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Top Story Compliance Related

05/21/2020

OFAC sanctions senior Iranian officials for human rights abuses

Treasury announced Wednesday that OFAC had taken action against Iran’s Interior Minister for his role in serious human rights abuses against Iranians, as well as seven senior officials of Iran’s Law Enforcement Forces (LEF) and a provincial commander of Iran’s Islamic Revolutionary Guard Corps (IRGC). Yesterday’s action also targets the Bonyad Taavon NAJA, which is translated as LEF Cooperative Foundation, along with its director and members of the board of trustees. The LEF Cooperative Foundation is an economic collaborative controlled by the LEF and is active in Iran’s energy, construction, services, technology, and banking industries.

All property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons. for identification information, see BankersOnline's OFAC Update.

05/21/2020

OCC finalizes CRA rule without FDIC and Fed

The OCC has announced its release of a final rule strengthening and modernizing the agency’s regulations under the Community Reinvestment Act (CRA).

The OCC reported it made several changes to its December 2019 proposal that respond to stakeholders’ comments, including:

  • Clarifying the importance of the quantity and quality of activities as well as their value.
  • Increasing credit for mortgage origination to promote availability of affordable housing in low- and moderate-income areas.
  • Clarifying credit for athletic facilities to ensure they benefit and support low- and moderate-income communities.
  • Deferring establishment of thresholds for grading banks’ CRA performance and delineating banks’ deposit-based assessment areas until the OCC assesses improved data required by the final rule.

The final CRA rule applies to national banks and savings associations, which, according to the OCC, conduct the majority of all CRA activity. The rule will become effective October 1, 2020, with a compliance date of January 1, 2023. Small and intermediate banks have until January 1, 2024, to comply with requirements involving assessment area, data collection and recordkeeping.

The FDIC, which had issued a proposal for CRA modernization jointly with the OCC in December 2019, issued a statement by Chairman Jelena McWilliams that the FDIC "is not prepared to finalize the CRA proposal at this time." The Federal Reserve Board has not issued a proposal to amend its current CRA regulations.

05/20/2020

Winners of FinCEN's BSA Awards program

FinCEN has announced the award recipients of the 2020 FinCEN Director’s Law Enforcement Awards Program who will be publicly identified in an official ceremony on October 29, 2020 in Washington, DC.

The annual program recognizes law enforcement agencies that used Bank Secrecy Act (BSA) reporting to successfully pursue and prosecute criminal investigation in seven categories:

  • SAR Review Task Force - Federal Bureau of Investigation
  • Significant Fraud - Immigration and Customs Enforcement-Homeland Security Investigations
  • Cyber Threat - Immigration and Customs Enforcement-Homeland Security Investigations
  • State and Local Enforcement - New York State Police
  • Third Party Money Launderers - Internal Revenue Service-Criminal Investigation
  • Transnational Organized Crime - Drug Enforcement Administration
  • Transnational Security Threat Category - Federal Bureau of Investigation

The description of each investigation illustrates the key role of financial industry BSA filings in law enforcement's pursuit of criminals.

05/20/2020

Commercial Bank Exam Manual updated

The Federal Reserve Board has posted an update of its Commercial Bank Examination Manual, which presents examination objectives and procedures that Federal Reserve System examiners follow in evaluating the safety and soundness of state member banks. The Manual is intended as guidance for planning and conducting bank examinations.

05/20/2020

OFAC designates China-based Mahan Air sales agent

Treasury has announced that OFAC has designated China-based Shanghai Saint Logistics Limited for acting as a general sales agent for or on behalf of Iranian airline Mahan Air. Mahan Air is designated under counterterrorism authorities for providing support to Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), as well as under a counter proliferation authority that targets weapons of mass destruction proliferators and their supporters.

As a result of yesterday’s action, all property and interests in property of Shanghai Saint Logistics Limited that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. Identity information is available in BankersOnline's OFAC Update.

05/19/2020

FinCEN advisory on COVID-19 medical scams

Yesterday, the Financial Crimes Enforcement Network issued Advisory FIN-2020-A002 on Medical Scams Related to the Coronavirus Disease (COVID-19), to alert financial institutions to rising medical scams related to the COVID-19 pandemic. This advisory contains red flags, descriptions of COVID-19 related medical scams, and information on reporting suspicious activity [insert "COVID-19 FIN-2020-A002" in field 2 (Financial Institution Note to FinCEN)]. This is the first of several advisories FinCEN intends to issue concerning financial crimes related to the COVID-19 pandemic.

FinCEN also issued a companion notice that provides detailed filing instructions for financial institutions, which will serve as a reference for future COVID-19 advisories.

05/19/2020

Labor may allow OT exemption for commissioned loan officers

The Department of Labor has published a final rule at 85 FR 29867 in the May 19, 2020, Federal Register withdrawing the "partial list of establishments" with "no retail concept" and the "partial list of establishments" that "may be recognized as retail" for the purposes of determining whether a business may qualify for an exemption from the Fair Labor Standards Act's overtime compensation requirement for certain commissioned employees employed by a retail or service establishment.

The elimination of the lists from Labor's regulations at 29 CFR 779 will promote consistent treatment when evaluating exemption claims by treating all businesses equally under the same standards. Banking and mortgage lending trade representatives have claimed the two lists have prevented mortgage lenders from applying for exemptions from the overtime requirement for mortgage loan officers who may earn more than half their income from commissions.

05/14/2020

FDIC updates exam manual

The FDIC has released its April 2020 updates to its Consumer Compliance Examination Manual. The following sections were updated:

  • Pre-Examination Planning (II-4.1): Updated to incorporate changes to the process.
  • Pre-Examination Information Packet Template (III-1.1): Changes to the Pre-Examination Planning process have been reflected in the Template.
  • Truth in Lending Act (V-1.1): Updated to reflect annual threshold changes. The escrow exemption and the appraisal exemption thresholds for higher priced mortgages and the credit card penalty fee safe harbor amount were increased.
  • Home Mortgage Disclosure Act (V-9.1): Updated to reflect updated loan volume thresholds. The asset size exemption thresholds were also updated.
  • Consumer Leasing Act (V-10.1): The exemption threshold for consumer credit and lease transactions were increased.
  • Community Reinvestment Act (XI-1.1): Asset-based definitions for Small Banks and Intermediate Small Banks were updated.

05/14/2020

CFPB statement on responsibility during pandemic

The CFPB has released a statement and FAQs outlining the responsibility of certain financial firms during the pandemic. In the statement, the Bureau outlines the billing error responsibilities of credit card issuers and other open-end non-home secured creditors during the COVID-19 pandemic. Additionally, the Bureau encourages financial firms to continue to provide the kind of assistance to their communities that many have been providing, such as waiving fees, lowering minimum-balance requirements, and implementing changes in account terms that benefit consumers.

It should be noted that these are Bureau statements, which may not reflect the positions of other federal financial regulators.

05/14/2020

OFAC updates 490 North Korea-related SDN listings

OFAC has posted a notice that it has added descriptive text to 490 SDN listings to reflect a prohibition on foreign subsidiaries of U.S. financial institutions from knowingly engaging in transactions with SDNs designated under North Korea-related authorities.

The added text reads: "Transactions Prohibited For Persons Owned or Controlled by U.S. Financial Institutions: North Korea Sanctions Regulations section 510.214.” The prohibition was added by the North Korea Sanctions and Policy Enhancement Act (NKSPEA) as modified by the National Defense Authorization Act for Fiscal Year 2020.

For the list of affected SDNs, see OFAC's May 13, 2020, notice.

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