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CFPB revises supervisory appeals process

The CFPB has announced it has issued a procedural rule updating the process by which financial institutions can appeal supervisory findings. The updated rule broadens the CFPB officials eligible to evaluate appeals, the options for resolving an appeal, the matters subject to appeal, and makes additional clarifying changes.

The changes in the updated appeals process include:

  • The Supervision Director will select an appeals committee of three CFPB managers with relevant expertise who did not work on the matter being appealed, and who will advise the Supervision Director in conjunction with attorneys assigned by the CFPB’s General Counsel.
  • The appeals committee will now be able to remand a matter to Supervision staff for consideration of a modified finding, in addition to the existing options of upholding or rescinding the finding.
  • Institutions may now file an appeal of any compliance rating or finding, not only an adverse rating.


U.S. sanctions two affiliates of Russian ransomware group

The Treasury Department on Tuesday reported that OFAC has designated two individuals who are affiliates of the Russia-based ransomware group LockBit. This action is the first in an ongoing collaborative effort with the U.S. Department of Justice, Federal Bureau of Investigation, and international partners targeting LockBit.

For identification information on the two individuals, see BankersOnline's February 20, 2024, OFAC Update.


FTC final rule on impersonization of government and businesses

The Federal Trade Commission has finalized its Trade Regulation Rule on Impersonation of Government and Businesses (16 C.F.R. Part 461), which prohibits the impersonation of government, businesses, and their officials or agents in interstate commerce as deceptive or unfair acts or practices.

The new rule will become effective 30 days after it is published in the Federal Register.

The FTC has also issued a supplemental notice of proposed rulemaking that would, if finalized as proposed, amend the amend the new rule to revise its title and add a prohibition on the impersonation of individuals, and extend liability for violations of the rule to parties who provide goods and services with knowledge or reason to know that those goods or services will be used in impersonations of the kind that are themselves unlawful under the Rule.

In its press release announcing the rule on impersonation of government and businesses and the supplemental notice of proposed rulemaking that would amend the rule, the FTC said it is proposing the amendments in light of surging complaints around impersonation fraud, as well as public outcry about the harms caused to consumers and to impersonated individuals. The Commission said that “emerging technology – including AI-generated deepfakes – threatens to turbocharge this scourge, and the FTC is committed to using all of its tools to detect, deter, and halt impersonation fraud.”

Comments on the supplemental notice of proposed rulemaking will be accepted for 60 days after Federal Register publication.


Agencies issue Shared National Credit Program report

The Federal Reserve Board, OCC, and FDIC on February 16 reported in the 2023 Shared National Credit (SNC) Report that credit quality associated with large, syndicated bank loans remains moderate. However, the agencies noted declining credit quality trends due to the pressure of higher interest rates on leveraged borrowers and compressed operating margins in some industry sectors.

Risks in leveraged loans remain high, and risks in certain industries, including technology, telecom and media; health care and pharmaceuticals; and transportation services are also elevated. Risk in the real estate and construction sector is segmented, with deteriorating trends in some sub-sectors being offset by stability and/or improvement in other sub-sectors. Industries affected by the pandemic, including transportation services and entertainment/recreation, continue to show notable improvement.

The 2023 review reflects the examination of SNC loans originated on or before June 30, 2023. The review focused on leveraged loans and stressed borrowers from various industry sectors.


Court bans and fines mortgage relief scam operators

The Federal Trade Commission on Friday announced that a federal court has issued an order banning the operators of the Home Matters USA mortgage relief scam from the telemarketing and debt relief businesses and requiring them to turn over $19 million as a result of a lawsuit by the Commission and the California Department of Financial Protection and Innovation (DFPI).

The FTC and DFPI sued companies doing business as Home Matters USA, Academy Home Services, Atlantic Pacific Service Group, and Golden Home Services America and the owners of the companies, Michael R. Nabati, Armando Solis Barron, Dominic Ahiga (also known as Michael D. Grinnell), and Roger S. Dyer in September 2022, charging them with taking millions of dollars from thousands of struggling homeowners seeking mortgage relief.

The court found that the defendants falsely promised to reduce homeowners’ mortgage payments and prevent foreclosures, defrauding distressed homeowners out of millions of dollars. The scheme harmed more than 3,000 people nationwide, particularly elders and veterans.


FCC order clarifies TCPA opt-out rules

The Federal Communications Commission has announced its adoption of new rules to further protect consumers from unwanted robocalls and robotexts. The new rule will make it simpler for consumers to revoke consent, and requires that callers and texters implement requests in a timely manner.

The new rules require that robocallers and robotexters honor do-not-call and consent revocation requests within a reasonable time, not to exceed 10 business days from receipt. Last week’s action also codifies the Commission’s 2015 ruling that consumers can revoke consent under the TCPA through any reasonable means.
Under the ruling, consumers will be able to opt out of test messages using “stop,” “quit,” “end,” “revoke,” “opt out,” “cancel,” or “unsubscribe" via reply text message as a per se reasonable means to revoke consent.

The ruling also adds to the FCC rules the Commission’s 2012 ruling that clarified that a one-time text message confirming a consumer’s request that no further text messages be sent does not violate the TCPA as long as the confirmation text merely confirms the called party’s opt-out request and does not include any marketing information.

The Commission also seeks comment on whether the TCPA applies to robocalls and robotexts from wireless providers to their own subscribers and whether consumers should have the ability to revoke consent and stop such communications.

