach consumers
discusses effective approaches to financial education.
July 21, 2014
OCC enforcement actions
The Office of the Comptroller of the Currency released a list of new enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. Included were four cease and desist orders, six personal civil money penalty (CMP) orders and one CMP order against a bank.
Wisconsin bank gets BSA/AML penalty
The bank civil money penalty announced (see story above) by the OCC was assessed against a Wisconsin Bank in the amount of $500,000 for "BSA/AML deficiencies in the Bank's internal controls, independent testing, day-to-day monitoring and coordination, and training." Additional information is available on BOL's BSA/AML Penalties page.
Kentucky bank directors pay CMPs
Also among the Enforcement Orders announced by the OCC were five personal civil money penalty orders against directors—four of them apparently members of the same family—of the First National Bank of Manchester, Manchester, Kentucky:
$40,000 CMP and Order of Prohibition against the former president and chairman, found to have used bank credit card and accounts for personal expenses, and to have failed to establish and enforce adequate internal controls over the use of the bank's credit cards and accounts. This order also included an order for restitution.
three $10,000 CMPs [Order 1; Order 2; Order 3] issued against current directors for failing to implement and enforce adequate internal controls over the use of the bank's credit cards and accounts, and for violations of Regulations O and W
one $5,000 CMP issued against a former director for failing to implement and enforce adequate internal controls over the use of the bank's credit cards and accounts, for violations of Regulations O, and for voting to approve loans on which he had performed evaluations of the collateral
Georgia bank closed Eastside Commercial Bank, Conyers, Georgia, has been closed by the Georgia Department of Banking & Finance, which appointed the FDIC as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Community & Southern Bank, Atlanta, Georgia, to assume all of the deposits of Eastside Commercial Bank. The bank was the 13th FDIC-insured institution to fail this year, and the first in Georgia.
FDIC updates transferred regs
The Federal Deposit Insurance Corporation has published final and proposed rules to update or rescind regulations transferred to the FDIC following the dissolution of the former Office of Thrift Supervision as provided in the Dodd-Frank Act, as follows:
a final rule [79 FR 42181] removing Part 390, supbart A (former OTS regulation at 12 CFR Part 507), and amend FDIC regulations at 12 CFR Part 336 (relating to post-employment activities of senior examiners), effective August 20, 2014
a final rule [79 FR 42183] removing Part 390, subpart H (former OTS regulation at 12 CFR Part 533), and amend FDIC regulations at 12 CFR part 346 (relating to disclosure and reporting of CRA-related agreements), effective August 20, 2014
a proposed rule [79 FR 42225] that would remove parts of its regulations entitled "Management Official Interlocks" relating to State savings associations (12 CFR 390, subpart V); and amend its regulation at 12 CFR Part 348. Comments are due by September 19, 2014.
a proposed rule [79 FR 42231] that would remove its regulations regarding Electronic Operations at 12 CFR Part 390, Subpart L. Comments are due by September 19, 2014.
a proposed rule [79 FR 42235] that would remove its regulations regarding Possession by Conservators and Receivers for Federal and State Savings Associations at 12 CFR Part 390, Subpart N. Comments are due by September 19, 2014.
July 18, 2014
FinCEN names foreign bank as money laundering concern
The Financial Crimes Enforcement Network (FinCEN) has announced the naming of FBME Bank Ltd., formerly known as the Federal Bank of the Middle East, as a foreign financial institution of primary money laundering concern pursuant to Section 311 of the USA PATRIOT Act. FinCEN reported that FBME openly advertises the bank to its potential customer base as willing to facilitate the evasion of AML regulations. FinCEN has delivered to the Federal Register a regulatory finding explaining the basis for the action as well as a notice of proposed rulemaking (NPRM) that, if adopted as a final rule, would prohibit covered U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for FBME itself, and for other foreign banks being used to process transactions involving FBME.
Proposed stress test changes
OCC Bulletin 2014-33 is a reminder of a Notice of Proposed Rulemaking (NPR) that would adjust the timing of the annual stress testing cycle and to clarify the method used to calculate regulatory capital in the stress tests. The proposal also provides that covered institutions would not have to calculate their regulatory capital requirements until the stress testing cycle beginning on January 1, 2016. Similar proposals were published by the FDIC and Federal Reserve System. Comments on the OCC and FDIC proposals are due by September 1, 2014; comments on the Federal Reserve proposal are due by August 11, 2014.
OFAC announces WMDPSR settlement
OFAC has announced that Tofasco of America, Inc. of La Verne, California, has remitted payment of $21,375 to settle potential civil liability for an alleged violation of the Weapons of Mass Destruction Proliferators Sanctions Regulations (the "WMDPSR"). The company appears to have violated WMDPSR provisions when it dealt in blocked property by engaging a bank to process a blocked letter of credit transaction representing payment for a shipment of recreational chairs with a substitute bill of lading omitting reference to the Islamic Republic of Iran Shipping Lines ("IRISL"), an entity whose property and interests in property are blocked. The company initially presented trade documents to a prior bank in connection with the letter of credit transaction; however, the prior bank refused to advise the letter of credit transaction due to IRISL's involvement. Neither bank was cited by OFAC.
