Top Story Compliance Related

The CFPB complaint snapshot this month spotlights money transfer complaints. The report shows that consumers continue to experience issues when attempting to resolve problems with disputed transactions. The report also highlights trends seen in complaints coming from Pennsylvania.

The Financial Action Task Force (FATF) has released its mutual evaluation report on Singapore’s anti-money laundering and counter-terrorist financing activities.

The Federal Trade Commission has announced it will return almost $20 million to more than 145,000 consumers across the country who were victimized by One Technologies LP and its two partner companies in an online scheme that lured consumers with “free” access to their credit scores and then billed them a recurring $29.95 monthly fee for credit monitoring they never ordered. The company marketed their credit monitoring programs, MyCreditHealth and ScoreSense, through at least 50 websites, including FreeScore360.com, FreeScoreOnline.com, and ScoreSense.com. The FTC alleged that the defendants violated the FTC Act and the Restore Online Shoppers' Confidence Act (ROSCA), which prohibits charging consumers for goods or services sold online via a negative option unless the seller clearly discloses all material terms before obtaining the consumer’s billing information, obtains the consumer’s express informed consent before making the charge, and provides a simple way to stop recurring charges.

The Federal Reserve Board issued 31 Section 19 Letters during the first half of calendar year 2016. Section 19 of the Federal Deposit Insurance Act prohibits a person convicted of a crime involving dishonesty or breach of trust from becoming or continuing as an institution-affiliated party with respect to any insured depository institution.

The Consumer Financial Protection Bureau (CFPB or Bureau) and the California Department of Business Oversight (DBO), after a coordinated investigation, have separately announced settlements with Flurish, Inc., doing business as LendUp, requiring the firm to make restitution to consumers.

The CFPB found that the company did not give consumers the opportunity to build credit and provide access to cheaper loans, as it claimed to consumers it would. The Bureau has ordered the company to provide more than 50,000 consumers with approximately $1.83 million in refunds. The company will also pay a civil penalty of $1.8 million to the Bureau's Civil Penalty Fund.

The DBO found over 385,000 violations of two state consumer protection laws and of the Federal Truth in Lending Act in examinations under those laws and ordered LendUp to pay $1.62 million in consumer refunds, a $100,000 penalty and $965,462 in costs. For details on the settlements with Flurish, Inc., see "LendUp penalized by CFPB and California for violations," in our Penalties pages.

The Consumer Financial Protection Bureau has taken action against TitleMax parent company TMX Finance LLC for luring consumers into costly loan renewals by presenting them with misleading information about the deals’ terms and costs. The lender also used unfair debt collection tactics that illegally exposed information about debts to borrowers’ employers, friends, and family. The Bureau ordered TMX Finance to stop its unlawful practices and pay a $9 million penalty. For more information, see "TMX Finance LLC pays $9M for lending UDAAP violations," in our Penalties pages.

The Federal Reserve Board has issued an invitation for public comment on a proposal to modify its capital plan and stress testing rules for the 2017 cycle. Among other changes, the proposal would tailor the Federal Reserve's Comprehensive Capital Analysis and Review (CCAR). It would remove the qualitative assessment of CCAR for large and noncomplex firms, or bank holding companies and intermediate holding companies of foreign banking organizations with total consolidated assets between $50 billion and $250 billion, on-balance sheet foreign exposure of less than $10 billion, and total consolidated nonbank assets of less than $75 billion. The proposed rule would take effect for the 2017 CCAR. The proposal would reinforce the Federal Reserve's less stringent expectations for these less systemic firms, which are generally engaged in traditional banking activities. The proposed rule would also reduce certain reporting requirements for these firms, which would continue to be subject to the quantitative requirements of CCAR, as well as normal supervision by the Federal Reserve regarding their capital planning. Comments on the proposal are due by November 25, 2016.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated one company and four individuals tied to the Government of North Korea’s proliferation of weapons of mass destruction (WMD). OFAC imposed sanctions on Dandong Hongxiang Industrial Development Company Ltd (DHID) for acting for or on behalf of Korea Kwangson Banking Corporation (KKBC), which was previously designated by the United States and the United Nations for providing financial services in support of WMD proliferators. OFAC also designated Ma Xiaohong, Zhou Jianshu, Hong Jinhua, and Luo Chuanxu for acting for or on behalf of DHID. Any property or interests in property of DHID, Ma Xiaohong, Zhou Jianshu, Hong Jinhua, and Luo Chuanxu in the possession or control of U.S. persons or within the United States are now blocked. Additionally, U.S. persons are generally prohibited from engaging in transactions involving these designated persons.

In a related action, the U.S. Department of Justice unsealed criminal charges against DHID, Ma Xiaohong, Zhou Jianshu, Hong Jinhua, and Luo Chuanxu for conspiring to evade U.S. economic sanctions and violating OFAC’s Weapons of Mass Destruction Proliferators Sanctions Regulations as well as conspiring to launder money instruments. Justice also announced the filing of a civil forfeiture action for all funds contained in 25 bank accounts belonging to DHID and its front companies and a request for a restraining order to be sent to China for all of the funds based upon the allegation of the United States that the funds represent property involved in money laundering.

See "OFAC targets supporters of North Korea's weapons program," in our OFAC Updates, for additional information on these actions.

The Federal Reserve Board has invited public comment on a proposed rule that would strengthen existing requirements and limitations on the physical commodity activities of financial holding companies. The proposal would help reduce the catastrophic, legal, reputational, and financial risks that physical commodity activities pose to financial holding companies. The propose rule would:

• Require firms to hold additional capital in connection with activities involving commodities for which existing laws would impose liability if the commodity were released into the environment;
• Tighten the quantitative limit on the amount of physical commodity trading activity firms may conduct;
• Rescind authorizations that allow firms to engage in physical commodity activities involving power plants;
• Remove copper from the list of precious metals that all bank holding companies are permitted to own and store; and
• Establish new public reporting requirements on the nature and extent of firms' physical commodity holdings and activities.

Comments on the proposed rule will be accepted for 90 days after publication in the Federal Register.

The Treasury Department has announced that OFAC has designated four Mexican nationals, pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). Eliseo Imperial Castro, a.k.a. “Cheyo Antrax,” Alfonso Lira Sotelo, a.k.a. “El Atlante,” Javier Lira Sotelo, a.k.a “El Hannibal” or “El Carnicero,” and Alma Delia Lira Sotelo have been designated for their narcotics trafficking and money laundering in support or on behalf of the Sinaloa Cartel and/or its high-ranking members. All assets of those designated that are within U.S. jurisdiction or in the control of U.S. persons are frozen, and U.S. persons are generally prohibited from engaging in transactions with them. See "Treasury targets Sinaloa Cartel cell," in our OFAC Updates, for more information.