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FinCEN posts 'stealth' CTR FAQ change

Thanks to a post in BankersOnline's BSA/AML/CIP/OFAC discussion forum by one of our newest users, we've learned that FinCEN has updated its FAQ document on CTR filing to change the answer to Question 16 concerning transactions in which the conductor has more than one role. Notice of the change may have been provided to users of FinCEN's e-filing site.

Current instructions on the CTR indicate that when the conductor completes a currency transaction on the conductor's own behalf and on behalf of another person (e.g.,a business owner depositing a reportable amount of cash to her personal account and to her entity business account), the reporter completes one Part I for the conductor and checks the first "role" in item 2 that applies, starting at the left. That would be check box 2a, indicating a transaction conducted on behalf of oneself. The total amount is reported in that Part I entry.

Apparently, FinCEN would like such a CTR completed differently. Question 16 in the FAQ now says that there should be two Part I entries for the conductor -- one with item 2a checked for the transaction "completed on own behalf" (the deposit to her personal account) and the other with item 2b checked to report the part of the transaction conducted on behalf of another (the business). And of course, there is still the Part I entry for the business with item 2c checked (person on which behalf transaction was conducted).

The discussion thread indicates FinCEN's Help Line says the change won't be enforced until the instructions are updated and more formal guidance provided. FinCEN should also review its response to FAQ question 22 before finalizing those instructions and guidance. But, of course, none of this comes straight from FinCEN.


OFAC targets N Korean cyber hackers and Ugandan top cop

The Treasury Department issued two news releases on Friday concerning OFAC actions. OFAC designated three North Korean state-sponsored malicious cyber groups responsible for North Korea’s malign cyber activity on critical infrastructure to support illicit weapon and missile programs. This activity included tactics such as cyber espionage, data theft, monetary heists, and destructive malware operations targeting government, military, financial, manufacturing, publishing, media, entertainment, and international shipping companies, as well as critical infrastructure.

OFAC also sanctioned the former Inspector General of Police of the Ugandan Police Force, Kale Kayihura, pursuant to Executive Order 13818, for having engaged in serious human rights abuse against Ugandan citizens, as well as for his involvement in corruption.

For identification information on the entities and individual designated by these actions, see BankersOnline's OFAC Update.


FinCEN requests info on Dorian-related report delays

FinCEN has requested financial institutions affected by Hurricane Dorian to contact FinCEN and their functional regulator as soon as practicable to discuss any delays in their ability to file required Bank Secrecy Act reports. Institutions seeking to contact FinCEN should call the FinCEN Resource Center at 1-800-949-2732 and select option 8 or send e-mail to FinCEN also reminded financial institutions to review its Advisory to Financial Institutions Regarding Disaster-Related Fraud due to the potential for fraudulent transactions.


Fannie and Freddie multifamily loan caps revised

The Federal Housing Finance Agency (FHFA) has announced a revised cap structure on the multifamily business of Fannie Mae and Freddie Mac (the Enterprises). The new multifamily loan purchase caps will be $100 billion for each Enterprise, a combined total of $200 billion in support to the multifamily market, for the five-quarter period Q4 2019 – Q4 2020. The new caps apply to all multifamily business – no exclusions.

A Fact Sheet and Revised Appendix A (Conservatorship Scorecard) were also posted.


$1.9 million in grants to low income CUs

The National Credit Union Administration has announced the award of $1.9 million in grants to 155 low-income credit unions located in 40 states and the District of Columbia.


IRS regs on 100% business depreciation

The Treasury Department has announced the IRS's release of final regulations and additional proposed regulations on the new 100% additional first year depreciation deduction that allows businesses to write off most depreciable business assets in the year they are placed in service by the business.


Agenda for next NCUA Board meeting

The NCUA has published [84 FR 48649] the agenda for its next open Board of Directors meeting, to be held beginning at 10 a.m. ET on September 19. Matters to be considered include:

  • the Share Insurance Fund quarterly report
  • NCUA regulations on—
    • Supervisor Committee Audits
    • Federal Credit Union Bylaws
    • Payday Alternative Loans II


FDIC annual summary of deposits results

The FDIC has released results of its annual survey of branch office deposits for all FDIC-insured institutions as of June 30, 2019. The Summary of Deposits includes historical data going back to 1994 that can be analyzed using online reports, tables, and downloads. SOD users can locate bank offices in a particular geographic area and create custom market share reports for areas such as state, county, and metropolitan statistical area. Market share reports have been expanded to allow users to see market growth and market presence for specific institutions.