Bureau documents published
The Consumer Financial Protection Bureau has published two recently announced documents in the Federal Register.
An interpretive rule [79 FR 41631] clarifying that substitution or addition of certain successors-in-interest as obligors on dwelling-secured consumer credit obligations are not subject the the Bureau's Ability-to-Repay Rule (§ 1026.43 of Regulation Z)
Policy Guidance on Supervisory and Enforcement Considerations Relevant to Mortgage Brokers Transitioning to Mini-Correspondent Lenders [79 FR 41671]
GAO update on FDIC data security
The Government Accountability Office (GAO) has issued a report that the Federal Deposit Insurance Corporation (FDIC) has implemented numerous information security controls intended to protect its key financial systems. However, weaknesses continue to place the confidentiality, integrity, and availability of agency financial systems and information at unnecessary risk. The report indicated that, during 2013, the FDIC implemented 28 of the 39 open GAO recommendations pertaining to previously-reported security weaknesses that were unaddressed as of December 31, 2012. At year end 2013, the FDIC had not fully implemented controls for (1) identifying and authenticating the identity of users, (2) restricting access to sensitive systems and data, (3) encrypting sensitive data, (4) completing background reinvestigations for employees and (5) auditing and monitoring system access. The GAO recommended that, to help strengthen access controls and other information security controls over key financial information, systems, and networks, the Chairman of the FDIC should direct the Chief Information Officer to document security controls descriptions for all systems to describe the control thoroughly and ensure that all the required information is included.
July 17, 2014
New OFAC list and designations
Treasury has announced the introduction of the Sectoral Sanctions Identification (SSI) List to identify persons operating in sectors of the Russian economy identified by the Secretary of the Treasury pursuant to Executive Order 13662. A broad-based package of sanctions was imposed on entities in the financial services, energy, and arms or related materiel sectors of Russia, and on those undermining Ukraine's sovereignty or misappropriating Ukrainian property. Secretary Lew also issued a statement on the actions. An FAQ with more information on the SSI List was also released. Four entities were added to the new SSI List. In addition, five individuals and eleven entities were added to the SDN List. Information regarding the additions to the SSI and SDN Lists has been posted in a BOL OFAC Update.
Agricultural lenders are reminded to maintain prudent risk management practices that focus on a borrower's cash flow and repayment capacity across a range of future conditions.
Management should consider, but not rely unduly on, secondary repayment sources and collateral positions.
Lenders should carefully consider and closely monitor cyclical factors, such as land values, before and after making credit decisions.
Management should be cognizant of speculation in agricultural land or commodities.
Management should identify and effectively manage credit concentrations.
Lenders should work constructively with borrowers experiencing financial difficulties.
This FIL rescinds and replaces FIL-85-2010, Prudent Management of Agricultural Credit through Farming and Economic Cycles, dated December 14, 2010.
CFPB proposes to make complaints public
In prepared remarks at the CFPB Consumer Response Field Hearing in El Paso, Director Cordray announced a new proposal to allow consumers to select an option to share the narrative portion of their complaints in the agency's Consumer Complaint Database. A notice of proposed policy statement and request for public comment has been issued. Companies would be able to publish their own replies to the consumer narratives. Complaints are not entered into the public database until after the company responds or has had the complaint for 15 calendar days without responding. If a consumer has opted to have the complaint narrative published, both the narrative and any response that the company decides to submit would be listed simultaneously, and would be scrubbed to remove personal identifying information (company names would not be redacted). Comments will be due within 30 days after publication of the proposal in the Federal Register.
Lew challenges industry on cybersecurity
Treasury has announced a Call to Action by Secretary Lew urging financial institutions and firms to take critical steps to better protect consumers and strengthen the nation's defenses against cybersecurity thefts, disruptions, and attacks. In remarks at CNBC and the Institutional Investor's 4th Annual Delivering Alpha Conference, Secretary Lew specifically called on the U.S. financial sector to improve cybersecurity by using the Administration's new cybersecurity framework for their own systems and as a way to evaluate outside vendors.
Call Report update FDIC FIL-38-2014 has been issued to remind institutions that the June 30, 2014, Call Report must be received by Wednesday, July 30, 2014. The following information was also highlighted in the FIL:
Data on international remittance transfer activity, which were collected initially in Schedule RC-M, Memoranda, in the March 2014 Call Report, will now be reported semiannually in June and December, beginning this quarter. Questions in the March 2014 Call Report about international remittance transfer activity during 2012 have been deleted.
The Call Report forms and an instruction book update for June 2014 are available on the Federal Financial Institutions Examination Council's website and the FDIC's website.
