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Top Story Compliance Related

02/25/2021

Discrimination charge against PA housing provider

The Department of Housing and Urban Development has announced charges against Perry Homes, Inc., and Whittington and Whittington, doing business as Perry Homes, with violating the Fair Housing Act by refusing to allow assistance animals in rental properties in Harmony, Cranberry Township, and Zelienople, Pennsylvania. HUD's charge specifically alleges that rental agents for Perry Homes told fair housing testers posing as prospective tenants with disabilities that they could accept service animals but were not permitted to accept “emotional support” animals.

02/25/2021

FinCEN issues advisory on crimes targeting EIPs

FinCEN has issued Advisory FIN-2021-A002, on Financial Crimes Targeting COVID-19 Economic Impact Payments [a/k/a "Stimulus Payments"]. The Advisory contains descriptions of EIP fraud, associated red flag indicators, and information on reporting suspicious activity. It is part of a series published by FinCEN on COVID-19-related frauds and criminal activity. Additional COVID-19-related information is located on FinCEN’s website at https://www.fincen.gov/coronavirus.

02/24/2021

CFPB reconsidering QM rules

The Bureau has released a statement [scheduled for Federal Register publication on 2/26/2021] on the mandatory compliance date of the General QM Final Rule and possible reconsideration of that rule and the Seasoned QM Final Rule.

The Bureau is considering whether to initiate a rulemaking to revisit the Seasoned QM Final Rule. If the Bureau decides to do so, it expects that it will consider in that rulemaking whether any potential final rule revoking or amending the Seasoned QM Final Rule should affect covered transactions for which an application was received during the period from March 1, 2021, until the effective date of such a final rule.

The Bureau also expects to issue shortly a proposed rule that would delay the July 1, 2021, mandatory compliance date of the General QM Final Rule. If such a proposed rule were finalized, creditors would be able to use either the current General QM loan definition or the revised General QM loan definition for applications received during the period from March 1, 2021, until the delayed mandatory compliance date. Furthermore, the Bureau anticipates that the Temporary GSE QM loan definition will remain in effect until the new mandatory compliance date, except that the Temporary GSE QM loan definition would expire with respect to a GSE if that GSE ceases to operate under conservatorship prior to the new mandatory compliance date.

The Bureau will consider at a later date whether to initiate another rulemaking to reconsider other aspects of the General QM Final Rule. Acting Director Dave Uelio discussed the two rules and the Bureau's plans in a Bureau Blog post yesterday.

The CFPB also posted an update of its small entity compliance guide for the ATR/QM rule, to include the latest amendments to the rule.

02/24/2021

FDIC releases fair lending assistance videos

The FDIC's FIL-10-2021 has announced the release of nine technical assistance videos on fair lending. The information in the videos is intended as a high-level overview to help FDIC-supervised institutions assess and mitigate fair lending risk, and to understand how FDIC examiners evaluate fair lending compliance. The videos range in length from approximately 10 to 28 minutes and are available on the FDIC Banker Resource Center.

  • Video 1 provides an overview of the federal fair lending laws and regulations and is intended for bank directors and senior managers.
    Video 2 focuses on how a bank’s compliance management system can mitigate fair lending risk and is intended for bank management and compliance staff.
  • Video 3 discusses how FDIC examiners evaluate fair lending risk during a consumer compliance examination and is intended for bank management and compliance staff.
  • Videos 4-9 discuss specific fair lending risk factors, as provided in the interagency fair lending examination procedures: overt discrimination, underwriting, pricing, steering, redlining, and marketing. These six videos are intended for bank management and compliance staff.

02/23/2021

Regulators' supervisory practices following Texas storms

The OCC, FRB, FDIC, NCUA, and the Conference of State Bank Supervisors issued a statement Monday that they recognize the serious impact of Texas winter storms 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. A complete list of the affected disaster areas can be found HERE.

02/23/2021

U,S. targets members of Burma's administration

The Treasury Department has announced that OFAC has sanctioned two individuals connected to the military apparatus responsible for the coup in Burma. OFAC took these actions in response to the Burmese security forces’ killing of peaceful protestors, imposing the sanctions under Executive Order 14014, the new Burma-focused sanctions authority President Biden issued on February 11. For identification details, see this BankersOnline OFAC Update.

OFAC also posted updates to CAATSA–Russia-related SDN listings, which can be seen in this BankersOnline OFAC Update.

