Top Story Compliance Related

The FDIC has released a list of orders of administrative enforcement actions taken against banks and individuals in March. There were three consent orders; seven Section 19 orders; five civil money penalties; six terminations of consent orders; three orders of restitution; and one decision and order dismissing a December 2015 notice of intention to prohibit from further participation, notice of charges, notice of assessment of civil money penalties, and order to pay.

• A civil money penalty of $2 million and order for approximately $1.3 million in restitution was imposed on The Bancorp Bank, Wilmington, Delaware.
• Cross River Bank, Teaneck, NJ, and an institutional affiliate, Freedom Financial Asset Management, LLC, were ordered to pay $1.1 million in civil money penalties and approximately $20 million in restitution.
• Flood Act penalties of $46,800 and $10,100 were imposed on banks in Monroe, MI, and Wildwood, NJ, respectively.
• A series of missteps by the FDIC and an Administrative Law Judge resulted in the FDIC Board's dismissal of a December 2015 notice of charges, assessment of civil money penalty and order for prohibition against an individual formerly affiliated with Branch Banking and Trust Company, Winston Salem, NC. That individual did surrender over $254,000 to the government in a civil forfeiture action while the FDIC action was pending.

FEMA has published in today's Federal Register a final rule identifying communities in Blair and Huntington Counties in Pennsylvania that are to be suspended from the National Flood Insurance Program on May 2, 2018, for non-compliance with the floodplain management requirements of the program.

OFAC has announced it has identified Chinese fentanyl trafficker Jian Zhang as a Significant Foreign Narcotics Trafficker pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). In addition, OFAC designated four additional Chinese nationals acting on behalf of Jian Zhang and Zaron Bio-Tech (Asia) Limited, an entity registered in Hong Kong that is owned or controlled by Jian Zhang. As a result of this action, any assets in which these persons have an interest in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked persons. For identifying information on the designated individuals and entity, see our OFAC Update.

Since June 2000, more than 2,100 individuals and entities have been named pursuant to the Kingpin Act for their role in international narcotics trafficking. Penalties for violations of the Kingpin Act range from civil penalties of up to $1,466,485 per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines of up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals could face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

The FDIC has issued a press release announcing that Thomas M. Hoenig is stepping down as Vice Chairman and Director of the Board of the agency on April 30, 2018. He joined the Board in 2012 and has served a full six-year term.

OCC Bulletin 2018-9, issued yesterday, announced a new "Recovery Planning" booklet for the Comptroller's Handbook. The new booklet, part of the “Safety and Soundness” category of the Handbook, explains the purpose of effective recovery planning pursuant to 12 CFR 30, appendix E, “OCC Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches.” The guidelines only apply to covered banks and have phased-in compliance periods culminating in July 2018.

A covered bank means any bank with average total consolidated assets—

• equal to or greater than $50 billion;
• less than $50 billion if the bank was previously a covered bank, unless the OCC determines otherwise; or
• less than $50 billion, if the OCC determines that the bank is highly complex or otherwise presents a heightened risk as to warrant the application of the recovery planning guidelines pursuant to paragraph I.C.1.a. of 12 CFR 30, appendix E.

Acting Federal Trade Commission Chairman Maureen K. Ohlhausen has issued a statement on the U.S. Senate’s confirmation of Joseph Simons as the new Commission Chairman, and of Noah Joshua Phillips, Rebecca Kelly Slaughter, Rohit Chopra and Christine Wilson as Commissioners.

Treasury has announced that OFAC removed the Colombian professional soccer team, Envigado Futbol Club S.A. (also known as Envigado F.C.), from the list of Specially Designated Nationals and Blocked Persons (SDN List). Envigado F.C. recently completed a sale and restructuring of team management under the oversight of the Colombian government that eliminated ties to a Colombian crime group involved in international narcotics trafficking and other criminal activities and cut them off from any benefit from the sale. For identification information, see our OFAC Update.

The Bureau of Consumer Financial Protection announced yesterday it has finalized an amendment to its TRID rule that addresses when mortgage lenders with a valid justification may pass on increased closing costs to consumers and disclose them on a Closing Disclosure. The Bureau said the update is intended to provide greater clarity and certainty to the mortgage industry.

The Bureau's rule is in response to feedback from the mortgage lending industry that it needed clarification on when creditors may pass on increased costs to consumers and disclose them on a closing disclosure. Specifically, a timing restriction on when the creditor may use a closing disclosure to communicate closing cost increases to the consumer could prevent a creditor from charging the consumer for those cost increases despite a valid reason for doing so, such as a changed circumstance or borrower request. The rule announced yesterday, which finalizes amendments proposed in July 2017 with minor clarifying changes, will be effective 30 days after publication in the Federal Register.

UPDATE: The rule is scheduled for publication on 5/2/18; it will be effective 6/1/18.

The Bureau has also posted an executive summary of the rule. BankersOnline has updated its Regulations page for Regulation Z § 1026.19 to reflect the amendments.

The Federal Trade Commission has filed a complaint charging the San Francisco-based LendingClub Corporation with falsely promising consumers they would receive a loan with “no hidden fees,” when the company deducted hundreds or even thousands of dollars in hidden up-front fees from the loans. The company is charged with violating the FTC Act and the Gramm-Leach-Bliley Act.

• FTC press release

The OCC will host a workshop in Detroit, Michigan, June 5-6, for directors, senior management team members, and other key executives of national community banks and federal savings associations. The Building Blocks: Keys to Success for Directors and Senior Management workshop combines lectures, discussion, and exercises to provide practical information on the roles and responsibilities of board participation. The workshop focuses on duties and core responsibilities of directors and management, discusses major laws and regulations, and increases familiarity with the examination process.