Fed Board to hold closed meeting on monetary policy

The Federal Reserve Board has posted a notice it will hold a closed meeting on September 17, 2019, to discuss Monetary Policy issues. A final announcement of matters considered will be available in the Board's Freedom of Information and Public Affairs Offices and on the Board's website following the closed meeting.


Georgia landlords face discrimination charges

HUD has announced it is charging a couple that owns an apartment building in Richmond Hill, Georgia, with violating the Fair Housing Act by refusing to rent to, imposing different rental terms and conditions on, and making discriminatory statements about families with children.


FTC charges operators of student loan debt relief schemes

The Federal Trade Commission announced yesterday it has charged the operators of two similar student loan debt relief schemes, and a financing company that assisted them, with bilking millions of dollars from consumers. The defendants allegedly charged illegal upfront fees that they led consumers to believe went toward consumers’ student loans, and falsely promised that their services would permanently lower or even eliminate consumers’ loan payments or balances. The defendants also signed customers up for high-interest loans to pay the fees without making required disclosures.

Complaints against:


FDIC State Profiles posted

The FDIC has posted the Second Quarter 2019 FDIC State Profiles, quarterly summaries of banking and economic conditions in each state.


Single-family rental discrimination claim settled

HUD has announced the owners and managers of a single-family rental home in Nampa, Idaho, will pay $15,000 under a Consent Order resolving allegations that they violated the Fair Housing Act by refusing to rent the large home to a married couple because they have more than four children.


NCUA quarterly map review of CU data

The NCUA has posted its Quarterly U.S. Map Review for the Second Quarter 2019, which indicates federally insured credit unions generally saw continued positive trends. Eighty-eight percent of federally insured credit unions reported positive net income at the end of the second quarter. Median annual loan growth in the year ending in the second quarter was 4.6 percent, and median annual asset growth was 1.7 percent.


NCUA board member wants stronger consumer compliance focus

In a speech delivered at a Women in Housing and Finance policy lunch, NCUA board member Todd Harper said that "NCUA's current method for examining and enforcing consumer financial protection laws and regulations in credit unions with less than $10 billion in assets that it supervises is not comparable to our sister agencies," and that "NCUA's different approach to consumer financial protection reviews runs counter to the congressionally mandated mission of the Federal Financial Institutions Examination Council, which works to 'prescribe uniform principles, standards, and report forms' across all types of financial institutions." He said that the NCUA should "evolve its approach to consumer financial protection [and] increase guidance to the credit union system to improve compliance with consumer financial protection laws."


Efforts to stop international business email schemes

The FBI has posted the results of Operation reWired, a months-long, multi-agency effort to disrupt and dismantle international business email compromise (BEC) schemes. These sophisticated cyber-enabled scams often target employees with access to company finances and—using methods like social engineering and computer intrusions—trick them into making wire transfers to bank accounts thought to belong to trusted partners. The accounts are actually controlled by the criminals.

Operation reWired resulted in 281 arrests, including 74 in the United States. Arrests were also made in Nigeria, Turkey, Ghana, France, Italy, Japan, Kenya, Malaysia, and the United Kingdom. The sweep resulted in the seizure of nearly $3.7 million and the disruption and recovery of approximately $118 million in fraudulent wire transfers.


FDIC updates manuals

The FDIC has released the September 2019 updates to its Risk Management Manual of Examination Policies. Section 3.2 (Loans) has been updated with revised loan evaluation instructions, technical updates for accounting, appraisal thresholds, syndicated lending instructions, and various technical edits to update terminology.

The FDIC also announced the September updates to its Compliance Examination Manual. Section IV-3.1 (Fair Lending Scope and Conclusions Memorandum) was revised to reflect changes to pre-examination interview questions and information requests made during the examination planning proceess, and Section V-6.1 (Flood Disaster Protection) was updated to incorporate the private flood insurance final rule’s provisions pertaining to the mandatory and discretionary acceptance of private flood insurance by financial institutions, the qualification process and acceptance of mutual aid society plans in satisfaction of the flood insurance purchase requirement; and minor technical changes.


