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Top Story Compliance Related

10/30/2020

OFAC targets companies involved in Iranian petrochemical sector

OFAC has designated eight entities and related officials for their involvement in the sale and purchase of Iranian petrochemical products brokered by Triliance Petrochemical Co. Ltd. (Triliance), an entity designated by Treasury in January 2020. These entities, based in Iran, China, and Singapore, engaged in transactions facilitated by Triliance or otherwise assisted Triliance’s efforts to process and move funds generated by the sale of those petrochemical products.

OFAC also updated the SDN listing of the Iraq-based Al Bilad Islamic Bank with additional aliases including al Atta Islamic Bank for Investment and Finance. Al Bilad Islamic Bank was designated pursuant to E.O. 13224, a counterterrorism authority, on May 15, 2018 for being owned or controlled by Aras Habib who was involved in the exploitation of Iraq’s banking sector to move funds from Tehran to Hizballah. Al-Bilad Islamic Bank was used by Iran’s Central Bank Governor to covertly funnel millions of dollars on behalf of the IRGC-QF to support Hizballah.

For identification information on the designated entities and individuals designated, see this BankersOnline OFAC Update.

10/28/2020

2020 National DNC Registry Data Book

The Federal Trade Commission has issued the National Do Not Call Registry Data Book for Fiscal Year 2020. The Do Not Call (DNC) Registry lets consumers choose not to receive most legal telemarketing calls. The data show that the number of active registrations on the DNC Registry increased by two million over the past year, while the total number of consumer complaints decreased for the third year in a row.

10/28/2020

OCC finalizes True Lender Rule

The OCC has issued a final rule that determines when a bank (national bank or federal savings association) makes a loan and is the “true lender,” including in the context of a partnership between a bank and a third party. The rule specifies that a bank makes a loan and is the true lender if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan. The rule also specifies that if, as of the date of origination, one bank is named as the lender in the loan agreement for a loan and another bank funds that loan, the bank that is named as the lender in the loan agreement makes the loan. The rule also clarifies that as the true lender of a loan, the bank retains the compliance obligations associated with the origination of that loan, thus negating concern regarding harmful rent-a-charter arrangements.

The OCC specifies in the prefatory text to the final rule in the Federal Register filing that the bank would not be considered the true lender in certain traditional lending or finance arrangements such as mortgage warehouse lending, indirect automobile finance, loan syndication and other structured finance. The OCC also clarified that the rule “does not affect the applicability” of the Home Mortgage Disclosure Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act or their implementing regulations. The final rule will take effect 60 days after publication in the Federal Register.

PUBLICATION AND EFFECTIVE DATE INFO: Published at 85 FR 68742 on October 30, 2020, with an effective date of December 29, 2020.

10/28/2020

9th mortgage company settles with CFPB over deceptive ads

The CFPB has issued a consent order against Low VA Rates LLC, a Utah-based mortgage lender and broker incorporated in Colorado and licensed in 48 states and the District of Columbia. The order addresses the Bureau’s finding that Low VA Rates sent consumers mailers for mortgage loans guaranteed by the U.S. Department of Veterans Affairs (VA) that contained false, misleading, and inaccurate statements, which violated the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts and practices, the Mortgage Acts and Practices – Advertising Rule (MAP Rule, Regulation N), and Regulation Z. The order requires Low VA Rates to pay a civil money penalty of $1,800,000 to the Bureau and imposes requirements to prevent future violations.

This CFPB action is the ninth and last case stemming from a Bureau sweep of investigations of multiple mortgage companies that used deceptive mailers to advertise VA-guaranteed mortgages. The Bureau began the sweep in response to concerns raised by the VA about potentially unlawful advertising in the mortgage lending market. The Bureau has obtained more than $4.4 million in civil money penalties as a result of this sweep.

To prevent future violations, the consent order requires Low VA Rates to designate an advertising compliance official who must review its mortgage advertisements for compliance with mortgage advertising laws prior to use. Low VA Rates must also refrain from making misrepresentations like those identified by the Bureau through its investigation, and comply with certain enhanced disclosure requirements.

For additional information, see "Low VA Rates LLC settles with Bureau over deceptive VA loan ads," in BankersOnline's Penalty Pages.