The order becomes effective 30 days after Federal Register publication (with some exceptions).


Agencies release Dodd-Frank Act stress test scenarios for 2024

The OCC, FDIC, and Federal Reserve Board have released the hypothetical scenarios for their annual Dodd-Frank stress tests, which help ensure that large banks can lend to households and businesses even in a severe recession.


FDIC special committee update on third-party review

The Special Committee of the FDIC Board of Directors established to oversee an independent third-party review of the agency’s workplace culture issued a statement yesterday with an update on the progress of the review.

More than 350 people have contacted Cleary Gottlieb Steen & Hamilton LLP, the law firm conducting the review. For individuals who leave contact information, the Special Committee has set goals to respond within 48 hours. Cleary Gottlieb has also been reaching out to and conducting interviews with FDIC staff from various Divisions and Regional Offices. The Special Committee recognizes it can be difficult for some to share their stories and appreciates and supports those who have chosen to do so.

The FDIC has agreed to waive any confidentiality restriction currently in place with employees that would otherwise preclude them from discussing specifics of their case or management’s responses to Cleary Gottlieb, the FDIC’s OIG, or any Congressional committee or subcommittee. Accordingly, an individual is free to share documentation or other information related to harassment, interpersonal misconduct, or the FDIC’s workplace culture with investigators, even if prohibited by terms of a settlement agreement or a nondisclosure agreement (NDA) with the FDIC.

The Committee intends to complete its independent review in the second quarter of 2024.


Social Security proposes to use electronic payroll data

The Social Security Administration has published [89 FR 11773] a proposed rule, "Use of Electronic Payroll Data to Improve Program Administration," describing the agency’s plans for accessing and using information from payroll data providers to reduce improper payments, including overpayments, which improves service to customers.

Unreported, late reported, and incorrectly reported earnings are often a cause of overpayments for people who receive Social Security Disability Insurance (SSDI) benefits and Supplemental Security Income (SSI) payments. When a person has been overpaid, the law requires the agency to ask for repayment, which can create financial difficulties for beneficiaries.

Social Security is working to reduce wage-related improper payments by using its legal authority to establish information exchanges with payroll data providers. These exchanges will help ensure the agency receives timely and accurate wage data. These exchanges and the agency’s planned business process is called the Payroll Information Exchange (PIE).

PIE will help reduce manual reporting errors as well as the reporting burden for individuals who authorize Social Security to obtain their wage and employment information through these information exchanges and work for employers whose payroll data is available through the exchange. PIE will also help to more quickly identify wages that often go unreported or undetected and which can lead to improper payments.

Comments on the proposal will be accepted through April 15, 2024.


OFAC amends North Korea Sanctions Regulations

The Treasury Department's Office of Foreign Assets Control has published [89 FR 12233] in today's Federal Register a final rule amending its North Korea Sanctions Regulations [31 C.F.R. 510] to modify a general license that authorizes certain transactions in support of specified humanitarian activities of nongovernmental organizations. Additionally, OFAC is adding general licenses to authorize the following: transactions related to the exportation and reexportation of items authorized by the U.S. Department of Commerce; the provision of certain agricultural commodities, medicine, and medical devices; and certain journalistic activities in North Korea.

The rule is effective today. OFAC also issued several new North Korea-related FAQs and amended three FAQs.


OCC enforcement actions for February 2024

The OCC has released its February 2024 list of enforcement actions taken against national banks and federal savings associations and related individuals.

  • The previously announced cease and desist order, order for civil money penalty, and Gramm-Leach-Bliley agreement issued to City National Bank, Los Angeles, California.
  • A cease and desist order against Blue Ridge Bank, N.A., Martinsville, Virginia, for unsafe or unsound practices, including those related to BSA/AML, capital ratios, capital and strategic planning, liquidity risk management, and information technology controls. The deficiencies in the BSA/AML compliance program resulted in violations of law, rule, or regulation, and the bank also failed to correct previously reported BSA problems.
  • A formal agreement with The First National Bank of St. Ignace, St. Ignace, Michigan, for unsafe or unsound practices, including those related to capital planning, capital stress testing, and strategic planning, and a violation of law, rule, or regulation related to payment of dividends.
  • An order of prohibition and for payment of a $50,000 civil money penalty against Stephen Adams, former senior vice president and managing director of residential lending, Sterling Bank and Trust, FSB, Southfield Michigan, for his role in failing to appropriately supervise, investigate, and discipline employees originating residential mortgage loans.
  • Orders of prohibition issued to—
    • Cole R. Mann, former branch manager, PNC Bank, National Association, Wilmington, Delaware, for stealing, embezzling, or otherwise misappropriating funds from the bank and a bank customer
    • Chimere Shanta Mitchell, former fraud and claims operations specialist at Wells Fargo Bank, N.A., Sioux Falls, South Dakota, for misappropriating confidential information of bank customers, including more than 20 elderly customers, and selling the information to a third party, resulting in fraudulent transactions
    • Aaron Parsons, relationship banker and Webster Bank N.A., Stamford, Connecticut, for unauthorized withdrawals from accounts of bank customers, four of whom are elderly, and depositing the funds in his own bank account
    • Nyema'sha Taylor, former teller at Wells Fargo Bank, N.A., Sioux Falls, South Dakota, for knowingly processing unauthorized cash withdrawals from a customer’s account
    • Francis Andujar Velazquez, former senior customer service representative, Santander Bank, Wilmington, Delaware, for misappropriating funds from customers’ accounts by making purchases using confidential bank customer information and selling confidential information of bank customers to a third party and facilitating fraudulent transactions
    • Mirsha Yamili Wilson, former associate Banker, JPMorgan Chase Bank, N.A., Columbus, Ohio, for taking cash used to supply a bank branch’s ATMs and concealing the shortage
  • Personal cease and desist orders against—
    • Colleen Kimmel, former general counsel, Sterling Bank and Trust, FSB, Southfield, Michigan, for her role in not ensuring the bank conducted or suggesting to the Board that the bank conduct an investigation into concerns related to a residential mortgage loan product, not ensuring the bank’s BSA program had an adequate system of internal controls, and not timely reporting suspicious activity related to certain residential mortgage loans
    • Jonathan Kolk, former residential underwriting manager, Sterling Bank and Trust, FSB, Southfield, Michigan, for capitulating to pressure to quickly underwrite certain residential mortgage loans and his role in underwriting, and supervising the underwriting of, loans that had false or fraudulent loan applications