CFPB issues innovation policies

The CFPB has issued three new policies to promote innovation and facilitate compliance: the No-Action Letter (NAL) Policy, Trial Disclosure Program (TDP) Policy, and Compliance Assistance Sandbox (CAS) Policy.

No-action letters provide increased regulatory certainty through a statement that the Bureau will not bring a supervisory or enforcement action against a company for providing a product or service under certain facts and circumstances. The Bureau has issued its first NAL under the new NAL Policy in response to a request by HUD on behalf of more than 1,600 housing counseling agencies (HCAs) that participate in HUD’s housing counseling program. The no-action letter essentially states that the Bureau will not take supervisory or enforcement action under RESPA against HUD-certified HCAs that have entered into certain fee-for-service arrangements with lenders for pre-purchasing of housing counseling services. The Bureau also released a No-Action Letter Template for mortgage lenders to apply for a NAL for any HUD-required MOU between the mortgage lender and a participating counseling agency under a Housing Counseling Funding Agreement.

Under the new TDP Policy, entities seeking to improve consumer disclosures may conduct in-market testing of alternative disclosures for a limited time upon permission by the Bureau.

The CAS Policy enables testing of a financial product or service where there is regulatory uncertainty. After the Bureau evaluates the product or service for compliance with relevant law, an approved applicant that complies in good faith with the terms of the approval will have a “safe harbor” from liability for specified conduct during the testing period. Approvals under the CAS Policy will provide protection from liability under the Truth in Lending Act, the Electronic Fund Transfer Act, or the Equal Credit Opportunity Act.

UPDATE: The policies were published in the Federal Register 9/13/2019:
NAL policy: 84 FR 48229
TDP policy: 84 FR 48260
CAS policy: 84 FR 48246


Enhanced counterterrorism sanctions authority exercised

Treasury has announced that OFAC used newly enhanced counterterrorism sanctions authorities on Tuesday to designate a series of terrorist leaders, facilitators, and entities. Equipped with new tools from recently updated Executive Order 13224, Treasury designated 15 leaders, individuals, and entities affiliated with terror groups. That action targets a wide array of groups, including entities affiliated with HAMAS, the Islamic State of Iraq and Syria (ISIS), al-Qa’ida, and the Islamic Revolutionary Guard Corps Qods-Force (IRGC-QF), and combined with actions taken by the State Department amounts to some of the furthest reaching designations of terrorists and their supporters in the past 15 years.

The amended Executive Order provides the Treasury and State Departments new tools allowing the U.S. to better identify and designate terrorists worldwide. The order now:

  • Contains new designation criteria that allows the U.S. Government to more efficiently target leaders or officials of terrorists groups as well as individuals who participate in terrorist training;
  • Provides for secondary sanctions against foreign financial institutions that have knowingly conducted or facilitated significant financial transactions on behalf of any person sanctioned pursuant to E.O. 13224;
  • Authorizes Treasury to prohibit a foreign financial institution that has knowingly conducted or facilitated a significant transaction with any Specially Designated Global Terrorist (SDGT) from opening or maintaining a correspondent or payable-through account in the United States;
  • Consolidates U.S. counterterrorism authorities under a single sanctions program by eliminating E.O. 12947 and combining that authority’s goal of defending the Middle East Peace Process with E.O. 13224’s global remit and expanded authorities.

For further information on the new Executive Order, OFAC's designations of individuals and entities, and changes to existing SDN listings, see BankersOnline's OFAC Update.


Bureau and states launch innovation network

The CFPB announced Tuesday the launch of the American Consumer Financial Innovation Network (ACFIN) to enhance coordination among federal and state regulators to facilitate financial innovation.

Initial state members of ACFIN are the attorneys general of Alabama, Arizona, Georgia, Indiana, South Carolina, Tennessee, and Utah. All state regulators have been invited to join.


Venezuela-related General License and amended FAQ

OFAC has issued a Venezuela-related General License (General License No. 34) and amended a related FAQ.


