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Top Story Compliance Related


OFAC removes four listings and updates two

OFAC has removed three Balkans sanctions listings and one Cuba sanctions listing, and updated listings for two vessels under its Cuba sanctions. For details, see the September 2, 2021, BankersOnline OFAC Update.


OCC releases CRA evaluations for 19 banks and FSAs

The OCC has released a list of Community Reinvestment Act performance evaluations that become public in August 2021. Of the 19 evaluations listed, 14 are rated Satisfactory and the following five are rated Outstanding:


SEC charges crypto lending platform with $2B fraud

The Securities and Exchange Commission has announced it has filed a complaint against BitConnect, an online crypto lending platform, its founder Satish Kumbhani, and its top U.S. promoter and his affiliated company, alleging that they defrauded retail investors out of $2 billion through a global fraudulent and unregistered offering of investments into a program involving digital assets. The complaint alleges that, to induce investors to deposit funds into the purported lending program, the defendants falsely represented, among other things, that BitConnect would deploy its purportedly proprietary "volatility software trading bot" that, using investors' deposits, would generate exorbitantly high returns. However, the SEC alleges that instead of deploying investor funds for trading with the purported trading bot, defendants BitConnect and Kumbhani siphoned investors' funds off for their own benefit by transferring those funds to digital wallet addresses controlled by them, their top promoter in the U.S., defendant Glenn Arcaro, and others.

The SEC's complaint charges the defendants with violating the antifraud and registration provisions of the federal securities laws. The complaint seeks injunctive relief, disgorgement plus interest, and civil penalties. The SEC previously reached settlements with two of the five individuals it charged in a related action for promoting the BitConnect offering. In a parallel action, the Department of Justice today announced that Arcaro has pleaded guilty to criminal charges.


CFPB proposes business loan data collection rule

The CFPB has announced a proposed new rule, mandated by Congress in section 1071 of the Dodd-Frank Act, that would, if finalized, require lenders to disclose information about their lending to small businesses, allowing community organizations, researchers, lenders, and others to better support small business and community development needs. Under the proposal, lenders would be required to report the amount and type of small business credit applied for and extended, demographic information about small business credit applicants, and key elements of the price of the credit offered.

The CFPB also launched a web portal for small business entrepreneurs to share their stories about applying for credit, which will help the CFPB understand small business entrepreneurs’ challenges and successes in accessing credit. The portal can be found on the CFPB's Small Business Lending webpage.

The CFPB is proposing to publish application-level data. However, to address privacy concerns, the CFPB is proposing to modify or withhold data from public disclosure based on an assessment of the risks to privacy interests and the benefits of publication.

In addition to comments on the overall proposal, the CFPB specifically seeks comments on a variety of issues, including:

  • How to define a small business for purposes of this data collection;
  • Where to set the activity threshold for when a lender is required to report information;
  • How best to collect pricing information for transparency into the cost of small business credit;
  • Whether and how to collect certain information about the sex of an applicant’s principal owners;
  • How to balance the benefits of public disclosure and the risk to privacy interests; and
  • The appropriate implementation period.

The CFPB also said specific and detailed feedback and suggestions for ways to improve the rule will be especially helpful as the Bureau works to finalize the rule in a timely manner. The comment period is 90 days from publication in the Federal Register, and the CFPB does not anticipate an extension of that deadline.


Operators of $18M Ponzi scheme restrained

The Securities and Exchange Commission has announced it has filed a complaint, and obtained a temporary restraining order and an asset freeze to stop an alleged Ponzi scheme perpetrated by Shakopee, Minnesota, residents Jason Dodd Bullard and Angela Romero-Bullard and the entity they control, Bullard Enterprises LLC. The SEC also named four relief defendants in the action – entities controlled by Bullard and Romero-Bullard that received investor funds from the alleged scheme.