02/23/2021

Bureau and 3 states sue Libre for predatory immigrant scam

The Consumer Financial Protection Bureau has announced that, in partnership with the attorneys general of Massachusetts, New York, and Virginia, it is suing Libre by Nexus, Inc. and its owners for a predatory immigrant-services scam that traps victims into paying expensive, long-term fees. The CFPB alleges in the complaint that Libre preys on immigrants, primarily Hispanics, who speak little or no English and are being held in federal detention centers, desperate to return to their families. Libre lures its victims through a series of false and misleading statements about its programs, pressuring them to sign abusive, English-only contracts that bind the immigrants to years of exorbitant monthly payments.

According to the CFPB investigation, Libre’s business model preys on detainees and their families desperate to get the detainees out of U.S. Immigration and Customs Enforcement (ICE) detention centers where they have been held, sometimes for months, while awaiting resolution of their immigration cases. In exchange for securing a bond, Libre requires the immigrants to pay a huge upfront fee equal to 25 to 30 percent of the bond plus $420 per month to “lease” GPS-tracking ankle monitors until their case is resolved, usually years later. Unlike a fully-paid bond, these fees are never refunded. In the end, the CFPB alleges, the immigrants often end up paying far more in non-refundable Libre fees than they would have paid for their refundable ICE bond.

The complaint also alleges that Libre:

  • Coerces vulnerable non-English speakers to sign predatory financial contracts in English
  • Deceives consumers about its relationship with immigration authorities
  • Strong-arms detainees with false debt collection threats
  • Incentivizes its employees to deceive and threaten

In its lawsuit, the CFPB is seeking an injunction, damages or restitution to consumers, disgorgement of ill-gotten gains, and the imposition of civil money penalties.

02/22/2021

FEMA to suspend communities from flood program on Friday

FEMA will publish in the Federal Register for February 23, 2021, a notice listing communities in Pennsylvania, Tennessee, and Virginia that it has scheduled for suspension from the National Flood Insurance Program on February 26, 2021, for noncompliance with the program's floodplain management requirements.

  • Pennsylvania: East Buffalo and Susquehanna
  • Tennessee: Brentwood, Cheatham County (unincorporated areas), Hendersonville, Pegram, Pleasant View, Ridgetop, and Robertson County (unincorporated areas)
  • Virginia: Culpeper, Culpeper County (unincorporated areas), and Rappahannock County (unincorporated areas)

If FEMA receives documentation that a listed community has adopted the required management measures before February 26, the community will not be suspended.

UPDATE: Published at 86 FR 10837 on 2/23/2021.

02/19/2021

Fed amends Reg EE Netting rule

The Federal Reserve Board has announced a final rule amending Regulation EE (Financial Institution Netting) to apply netting provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) to certain new clearing organizations including swap dealers. The rule would also make minor clarifications to the existing activities-based test in Regulation EE to clarify how the activities-based test applies following a consolidation of legal entities.

The amendments are intended to reduce risk and increase efficiency in the financial system by applying netting protections to a broader range of financial institutions. The final rule will become effective 30 days after publication in the Federal Register.

02/19/2021

BitPay settles with OFAC for apparent violations

OFAC has announced that BitPay, Inc., a private company based in Atlanta, Georgia, that offers a payment processing solution for merchants to accept digital currency as payment for goods and services, has agreed to remit $507,375 to settle its potential civil liability for 2,102 apparent violations of multiple sanctions programs that occurred between June 2013 and September 2018. BitPay allowed persons who appear to have been located in the Crimea region of Ukraine, Cuba, North Korea, Iran, Sudan, and Syria to transact with merchants in the United States and elsewhere using digital currency on BitPay’s platform even though BitPay had location information, including IP addresses and other location data, about those persons prior to effecting the transactions. BitPay received digital currency payments on behalf of its merchant customers from those merchants’ buyers who were located in sanctioned jurisdictions, converted the digital currency to fiat currency, and then relayed that currency to its merchants.

OFAC's enforcement action is a reminder that companies involved in providing digital currency services—like all financial service providers—should understand the sanctions risks associated with providing digital currency services and should take steps necessary to mitigate those risks. Companies that facilitate or engage in online commerce or process transactions using digital currency are responsible for ensuring that they do not engage in unauthorized transactions prohibited by OFAC sanctions, such as dealings with blocked persons or property, or engaging in prohibited trade or investment-related transactions.

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