OCC schedules 2 LA workshops

The OCC has announced it will host two workshops at the Federal Reserve Bank of Los Angeles, October 22 and 23, for directors of institutions supervised by the OCC:

  • The Compliance Risk workshop on October 22 focuses on the critical elements of an effective compliance risk management program. Topics of discussion include the Bank Secrecy Act, Flood Disaster Protection Act, Fair Lending, Home Mortgage Disclosure Act, Community Reinvestment Act, and other compliance hot topics.
  • The Operational Risk workshop on October 23 focuses on the key components of operational risk—people, processes, and systems. The workshop also covers governance, third-party risk, vendor management, internal fraud, and cybersecurity.


FDIC requests comments on interest rate restrictions

The FDIC has issued FIL-49-2019 reminding bankers it is seeking comment on proposed revisions to its regulations on interest rate restrictions that apply to insured depository institutions that are less than well capitalized. See BankersOnline's August 21 Top Story for details. Comments on the FDIC's proposal are due by November 4, 2019.


July G.19 Consumer Credit data

The Federal Reserve System has released July 2019 G.19 Consumer Credit data. Consumer credit increased at a seasonally adjusted annual rate of 6-3/4 percent. Revolving credit increased at an annual rate of 11-1/4 percent, while non-revolving credit increased at an annual rate of 5-1/4 percent.


Fed CRA evals released in August

Our review of the Federal Reserve's CRA evaluation ratings reveals that 18 ratings were made public in August. Sixteen institutions were rated Satisfactory. Two institutions received Outstanding ratings (links are to their evaluation reports):


FTC challenges $1.2B merger of title insurance providers

The Federal Trade Commission has issued an administrative complaint seeking to block title insurance provider Fidelity National Financial, Inc.’s $1.2 billion acquisition of Stewart Information Services, alleging the merger would substantially reduce competition in state markets for title insurance underwriting for large commercial transactions, and in several local markets for title information services.


OFAC amends Cuban Assets Control Regs

OFAC has published [84 FR 47121] a final rule amending the Cuban Assets Control Regulations to further implement elements of U.S. foreign policy toward Cuba. The rule amends the general license relating to "U-turn" financial transactions to eliminate the authorization to process such transactions and instead only allow the rejection of such transactions. The rule adds restrictions on "family remittances," eliminates the authorization for donative remittances, and adds a provision to authorize unlimited remittances to certain additional self-employed individuals.

The rule provides a 30-day implementation period, making it effective October 9, 2019, to allow for technical implementation of the added restrictions.


OCC releases CRA evaluations

The OCC has released a list of the 26 Community Reinvestment Act (CRA) performance evaluations that became public during the month of August. Nineteen were rated satisfactory and these seven were rated outstanding (links are to the institutions' evaluations):


Los Angeles housing authority settles discrimination claim

HUD has announced it has approved a Conciliation/Voluntary Compliance Agreement with the Housing Authority of Los Angeles, settling claims that it discriminated against a resident because of her sex and disabilities.


CFPB files complaint against CFLA, Lehman, and Carrigan

The Consumer Financial Protection Bureau announced on Friday it has filed a complaint in federal court in the Central District of California against Certified Forensic Loan Auditors, LLC (CFLA), Andrew Lehman, and Michael Carrigan. The complaint alleges that CFLA and Lehman have engaged in deceptive and abusive acts and practices and have charged unlawful advance fees in connection with the marketing and sale of financial advisory and mortgage assistance relief services to consumers.

CFLA is a foreclosure relief services company incorporated in California and headquartered in Houston, Texas. Lehman is CFLA’s president and CEO. The Bureau’s complaint alleges that Carrigan, who was the company’s sole auditor, provided substantial assistance to CFLA and Lehman. Concurrent with the complaint, the Bureau and Carrigan filed a proposed stipulated final judgment and order to resolve the substantial assistance claims against Carrigan.


HUD and Treasury propose housing reform plans

HUD and Treasury announced they have presented their housing finance reform plan to the president. The plans were developed in respond to the president’s Memorandum on Federal Housing Finance Reform issued on March 27, 2019, which directed HUD and Treasury to craft the housing finance reform plans.