New SAR statistics publication
FinCEN has published the first issue of SAR Stats, a technical bulletin that replaces The SAR Activity Review: By the Numbers. The inaugural issue examines only the data contained on the 1,369,529 unique FinCEN SARs with filing dates from March 1, 2012 to December 31, 2013, inclusive.
Beige Book update
The Federal Reserve has released a summary and full report of the July 7, 2014 issue of the Beige Book, a commentary on the current economic conditions of each Federal Reserve District.
Technical correction of Risk-Based Capital rules
A joint press release from the Federal Reserve, FDIC and OCC has announced the finalization of a technical correction to the definition of "eligible guarantee" in the agencies' risk-based capital rules. The final rule is effective October 1, 2014.
Fed halts ECI research
Federal Reserve Financial Services has announced that its research and development on electronically created items (ECI), begun in 2013, has been discontinued.
July 16, 2014
Counter terrorism designations
OFAC has announced the designation of one individual from Norway as a Specially Designated Global Terrorist (SDGT) and a change in an existing SDN listing. The details of these changes to OFAC's SDN List have been posted in a BOL OFAC Update.
FDIC proposes revision of insurance assessment method
The FDIC has issued FIL-37-2014 to announce the agency's approval of a proposed rule that would revise the FDIC's risk-based deposit insurance assessment system to reflect changes in the regulatory capital rules that go into effect in 2015 and 2018. For deposit insurance assessment purposes, the proposal would
revise the ratios and ratio thresholds relating to capital evaluations;
revise the assessment base calculation for custodial banks; and
require that all highly complex institutions measure counterparty exposure for assessment purposes using the standardized approach in the regulatory capital rules.
Comments are due 60 days following publication in the Federal Register. [Editor's note: This proposal was published [79 FR 42698] on July 23, 2014, with a comment period expiring on September 22, 2014.]
Yellen delivers money policy report to Congress
Chair Yellen has delivered the Federal Reserve Board's semiannual Monetary Policy Report to Congress. She discussed the current economic situation, the outlook, monetary policy and financial stability. The Secretary noted, "The economy is continuing to make progress toward the Federal Reserve's objectives of maximum employment and price stability." She stated, "The FOMC (Federal Open Market Committee) is committed to policies that promote maximum employment and price stability, consistent with our dual mandate from Congress." Chair Yellin indicated, "The Committee recognizes that low interest rates may provide incentives for some investors to 'reach for yield,' and those actions could increase vulnerabilities in the financial system to adverse events." She concluded, "The Federal Reserve remains committed to employing all of its resources and tools to achieve its macroeconomic objectives and to foster a stronger and more resilient financial system."
Georgia MSB pays $45,000 CMP for BSA infractions
FinCEN has announced the assessment of a $45,000 civil money penalty (CMP) against a Georgia money services business (MSB) which failed to register as an MSB and failed to report CTRs on 40% of required transactions. Numerous violations occurred after the MSB was put on notice by its examiner, the Internal Revenue Service's Small Business/Self-Employed Division, of deficiencies in meeting its reporting obligations.
Florida business pleads guilty in $44M bank fraud
U.S. Immigration and Customs Enforcement (ICE) has announced that Pedro "Pete" Benevides, of Astatula, Florida, has pled guilty to conspiracy to commit bank fraud and faces a maximum penalty of 30 years in federal prison. According to the plea agreement, from about 2005 through September 2008, he obtained 20 commercial and residential loans and lines of credit from several federally insured financial institutions, totaling approximately $44,049,565. Benevides, in addition to paying full restitution to the financial institutions that were the victims of his offense, also agreed to forfeit $44,059,565, including several bank accounts holding approximately $40 million in cash, and three exotic sports cars.
HUD adds funds for Illinois and Colorado
The Department of Housing and Urban Development has announced the allocation of more than $31 million to Illinois and $58 million to Colorado victims of 2013 storms and flooding. The allocations are in addition to funds previous allocated to victims in those states.
Roundtable on debt collection and Latino community
The Federal Trade Commission has announced that the agency will co-host with the CFPB a roundtable meeting in Long Beach, California, on October 23, 2014. "Debt Collection & the Latino Community" will bring together consumer advocates, industry representatives, state and federal regulators, and academics to discuss how debt collection issues affect Latino consumers, especially those who have limited English proficiency. The roundtable is free and open to the public.
July 15, 2014
Citigroup pays record CMP in $7 billion settlement
The Justice Department, along with federal and state partners, has announced a $7 billion settlement with Citigroup Inc. to resolve federal and state civil claims related to Citigroup's conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) prior to January 1, 2009. The Department also released a Statement of Facts relating to Citigroup's conduct. Of the $7 billion total settlement, $4.5 billion will be paid to settle federal and state civil claims, including
$4 billion as a civil penalty under FIRREA (the largest to date)
$208.25 million to FDIC claims relating to its receiverships for three failed banks
$102.7 million to the State of California
$92 million the State of New York
$44 million to the State of Illinois
$45.7 million to the Commonwealth of Massachusetts
$7.35 million to the State of Delaware
The settlement also includes $2.5 billion in the form of relief to aid consumers harmed by the unlawful conduct of Citigroup. Any of that sum not expended by the end of 2018 is to be paid to NeighborWorks America, a non-profit leader in providing affordable housing and facilitating community development.
