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Top Story Compliance Related

11/15/2021

OFAC sanctions Eritrean entities and individuals

On Friday, OFAC designated four entities and two individuals under the authority of Executive Order 14046 in response to the growing humanitarian and human rights crisis and expanding military conflict in Ethiopia. The individuals and entities designated today are the Eritrean Defense Force, the People’s Front for Democracy and Justice, Abraha Kassa Nemariam, Hidri Trust, Hagos Ghebrehiwet W Kidan, and Red Sea Trading Corporation.

As a result of today’s action, all property and interests in property of the persons named above that are in the United States, or in the possession or control of U.S. persons, are blocked and must be reported to OFAC. No entity shall be blocked pursuant to E.O. 14046 solely because it is owned in whole or in part, directly or indirectly, by one or more sanctioned persons, unless the entity is itself a sanctioned person.

For identification information on those designated, as well as information on a number of designation removals, see BankersOnline's November 12, 2021, OFAC Update.

11/12/2021

FinCEN Exchange held

On Tuesday, FinCEN convened a virtual FinCEN Exchange with members of the financial industry and law enforcement to discuss FinCEN’s analysis of suspicious activity reporting (SAR) with a transactional nexus to Alabama, Florida, Georgia, Mississippi, and South Carolina. Topics of discussion included an analysis of certain Bank Secrecy Act (BSA) filing statistics for SARs and an analysis of SAR filings related to recent FinCEN advisories.

FinCEN Exchanges support one of FinCEN’s highest priorities—to strengthen public-private partnerships to identify and mitigate threats in order to safeguard our national security and protect communities and citizens from harm. Engagement on specific topics, trends, and typologies between industry, law enforcement, and FinCEN can enhance the value of BSA reporting. Such reporting can assist law enforcement in identifying and addressing potential criminal methodologies, support ongoing investigations, and promote efficient and effective reporting of actionable information by financial institutions.

11/12/2021

Mortgage servicing supervisory flexibility ending

The CFPB, OCC, Board of Governors, OCC, FDIC, NCUA and state financial regulators on Wednesday, November 10, 2021, issued an updated "Joint Statement on Supervisory and Enforcement Practices Regarding the Mortgage Servicing Rules in Response to the Continuing COVID-19 Pandemic and CARES Act."

The temporary supervisory and enforcement flexibility announced in the original (April 2020) joint statement no longer applies, and the agencies will apply their respective supervisory and enforcement authorities, when appropriate, to address any noncompliance or violations of the Regulation X mortgage servicing rules that occur after the date of this statement. These rules include "Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (RESPA)," Regulation X (86 Fed. Reg. 34848), which became effective on August 31, 2021.

The new joint statement closes with this paragraph—

  • "The agencies recognize the ongoing challenges faced by mortgage servicers and their efforts to assist customers and members affected by the ongoing COVID-19 pandemic. The agencies continue to encourage mortgage servicers to engage in these efforts. The agencies will consider, when appropriate, the specific impact of servicers’ challenges that arise due to the COVID-19 pandemic and take those issues in account when considering any supervisory and enforcement actions. As part of their considerations, the agencies will factor in the time it takes to make operational adjustments in connection with this joint statement."

Related links:

11/12/2021

Fair Lending interagency webinar

The Federal Reserve Bank of Philadelphia has sent out invitations to the Outlook Live 2021 Fair Lending Interagency Webinar, to be held on December 7, 2021, from 2:00 to 3:30 p.m. Eastern time. Speakers will represent eight federal agencies:

  • Consumer Financial Protection Bureau
  • Department of Housing and Urban Development
  • Department of Justice
  • Federal Deposit Insurance Corporation
  • Federal Housing Finance Agency
  • Federal Reserve Board
  • National Credit Union Administration
  • Office of the Comptroller of the Currency

Topics to be discussed include:

  • Recent Fair Lending Guidance Documents
  • Analyzing HMDA Data
  • Enterprise Fair Lending Data
  • Fintech Risk Management
  • Redlining Self-Assessments
  • Redlining & Marketing
  • DOJ Redlining Initiative and Recent Enforcement
  • JP Morgan Chase Conciliation Agreement

Online registration is required, and is now open.

11/12/2021

FFIEC to send 'Announcements'

The Federal Financial Institutions Examination Council (FFIEC) on Wednesday launched “FFIEC Announcements,” email notifications providing relevant and timely information designed specifically for examiners and practitioners within the financial services sector.

FFIEC Announcements will be distributed to the FFIEC's email subscribers notifying them of updates to the FFIEC's website and InfoBases.

11/12/2021

OFAC targets corrupt Cambodian military officials

On Wednesday, the Treasury Department announced that OFAC has sanctioned two Cambodian government officials, Chau Phirun (Chau) and Tea Vinh (Tea), for their roles in corruption in Cambodia. These individuals were designated pursuant to Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption around the world. The designations were complemented by the U.S. Department of State’s announcement of visa restrictions under Section 7031(c) of the FY 2021 Department of State, Foreign Operations, and Related Programs Appropriations Act on Chau and Tea, and their eligible immediate family members, due to their involvement in significant corruption.

See the BankersOnline OFAC Update for November 10, 2021, for identification information on Chau and Tea.

OFAC has also published a Cambodia Business Advisory on High-Risk Investments and Interactions.