CFPB: Large banks charge higher credit card rates than small institutions

The CFPB has announced its release of a report based on the first set of results from the newly updated Terms of Credit Card Plans survey. The survey data reveal that large banks are offering worse credit card terms and interest rates than small banks and credit unions, regardless of credit risk. In fact, reports the Bureau, the 25 largest credit card issuers charged customers interest rates of 8 to 10 points higher than small- and medium-sized banks and credit unions. This difference can translate to $400 to $500 in additional annual interest for the average cardholder.

The survey data include information on all general-purpose credit cards of the largest 25 credit card issuers in the United States. The data also include a representative sample of products from small- and medium-sized banks and credit unions across the country.


Merchant cash advance operator to pay $20.3M

The Federal Trade Commission has announced a federal court has entered a judgment requiring merchant cash advance operator Jonathan Braun to pay $20.3 million in monetary relief and civil penalties. This is the first trial by jury that the FTC has ever conducted.

The judgment follows a January trial in which a jury found that Braun, in his role with small-business funding company RCG Advances, which formerly did business as Richmond Capital Group, knowingly violated the Gramm-Leach-Bliley Act by deceiving small businesses about the amount of funding that Defendants would provide to and collect from them. The court entered a judgment of $3,421,067 to redress the harm that Braun’s misconduct caused to small businesses. In addition, noting the utter disregard and contempt that Braun showed to consumers, including spewing vile threats and profanities to small business owners, the court imposed $16,956,000 in civil penalties for Braun’s violations of law.

The FTC sued Braun in June 2020, along with four other defendants, charging that he deceived small businesses and other organizations by misrepresenting the terms of merchant cash advances his business provided, and then used unfair collection practices, including sometimes threatening physical violence, to compel consumers to pay.


Annual review of NMLS fees underway

The Conference of State Banking Supervisors yesterday announced that an annual review of NMLS fees has begun. The fees are reviewed annually to determine if the fee structure is properly aligned with the costs of efficiently operating NMLS for the 600,000 industry users who rely on the system to maintain their licensing or registration. The fee review process will continue throughout 2024. Any changes to NMLS fees will take effect in 2025.


OFAC sanctions network smuggling U.S. tech to Central Bank of Iran

The U.S. Department of the Treasury yesterday announced that OFAC has a procurement network responsible for facilitating the illegal export of goods and technology from over two dozen U.S. companies to end-users in Iran, including the Central Bank of Iran (CBI), which is designated for its role in providing financial support to the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and Hizballah. These designations target three individuals and four entities tied to the procurement of sophisticated U.S. technology for use by CBI in violation of U.S. export restrictions and sanctions.

Among the goods and technology acquired by CBI were items classified as information security items subject to national security and anti-terrorism controls by the U.S. Department of Commerce’s Bureau of Industry and Security.

For the names and identification information of the designated entities and individuals, see BankersOnline's February 14, 2024, OFAC Update.


Treasury fact sheet on recent actions

Yesterday, the Treasury Department issued a Fact Sheet on recent actions taken to enhance financial transparency and combat illicit finance. These initiatives include major steps towards implementing the Anti-Money Laundering Act, including the Corporate Transparency Act, and supporting the Administration’s Strategy to Counter Corruption. Major initiatives include:

  • Increasing corporate transparency through beneficial ownership reporting as FinCEN implements the Corporate Transparency Act
  • Strengthening transparency in the residential real estate market with its February 2024 Notice of Proposed Rulemaking to require certain professionals involved in real estate closings and settlements to report information to FinCEN about non-financed transfers of residential real estate to legal entities or trusts.
  • Protecting the investment adviser sector from abuse with its recent Notice of Proposed Rulemaking to require certain investment advisers to apply AML/CFT requirements pursuant to the Bank Secrecy Act, including implementing risk-based AML/CFT programs, reporting suspicious activity to FinCEN, and fulfilling relevant recordkeeping requirements. Related to this effort, Treasury also published a detailed risk assessment of the investment adviser sector that identified several illicit finance and national security risks.
  • Publication of the 2024 National Risk Assessments on Money Laundering, Terrorist Financing, and Proliferation Financing.


OCC workshops for directors and senior managers

The OCC reports it has opened registration for its 2024 schedule of in-person workshops for board directors and senior management of national community banks and federal savings associations.