Bureau sues Georgia debt collector
The Consumer Financial Protection Bureau has announced the filing of a lawsuit in a federal district court against a Georgia-based firm, Frederick J. Hanna & Associates, and its three principal partners for operating a debt collection lawsuit mill that uses illegal tactics to intimidate consumers into paying debts they may not owe. The Complaint alleges the firm churns out hundreds of thousands of lawsuits that frequently rely on deceptive court filings and faulty or unsubstantiated evidence.
FRB Discount Rate Meeting minutes
The minutes of the June 2 and June 16 discount rate meetings have been released by the Federal Reserve Board.
Second quarter Call Report instructions
The FDIC has issued FIL-36-2014 with materials attached pertaining to the June 30, 2014, Call Report. The Call Report forms and an instruction book update for June 2014 are available on the FFIEC and FDIC websites.
clarify how the agencies consider community development activities benefiting a broader statewide or regional area that includes an institution's assessment area
provide guidance related to CRA consideration of, and documentation associated with, investments in nationwide funds
clarify the consideration of certain community development services, such as service on a community development organization's board of directors
address the treatment of loans or investments to organizations that, in turn, invest those funds and use only a portion of the income from their investments to support a community development purpose
clarify that community development lending performance is always considered in a large financial institution's lending test rating
CFPB guidance for mortgage brokers
The Consumer Financial Protection Bureau has announced it has issued guidance for mortgage brokers who are transitioning to a "mini-correspondent" lender model, some of whom may be under the mistaken belief that identifying themselves as such would automatically exempt them from important consumer protection rules affecting broker compensation. The guidance sets out how the Bureau evaluates mortgage transactions involving mini-correspondent lenders and confirms who must comply with the broker compensation rules, regardless of how they may describe their business structure.
SDN List removal
An entity with a counter terrorism designation has been removed from OFAC's SDN List. Further information has been posted in a BOL OFAC Update.
$1 coin miscellany
The Federal Reserve has released the Second Quarter 2014 report of $1 Coin Quarterly Inventories, Payments, and Receipts (listed in millions of pieces).
Credit Extended through Federal Reserve Liquidity Facilities
Support for Specific Institutions
Selected Liabilities of the Federal Reserve
July 11, 2014
Payday lender to pay up for abusive debt collection
The Consumer Financial Protection Bureau has announced an enforcement action against ACE Cash Express, a payday lender, which will pay $5 million in refunds plus a $5 million penalty for pushing payday borrowers into a cycle of debt. A CFPB investigation found ACE used illegal debt collection tactics to pressure overdue borrowers into taking out additional loans they could not afford. The press release was accompanied by remarks by Director Cordray on the enforcement action.
Counter terrorism designations
Treasury has announced that it has targeted a key Hizballah procurement network by designating brothers Kamel and Issam Mohamad Amhaz, their consumer electronics business Stars Group Holding based in Beirut, Lebanon, its subsidiaries, and certain managers and individuals who support their illicit activities. These actions were taken pursuant to E.O. 13224, which targets terrorists and those providing support to terrorists, or acts of terrorism. As a result of the action, all assets of those designated that are based in the United States or in control by U.S. persons are frozen, and U.S. persons are generally prohibited from engaging in transactions with them. Information regarding the designations has been posted in a BOL OFAC Update.
FHFA proposes mortgage insurer eligibility requirements
The Federal Housing Finance Agency (FHFA) is seeking input on draft requirements that would apply to private mortgage insurance companies that insure mortgage loans owned or guaranteed by Fannie Mae and Freddie Mac. Comments must be submitted by September 8, 2014.
Kentucky CU liquidated
The NCUA has announced the liquidation of IBEW Local 816 Federal Credit Union, Paducah, Kentucky. It was the sixth federally insured credit union to be liquated in 2014.
CFPB schedules El Paso consumer complaint hearing
The CFPB has announced that a field hearing on consumer complaints will be held in El Paso, Texas on July 17, 2014, at 10:30 a.m. MDT. It will feature remarks from Director Cordray and testimony from consumer groups, industry representatives, and members of the public. The event is open to the public and a livestream will be available, but a reservation is required to attend.
June Housing Scorecard
HUD and Treasury have released the June 2014 Obama Administration Housing Scorecard—a comprehensive report on the U.S. housing market. The data includes key indicators, including equity and the sale of new and existing homes.
