Top Story Compliance Related

The Federal Emergency Management Agency has suspended several communities in the State of Washington from the National Flood Insurance Program, effective March 7, 2017, as announced in a final rule published at 82 FR 13399 in this morning's Federal Register. The communities are portions of Island, King, and Pierce Counties.

The Federal Reserve Board announced on Friday it will seek to fine and prohibit Fang Fang and Timothy Fletcher, two former managing directors at J.P. Morgan Securities (Asia Pacific) Limited, from working in the banking industry for their participation in a referral hiring program that violated anti-bribery law. In addition to permanently prohibiting them from the banking industry, the Board seeks to impose a $1 million fine against Fang and a $500,000 fine against Fletcher.

The enforcement proceedings against Fang and Fletcher follow the Board's November 2016 enforcement actions against JPMorgan Chase & Co. for unsafe and unsound practices related to the firm's referral hiring program. The Board required JPMorgan Chase & Co. to pay $61.9 million in penalties for control deficiencies related to the firm's referral hiring practices and anti-bribery policies.

The CFPB has published a request for information from the public as part of its biennial review of the credit card market under the CARD Act.

The CFPB has announced a proposal to delay for six months the effective date of its final rule governing prepaid accounts. The Bureau indicated it has learned that some industry participants believe they will have difficulty complying with certain provisions of the rule by the current October 1, 2017, effective date. The CFPB is requesting comments about any implementation challenges that may affect consumers, and how additional time will impact industry, consumers, and other stakeholders. Comments will be due 21 days after the request is published in the Federal Register.

Update: Published at 82 FR 13782 on March 15, 2017. Comments due by April 5, 2017.

The FDIC will host a Town Hall webinar, "Money Smart for Small Business," on Thursday, March 23, from 2–3 p.m. EDT. Money Smart for Small Business (MSBB) is an instructor-led curriculum developed by the FDIC and the Small Business Administration, with 13 modules available in both English and Spanish. The purpose of the town hall webinar is to:

• Further bankers' understanding of the MSSB Curriculum and connect it with their mission and strategic objectives
• Learn how others customize the MSSB modules to meet the needs of their unique entrepreneur audiences
• Ask questions and share experiences about the adoption and implementation of MSSB

The Bureau has made available on its implementation and guidance page for the Prepaid Account Rule a guide to preparing the short form disclosure for prepaid accounts. This disclosure guide is based on Regulation E’s Model Form A-10(c) and provides basic “how to” instructions to help financial institutions prepare short form disclosures for prepaid accounts other than government benefit accounts or payroll card accounts.

The Federal Trade Commission has announced that United Debt Counselors LLC, a debt relief company, and its principals, who allegedly misled consumers and charged illegal advance fees, will be banned from those practices under a settlement with the regulator. According to a complaint filed by the Commission, the company exaggerated how much money people would save using its services. The company’s direct mail ads, which reached up to 100,000 consumers per week, looked like official documents from a bank or attorney, and claimed that typical customers would have their credit card debt cut in half and become debt-free within 36 months. Under a stipulated order, the defendants are banned from making misrepresentations about debt relief and other financial products or services, and making unsubstantiated claims about any products or services. They can charge advance fees only if they comply with the Telephone Sales Rule; sales persons making face-to-face sales presentations must have authority to discuss material terms, they must do so in specific detail, and they must be able to answer consumers’ questions. The order imposes a $9 million judgment that represents the amount of alleged harm to consumers. It will be partially suspended upon payment of $510,000. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

The FDIC has issued "Credit Risk Trends and Supervisory Expectation Highlights," which appears in the Winter 2016 issue of Supervisory Insights. The lead article identifies trends in credit risk and emphasizes to bankers and examiners that now is the time to heed long-standing principles of sound risk-management practices. It also examines growth on bank balance sheets and effective risk management practices related to commercial real estate, agriculture, and oil and gas-related lending.

The OCC has released its schedule of Community Reinvestment Act (CRA) evaluations to be conducted in the second quarter of 2017.

OFAC has announced a $100,871,266 settlement agreement with Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd. and their subsidiaries and affiliates ((collectively referred to as “ZTE”), to settle ZTE’s potential civil liability for 251 apparent violations of the Iranian Transactions and Sanctions Regulations. The maximum penalty for the violations was determined to be $106,180,280.

ZTE’s settlement with OFAC is concurrent with a settlement agreement between ZTE and the Department of Commerce’s Bureau of Industry and Security, and ZTE’s plea agreement (pending court approval) with the Department of Justice’s National Security Division and U.S. Attorney’s Office for the Northern District of Texas. The Department of Justice has reported that in the plea agreement, ZTE has agreed to pay a $430,488,798 penalty, and that ZTE simultaneously reached settlement agreements with the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) and the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). In total ZTE has agreed to pay the U.S. Government $892,360,064. The BIS has suspended an additional $300,000,000, which ZTE will pay if it violates its settlement agreement with the BIS.

• DOJ ZTE Information
• DOJ ZTE Plea Agreement
• DOJ ZTE Plea Agreement Supplement
• DOJ ZTE Factual Resume