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Top Story Compliance Related


Some education loans can be discharged in bankruptcy

The CFPB has posted an article, "Busting myths about bankruptcy and private education loans," on its Blog, explaining that several types of loans associated with education expenses are dischargeable in bankruptcy, like most other types of unsecured consumer debt. These types of loans for education expenses are not subject to the more difficult standard and extra step. Such loans could include, for example:

  • Loans where the loan amount was higher than the cost of attendance (such as tuition, books, room, and board), which can occur when a loan is paid directly to a consumer.
  • Loans to pay for education at places that are not eligible for Title IV funding such as unaccredited colleges, a school in a foreign country, or unaccredited training and trade certificate programs.
  • Loans made to cover fees and living expenses incurred while studying for the bar exam or other professional exams.
  • Loans made to cover fees, living expenses, and moving costs associated with medical or dental residency.
  • Loans to a student attending school less than half-time.

Other private education loans can also be discharged in bankruptcy provided that the borrower passes a more difficult test for relief (a showing of "undue hardship") and an extra step in the process (an "adversary proceeding" or lawsuit within the bankruptcy).

Complaints submitted to the CFPB suggest that some education loan servicers may be making false statements to borrowers about the protections afforded by bankruptcy, and some may be collecting debts that have already been discharged by a bankruptcy judge.


Fed Board bans former Florida banker

The Federal Reserve Board has announced it has issued a consent prohibition order against Jennifer Woods, formerly a commercial loan officer employed by Centennial Bank (Conway, Arkansas) in Panama City, Florida, between October 2006 and August 2019.

On February 18, 2021, Woods was indicted on charges of conspiracy to commit bank fraud, aggravated identity theft, and conspiracy to commit wire fraud, to which charges Woods pleaded guilty.


CFPB charges TransUnion and executive with violating 2017 order

The Consumer Financial Protection Bureau on Tuesday announced it has filed a lawsuit against TransUnion, two of its subsidiaries, and longtime executive John Danaher for violating a 2017 law enforcement order that was issued to stop the company from engaging in deceptive marketing, regarding its credit scores and other credit-related products. The Bureau alleges that TransUnion disregarded the order's requirements and continued using deceitful dark patterns — hidden tricks or trapdoors companies build into their websites to get consumers to inadvertently click links, sign up for subscriptions or purchase products or services — to profit from customers. The CFPB also alleges that TransUnion violated additional consumer financial protection laws.

On January 3, 2017, the CFPB settled charges with TransUnion and its subsidiaries for deceptively marketing credit scores and credit-related products, including credit monitoring services. As part of the settlement, TransUnion agreed to pay $13.9 million in restitution to victims and $3 million in civil penalties. TransUnion and its subsidiaries also agreed to a formal law enforcement order that, among other things, required the credit reporting giant to (1) warn consumers that lenders are not likely to use the scores they are supplying, (2) obtain the express informed consent of customers for recurring payments for subscription products or services, and (3) provide an easy way for people to cancel subscriptions. The order was binding on the company, its board of directors, and its executive officers.

The Bureau's complaint alleges TransUnion used an array of dark patterns to trick people into recurring payments and to make it difficult to cancel them. For example, under federal law, Americans are entitled to a free credit report from TransUnion through TransUnion asked consumers to provide credit card information that appeared to be part of an identity verification process. TransUnion then integrated deceptive buttons into the online interface that gave the impression that the consumer could also access a free credit score in addition to viewing their free credit report. In reality, clicking this button signed consumers up for recurring monthly charges using the credit card information they had provided. The only indication in the enrollment process that consumers were making some sort of purchase was through a fine print, low contrast disclosure, located off to the side of the enrollment form. The disclosure is inside an image that can take up to 30 seconds longer to load than the rest of the material in the form. This dark pattern triggered thousands of complaints.

The CFPB alleges that TransUnion has knowingly violated the 2017 order, Regulation V, which implements the Fair Credit Reporting Act, and Regulation E, which implements the Electronic Fund Transfer Act, and is seeking monetary relief for consumers, such as restitution or return of funds, disgorgement or compensation for unjust gains, injunctive relief, and civil money penalties.


NCUA OMWI Annual Report

The National Credit Union Administration has released its Office of Minority and Women Inclusion annual report, which provides an overview of the NCUA’s diversity and inclusion programs and initiatives in 2021. The report also highlights the agency’s efforts to ensure fair and inclusive business practices as well as assess the diversity policies and practices of the entities it regulates.