OFAC Syria and Non-proliferation designations
The Department of the Treasury has announced that it has taken action to increase pressure on the Syrian regime and those providing support that could aid its military efforts. The Department designated United Arab Emirates-based Pangates International Corporation Ltd. (Pangates) pursuant to Executive Order (E.O.) 13582 for providing material support for, and goods and services to, the Government of Syria, including SYTROL, a Syrian state oil company sanctioned by the United States. The Department also designated Syria-based front companies Expert Partners and Megatrade pursuant to E.O. 13382 for acting for or on behalf of the U.S.-sanctioned entity Scientific Studies and Research Center (SSRC), Syria's government agency responsible for developing and producing non-conventional weapons and ballistic missiles. Both SYTROL and SSRC have been sanctioned by the European Union. Information regarding the designations has been posted in a BOL OFAC Update.
OCC increases assessments for large banks
The Office of the Comptroller of the Currency has announced its publication of a final rule [79 FR 68769] in the Federal Register that raises the OCC's assessments for national banks and federal savings associations with total assets over $40 billion. The average increase in assessments for affected banks and savings associations will be 12 percent. The final rule, which makes no change in the assessments for banks or federal savings associations with $40 billion or less in total assets, is effective August 8, 2014.
The minutes of the June 17–18, 2014, meeting of the Federal Open Market Committee (FOMC) have been released by the Federal Reserve Board.
OCC workshops in Syracuse
The OCC will host risk assessment and compliance risk workshops in Syracuse, New York on August 5–6,2014, designed exclusively for directors of institutions supervised by the OCC. The compliance risk workshop focuses on major compliance risk and consumer protection regulations, such as the Qualified Mortgage Rule, Bank Secrecy Act, and Community Reinvestment Act, along with key elements of an effective compliance risk management program. The risk assessment workshop discusses the OCC's approach to risk-based supervision, and best practices to identify, measure, monitor and control risk. The interactive sessions also cover industry hot topics such as credit risk, strategic risk, and the regulatory environment.
Refunds on way to mortgage modification scam victims
The Federal Trade Commission has announced the mailing of refund checks totaling $499,701.84 to 229 consumers who paid the Lucas Law Center an advance fee for mortgage loan modifications the company falsely claimed it would obtain for them. The average check amount is $2,182.10.
July 9, 2014
Bureau issues Ability-to-Repay interpretive rule
The CFPB has announced a new interpretive rule to clarify that when a borrower dies, the name of the borrower's heir generally may be added to the mortgage without triggering the Bureau's Ability-to-Repay rule. The interpretive rule can also apply to other transfers, including transfers to living trusts, transfers during life from parents to children, transfers resulting from divorce or legal separation, and other family-related transfers. The interpretive rule does not require that the creditor or assignee of the loan accept the change of obligor(s); it facilitates such a change when the creditor or assignee is willing to accept it.
Equal treatment for same-sex married couples memo issued by CFPB
An article has been posted by the CFPB stating that, due to the recent Supreme Court decision in the case of United States V. Winsor, Director Cordray has issued a memo to staff clarifying that the Bureau's policy is to recognize all lawful marriages valid at the time of the marriage in the jurisdiction where the marriage was celebrated. This policy applies to all of the laws, regulations, and policies that the Bureau administers, including the Equal Credit Opportunity Act (ECOA), Fair Debt Collection Practices Act (FDCPA), Truth in Lending Act (TILA), and Real Estate Settlement Procedures Act (RESPA).
SIRFers to do time
The Department of Justice has announced the sentencing of two Alabama men in separate stolen identity refund fraud (SIRF) cases. One case involved the use of stolen identities to steal money from the IRS by filing fraudulent tax returns claiming refunds in the victims' names and the other involved the sale of stolen identities to others to be used in SIRF crimes.
NMLS to host open meeting with Ombudsman in Seattle
The NMLS has announced an open meeting with the NMLS Ombudsman will be held on August 5, 2014 from 9:00–11:30 am, in conjunction with the American Association of Residential Mortgage Regulators (AARMR) Annual Regulatory Conference in Seattle, Washington. Conference registration is not required to attend the meeting. The meeting will be in-person only; there will be no dial-in available.
Consumer Credit report
The Federal Reserve Board has released the May 2014 G.19 Consumer Credit Report, which indicates consumer credit increased at a seasonally adjusted annual rate of 7½ percent. Revolving credit increased at an annual rate of 2½ percent, while nonrevolving credit increased at an annual rate of 9¼ percent.
FDIC Community Affairs webinar FIL-35-2014 has been issued by the FDIC to announce a webinar, "Model Approaches to Community Bank/Community Development Financial Institution (CDFI) Partnerships," to be held on July 31, 2014, from 2:00 p.m. to 3:30 p.m. ET. FDIC staff will provide an overview of a resource guide, Strategies for Community Banks to Develop Partnerships with CDFIs, designed to help community banks identify and evaluate opportunities to collaborate with CDFIs. The webinar also will include presentations on model bank/CDFI partnerships and an overview of U.S. Department of the Treasury programs that can potentially support partnership efforts. The session is free but registration is required by July 28.