The Treasury recommendation includes providing explicit and paid-for federal government support for the secondary market, ending the more-than-decade-long conservatorships of Fannie Mae and Freddie Mac and promoting greater private-sector competition in housing finance. HUD's proposal includes reforms to the Federal Housing Administration and Ginnie Mae.


FDIC Q2 insured institutions report

The FDIC has released its Second Quarter 2019 Report based on Call Report data from all FDIC-insured institutions, highlighting—

  • Net income of $62.6 billion
  • Net income Increased 4.1 percent from second quarter 2018
  • Net interest margin remained stable at 3.39 percent
  • Community banks reported 8.1 percent increase in net income over 2018
  • Total loan and lease balances increased from the previous quarter and 2018
  • The number of banks on the "Problem Bank List" declined to 56


Housing Preservation Program expanded

HUD has announced a significant expansion of its Rental Assistance Demonstration (RAD) to facilitate capital investment in senior housing developments assisted through HUD's Section 202 Supportive Housing for the Elderly Project Rental Assistance Contracts (PRAC).

Expanding RAD to include Section 202 PRAC units will now allow nonprofit housing developers to access capital investment to revitalize their aging properties and to ensure sustainable affordability for their very low-income elderly residents. There are approximately 120,000 units across 2,800 properties that will now become eligible to participate in the demonstration program.

  • HUD Notice to public housing entities


FDIC lists four outstanding CRA evals

The FDIC has released a list of banks recently evaluated for compliance with the Community Reinvestment Act. Bank evaluations are given ratings of Substantial Non-Compliance, Needs to Improve, Satisfactory or Outstanding. Of the 73 banks listed, 68 received Satisfactory ratings, one bank was rated Needs to Improve, and these four banks were awarded Outstanding ratings (links are to their evaluations):


Nebraska bank pays $37K flood penalty

The Federal Reserve Board has issued an Order of Assessment of a civil money penalty of $37,000 on First State Bank Nebraska for its pattern or practice of unspecified violations of Federal Reserve Regulation H, 12 CFR 208.25, which implements the requirements of the National Flood Insurance Act.

BOL's Andy Zavoina notes that 2019 flood violation civil money penalties to date are 151 percent of the total for all of 2018, at $759,000.


CFPB offers 'relative' scam call tips

The Bureau has posted an article offering tips regarding scam calls that purport to be from a relative:

  • Don’t panic! Take a deep breath and get the facts.
  • Don’t send money unless you’re sure it’s the real person who contacted you. Hang up and call your grandchild or friend’s phone number to see if the story checks out. You could also call a different friend or relative to confirm the facts
  • Is the person asking for gift cards? This is a sign that it may be a scam, because gift cards usually won’t help when someone is in real need of assistance.


OFAC Iran FAQs updated and expanded

OFAC has posted a notice that it has updated and expanded its Iran-related FAQs.

Existing FAQ 296 has been updated and new FAQs on bunkering of non-Iranian and Iranian vessels carrying goods to or from Iran have been published.


FATF Iceland compliance report

The Financial Action Task Force has issued a report on Iceland’s progress in strengthening measures to tackle money laundering and terrorist financing.


Options Clearing Corp pays $20M per SEC order

The SEC and the Commodity Futures Trading Commission have announced that the Options Clearing Corporation (OCC) will undertake remedial efforts and pay $20 million in penalties to settle charges that it failed to implement policies to manage certain risks as required by U.S. laws and SEC and CFTC rules.


NCUA to phase in Field of Membership rule

NCUA Chairman Hood has issued a statement in response to the August 20 ruling by the D.C. Circuit Court of Appeals regarding the NCUA’s field-of-membership rules. The NCUA will take a phased approach to implementing the court's decision because the ruling remains subject to requests for further review.


FEMA to suspend Oklahoma communities

The Federal Emergency Management Agency has published a notice [84 FR 46685] in today's Federal Register identifying communities in Oklahoma scheduled for suspension from the National Flood Insurance Program on September 13, 2019, for failure to comply with the floodplain management requirements of the program.

The communities listed are Afton, Bernice, Bluejacket, Disney, Jay, Miami, Vinita, and unincorporated areas of Craig and Mayes Counties.