The OCC examiner-led workshops provide practical training and guidance to directors and senior management of national community banks and federal savings associations to support the safe and sound operation of community-based financial institutions.

The OCC offers five daylong workshops:

  • Building Blocks: Developing Strong Management
  • Risk Governance: Improving Effectiveness
  • Compliance Risk: Understanding the Rules
  • Credit Risk: Recognizing and Responding to Risk
  • Operational Risk: Navigating Rapid Changes

The OCC is also offering a half-day workshop, Capital Markets: Keeping Current. This workshop covers balance sheet management risks, as well as hot topics and risk themes for bankers and regulators in the capital markets area.

Workshops are limited to 35 participants. Attendees will receive course materials, supervisory publications, and lunch.

Schedules, locations, cost and fee waiver information, and online registration are available on the OCC's website.


FinCEN sees increase in reports of use of CVC for child exploitation and human trafficking

Yesterday, FinCEN issued a Financial Trend Analysis (FTA) reflecting an increase in Bank Secrecy Act (BSA) reporting associated with the use of convertible virtual currency (CVC) and online child sexual exploitation (OCSE) and human trafficking. This FTA is based on BSA reporting filed between January 2020 and December 2021.

The analysis detailed in this FTA furthers Treasury efforts to combat human trafficking as well as the illicit uses of CVC. For example, Brian Nelson, Treasury’s Under Secretary for Terrorism and Financial Intelligence, announced at the President’s Interagency Task Force to Monitor and Combat Trafficking that FinCEN has joined the Canadian financial intelligence unit’s Project Protect—a flagship public-private partnership on human trafficking. In addition, in June 2021, FinCEN identified human trafficking and cybercrime as among the “Anti-Money Laundering and Countering the Financing of Terrorism National Priorities” issued pursuant to the Anti-Money Laundering Act of 2020.

More recently, in October 2023, FinCEN issued a finding pursuant to Section 311 of the USA PATRIOT Act that CVC mixing is a class of transactions of primary money laundering concern and proposed reporting requirements to increase transparency in connection with CVC mixing.

FinCEN’s analysis highlights the value of BSA reporting filed by regulated financial institutions.


Virginia bank pays $9,600 flood insurance penalty

The Federal Reserve Board has reported it has issued a consent order for the payment of a civil money penalty of $9,600 to Select Bank, Forest, Virginia, for a pattern or practice of unspecified flood insurance violations.


FinCEN proposes AML/CFT requirements for some investment advisors

FinCEN has issued a Notice of Proposed Rulemaking to be published in the February 15, 2024, Federal Register that would require certain investment advisers to apply Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) requirements pursuant to the Bank Secrecy Act (BSA), including implementing risk-based AML/CFT programs, reporting suspicious activity to FinCEN, and fulfilling recordkeeping requirements.

The proposed rule would add investment advisers to the list of businesses classified as “financial institutions” under the BSA. Investment advisers registered with the Securities and Exchange Commission (SEC), as well as those that report to the SEC as exempt reporting advisers, would be required to implement AML/CFT programs. They would also be required to file suspicious activity reports, fulfill certain recordkeeping requirements, and fulfill other obligations applicable to financial institutions subject to the BSA and FinCEN’s implementing regulations.

The proposed rule would also apply information-sharing provisions between and among FinCEN, law enforcement government agencies, and certain financial institutions, along with special measures that have been applied under Section 311 of the USA PATRIOT Act. Finally, FinCEN is proposing to delegate examination authority for this rule to the SEC given the SEC’s expertise in the regulation of investment advisers and experience in examining other financial institutions with respect to AML/CFT responsibilities.

Treasury today also published its risk assessment of this sector, which identifies illicit finance threats and vulnerabilities in the sector, including how the uneven application of AML/CFT requirements across the sector allows both legitimate and illicit investors to “shop around” for an adviser who does not need to inquire into their source of wealth.

Comments on the proposal are due by April 15, 2025.


FDIC guidance to help financial institutions in Michigan

The FDIC has issued FIL-6-2024 with guidance to help financial institutions and facilitate recovery in areas of Michigan affected by severe storms, tornadoes, and flooding August 24–26, 2023.


FHFA to host multifamily property insurance symposium

The Federal Housing Finance Agency has announced it will host the next session in its series of property insurance symposiums on March 13, 2014. The session will afford multifamily industry leaders and stakeholders the opportunity to exchange and openly discuss creative ideas to address escalating insurance market stress and how we can help those impacted.

The event will feature panels with various stakeholders, including:

  • ​​​Fannie Mae and Freddie Mac
  • The U.S Department of Housing and Urban Development Multifamily Office
  • Insurance industry experts
  • Multifamily lenders and borrowers

The session will be an in-person event in Washington on a first-come, first-served basis. Virtual attendance will also be available. For questions and additional information, including registration, email the FHFA at


FFIEC statement on exam principles related to valuation bias

The Federal Financial Institutions Examination Council has issued, on behalf of its members—the Federal Reserve Board, FDIC, OCC, CFPB, NCUA, and the State Liaison Committee—a Statement on Examination Principles Related to Valuation Discrimination and Bias in Residential Lending. The statement's purpose is to (i) mitigate risks that may arise due to potential discrimination or bias in those practices, and (ii) promote credible valuations.