OFAC targets Kinahan Organized Crime Group

The Treasury Department has reported that OFAC has designated the Kinahan Organized Crime Group (KOCG) along with seven of its key members, including its Irish leaders Christopher Vincent Kinahan Senior, Daniel Joseph Kinahan, Christopher Vincent Kinahan Junior, and three associated businesses under Executive Order 13581, “Blocking Property of Transnational Criminal Organizations.”

For identification of the organizations and individuals designated by OFAC, and a link to OFAC’s chart of the Kinahan Organized Crime Group, see this BankersOnline OFAC Update.


Targeting actors destabilizing western Balkans

On Monday, the Treasury Department reported that OFAC has designated seven individuals and one entity across four countries in the Western Balkans under Executive Order 14033. This is the second action OFAC has taken under E.O. 14033 targeting persons who threaten the stability of the region through corruption, criminal activity, and other destabilizing behavior.

For the names of the designated individuals and entity, as well as several designations that OFAC has removed, see the BankersOnline April 11, 2022, OFAC Update.


FDIC requests notice of crypto assets activity

The FDIC has issued FIL-16-2022 to announce that All FDIC-supervised institutions that intend to engage in, or that are currently engaged in, any activities involving or related to crypto assets (also referred to as “digital assets”) should notify the FDIC. FDIC-supervised institutions are requested to provide information described in the FIL. The FDIC will review the information and provide relevant supervisory feedback.

The FDIC notes that there is little consistency in the definitions associated with many crypto assets and crypto-related activities, which makes it difficult to categorically identify these assets and activities. Further, the structure and scope of these activities are rapidly changing and expanding. As a result of the dynamic nature of crypto-related activities, it is difficult for institutions, as well as the FDIC, to adequately assess the safety and soundness, financial stability, and consumer protection implications without considering each crypto-related activity on an individual basis.

Prior to engaging in, or if currently engaged in, a crypto-related activity, an FDIC-supervised institution promptly should notify the appropriate FDIC Regional Director. The FDIC will request that the institution provide information necessary to allow the agency to assess the safety and soundness, consumer protection, and financial stability implications of such activities. The information requested by the FDIC will vary on a case-specific basis depending on the type of crypto-related activity. However, the initial notification to the FDIC Regional Director should describe the activity in detail and provide the institution’s proposed timeline for engaging in the activity.

Upon receipt, the FDIC will review the notification and information received, request additional information as needed, and consider the safety and soundness, financial stability, and consumer protection considerations of the proposed activity. The FDIC will provide relevant supervisory feedback to the FDIC-supervised institution, as appropriate, in a timely manner.

Institutions notifying the FDIC are also encouraged to notify their state regulator.


Comptroller’s Licensing Manual booklets revised

OCC Bulletin 2022-11, issued yesterday, announced revised "General Policies and Procedures," "Management Interlocks," and "Public Notice and Comments" booklets of the Comptroller's Licensing Manual. The revised booklets reflect recent changes to 12 CFR 5, make corrections where necessary, and contain updated guidance.


Former Goldman Sachs employee barred from banking

The Federal Reserve Board has announced that it has issued an order of prohibition permanently barring from the banking industry Joseph Jiampietro, a former managing director at Goldman Sachs Group, Inc. Jiampietro agreed to the prohibition, stemming from his unauthorized use and disclosure of confidential supervisory information, which includes bank examination reports and other confidential reports prepared by banking regulators. It is illegal to use or disclose confidential supervisory information without prior approval of the appropriate banking regulator.


Major Russian state-owned enterprises sanctioned

On Thursday, Treasury announced that OFAC has designated Alrosa, a Russian state-owned enterprise and the world’s largest diamond mining company, which is also responsible for 90 percent of Russia’s diamond mining capacity. Alrosa has also been sanctioned by Canada, the United Kingdom, New Zealand, and the Bahamas.

The Department of State also redesignated Joint Stock Company United Shipbuilding Corporation (USC), as well as its subsidiaries and board members. USC is a Russian state-owned enterprise that develops and constructs the majority of the Russian military’s warships, likely including many of those used to bombard Ukraine’s cities and harm Ukraine’s citizens. Along with re-designating USC, the Department of State designated 28 subsidiaries and eight board members.

For information on the individuals and entities designated as well as updates to Russia-related General Licenses, see the BankersOnline April 7, 2022, OFAC Update.


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