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Top Story Compliance Related

01/14/2022

CFPB Bulletin on unlawful medical debt collection and reporting

Yesterday, the CFPB announced it has issued Bulletin 2022-01, "Medical Debt Collection and Consumer Reporting Requirements in Connection with the No Surprises Act," to remind debt collectors and credit bureaus of their legal obligations in light of the No Surprises Act, which protects consumers from certain unexpected medical bills.

Companies that try to collect on medical bills that are prohibited by the No Surprises Act, or who furnish information to credit bureaus about such invalid debts, may face significant legal liability under the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA). The bulletin advises credit bureaus that the accuracy and dispute obligations imposed by the FCRA apply with respect to debts stemming from charges that exceed the amount permitted by the No Surprises Act.

01/13/2022

Reserve Banks issue 2 Outstanding CRA ratings

Our monthly review of the Federal Reserve System's archive of Community Reinvestment Act evaluations has found that the Reserve Banks made 16 evaluations public in December. Fourteen of those evaluations were rated Satisfactory. We congratulate the two banks whose evaluations received Outstanding ratings:

01/13/2022

OFAC targets supporters of DPRK weapons programs

The Treasury Department on Wednesday announced that OFAC had designated five Democratic People’s Republic of Korea (DPRK) individuals—Choe Myong Hyon, Sim Kwang Sok, Kim Song Hun, Kang Chol Hak, and Pyon Kwang Chol—responsible for procuring goods for the DPRK’s weapons of mass destruction (WMD) and ballistic missile-related programs. These actions are in line with U.S. efforts to prevent the advancement of the DPRK’s WMD and ballistic missile programs and impede attempts by Pyongyang to proliferate related technologies.

In a related action, the Department of State designated DPRK national O Yong Ho, Russian national Roman Anatolyevich Alar, and Russian entity Parsek LLC pursuant to E.O. 13382 for having engaged in activities or transactions that have materially contributed to the proliferation of weapons of mass destruction or their means of delivery by DPRK.

See the January 12, 2022, BankersOnline OFAC Update for identification information for the designated individuals and entity.

01/12/2022

NCUA extends self-assessment deadline

The NCUA yesterday announced that, to allow federally insured credit unions more time to complete and submit the voluntary Credit Union Diversity Self-Assessment, the agency has extended the deadline from January 15 to January 31, 2022. The Self-Assessment is a tool designed to help credit unions evaluate and advance their diversity policies and practices. Credit unions can voluntarily use the online tool to create a baseline for action, such as making the commitment to develop new products and services aimed at addressing the needs of communities of color, increasing investment in underserved areas, or improving community marketing and outreach.

01/12/2022

OFAC settles with Hong Kong company for $5M+

On Tuesday, OFAC announced a settlement with Sojitz (Hong Kong) Limited ("Sojitz HK"), a Hong Kong, China-based company that engages in offshore trading and cross-border trade financing. Sojitz HK agreed to remit $5,228,298 to settle its potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR).

In its Enforcement Release, OFAC said that this case "demonstrates the importance of effective risk-based internal controls to identify, interdict, escalate, and prevent activity prohibited by the sanctions programs administered by OFAC. Even where elements of a reasonable compliance program are in place, employees may act on their own initiative to pursue profit over compliance and find ways to circumvent their organization’s policies and procedures. In such cases, their actions can result in violations attributable to their organizations. This case also highlights the risks and potential costs that non-U.S. companies are exposed to when the U.S. financial system is used for transactions that may involve sanctioned persons or jurisdictions."

Details of the Sojitz HK conduct that led to the settlement can be found in the January 11, 2022, BankersOnline Penalty page.

01/11/2022

Fed finalizes rule streamlining subscription reporting of member banks

The Federal Reserve Board has announced it has finalized a technical rule that will streamline reporting requirements for member banks related to their subscriptions to Federal Reserve Bank capital stock. The final rule is substantially similar to the proposal published on April 13, 2021.

The final rule amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to Federal Reserve Bank capital stock, except in the context of mergers.

The rule will be effective 30 days after publication in the Federal Register.

Update on publication and effective date:Published [87 FR 2027] on January 13, 2022, with effective date of February 14, 2022. The amendments have been posted to the BankersOnline Regulations pages.

01/11/2022

Bureau sues United Holding Group for debt collection practices

Yesterday, the CFPB announced it has sued United Debt Holding (UDH), JTM Capital Management, United Holding Group (UHG), and their owners, Craig Manseth, Jacob Adamo, and Darren Turco, for illegal debt-collection practices. The Bureau alleges that the defendants placed consumer debt with, or sold consumer debt to, collection companies that used unlawful and deceptive collection tactics, and that the defendants knew, or should have known, the collection companies made false threats and false statements to consumers.

The Bureau reports that UHG, headquartered in Williamsville, New York, was founded by Manseth, Adamo, and Turco in May 2017. Before co-founding UHG, Manseth owned UDH, Turco worked at UDH as a manager, and Adamo owned JTM. All three companies are debt collectors that buy debt portfolios from creditors, or other debt sellers, and then place the portfolios with or sell them to other collection companies. From September 2017 through April of 2020, claims the CFPB, the defendants collectively placed debts with a face value of more than $8 billion. The three individuals formed UHG, and UHG then managed ongoing business for UDH and JTM. According to the CFPB's complaint, the Bureau alleges all three companies allowed third-party collection companies to deceive consumers and placed or sold debt portfolios to collection companies engaged in unlawful behavior.

  • The defendants received hundreds of complaints that their collection companies were threatening arrest, jail, or lawsuits if consumers did not pay their debts imminently.
  • The defendants also received recorded phone calls in which some of their third-party collection companies falsely threatened suits or made false statements about credit reporting.
  • From 2015 through January 2017, UDH’s compliance staff reviewed recorded phone calls from JTM’s collection companies and found that many contained major violations of federal law.
  • Instead of terminating its relationship with JTM, UDH increased the amount of business it sent to JTM.
  • By 2017, UDH was using JTM almost exclusively for debt placements despite objections by UDH’s compliance manager.

The CFPB is seeking monetary relief for consumers, disgorgement of unjust gains, injunctive relief, and a civil money penalty.

The complaint is not a final finding or ruling that the defendants have violated the law.

01/11/2022

OFAC designates Nicaraguan officials

The Treasury Department yesterday announced OFAC has designated six officials of the Government of Nicaragua pursuant to Executive Order 13851. The targeted individuals are identified in the January 10, 2021, BankersOnline OFAC Update.

As a result of this action, all property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more in the aggregate by one or more of such persons are also blocked. 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 or designated persons.

01/10/2022

Materials for December 31 Call Report

FDIC FIL-3-2021, released Friday, conveys materials pertaining to the Consolidated Reports of Condition and Income (Call Report) for the December 31, 2021, report date and provide guidance on certain reporting issues. This Financial Institution Letter and the attached Supplemental Instructions should be shared with the individuals responsible for preparing the Call Report at your institution.

01/10/2022

Fed FAQs on approach to covered savings associations

The Federal Reserve Board has posted a series of frequently asked questions and answers regarding its approach with regard to OCC-regulated federal savings associations and federal mutual savings banks that choose to exercise the option to become a “covered savings association,” as allowed by § 206 of the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act. The law provides additional flexibility for institutions chartered under the Home Owners Loan Act. The FAQs address implications for covered savings associations of the Bank Holding Company Act, Federal Reserve Act, and related regulations and reporting requirements.

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