10/28/2020

FDIC updates RMS Manual

The FDIC has released the October 2020 updates to its Risk Management Manual of Examinations Policies (RMS Manual). Updates to Section 22.1—Examination Documentation (ED) Modules include revisions to the Credit Card Related Merchant Activities, Electronic Funds Transfer Risk Assessment, Trust, and Trust - Abbreviated ED modules to clarify certain procedures and to address other technical edits.

10/27/2020

Revised pamphlet for Comptroller's Handbook

The OCC has posted Bulletin 2020-90 to announce the revision of the “Concentrations of Credit” booklet of the Comptroller’s Handbook, which is used by OCC examiners in their examination and supervision of national banks, federal savings associations, and federal branches and agencies of foreign banking organizations. The revised booklet—

  • changes the supervisory calculation for credit concentration ratios for banks that have implemented the current expected credit loss (CECL) transition rule to avoid double counting the allowance for credit losses in the denominator
  • replaces the term “criticized” with “special mention” for consistency with Banking Bulletin (BB) 1993-35, “Interagency Definition of Special Mention Assets”
  • reflects relevant OCC issuances published since this booklet was last issued
  • reflects changes to laws and regulations that occurred since this booklet was last issued
  • clarifies applicability of references to covered savings associations
  • includes clarifying edits regarding supervisory guidance, sound risk management practices, or legal language
  • revises certain content for general clarity
  • removes the NAICS code listing, as this information is readily available at www.census.gov

10/27/2020

OFAC targets key actors in Iran's oil sector

On Monday, OFAC designated the Iranian Ministry of Petroleum, the National Iranian Oil Company (NIOC), and the National Iranian Tanker Company (NITC) in accordance with E.O. 13224, a counterterrorism authority, for their financial support to Iran’s Islamic Revolutionary Guard Corps-Qods Force. OFAC also designated multiple entities and individuals associated with the Ministry of Petroleum, NIOC, and NITC, including front companies, subsidiaries, and senior executives; and four persons involved in the recent sale of Iranian gasoline to the illegitimate Maduro regime in Venezuela.

For identification information on the individuals, entities and vessels added to OFAC's SDN List with those designations, related changes to the List, and a new Iran-related General License, see this BankersOnline OFAC Update.

10/27/2020

Cuban Assets Control Regs amended

OFAC has amended the Cuban Assets Control Regulations (CACR) to further implement parts of the president's foreign policy toward Cuba. The changes are meant to deny the Cuban government access to funds in connection with remittances to Cuba. The rule was published in the October 27, 2020, Federal Register, and will be effective 30 days later, on November 26, 2020.

OFAC's announcement also includes links to 10 FAQ updates and one new FAQ related to the CCAR.

10/26/2020

Agencies propose lower recordkeeping and travel rule threshold

The Financial Crimes Enforcement Network (FinCEN) and the Federal Reserve Board have invited comment on a proposed rule that would amend the recordkeeping and travel rule regulations under the Bank Secrecy Act.

FinCEN and the Board, under their shared authority, are proposing amendments to the recordkeeping rule jointly, while FinCEN is proposing amendments to the travel rule. Under the current recordkeeping and travel rule regulations, financial institutions must collect, retain, and transmit certain information related to funds transfers and transmittals of funds over $3,000. The proposed rule lowers the applicable threshold from $3,000 to $250 for international transactions. The threshold for domestic transactions remains unchanged at $3,000.

The proposed rule further clarifies that those regulations apply to transactions above the applicable threshold involving convertible virtual currencies, as well as transactions involving digital assets with legal tender status, by clarifying the meaning of "money" as used in certain defined terms.

Comments on the proposal will be accepted for 30 days following publication in the Federal Register.

PUBLICATION AND COMMENT PERIOD UPDATE: Published at 85 FR 68005 on 10/27/2020, with a comment period ending 11/27/2020.

10/26/2020

FATF strengthens standards against proliferation financing

Treasury reports that the Financial Action Task Force (FATF) concluded its 32nd plenary meeting on Friday, October 23, by agreeing to revise its standards to further strengthen the global response to the financing of proliferation related to weapons of mass destruction. The endorsement of the new standard is a result of an initiative that began under the U.S. FATF presidency and was adopted by finance ministers of FATF members in 2019.

The FATF also continued its focus on the impact of the COVID-19 pandemic on detecting and countering fraud including attempts to defraud government-backed stimulus programs. The task force also adopted an updated report on trade-based money laundering and recognized progress by a number of jurisdictions in rectifying their AML/CFT deficiencies.

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