Because real estate valuations are a critical underwriting component in residential real estate lending, both from a consumer compliance and safety and soundness perspective, examiners assess institutions’ compliance management systems and risk management practices for identifying and mitigating potential discrimination or bias in residential property valuation practices.

Institutions rely on real estate valuations when assessing the level of collateral support in residential credit decisions. Deficiencies in real estate valuations, including those due to valuation discrimination or bias, can lead to increased safety and soundness risks, as well as consumer harm and have an adverse impact on borrowers and their communities. Examples of such harm are consumers being denied access to credit for which they may be otherwise qualified, offered credit at less favorable terms, or steered to a narrower class of loan products.

For an institution, the failure of internal controls to identify, monitor, and control valuation discrimination or bias could negatively affect credit decisions, potentially exposing an institution to legal and compliance risks or affecting an institution’s financial condition and operations. Furthermore, material findings and concerns related to noncompliance with laws and regulations generally negatively affect the supervisory assessment of an institution’s management in a safety and soundness examination.

To promote compliance with statutory and regulatory requirements, institutions may establish a formal valuation review program. Effective review programs can enable institutions to identify noncompliance with appraisal regulations or USPAP, inaccuracies, or poorly supported valuations. These review programs can also provide the opportunity for institutions to address deficiencies due to potential valuation discrimination or bias before making a credit decision. The Interagency Appraisal and Evaluation Guidelines [see 75 FR 77450, December 10, 2010] provide additional information on the valuation review process and identify elements of an effective real estate valuation program.

The statement of principles should not be interpreted as new guidance to supervised institutions nor an increased focus on supervised institutions’ appraisal practices. Instead, the statement of principles offers transparency into the examination process and supports risk-focused examination work.


FTC gets $195M judgment and permanent telemarketing ban

On Friday, the Federal Trade Commission announced it had obtained a $195 million judgment against Simple Health Plans LLC and its CEO Steven J. Dorfman over charges they duped consumers into signing up for sham health care plans that did not deliver the coverage or benefits they promised and effectively left consumers uninsured and exposed to limitless medical expenses.

In granting the FTC’s motion for summary judgment, the Federal District Court in the Southern District of Florida also banned Simple Health, five related entities and Dorfman from telemarketing and from marketing, promoting, selling or offering any healthcare products.

In a complaint filed in 2018, the FTC said that Florida-based Simple Health misled people into thinking they were buying comprehensive health insurance that would cover preexisting medical conditions, prescription drugs, primary and specialty care treatment, inpatient and emergency hospital care, surgical procedures, and medical and laboratory testing. In reality, most consumers who enrolled reported paying as much as $500 per month for what was actually a medical discount program or extremely limited benefit program that did not deliver the promised benefits and often left consumers with thousands of dollars in uncovered medical bills, or worse yet, unable to get necessary healthcare.


CFPB gets $12M from leaders of foreclosure relief scam

The Consumer Financial Protection Bureau has announced it has resolved an appeal in a long-running enforcement suit against a foreclosure relief scam operation for $12 million in consumer redress and penalties. Consumer First Legal Group, LLC and four attorneys, Thomas G. Macey, Jeffrey J. Aleman, Jason Searns, and Harold E. Stafford, charged millions of dollars in illegal advance fees to financially-distressed homeowners for legal representation the defendants promised but did not provide.

This case was part of a coordinated effort against various foreclosure relief scam operations by the CFPB, Federal Trade Commission (FTC), and 15 states in 2014. The CFPB filed three lawsuits, the FTC filed six lawsuits, and the states took 32 actions.

The CFPB won a judgment against the defendants in 2019. The case has been ongoing given multiple appeals. Yesterday’s settlement brings the case to an end.

Under the resolution, the defendants will pay $10.9 million in consumer redress and a $1.1 million penalty into the CFPB’s victims relief fund. The individual defendants are covered by 8- or 5-year bans from the mortgage assistance industry, under the district court’s original order.


U.S. targets price cap violators and implements Russian diamond ban

Yesterday, the Treasury Department announced that OFAC has taken its second Russian oil price cap enforcement action of 2024, imposing sanctions on four entities and identifying one vessel as blocked property. The network of these entities and the vessel were involved in a price cap violation scheme in late 2023.

OFAC also issued two new determinations that implement G7 commitments to ban the importation of Russian diamonds. First, OFAC issued a determination prohibiting the importation of on non-industrial diamonds mined or extracted in Russia, notwithstanding whether they have been substantially transformed in a third country, effective beginning on March 1, 2024 for certain categories of diamonds, and expanding on September 1, 2024 to include additional categories. Second, OFAC issued a determination prohibiting the importation of diamond jewelry and unsorted diamonds of Russian Federation origin or exported from the Russian Federation, effective March 1, 2024.

For identification information on the designated entities and vessel and links to the Determinations and a related General License, see BankersOnline's February 8, 2024, OFAC Update.


U.S. sanctions Equador's Los Choneros gang and its leader

The Treasury Department has reported that OFAC has sanctioned one of Ecuador’s most violent gangs, Los Choneros, and its leader, José Adolfo Macías Villamar (a/k/a “Fito”), pursuant to counter narcotics authorities.

For identification information on Los Choneros and Macías Villamar, see BankersOnline's February 7, 2024, OFAC Update.


G.19 Consumer Credit statistics

The Federal Reserve Board has posted its G.19 Consumer Credit statistics for the fourth quarter of 2023.