11/10/2021

UAE bank cited for violations of Sudanese sanctions

The Office of Foreign Assets Control and the Federal Reserve Board have cited Mashreqbank psc for violations of the now-repealed Sudanese Sanctions Regulations (SSR), as part of a global settlement between Mashreqbank, the New York State Department of Financial Services (DFS) and the Federal Reserve Board of Governors. The violations related to Mashreqbank’s processing of payments through U.S. financial institutions that related to U.S. dollar transfers from accounts of Sudanese banks held outside the United States. Mashreqbank psc is a commercial bank headquartered in Dubai, United Arab Emirates, that maintains a branch in New York, New York.

OFAC issued a Finding of Violation to Mashreqbank. rather than a civil money penalty order, in part because Mashreqbank voluntarily entered into a retroactive statute of limitations waiver agreement, without which OFAC would have been time-barred from charging the violations.

The Federal Reserve Board on Tuesday announced it has issued a consent cease and desist order to Mashreqbank.

11/09/2021

Payment processor banned by FTC

The Federal Trade Commission has issued an order permanently banning a payment processor that facilitated a fraudulent student loan debt relief scheme from processing debt relief payments. The order also requires the company and its owner to surrender $500,000 to the FTC for consumer redress.

A complaint filed by FTC alleged Automatic Funds Transfer Services, Inc. (AFTS) and its owner, Eric Johnson, processed at least $31 million in consumer payments for a fraudulent student loan debt relief scheme sued by the FTC in 2019. The debt relief scheme used numerous names, including The Student Loan Group (SLG).

AFTS and Johnson processed payments from tens of thousands of consumers deceived by SLG into paying illegal upfront fees with false promises to lower the consumers’ monthly student loan payments. The complaint cites correspondence showing that AFTS and Johnson were aware of numerous issues with the scheme. The FTC alleges that the company and Johnson received complaints from, among others, consumers and banks; were aware that SLG had high return rates and was collecting illegal upfront fees from consumers; and knew that SLG kept changing company and brand names to, among other reasons, mitigate negative publicity. Despite numerous warning signs, AFTS and Johnson continued processing consumer payments for SLG right until the scheme was ultimately shut down following an enforcement action by the FTC.

The settlement permanently prohibits AFTS and Johnson from processing payments for debt relief or student loan companies. They will also be prohibited from processing payments indirectly for any merchant that does not have a signed contract with AFTS, and will be required to apply enhanced screening and monitoring of certain high risk clients to ensure such clients are not operating illegally. The monetary judgment of $27,584,969 is largely suspended due to an inability to pay. AFTS and Johnson will be required to surrender $500,000 to the FTC, and if they are found to have misrepresented their financial status, the full amount of the judgment would be immediately due.

Press release

11/09/2021

Treasury continues to counter ransomware

The Department of the Treasury on Monday announced a set of actions focused on disrupting criminal ransomware actors and virtual currency exchanges that launder the proceeds of ransomware. Treasury’s actions advance the administration’s counter-ransomware efforts to disrupt ransomware infrastructure and actors and address abuse of the virtual currency ecosystem to launder ransom payments.

Monday's actions include the OFAC designation of Chatex, a virtual currency exchange, and its associated support network, for facilitating financial transactions for ransomware actors. OFAC also designated IZIBITS OU, Chatextech SIA, and Hightrade Finance Ltd for providing material support and assistance to Chatex.

Complementing this action, the Department of State announced a Transnational Organized Crime Reward offer of up to $10,000,000 for information leading to the identification or location of any individual(s) who hold a key leadership position in the Sodinokibi/REvil ransomware variant transnational organized crime group. The Department of State also announced a reward offer of up to $5,000,000 for information leading to the arrest and/or conviction in any country of any individual conspiring to participate in or attempting to participate in a Sodinokibi variant ransomware incident.

OFAC also designated Ukrainian Yaroslav Vasinskyi and Russian Yevgeniy Polyanin for their part in perpetuating Sodinokibi/REvil ransomware incidents against the United States. These two individuals are part of a cybercriminal group that has engaged in ransomware activities and received more than $200 million in ransom payments paid in Bitcoin and Monero. OFAC also designated a company owned by Polyanin.

Treasury also reported FinCEN's release of an updated advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments (see our related report).

For identification information on the individuals and entities targeted by OFAC, see the November 8, 2021, BankersOnline OFAC Update.

11/09/2021

FinCEN updates Advisory on Ransomware

FinCEN has announced its release of an updated advisory, FIN-2021-A004, "Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments." The release was made in connection with a set of actions announced Monday by the Treasury Department and focused on disrupting criminal ransomware actors. Yesterday's Advisory replaces advisory FIN-2020-A006, issued October 1, 2020.

The updated advisory is in response to the increase of ransomware attacks in recent months against critical U.S. infrastructure, such as the May 2021 ransomware attack that disrupted the operations of Colonial Pipeline, the largest pipeline system for refined oil products in the United States. This attack led to widespread gasoline shortages that affected tens of millions of Americans. Other recent targets include entities in the manufacturing, legal services, insurance, financial services, health care, energy, and food production sectors.

This amended advisory reflects information released by FinCEN in its Financial Trend Analysis Report issued on October 15, 2021, and is part of the Department of the Treasury’s broader efforts to combat ransomware. In particular, this updated advisory identifies new trends and typologies of ransomware and associated payments, including the growing proliferation of anonymity-enhanced cryptocurrencies (AECs) and decentralized mixers.

The updated advisory comes with FinCEN's request that financial institutions reference "CYBER FIN-2021-A004" in SAR field 2 and the narrative, and select SAR field 42 when filing suspicious activity reports on suspicious activity that may be related to ransomware attacks.

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