Top Story Compliance Related

OFAC has announced that American Honda Finance Corporation (AHFC), a motor vehicle finance company headquartered in California, has agreed to remit $87,255 to settle its potential civil liability for 13 apparent violations of the Cuban Assets Control Regulations, (the “Alleged Violations”). The Alleged Violations occurred between February 2011 and March 2014, when Honda Canada Finance, Inc., a majority-owned subsidiary of AHFC located in Canada, approved and financed 13 lease agreements between an unaffiliated Honda dealership in Ottawa, Canada and the Embassy of Cuba in connection with the Cuban Embassy’s leasing of several Honda vehicles. OFAC determined that AHFC voluntarily self-disclosed the Alleged Violations to OFAC, and that the Alleged Violations constitute a non-egregious case.

The CFPB announced yesterday it has taken action against mortgage servicer Fay Servicing for failing to provide mortgage borrowers with the protections against foreclosure that are required by law. The Bureau found that Fay violated the CFPB’s servicing rules by keeping borrowers in the dark about critical information about the process of applying for foreclosure relief. The Bureau also found instances in which the servicer illegally launched or moved forward with the foreclosure process while borrowers were actively seeking help to save their homes. A consent order has been filed by the CFPB ordering Fay Servicing to stop its illegal practices and pay up to $1.15 million to harmed borrowers.

FDIC FIL-21-2017, issued yesterday, reminds all FDIC-insured institutions with branches that their June 30 Summary of Deposits (SOD) must be filed by July 31, 2017. All institutions with branch offices are required to submit the survey; institutions with only a main office are exempt. No filing extensions will be granted.

The OCC has issued Bulletin 2017-21 with frequently asked questions (FAQ) to supplement Bulletin 2013-29 “Third-Party Relationships: Risk Management Guidance,” issued October 30, 2013. The FAQs address several areas related to the guidance, including collaboration with other banks and partnerships with fintech providers.

The OCC has announced it will host two workshops in Cleveland on July 18-19, for directors of institutions supervised by the OCC. The Risk Governance workshop on July 18 combines lectures, discussion, and exercises to provide practical information for directors to effectively measure and manage risks. The workshop also focuses on the OCC’s approach to risk-based supervision and major risks in the financial industry. The Compliance Risk workshop on July 19 combines lectures, discussion, and exercises on the critical elements of an effective compliance risk management program. This workshop also focuses on major compliance risks and critical regulations. Topics of discussion include the Bank Secrecy Act, Flood Disaster Protection Act, Fair Lending, Home Mortgage Disclosure Act, Community Reinvestment Act, and other compliance areas of interest.

The Federal Reserve Board has permanently barred Richard Henderson and Philip Cooper, former employees of Regions Bank, from the banking industry after both pleaded guilty to conspiracy to commit money laundering, and conspiracy to commit bank bribery and wire fraud affecting a financial institution. Henderson and Cooper held senior positions at Regions Equipment Finance Corporation (REFCO), a Regions' subsidiary. In their plea agreements, Henderson and Cooper admitted that they conspired to defraud Regions and REFCO by directing REFCO to purchase insurance from a shell company that paid kickbacks to Henderson and Cooper. Henderson and Cooper attempted to conceal those kickbacks by establishing additional shell companies to receive their kickbacks. In December 2016, the Board had barred Henderson and Cooper for the duration of their their criminal proceedings.

The Federal Reserve Board has announced that it has approved an extended transition period of up to five years for Deutsche Bank AG, SVB Financial Group, and UBS Group AG to conform investments in certain "illiquid funds" to the requirements of section 619 of the Dodd-Frank Act, commonly known as the Volcker rule. Section 619 generally prohibits banking entities from engaging in proprietary trading and from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with a hedge fund or private equity fund. These prohibitions are subject to a number of statutory exemptions and restrictions.

The NCUA Board has published a proposed rule [82 FR 26605] that would revise the procedures a federal credit union must follow to merge voluntarily with another credit union. The proposed change would:: Revise and clarify the contents and format of the member notice; require merging FCUs to disclose all merger-related financial arrangements for covered persons; increase the minimum member notice period; and provide procedures to allow reasonable member-to-member communications regarding the proposed merger. The proposed changes also make conforming amendments to NCUA regulations governing termination of federal share insurance when the continuing credit union is not an FCU. Comments on the proposal are due within 60 days (by August 7, 2017).

The NCUA Board has published two proposed rules in today's Federal Register that would affect the agency's appeals process. Under the first proposal, at 82 FR 26378, the NCUA would adopt procedures to govern appeals to the Board that would apply to agency regulations that currently have their own embedded appeals provisions and will replace those current provisions. The procedures would apply in cases in which a decision rendered by a regional director or other program office director is subject to appeal to the Board. The second proposal, at 82 FR 26391, would amend the Board's procedures for appealing material supervisory determinations to the NCUA Supervisory Review Committee (SRC) to enhance due process and to be more consistent with the practices of the federal banking agencies. Both proposals are open for public comment for 61 days, through August 7, 2017.

OCC Bulletin 2017-20, released yesterday, announced the revision of the “Termination of Federal Charter” booklet of the Comptroller’s Licensing Manual. The revised booklet replaces the “Termination of National Bank Status” booklet issued in April 1998. The revision incorporates termination procedures and requirements updated after the Office of Thrift Supervision’s integration into the OCC on July 21, 2011, and revised regulations that became effective July 1, 2015, addressing termination of both national banks and federal savings associations.