NCUA July training sessions
The NCUA announced that credit union staff, managers and senior leadership still have time to register for the following informative training sessions in July:
SEC charges school district with misleading investors
A California school district has been charged by the SEC with misleading bond investors about its failure to provide contractually required financial information and notices. The case is the first to be resolved under a new SEC initiative to address materially inaccurate statements in municipal bond offering documents. A cease and desist order has been issued.
FDIC announces Board agenda
The FDIC has announced the agenda for the July 15, 2014, meeting of its Board of Directors.
Bureau report on remittance histories and credit scoring
The CFPB has released a report on its study into the feasibility of using remittance information—records of certain electronic transfers by U.S. consumers to overseas recipients—as a supplement to traditional credit history data in credit scoring. The study was mandated under section 1073(e) of the Dodd-Frank Act. The report suggests there are multiple impediments to successful use of remittance information in credit scoring, concluding that "remittance transfers offer little potential to either allow scores to be generated for consumers with unscorable credit records or to improve the scores of consumers with scorable credit records."
FRB delivers TALF report
The Federal Reserve Board has issued an update to Congress on the status of the Term Asset-Backed Securities Loan Facility (TALF), which was established in 2008. The TALF was intended to assist financial markets in accommodating the credit needs of consumers and businesses of all sizes by facilitating the issuance of asset-backed securities collateralized by a variety of consumer and business loans.
Independent Foreclosure Review report published
A Federal Reserve press release has been issued to announce the publication of a report on the Independent Foreclosure Review (IFR) and the Payment Agreement that replaced the IFR. The report provides information on the process for the review of the foreclosure files during the IFR and file review results.
FDIC CRA webinar FDIC FIL-34-2014 reminds bankers of the July 17, 2014, teleconference that will focus on the recently revised Interagency Questions and Answers regarding Community Reinvestment and the updated Interagency Large Institution Community Reinvestment Act Examination Procedures. The webinar is scheduled to run from 2:00 p.m. to 3:30 p.m. ET. Registration is required by July 16, 2014.
2014 geocoding system updates
The Federal Financial Institutions Examination Council (FFIEC) has updated its Geocoding System with the 2014 census demographic data.
New Federal Reserve short-term offering
Today, the Federal Reserve's Term Deposit Facility (TDF) will conduct a fixed-rate offering of seven-day term deposits with an interest rate of 0.30 percent. This offering marks the fourth consecutive one basis-point up-tick in the offering interest rate, which was at 0.26 percent from the start of the year through the June 9 offering. In the current offering, tender amounts from $10,000 through $10 billion will be accepted.
Ocwen settlement claim forms available
The CFPB has posted an article on the submission of a claims by consumers who were foreclosure victims of Ocwen Financial Corporation and Ocwen Loan Servicing (Ocwen). The National Ocwen Settlement Administrator, who will distribute $125 million to the victims, has created an informational website with a commonly asked questions page. Filing a claim is free and can be done online. Claims must be submitted online or postmarked by September 15, 2014.
OFAC issues Central African Republic rules
The Treasury Department's Office of Foreign Assets Control (OFAC) has published [79 FR 38248] regulations to implement Executive Order 13667 of May 12, 2014 ("Blocking Property of Certain Persons Contributing to the Conflict in the Central African Republic"). OFAC intends to supplement this part 553 with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance and additional general licenses and statements of licensing policy.
July 3, 2014
OFAC Transnational Criminal Organizations designations
Treasury has announced action against four transnational criminal organizations (TCOs): the Camorra, the Yakuza, the Brothers' Circle, and Mara Salvatrucha (MS-13). New designations include seven members of the Camorra, one of Europe's largest criminal organizations; the Kudo-kai, a violent syndicate within the Japanese Yakuza criminal network along with two of its leaders; an individual known to act on behalf of the Brothers' Circle, a large multi-ethnic Eurasian criminal network; and one member of MS-13, a criminal street gang that operates internationally. These designations were imposed under Executive Order (E.O.) 13581, "Blocking Property of Transnational Criminal Organizations," which targets significant TCOs and individuals or entities determined to have provided material support to, or to be owned or controlled by, or to have acted or purported to act for or on behalf of, such organizations. Information regarding the designations has been posted in a BOL OFAC Update.
Unused ITINs will expire after five years
An IRS news release has announced that individual taxpayer identification numbers (ITINs) will expire if not used on a federal income tax return for five consecutive years. The new policy applies to any ITIN regardless of when it was issued. To allow for an adjustment period, ITINs will not be deactivated until 2016. Under the former IRS policy, ITINs issued after January 1, 2013, would have automatically expired after five years, even if used properly and regularly by taxpayers.
CFPB develops resources for libraries and librarians
A CFPB blog article provides an update on a CFPB project to make public libraries the places to go for financial information. The initiative was announced in April 2014 and the first set of program ideas, online resources and free government publications is now available. A guidebook for librarians has also been released.