Beige Book released

The September Beige Book has been posted by the Reserve Board, with information collected on or before August 23, 2019, and summarizes comments received from outside the Federal Reserve System.

On balance, reports from Federal Reserve Districts suggested that the economy expanded at a modest pace through the end of August. Although concerns regarding tariffs and trade policy uncertainty continued, the majority of businesses remained optimistic about the near-term outlook. Reports on consumer spending were mixed, although auto sales for most Districts grew at a modest pace. Tourism activity since the previous report remained solid in most reporting Districts. On balance, transportation activity softened, which some reporting Districts attributed to slowing global demand and heightened trade tensions. Home sales remained constrained in the majority of Districts due primarily to low inventory levels, and new home construction activity remained flat.


Second quarter CU performance data

The NCUA has released data on the financial performance of federally insured credit unions for the quarter ending June 30, 2019. The report includes an overview of the quarterly Call Report data as well as tables showing the recent history of major credit union performance indicators.


Google and YouTube pay $170M COPPA penalty

The Federal Trade Commission has announced that Google LLC and its subsidiary YouTube LLC have agreed to pay a federal civil money penalty of $136 million and a New York State penalty of $34 million to settle allegations that YouTube violated the Children's Online Privacy Protection Act (COPPA) Rule by collecting personal information—in the form of persistent identifiers that are used to track users across the Internet—from viewers of child-directed channels, without first notifying parents and getting their consent. YouTube earned millions of dollars by using the identifiers, commonly known as cookies, to deliver targeted ads to viewers of these channels, according to the complaint.

Google and YouTube also agreed to develop, implement, and maintain a system that permits channel owners to identify their child-directed content on the YouTube platform so that YouTube can ensure it is complying with COPPA. In addition, the companies must notify channel owners that their child-directed content may be subject to the COPPA Rule’s obligations and provide annual training about complying with COPPA for employees who deal with YouTube channel owners.

For additional information, see "YouTube pays $170M for COPPA violations," in BankersOnline's Penalty pages.


Prepaid Card Report sent to Congress

The Federal Reserve Board has submitted it’s annual report to 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.


OFAC tags terrorists' shipping network

Treasury has announced that OFAC has taken action against a large shipping network that is directed by and financially supports the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and its terrorist proxy Hizballah. Senior IRGC-QF official and former Iranian Minister of Petroleum Rostam Qasemi oversees this sprawling network, which features dozens of ship managers, vessels, and facilitators. This complex network of intermediaries enables the IRGC-QF to obfuscate its involvement in selling Iranian oil. The IRGC-QF also relies heavily on Hizballah officials and front companies to broker associated contracts. OFAC also is issuing a new shipping advisory to the maritime community warning of these types of schemes and the sanctions risks associated with blocked persons.

OFAC announced the designation of some 16 entities and 10 individuals pursuant to E.O. 13224, and identified 11 vessels as property in which blocked persons have an interest. For identification details, see BankersOnline's OFAC Update.


FATF report on Hong Kong AML measures

The Financial Action Task Force (FATF) has issued its report regarding Hong Kong, China’s measures to combat money laundering and terrorist financing.


OFAC publishes Nicaragua sanctions regs

OFAC has announced it has issued regulations to implement Executive Order 13851 of November 27, 2018 ("Blocking Property of Certain Persons Contributing to the Situation in Nicaragua"). These regulations (31 CFR part 582) are effective with today's publication at 84 FR 46440 in the Federal Register. OFAC intends to supplement part 582 with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance and additional general licenses and statements of licensing policy.

OFAC also updated its SDN List, adding three Iranian entities subject to secondary sanctions under OFAC's Iran-related and Non-proliferation of weapons of mass destruction programs, and updating a Kingpin Act listing of a Mexican national. See BankersOnline's OFAC Update for details.


August foreign exchange rates

The Federal Reserve System has posted G.5 Foreign Exchange Rates data for August 2019.


CFPB tax time savings study

The CFPB has released the results of a pilot study launched with the tax preparation company H&R Block. The "Planning for tax time savings" study shows that simple messages and small incentives encouraging customers to use their prepaid card to save at tax time increased the likelihood that they would do so.


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