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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