State loan-to-deposit ratios issued
The Federal Reserve, FDIC and OCC have issued the host state loan-to-deposit ratios that the agencies will use to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. Section 109 prohibits a bank from establishing or acquiring a branch or branches outside of its home state primarily for the purpose of deposit production. It also prohibits branches of banks controlled by out-of-state bank holding companies from operating primarily for the purpose of deposit production.
Yellen on monetary policy and financial stability
In a presentation at the 2014 Michel Camdessus Central Banking Lecture of the International Monetary Fund, Federal Reserve Chairman Yellen addressed the question: How should monetary and other policymakers balance macroprudential approaches and monetary policy in the pursuit of financial stability?
Public sections of resolution plans released
A joint press release from the Federal Reserve Board and the FDIC has announced the release of the public portions of annual resolution plans for 17 financial firms. Each plan must describe the company's strategy for rapid and orderly resolution under the U.S. Bankruptcy Code in the event of material financial distress or failure of the company. The public portions of the plans are available on the Federal Reserve and FDIC websites.
Student loans and closed schools
An article on the CFPB Blog offers advice for students if they have a student loan and the school they are attending or have recently attended shuts its doors. The article discusses the impact on federal and private student loans and offers a cautionary note on how "teach-out" arrangements may affect a borrower's options.
July 2, 2014
Mortgage lender pays $48,000 for Fair Housing violation
HUD has announced that Greenlight Financial Services, an Irvine, California-based mortgage lender, will pay $48,000 to settle allegations that it violated the Fair Housing Act when it denied or delayed mortgage loans to women because they were on maternity leave.
Chicago bank pays $4.1M CMP for deceptive practices
The Board of Governors of the Federal Reserve System has announced a consent order to cease and desist and civil money penalty assessments totaling $4,110,000 against Cole Taylor Bank of Chicago, Illinois, related to the participation by the bank and its agent, Higher One, Inc. of New Haven, Connecticut (Higher One), in deceptive practices in violation of section 5 of the Federal Trade Commission Act. Higher One, under Cole Taylor's oversight, offered students a deposit account and debit card product known as OneAccount. The FRB determined that, at various points in the financial aid refund selection process, students were mislead about the OneAccount by:
The omission of material information about how students could get their financial aid refund (the amount of financial aid in excess of tuition and school fees) without having to open a OneAccount
The omission of material information about the fees, features, and limitations of the OneAccount product
The omission of material information about the locations of ATMs where students could access OneAccount without cost and the hours of availability of those ATMs
The prominent display of the school logo, which may have erroneously implied that the school endorsed the OneAccount product
Under the Order, which was issued jointly with the Illinois Department of Financial and Professional Regulation, Division of Banking, the bank remains contingently liable for up to an additional $30 million in required restitution if Higher One cannot pay any amounts of restitution that Higher One may be required to pay for the benefit of consumers who opened OneAccounts at Cole Taylor under the terms of any enforcement action by the Board of Governors against Higher One. Finally, the Board's press release stated that actions are also pending against another state member bank that has a similar arrangement with Higher One relating to OneAccounts.
Consumer Compliance Outlook
The Second Quarter 2014 issue of Consumer Compliance Outlook is now available online, featuring these articles:
Risk-Focused Consumer Compliance Supervision Program for Community Banks
Risk-Focused Supervision Webinar Questions and Answers
News from Washington
On the Docket
Consumer Compliance Risk Management for Social Media
Treasury has issued a press release as a reminder of the July 1, 2014, effective date of the Foreign Account Tax Compliance Act (FATCA). FATCA was enacted in 2010 by Congress to target noncompliance by U.S. citizens of tax obligations through the use of foreign accounts. See Treasury's FATCA Page for more information.
HELOC 'end-of-draw' guidance
Four federal financial institutions regulatory agencies and the Conference of State Bank Supervisors (CSBS) today issued guidance to financial institutions regarding home equity lines of credit (HELOCs) nearing their "end-of-draw" periods, when the principal amount of the HELOC must begin to be repaid. The guidance encourages financial institutions to effectively communicate with borrowers about the pending reset and provides broad principles for managing risk as HELOCs reach their end-of-draw periods. Three of the agencies issued separate industry announcements on the Guidance:
FEMA suspending communities
The Federal Emergency Management Agency has published three final rules identifying communities where the sale of flood insurance has been authorized under the National Flood Insurance Program (NFIP) that are scheduled for suspension on the effective dates listed below because of noncompliance with the floodplain management requirements of the program.