In 2023, consumer credit increased 2.4 percent, with revolving and nonrevolving credit increasing 8.4 percent and 0.4 percent, respectively. During the fourth quarter, consumer credit increased at a seasonally adjusted annual rate of 2.6 percent, while in December it increased at a seasonally adjusted annual rate of 0.4 percent.


NCUA to review CU OD and NSF fee income, and more

In prepared remarks at the Brookings Institution on Tuesday, NCUA Chairman Todd M. Harper reported that the NCUA intends to review several aspects of compliance with consumer protection laws and regulations. He said, " Overdraft and non-sufficient fund fees are a key component of the NCUA’s review. NCUA examiners this year will continue an expanded review of credit union overdraft programs, including website advertising, balance calculation methods, and settlement processes. Problematic overdraft programs and non-sufficient funds alerts include fees that aren’t reasonable and proportional, rely on systems that authorize positive and settle negative, or impose multiple representment fees, often in one day."

Chairman Harper added, "NCUA’s fair lending examinations will also increase in number and focus on ensuring policies and practices are fair and not discriminatory. And examiners will continue to evaluate credit unions’ policies and procedures governing compliance with flood insurance rules. The NCUA's other areas of emphasis for 2024 include Bank Secrecy Act compliance and support for small credit unions and minority depository institutions."


FinCEN to publish proposed AML regs for residential real estate transfers

FinCEN has filed a notice of proposed rulemaking for publication in the February 16, 2024, Federal Register that would require certain persons involved in real estate closings and settlements to submit reports and keep records on identified non-financed transfers of residential real property to specified legal entities and trusts on a nationwide basis.

Transfers made directly to an individual would not be covered by this proposed rule. The proposed rule describes the circumstances in which a Real Estate Report (a streamlined version of a Suspicious Activity Report) must be filed, who must file a Real Estate Report, what information must be provided, and when such a report is due. These reports are expected to assist the U.S. Department of the Treasury; Federal, State, and local law enforcement; and national security agencies in addressing illicit finance vulnerabilities in the U.S. residential real estate sector and to curtail the ability of illicit actors to anonymously launder illicit proceeds through the purchase of residential real property, which threatens U.S. economic and national security.

Under the proposed rule, persons involved in real estate closings and settlements would continue to be exempt from the anti-money laundering compliance program requirements of the Bank Secrecy Act. However, as provided in 31 CFR 1010.205(c), no such exemption applies for a financial institution that is otherwise required to establish an anti-money laundering program.

Comments will be accepted for 60 days following publication (through April 16, 2024).


SEC adopts rules covering dealers and government securities dealers

The Securities and Exchange Commission yesterday announced its adoption of two rules that require market participants who engage in certain dealer roles, in particular those who take on significant liquidity-providing roles in the markets, to register with the SEC, become members of a self-regulatory organization (SRO), and comply with federal securities laws and regulatory obligations.

The final rules, Exchange Act Rules 3a5-4 and 3a44-2, further define the phrase “as a part of a regular business” in Sections 3(a)(5) and 3(a)(44) of the Securities Exchange Act of 1934 to identify certain activities that would cause persons engaging in such activities to be “dealers” or “government securities dealers” and be subject to the registration requirements of Sections 15 and 15C of the Act, respectively, in connection with certain liquidity-providing roles.

Under the final rules, any person that engages in activities as described in the rules is a “dealer” or “government securities dealer” and, absent an exception or exemption, required to: register with the Commission under Section 15(a) or Section 15C, as applicable; become a member of an SRO; and comply with federal securities laws and regulatory obligations and applicable SRO and Treasury rules and requirements.

The rules will become effective 60 days after they are published in the Federal Register, and compliance will be required one year later.


FDIC terminates nine receiverships

The FDIC has published [89 FR 8427] a notice that it has fulfilled its obligations and made all dividend distributions required by law for the receiverships of the following nine closed banks, effective February 1, 2024:

  • Silver State Bank, Henderson, Nevada
  • Ocala National Bank, Ocala, Florida
  • Integrity Bank, Jupiter, Florida
  • First Chicago Bank & Trust, Chicago, Illinois
  • Bank of Whitman, Colfax, Washington
  • Premier Bank, Wilmette, Illinois
  • Heritage Bank of Florida, Lutz, Florida
  • Banks of Wisconsin, Kenosha, Wisconsin
  • Sunrise Bank, Valdosta, Georgia


FEMA proposes revised homeowner flood policy form

Yesterday, the Federal Emergency Management Agency published [89 FR 8282] a notice of proposed rulemaking that would revise the Standard Flood Insurance Policy by adding a new Homeowner Flood Form and five accompanying endorsements — increased cost of compliance coverage, actual cash value loss settlement, temporary housing expense, basement coverage and builder’s risk.

The new Homeowner Flood Form would replace the Dwelling Form as a source of coverage for homeowners of one-to-four family residences. Together, the new Homeowner Flood Form and endorsements would more closely align with property and casualty homeowners insurance and provide increased options and coverage in a more user-friendly and comprehensible format.

Comments on the proposal will be accepted through April 8, 2024.


FinCEN seeks comments on renewal of CTR filing requirements

FinCEN has published [89 FR 7767] a notice and request for comments on its proposal to renew without changes, its existing information collection requirements relating to Currency Transaction Reports (CTRs). Comments will be accepted though April 5, 2024.