According to the complaint, from at least 2007 to 2021, the defendants raised approximately $17.6 million from as many as 200 investors to invest in Bullard Enterprises' purported Flagship and Platinum Funds. Bullard and Romero-Bullard allegedly told investors – most of whom were friends and family, including many elderly retirees – that their investments would be used to trade foreign currencies, and sent investors account statements showing that their accounts were increasing in value. In reality, according to the complaint, Bullard Enterprises stopped trading in foreign currencies in 2015, and the defendants simply used new investor money to pay purported "returns" to existing investors. Bullard and Romero-Bullard also allegedly misappropriated investors' money to support other businesses they owned, including a horse racing stable, limousine service, and health and fitness studio.


California Wildfires - Agency statement on supervisory practices

The OCC, Federal Reserve, FDIC, NCUA and state regulators have issued an interagency statement that they recognize the serious impact of California wildfires on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision. The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities.

Press releases:


CFPB withdraws proposal to delay Debt Collection rules

The CFPB has published [86 FR 48918] in today's Federal Register a withdrawal of its April 2021 proposal to delay the November 30, 2021, effective date of two rules revising Regulation F, 12 CFR Part 1006, which implements the Fair Debt Collection Practices Act. The rules will become effective November 30.


Interagency statement regarding Hurricane Ida

The OCC, FRB, FDIC, NCUA and state regulators issued a joint statement yesterday that they recognize the serious impact of Hurricane Ida on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision. The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities.

The agencies' statement included guidance on lending, temporary facilities requests, relaxation of publishing and reporting requirements, CRA, and investments in the affected disaster areas.


FDIC issues October–March CRA exam schedules

The FDIC has issued the lists of institutions scheduled for a Community Reinvestment Act (CRA) examination during the fourth quarter 2021 and first quarter 2022.

The schedules are based on the best information now available and are subject to change. For example, a regulated financial institution not otherwise scheduled for an examination may be examined in connection with the application for a deposit facility. Alternatively, some institutions may require more time and resources than originally allotted, thus delaying other scheduled examinations. If an institution is rescheduled for a different quarter, that information will be included on a later list.


Cadence Bank settles housing discrimination claims

The Department of Justice (DOJ) has announced that the Department and the OCC have completed coordinated actions to address allegations of lending discrimination by Cadence Bank N.A. (Atlanta, Georgia).

The DOJ’s Civil Rights Division and the U.S. Attorney’s Office for the Northern District of Georgia announced an agreement to resolve allegations that Cadence Bank, which is headquartered in Atlanta, engaged in lending discrimination by “redlining” predominantly Black and Hispanic neighborhoods in the Houston, metro area. Under the department’s settlement, Cadence will invest over $5.5 million to increase credit opportunities for residents of those neighborhoods.

The OCC announced it has assessed the bank a civil money penalty of $3 million related to the violations alleged in the DOJ complaint. The department opened its investigation after the OCC referred the matter.

In its complaint, the DOJ alleges that Cadence Bank violated the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race, color or national origin in their mortgage lending services. Specifically, the complaint alleges that, from 2013 to 2017, Cadence engaged in unlawful redlining in the Houston area by avoiding predominantly Black and Hispanic neighborhoods because of the race, color and national origin of the people living in those neighborhoods. The department also alleges that Cadence’s branches were concentrated in majority-white neighborhoods, that the bank’s loan officers did not serve the credit needs of majority-Black and Hispanic neighborhoods and that the bank’s outreach and marketing avoided those neighborhoods.

Under the department’s settlement, which is subject to approval by the District Court, Cadence will invest $4.17 million in a loan subsidy fund for residents of predominantly Black and Hispanic neighborhoods in the Houston area, $750,000 for development of community partnerships to provide services that increase access to residential mortgage credit in those neighborhoods, and at least $625,000 for advertising, outreach, consumer financial education, and credit repair initiatives. The bank will dedicate at least four mortgage loan officers to majority-Black and Hispanic neighborhoods in Houston and open a new branch in one of those neighborhoods. Cadence will employ a director of community lending and development who will oversee these efforts and work in close consultation with the bank’s leadership. The bank will take these steps in addition to other fair lending measures it has already put in place.


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