Top Story Compliance Related

The State Department has announced the designation of al-Qa’ida in the Arabian Peninsula (AQAP) leader Khalid Batarfi and two ISIS members as Specially Designated Global Terrorists. See the BOL OFAC Update for identification information.

The Federal Trade Commission has published a final rule implementing adjustments to the civil penalty amounts within its jurisdiction to account for inflation, effective January 22, 2018. Among the penalty caps adjusted are those for violations of portions of section 5 of the Federal Trade Commission Act (unfair or deceptive acts or practices), which are being increased to $41,484 per violation (the amount provided in the statute is $10,000). In the case of continuing violations, each day of continuance can be treated as a separate violation.

OFAC has posted a new Frequently Asked Question relating to a December 2017 announcement by Venezuelan President Nicolas Maduro of plans for the Venezuelan government to launch a digital currency. Because the proposed currency would reportedly carry rights to receive commodities in specified quantities at a later date, OFAC has determined that the currency would appear to be an extension of credit to the Venezuelan government, and U.S. persons that deal in the prospective Venezuelan digital currency may be exposed to U.S. sanctions risk.

The OCC has issued its Semiannual Risk Perspective for Fall 2017, which covers risks facing national banks and federal savings associations based on data as of June 30, 2017. The report presents data in four main areas: the operating environment, bank performance, trends in key risks, and supervisory actions. It focuses on issues that pose threats to those financial institutions regulated by the OCC and is intended as a resource to the industry, examiners, and the public.

Highlights include:

• The credit environment continues to be influenced by aggressive competition, tighter spreads, and slowing loan growth. These factors are driving incremental easing in underwriting practices and increasing concentrations in select loan portfolios—leading to heightened risk if the economy weakens or markets tighten quickly.
• Operational risk continues to challenge banks because of increasing complexity of cybersecurity threats, use of third-party service providers, and increasing concentrations in third-party service providers for some critical operations.
• Compliance risk remains elevated as banks continue to manage money laundering risks, as well as consumer compliance risks, particularly due to the increasing complexity in consumer compliance regulations.

In a marked departure from earlier practice, the CFPB will not seek funding from the Federal Reserve for its second quarter of FY 2018 operations. In a letter to Federal Reserve Board Chair Janet Yellen, Acting CFPB Director Mick Mulvaney notified the Board that the Bureau is "requesting $0." Under the Dodd-Frank Act, subject to a funding cap, the Fed is required to transfer to the Bureau each quarter "the amount determined by the [CFPB] Director to be reasonably necessary to carry out the authorities of the Bureau under Federal consumer financial law, taking into account such other sums made available to the Bureau from the preceding year (or quarter of such year.)" Mulvaney states in his letter that he has been assured that the Bureau has sufficient funds to carry out its statutory mandates for the quarter.

FDIC FIL-6-2018 and OCC Bulletin 2018-2 were issued January 18, 2018, distributing an Interagency Statement on Accounting and Reporting Implications of the New Tax Law, issued by the OCC, Federal Reserve Board, and the FDIC. Changes required as a result of the new law, which was enacted on December 22, 2017, are relevant to December 31, 2017, financial statements and regulatory reports, including Call Reports. Among other things, the guidance clarifies

• that changes in deferred tax assets and deferred tax liabilities resulting from the lower corporate income tax rate, and other applicable provisions of the new tax law, should be reflected in an institution’s income tax expense in the period of enactment.
• how to resolve the disproportionate tax effects in accumulated other comprehensive income as a result of the remeasurement of deferred tax assets and liabilities.
• the impact of the new tax law on regulatory capital.

The Federal Equal Employment Opportunity Commission has published a final rule in this morning's Federal Register, increasing the civil money penalty for a violation of the notice-posting requirements in Title VII of the Civil Rights act of 1964, the Americans with Disabilities Act, and the Genetic Information Non-Discrimination Act, from $534 to $545, effective February 20, 2018.

The Federal Reserve Board has announced it has issued a consent cease and desist order and a $29 million penalty against the U.S. operations of Mega International Commercial Bank Co., Ltd., of Taipei, Taiwan, for anti-money laundering violations and required the firm to improve its anti-money laundering oversight and controls. For further details, see "Mega International Commercial Bank pays $29M BSA penalty," in our Penalty pages.

The CFPB has announced it will issue a "call for evidence" to ensure the Bureau is fulfilling its proper functions to best protect consumers. The Bureau plans to publish a series of Requests for Information (RFIs) seeking comment on the Bureau's enforcement, supervision, rulemaking, market monitoring, and education activities. Acting Director Mick Mulvaney said, "Much can be done to facilitate greater consumer choice and efficient markets, while vigorously enforcing consumer financial law in a way that guarantees due process. I look forward to receiving public comments in response to this call for evidence and encourage all interested parties to participate."

In the first RFI, the Bureau will seek comment on Civil Investigative Demands, which are issued during an enforcement investigation.

The National Credit Union Administration has published a final rule to adjust the maximum amount of each civil monetary penalty (CMP) within its jurisdiction to account for inflation. The rule became effective on January 15, 2018.