FDIC regulatory relief for West Virginia and Maine banks

Yesterday, the FDIC issued FIL-4-2024 to announce regulatory relief and facilitate recovery in areas of West Virginia affected by severe storms, flooding, landslides, and mudslides from August 28 to August 30, 2023; and FIL-5-2024 to announce regulatory relief and facilitate recovery in areas of Maine affected by severe storms and flooding from December 17 to December 21, 2023.


Reserve Banks publish 31 CRA evaluation ratings

The Federal Reserve Banks published 31 Community Reinvestment Act evaluation ratings in January. Twenty-four of the listed banks earned Satisfactory ratings. We congratulate the following seven banks for receiving Satisfactory ratings:


FDIC Consumer News features info on student loans

The FDIC has released its February issue of FDIC Consumer News, featuring guidance and strategies concerning student loans.


Agencies publish EGRPRA reg review schedule

The OCC, FDIC, and Federal Reserve Board have published [89 FR 8084] a notice of regulatory review and request for comments. As required by the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), the agencies are reviewing agency regulations to identify outdated or otherwise unnecessary regulatory requirements on insured depository institutions and their holding companies. The agencies divided their regulations into 12 categories. Over the next two years, the agencies will publish four Federal Register documents requesting comment on multiple categories.

This first Federal Register document requests comment on regulations concerning the following three categories: Applications and Reporting, Powers and Activities, and International Operations. Comments will be accepted through May 6, 2024.


Updated NMLS modernization web page available

The Conference of Banking Supervisors has launched an updated NMLS Modernization web page, which has been redesigned to make it easy for NMLS users, the public, and other stakeholders to stay abreast of key NMLS enhancements underway now and in the future.


January SLOOS on bank lending practices

The Federal Reserve Board has posted the results of the January 2024 Senior Loan Officer Opinion Survey (SLOOS) on Bank Lending Practices, which addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally correspond to the fourth quarter of 2023.

Regarding loans to businesses, survey respondents, on balance, reported tighter standards and weaker demand for commercial and industrial (C&I) loans to firms of all sizes over the fourth quarter. Furthermore, banks reported tighter standards and weaker demand for all commercial real estate (CRE) loan categories.

For loans to households, banks, on balance, reported that lending standards tightened across all categories of residential real estate (RRE) loans other than government residential mortgages and government-sponsored enterprise (GSE)-eligible residential mortgages, for which standards remained basically unchanged. Meanwhile, demand weakened for all RRE loan categories. In addition, banks reported tighter standards and weaker demand for home equity lines of credit (HELOCs). Moreover, for credit card, auto, and other consumer loans, standards reportedly tightened, and demand weakened on balance.

While banks, on balance, reported having tightened lending standards further for most loan categories in the fourth quarter, lower net shares of banks reported tightening lending standards than in the third quarter across all loan categories.

The January SLOOS also included a set of special questions inquiring about banks’ expectations for changes in lending standards, borrower demand, and loan performance over 2024. Banks, on balance, reported expecting lending standards to remain basically unchanged for C&I and RRE loans, but to tighten further for CRE, credit card, and auto loans. In addition, banks reported expecting loan demand to strengthen across all loan categories, and loan quality to deteriorate across most loan types.


Trade associations sue regulators over new CRA regulations

The American Banker reports that the ABA, Independent Community Bankers of America, U.S. Chamber of Commerce, Texas Bankers Association and other trade associations have filed suit in the Northern District of Texas against the OCC, Federal Reserve, and FDIC, in an attempt to stop the recently finalized Community Reinvestment Act regulations reforms.

The suit argues that the agencies arbitrarily exceeded their statutory authority when they finalized their amendments to the CRA rules in October. The suit also calls on the court to stay the rules pending the outcome of the suit. The complaint argues that the October 2023 update works "a wholesale and unlawful change to a statutory and regulatory regime that, for nearly five decades, has successfully encouraged lending in low- and moderate-income neighborhoods throughout the United States."


OFAC targets Iranian procurement network and malicious cyber actors

The Treasury Department on Friday announced sanctions against a transnational procurement network supporting Iran's ballistic missile and unmanned aerial vehicle (UAV) programs.

In a separate release, Treasury announced sanctions against actors responsible for malicious cyber activities on critical infrastructure in the U.S. and other countries.

For the names and identification information of the designated individuals and entities, see BankersOnline's February 2, 2024, OFAC Update.


FDIC releases list of 56 banks examined for CRA compliance

The FDIC has released a list of 56 banks examined for CRA compliance whose evaluation ratings were assigned in November 2023. Of the banks listed, Norway Savings Bank, Norway, Maine, received the only Outstanding rating. The other 55 banks' evaluations were rated Satisfactory.


Another proposal for Call Report revisions

The FDIC has issued FIN-3-2024 announcing a recent joint notice and request for comment by the FDIC, OCC, and Federal Reserve Board on a proposal to revise certain FFIEC reports, including the Call Report, consistent with proposed changes to the agencies’ regulatory capital rule published by the agencies in the Federal Register on September 18, 2023 (proposed capital rule). The comment period for the proposed capital rule ended on January 16, 2024. The agencies are proposing substantive changes for banks currently filing the FFIEC 031 or banks that would be subject to the expanded risk-based approach under the proposed capital rule, and only making technical revisions to the FFIEC 041 and FFIEC 051.