July 7, 2014—communities in Massachusetts, Rhode Island, Delaware, Georgia; Kentucky, North Carolina, Indiana, Minnesota, Texas, Nebraska, and Idaho
July 16, 2014—communities in Massachusetts, Pennsylvania, Indiana, Michigan, Louisiana, and Kansas
AML/BSA Written Agreement
The Federal Reserve has announced the execution of a Written Agreement with Turkiye Cumhuriyeti Ziraat Bankasi A.S., Ankara, Turkey and Turkiye Cumhuriyeti Ziraat Bankasi A.S. New York Branch, New York, New York. The Agreement concerns steps the bank will take to address deficiencies relating to the New York Branch's risk management and compliance with applicable federal and state laws, rules, and regulations relating to anti-money laundering compliance, including the Bank Secrecy Act; the rules and regulations issued by the U.S. Department of the Treasury (31 C.F.R. Chapter X); and the requirements of Regulation K of the Board of Governors to report suspicious activity and to maintain an adequate BSA/AML compliance program; and the related regulations of State of New York.
Term deposit offering results
The results of the June 30, 2014, fixed-rate offering of term deposits has been released by the Federal Reserve.
First quarter trading revenues increase
The OCC has released the First Quarter 2014 Report on Bank Trading and Derivatives Activities, which indicates insured U.S. commercial banks and savings associations reported trading revenue of $6.1 billion in the first quarter of 2014, up $3.2 billion, or 108 percent, from $2.9 billion in the fourth quarter of 2013.
July 1, 2014
French bank to pay over $8.9 billion for OFAC violations
The Treasury Department's Office of Foreign Assets Control (OFAC) has announced a $963 million agreement with BNP Paribas SA (BNPP), a French bank and financial services company, to settle potential liability for apparent violations of U.S. sanctions. An OFAC investigation indicated BNPP concealed, removed, omitted, or obscured references to information about U.S.-sanctioned parties in 3,897 financial and trade transactions routed to or through banks in the United States between 2005 and 2012 in apparent violation of the Sudanese Sanctions Regulations, the Iranian Transactions and Sanctions Regulations, the Cuban Assets Control Regulations; and the Burmese Sanctions Regulations. The settlement is the largest to date of any kind for OFAC. In addition, the Federal Reserve Board has announced a $508 million penalty against BNPP, the largest penalty ever assessed by that agency for violations of U.S. sanctions laws, plus a Cease and Desist order issued jointly with the Autorité de Contrôle et de Prudentiel et de Résolution (ACPR), the home country supervisor of BNPP.
These actions are taken in conjunction with actions by the Asset Forfeiture and Money Laundering Section of the Criminal Division of the Department of Justice, the Office of the U.S. Attorney for the Southern District of New York, the New York County District Attorney's Office, and the New York Department of Financial Services for violations of U.S. sanctions laws and various New York State laws. The assessments issued by the agencies total $8.9736 billion in a combination of a forfeiture of $8.8336 billion and various civil money penalties and fines. The forfeiture amount approximates the dollar value of the transactions involved in the allegations.
As part of the penalty extracted by the Department of Financial Services, the bank must suspend its U.S. dollar clearing operations through its New York branch for one year involving business lines on which the misconduct centered.
$200 million for ineligible loans
A Justice Department release reports that U.S. Bank has agreed to pay $200 million to resolve allegations that it violated the False Claims Act by knowingly origination and underwriting mortgage loans insured by the FHA that did not meet applicable requirements. As part of the settlement, U.S. Bank admitted that, from 2006 through 2011, it repeatedly certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements. The bank also admitted that its quality control program did not meet FHA requirements, and as a result, it failed to identify deficiencies in many of the loans it had certified for FHA insurance, failed to self-report many deficient loans to HUD, and failed to take the corrective action required under the program.
FHA seeks feedback on new single-family handbook sections
HUD has announced Federal Housing Administration requests for feedback on two new handbook sections posted on The Drafting Table, an agency website for posting draft policies and handbook sections. The new sections are:
Comments on both sections are due by July 29, 2014.
Distressed or Underserved list
The Federal Reserve, FDIC and OCC have announced the availability of the 2014 list of distressed or underserved nonmetropolitan middle-income geographies where revitalization or stabilization activities will receive Community Reinvestment Act (CRA) consideration as "community development."
Basel Coordination Committee Bulletin Bulletin BCC 14-1 has been issued by the Basel Coordination Committee to provide examination guidance relating to the implementation of the advanced approaches risk-based capital rule (advanced approaches rule). The Bulletin provides guidance regarding supervisory expectations for data, modeling, and model risk management under the operational risk advanced measurement approaches (AMA) to calculate a regulated banking organization's operational risk. The BCC consists of Federal Reserve System staff who are responsible for overseeing the Federal Reserve System's process for implementing the advanced approaches rule.
NCUA prohibition orders
The NCUA has issued six orders prohibiting designated individuals from participating in the affairs of any federally insured financial institution. One of the individuals had been separately ordered to pay $437,250 in restitution.
FRB/US model package updated
The Federal Reserve has posted the June 30, 2014, updates of the FRB/US model package and the FRB/US dataset and variable listing. The main FRB/US model package is a self-contained set of equations, data, programs and documentation that enables various types of simulations and provides information about the model's structure.
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