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Top Story Compliance Related


FinCEN renewing info collections without changes

FinCEN has published two notices and requests for comment to extend its authority to require the collection of information.

On Friday, February 23, FinCEN published [89 FR 13802] a notice on the proposed renewal, without change, of an existing information collection requirement for geographic targeting orders (GTOs). This will allow FinCEN to continue renewing its GTOs while its proposal for requiring nationwide Real Estate Reports of non-financed transfers of residential real estate remains under consideration. Comments are due by April 23, 2024.

On Monday, February 26, FinCEN published [89 FR 14148] a notice on the proposed renewal, without change, of its existing information collection requirement in 31 CFR 1010.230 related to beneficial ownership requirements for legal entity customers. The current requirement for banks to obtain certifications of beneficial ownership from entity customers will continue until FinCEN proposes and issues and makes effective a final rule to change the requirements in section 1010.230, which is not expected until at least the end of 2024. Comments on FinCEN's notice are due by April 26, 2024.


FTC issues UDAP complaint against H&R Block

The Federal Trade Commission reports it is taking action against tax preparation company H&R Block for unfairly deleting consumers’ tax data and requiring them to contact customer service when they downgrade to more affordable online products, and deceptively marketing their products as “free” when they were not free for many consumers.

In an administrative complaint, FTC staff alleges that H&R Block’s online tax filing products lead consumers into higher-cost products made for more complicated tax filings, despite many consumers not needing the additional tax forms and schedules offered by those products. In addition, H&R Block fails to clearly explain which of its products cover what forms, schedules, or tax situations, leading many consumers to start completing their tax returns in products that are more expensive than they need. When consumers later realized they did not need or want those more expensive products, though, H&R Block presented them with a series of time-consuming challenges when attempting to downgrade after already spending substantial time entering their tax information.

Specifically, when consumers choose to downgrade, H&R Block requires consumers to contact its customer support via chat or phone. Then, its system deletes all the tax data the consumers have entered, requiring them to start their tax return from scratch, creating a significant disincentive to downgrading. This stands in contrast to the upgrade process, where consumers’ data seamlessly moves to the more expensive product instantly.


FDIC releases January enforcement actions

The FDIC has released a list of 15 orders of administrative enforcement actions taken against banks and individuals in January 2024. The administrative enforcement actions in those 15 orders consisted of six orders to pay civil money penalties, two combined prohibition orders and orders to pay civil money penalties, two prohibition orders, four consent orders, and one order terminating a consent order.

  • Nine orders against individuals who are current or former institution-affiliated parties of Bank of England, England, Arkansas, connected to violations of section 5 of the Federal Trade Commission Act involving misrepresentations of personal and bank affiliations with the Department of Veterans Affairs in the course of taking applications for VA mortgage loans.
    • Assessments of civil money penalties and orders of removal/prohibition were issued to:
      • Ryan Qarana, former branch manager of the Bloomfield, MI, loan production office of the bank, for failing to ensure that loan officers in the Bloomfield, Michigan loan production office complied with Section 5; specifically by misrepresenting or failing to ensure that loan officers did not misrepresent: (1) available loan prices for mortgage loans, (2) that consumers could skip two months of their mortgage payments, and (3) the loan production office’s affiliation with the Department of Veterans Affairs. CMP $100,000.
      • Jasmine Jonna, former sales manager of the Bloomfield loan production office, for misrepresenting available loan prices for mortgage loans, misrepresenting to consumers that they could skip two months of their mortgage payments, and misrepresenting the loan production office’s affiliation with the Department of Veterans Affairs. CMP of $12,000.
    • Civil money penalties were assessed on:
      • Ramy Zoma, for misrepresenting the bank as affiliated with the Department of Veterans Affairs. CMP $2,500.
      • Janel Zaitona, for luring consumers to apply for mortgage loans with low, unavailable loan prices that would not be honored and subsequently increasing the price before closing the loan, and misrepresenting to consumers that they could skip two months of mortgage payments and by misrepresenting to consumers the Bank’s affiliation with the Department of Veteran’s Affairs. CMP $1,000
      • Salam Yaldo, for luring consumers to apply for mortgage loans with low, unavailable loan prices, that would not be honored and subsequently increasing the price before closing the loan; misrepresenting to consumers that they could skip two months of mortgage payments; and misrepresenting to consumers his and the Bank’s affiliation with the Department of Veterans Affairs. CMP $15,000
      • Zach Jabro, for failing, as the branch manager of the office, in certain aspects, to manage, monitor, and oversee the sales operations of the branch. CMP $110,000
      • Maria Abdulnoor, for luring consumers to apply for mortgage loans with low, unavailable loan prices that would not be honored and subsequently increasing the price before closing the loan, and misrepresenting to consumers that they could skip two months of mortgage payments. CMP $35,000.
    • Cease and desist orders were issued to Lamont Kennedy and Oday Sessi.
  • An order to pay a civil money penalty of $2,000 was issued to Collins State Bank, Collins, Wisconsin, for violations of the Flood Disaster Protection Act, National Flood Insurance Act, and Part 339 of the FDIC's Rules and Regulations, by failing to obtain adequate flood insurance at the time of making, increasing, renewing, or extending four (4) loans.
  • Removal/prohibition orders were issued to:
    • Laura Ellen Ellison, formerly a loan operations specialist for CommerceOne Bank, Birmingham, Alabama, for executing nine unauthorized wire transfers from accounts of two bank customers to her personal bank account at another bank, and creating false documentation to make the transfers appear to have been authorized.
    • Bonnie A. Kirkpatrick, formerly employed by First Farmers & Merchants State Bank, Brownsdale, Minnesota, after a finding that she forged withdrawal slips, took various amounts of money from multiple consumer accounts without permission or authority, and removed Bank funds from the cash drawer, all for her own personal gain.
  • Consent orders were issued to First Farmers & Commercial Bank, Pikeville, Tennessee, and Lineage Bank, Franklin, Tennessee
  • A consent order issued in September 2022 to Union Savings Bank, Cincinnati, Ohio, was terminated.


President announces more sanctions against Russia

The White House has released a statement in which President Biden announced “more than 500 new sanctions against Russia for its ongoing war of conquest on Ukraine and for the death of Aleksey Navalny, who was a courageous anti-corruption activist and Putin’s fiercest opposition leader. These sanctions will target individuals connected to Navalny’s imprisonment as well as Russia’s financial sector, defense industrial base, procurement networks and sanctions evaders across multiple continents. They will ensure Putin pays an even steeper price for his aggression abroad and repression at home.”

The U.S. is also “imposing new export restrictions on nearly 100 entities for providing backdoor support for Russia’s war machine [and] taking action to further reduce Russia’s energy revenues.”

Specifics of the sanctions will be announced by the Treasury Department's Office of Foreign Assets Control.


FinCEN issues Small Entity Compliance Guide for BOI access

FinCEN has issued a Small Entity Compliance Guide for Beneficial Ownership Information Access and Safeguards Requirements to provide an overview of the Beneficial Ownership Information Access and Safeguards Rule (Access Rule) requirements for small entities (including financial institutions) that obtain beneficial ownership information (BOI) from FinCEN.

The preface of the Guide indicates it is explanatory only, does not supplement or modify any obligations imposed by statute or regulation, and does not supersede more recent guidance documents issued by FinCEN.

The Guide and other resource materials about the Beneficial Ownership Information Reporting rules can be found on FinCEN's BOI Reference Materials webpage.


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.

Publication Update: Published on 2/22/2024 at 89 FR 13263. It became applicable on publication.


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 impersonation 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, 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.


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).


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.


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