The proposal would—

  • Revise the FFIEC 041 and FFIEC 051, Schedule RC-R, Part I, to remove items that are no longer relevant and make other technical edits;
  • Revise the FFIEC 031 instructions to require all banks subject to the expanded risk–based approach under the proposed capital rule to file the FFIEC 031; and
  • Revise the FFIEC 031, Schedule RC–R, Part I, Regulatory Capital Components and Ratios, to align the calculation of regulatory capital for institutions subject to Category III or Category IV standards with the calculation used for institutions subject to Category I and Category II standards.

The agencies propose to make these reporting changes effective for the third quarter of 2025 (as of the September 30, 2025, report date), consistent with the proposed July 1, 2025, effective date for the proposed capital rule. For modifications made to the proposed capital rule when the rule is adopted in final form, the agencies would modify the Call Report proposal to incorporate such changes.

Comments will be accepted through March 26, 2024.


OCC CRA evaluations for 18 institutions

The OCC has released a list of Community Reinvestment Act performance evaluations that became public in January, 2024.

Of the 18 evaluations made public this month, three are rated needs to improve, nine are rated satisfactory, and six are rated outstanding. We congratulate these institutions for their outstanding ratings:


FinCEN alert on Israeli extremist settler violence against Palestinians

FinCEN, in an announcement coordinated with OFAC's reporting of a new Executive Order and sanctions program, reported it had issued an Alert related to the financing of Israeli extremist settler violence against Palestinians in the West Bank. The alert provides select red flags to assist U.S. financial institutions in identifying and reporting suspicious activity that finances such violence.

While the alert highlights the potential involvement of certain nonprofit organizations (NPOs) in facilitating payments to fund violence in the West Bank, FinCEN continues to emphasize that legitimate charities should have access to financial services and can transmit funds through legitimate and transparent channels. FinCEN is also reminding financial institutions to apply a risk-based approach to Customer Due Diligence requirements when developing the risk profiles of charities and other non-profit customers. No specific customer types, including charities and NPOs, automatically present a higher risk of illicit activity.

The Alert cited red flag indicators to help detect, prevent, and report potential suspicious activity related to the financing of Israeli extremist settler violence against Palestinians in the West Bank, but advised that "no single red flag is necessarily indicative of illicit or suspicious activity, U.S. financial institutions are encouraged to consider all the surrounding facts and circumstances before determining whether a specific transaction is suspicious or associated with potential Israeli violent extremist groups or campaigns."

FinCEN asked that financial institutions reference the alert in SAR field 2 and the narrative by including the key term "FIN-2024-WBEXTREMISM."


New Executive Order and sanctions program announced

OFAC has announced that the president has signed a new Executive Order, “Imposing Certain Sanctions on Persons Undermining Peace, Security, and Stability in the West Bank.”

Under the authority of the new Executive Order, OFAC added four Israeli nationals to its SDN List, with the new "Middle-East-EO" sanctions program tag. For identification information on those individuals, see BankersOnline's February 1, 2024, OFAC Update.


Treasury announces three OFAC actions

On Wednesday, January 31, 2024, the Department of the Treasury announced three OFAC actions.

  • Sanctioning of Iranian IRGC-QF and Hizballah Financial Network: OFAC sanctioned three entities — Mira Ihracat Ithalat Petrol, Yara Offshore SAL, and Hydro Company for Drilling Equipment Rental — and one individual — Ibrahim Talal al-Uwayr — located in Lebanon and Türkiye for providing critical financial support to an Iranian Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and Hizballah financial network.
  • Sanctioning of three entities — Alkhaleej Bank Co Ltd., Zadna International Co for Development Ltd., and Al-Fakher Advanced Works Co. Ltd. — for their role in undermining the peace, security, and stability of Sudan.
  • Designation of two entities closely associated with Burma’s military regime — the Shwe Byain Phyu Group of Companies and Myanma Five Star Line Company Limited — and four cronies — Tin Latt Min, Theint Win Htet, Win Paing Kyaw, and Thein Win Zaw,

For identification information on the entities and individuals designated in the three OFAC actions, see BankersOnline's January 31, 2023, OFAC Update.


Agencies publish CRA regulations update

The Federal Reserve Board, OCC, and FDIC published [89 FR 6574] the previously announced joint final rule updating their Community Reinvestment Act regulations.


January 31 FOMC Statement released

The Federal Reserve Board has issued the Federal Open Market Committee (FOMC) statement following the committee meeting of January 30–31, 2024.

The Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.

The FOMC also reaffirmed its Statement on Longer-Run Goals and Monetary Policy Strategy, unchanged from the version adopted in August 2020.

The Implementation Note issued with the Statement indicates that the Board of Governors voted to maintain the interest rate paid on reserve balances at 5.4 percent, and to approve the establishment of the primary credit rate at the existing rate of 5.5 percent.

The FOMC also announced updates effective June 30, 2024, that further enhance its policy on investment and trading. The policy, which was first adopted in 2022, aims to support public confidence in the impartiality and integrity of the Committee's work by guarding against even the appearance of any conflict of interest.

The updates will increase the number of Federal Reserve System staff who will be covered by the most stringent restrictions on investment and trading activities and will tighten restrictions on all staff with access to confidential FOMC information. Additionally, the updated policy supports a new compliance regime where staff with access to the most sensitive FOMC information may be directed to submit brokerage statements or other securities transaction statements to verify the accuracy of their financial disclosures.


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