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Top Story Compliance Related

06/16/2021

FATF reports Mexico AML/CFT actions

A report issued by the Financial Action Task Force (FATF) reports that an assessment of the measures Mexico has made to tackle money laundering and terrorist financing indicates progress has been made and the FATF has re-rated the country as follows:

  • Non-profit organizations, from partially compliant to largely compliant
  • Customer due diligence, from partially compliant to largely compliant
  • Politically exposed persons, from partially compliant to compliant
  • Wire transfers, from partially compliant to compliant
  • Reliance on third parties, from partially compliant to compliant

06/16/2021

Insider trading ring charged by SEC

The Securities and Exchange Commission has announced insider trading charges against a Silicon Valley trading ring whose members generated nearly $1.7 million in illegal profits and losses avoided by trading on the confidential earnings information of two local technology companies.

The SEC’s complaint alleges that Nathaniel Brown, who served as the revenue recognition manager for Infinera Corporation, repeatedly tipped Infinera’s unannounced quarterly earnings and financial performance to his best friend, Benjamin Wylam, from April 2016 until Brown left the company in November 2017. Wylam, a high school teacher and bookmaker, traded on this information and also tipped Naveen Sood, who owed Wylam a six-figure gambling debt. Sood allegedly traded on this information and tipped his three friends Marcus Bannon, Matthew Rauch, and Naresh Ramaiya, each of whom also illegally traded on the information. Bannon, Rauch, and Ramaiya consented to the entry of final judgments without admitting or denying the allegations in the complaint. Bannon agreed to pay a civil penalty of $281,497, Rauch agreed to pay $128,230, and Ramaiya agreed to pay $65,780. Sood also consented to the entry of a final judgment and agreed to pay a civil penalty of $178,320.

In parallel proceedings, the U.S. Attorney’s Office for the Northern District of California announced related criminal charges against Brown, Wylam, and Sood.

06/16/2021

First American Financial Corp settles SEC charges

The Securities and Exchange Commission has announced it has settled charges against real estate settlement services company First American Financial Corporation for disclosure controls and procedures violations related to a cybersecurity vulnerability that exposed sensitive customer information.

According to an SEC order, on the morning of May 24, 2019, a cybersecurity journalist notified First American of a vulnerability with its application for sharing document images that exposed over 800 million images dating back to 2003, including images containing sensitive personal data such as Social Security numbers and financial information. In response, according to the order, First American issued a press statement on the evening of May 24, 2019, and furnished a Form 8-K to the Commission on May 28, 2019.

However, according to the order, First American’s senior executives responsible for these public statements were not apprised of certain information that was relevant to their assessment of the company’s disclosure response to the vulnerability and the magnitude of the resulting risk. In particular, the order finds that First American’s senior executives were not informed that the company’s information security personnel had identified the vulnerability several months earlier, but had failed to remediate it in accordance with the company’s policies.

The SEC’s order charges First American with violating Rule 13a-15(a) of the Exchange Act. Without admitting or denying the SEC’s findings, First American agreed to a cease-and-desist order and to pay a $487,616 penalty.

06/15/2021

FTC amends complaint against RCG Advances

In a newly filed amended complaint, the Federal Trade Commission alleges that merchant cash advance provider RCG Advances and other defendants made multiple unauthorized withdrawals from small businesses’ banks, sometimes taking thousands of dollars more than the agreed repayment amount. The amended complaint also alleges that RCG, formerly known as Richmond Capital Group, LLC and also doing business as Viceroy Capital Funding and Ram Capital Funding, violated the Gramm-Leach-Bliley Act’s prohibition on using false or deceptive information to obtain a consumer’s bank account information.

The amended complaint also alleges wanton and egregious behavior by the defendants, including laughing at consumer requests for refunds from RCG’s unauthorized withdrawals from customer bank accounts; abusing the legal system to seize the business and personal assets of their customers; and threatening to break their customers’ jaws or falsely accusing them of child molestation during collection calls. The FTC asks the court to assess civil penalties against the defendants, along with injunctive relief and requiring the defendants to turn over ill-gotten gains.

The case was originally filed in June 2020.

06/15/2021

FTC to review Business Opportunity Rule

The Federal Trade Commission has announced that, as part of its systematic review of all current Commission rules and guides, it will review 16 CFR 437, the Business Opportunity Rule, in 2021. The Rule requires business opportunity sellers to give prospective buyers specific information to help them evaluate a business opportunity, thus ensuring that the prospective purchasers have the information they need in order to assess the risks of buying a work-at-home program or any other business opportunity.

06/14/2021

New American Rescue Plan FAQs from IRS

The IRS has announced it has posted two new, separate sets of frequently-asked-questions (FAQs) to assist families and small and min-sized employers in claiming credits under the American Rescue Plan (ARP):

  • Child and dependent care credit - For 2021, the ARP increased the maximum amount of work-related expenses for qualifying care that may be taken into account in calculating the credit, increased the maximum percentage of those expenses for which the credit may be taken, modified how the credit is reduced for higher earners, and made it refundable.
  • Paid sick and family leave credits - The FAQs include information on how eligible employers may claim the paid sick and family leave credits, including how to file for and compute the applicable credit amounts, and how to receive advance payments for and refunds of the credits. Under the ARP, eligible employers, including businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, may claim tax credits for qualified leave wages and certain other wage-related expenses (such as health plan expenses and certain collectively bargained benefits) paid with respect to leave taken by employees April 1, 2021, through September 30, 2021.

06/11/2021

FDIC guidance on recovery after Louisiana storms

The FDIC has issued FIL-40-2021 with guidance and steps to provide regulatory relief to financial institutions and facilitate recovery in areas of Louisiana affected by severe storms, tornadoes, and flooding May 17–21..

06/11/2021

OFAC sanctions smuggling network

Yesterday, OFAC designated members of a smuggling network that helps fund Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and the Houthis in Yemen. OFAC's action was taken under the counterterrorism authority Executive Order (E.O.) 13224, as amended. The IRGC-QF was designated under E.O. 13224 in 2007 for support to numerous terrorist groups.

OFAC and the Department of State also lifted sanctions on three former Government of Iran officials, and two companies formerly involved in the purchase, acquisition, sale, transport, or marketing of Iranian petrochemical products. These delistings are a result of a verified change in behavior or status on the part of the sanctioned parties,

For details on the parties affected by OFAC's actions, see the June 10, 2021, BankersOnline OFAC Update.

06/10/2021

FTC sends $30M in refunds to schools scam victims

The Federal Trade Commission is sending nearly $30 million in refunds to people tricked by agents working on behalf of Career Education Corporation (currently operating as Perdoceo Education Corporation), the operator of several post-secondary schools. CEC’s lead generators tricked consumers into providing their information and enrolling at CEC schools using a variety of deceptive methods, including pretending to be U.S. military recruiters, or affiliated with the military, and falsely promising to provide assistance with job placement and various public benefits, according to the FTC’s complaint. CEC’s lead generators tricked consumers into providing their information and enrolling at CEC schools using a variety of deceptive methods, including pretending to be U.S. military recruiters, or affiliated with the military, and falsely promising to provide assistance with job placement and various public benefits.

The FTC mailed approximately $30 million to more than 8,000 recipients yesterday. The average refund is more than $3,700 per person, the largest per person average in the agency’s history.

06/10/2021

Reserve Banks released two outstanding CRA evals in May

The Federal Reserve Banks released two CRA evaluations rated Outstanding in May 2021. We congratulate:

The Reserve Banks also released 13 CRA evaluations in May with Satisfactory ratings.

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