Top Story Compliance Related

The Conference of State Bank Supervisors has filed a complaint in the U.S. District Court for the District of Columbia against the OCC and Comptroller Curry to challenge the OCC's recent decision to create a new special-purpose national bank charter for financial technology and other nonbank companies, arguing that the OCC's licensing of such companies would go "far beyond the limited authority granted to it by Congress under the National Bank Act and other federal banking laws." The CSBS also alleges in its complaint that the OCC's decision to offer these special-purpose charters was in violation of the Administrative Procedure Act. The suit seeks declaratory and injunctive relief declaring the OCC's creation of the nonbank charter to be unlawful and enjoining the OCC from pursuing it.

• CBSC complaint

The FDIC has released a list of 34 orders and one adjudicated decision for the month of March 2017. The administrative enforcement actions included five removal and prohibition orders, six Section 19 orders, two civil money penalties, four voluntary terminations of insurance; seven terminations of prior orders, and the adjudicated decision. Of note:

• A Nebraska bank was ordered to pay a $6,500 civil money penalty for violations of the Flood Disaster Protection Act and Part 339 of the FDIC's Rules and Regulations
• An individual now or formerly an institution-affiliated person of a South Dakota bank was ordered to pay $15,000 in civil money penalties for unspecified transgressions
• Orders for termination of insurance (without deposits) were approved for:
  • Republic Bank, Bountiful, Utah
  • Builders Bank, Chicago, Illinois
  • Bank of Pine Hill, Pine Hill, Alabama
  • Banamex USA, Century City, California

The CFPB has filed a complaint against four online lenders – Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc. – for deceiving consumers by collecting debt that the consumers did not legally owe. In the complaint, the CFPB alleges that the four lenders could not legally collect on these debts because the loans were void under state laws governing interest rate caps or the licensing of lenders. The CFPB also alleges that the lenders made deceptive demands and illegally took money from consumer bank accounts for debts that consumers did not legally owe. The CFPB seeks to stop the unlawful practices, recoup relief for harmed consumers, and impose a penalty.

The Bureau's complaint states that the four companies are owned and incorporated by the Habematolel Pomo of Upper Lake Indian Tribe, whose Rancheria is located in California.

• CFPB's Press Release

The OCC has announced it will host two workshops in Oklahoma City at the Aloft Oklahoma City Downtown-Bricktown, June 6-7, 2017, for directors of national community banks and federal savings associations.

• The Risk Governance workshop on June 6 provides 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 June 7 focuses on the critical elements of an effective compliance risk management program. The 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.

OFAC has added the name of Mubarak Mohammed A Alotaibi, a Saudi national, to the Specially Designated Nationals List as a global terrorist. For identification information, see our OFAC Update.

The Bureau has released the Spring 2017 issue of Supervisory Highlights, announcing that its recent supervisory work has found that some student loan and mortgage servicers are violating the law by failing to provide struggling borrowers with legal protections. CFPB examiners found that some student loan servicers failed to refund charges imposed on borrowers who had been wrongly denied the right to defer payments while enrolled in school. The report also found that some mortgage servicers did not deliver the required foreclosure protections to borrowers seeking to save their homes, mishandled escrow accounts, and sent incomplete bills. The report also announced that non-public supervisory activities have led to the recovery of about $6.1 million for 16,000 consumers harmed by auto loan originators.

UPDATE: The Bureau is publishing this issue of Supervisory Highlights in the May 12, 2017, Federal Register at https://www.federalregister.gov/d/2017-09658.

In remarks delivered yesterday at the FDIC Economic Inclusion Summit in Arlington, VA, Chairman Gruenberg focused on FDIC efforts to enhance economic inclusion and the lessons learned along the way. He noted that, since 2009, the FDIC has monitored consumer engagement with the banking industry through the biennial National Survey of Unbanked and Underbanked Households. The survey, conducted in cooperation with the Census Bureau, provides reliable measurements on access to and use of mainstream and alternative financial services at the national and state level and for 68 large metropolitan areas. In addition, the FDIC has undertaken a number of initiatives to expand economic inclusion. A key area of focus has been creating access to low-cost, safe transaction accounts.

The CFPB took another swipe at SNAAC - - Security National Automotive Acceptance Company -- with a consent order that the Ohio-based auto lender specializing in loans to servicemembers pay an additional $1.25 million in penalties for noncompliance with an October 28, 2015, CFPB Administrative Order. According to the Bureau's press release the CFPB determined that SNAAC failed to provide more than $1 million in refunds and credits due under the earlier order to more than 1,000 consumers. In 2015, SNAAC paid a $1 million civil penalty and was supposed to make approximately $2.28 million in redress payments. Yesterday's CFPB press release reports that SNAAC treated accounts that were settled-in-full as having a positive account balance instead of providing refunds. These "account credits" were worthless to consumers who no longer owed SNAAC money and couldn't use the credits toward another loan with SNAAC, said the Bureau. SNAAC gave consumers whose accounts were discharged in bankruptcy the same worthless-credit treatment.

To ensure that the yet-to-be-completed redress payments will be properly delivered, the Bureau has now ordered SNAAC to pay the funds to the Bureau for redistribution to the consumers involved, along with a fee of $75,000 to the Bureau to cover the Bureau's costs involved. In addition, SNAAC must pay an additional civil money penalty of $1.25 million to the Bureau's Civil Penalty Fund. For additional information, see "CFPB hits SNAAC with another $1.25M CMP," in our Penalty Pages.

A SNAAC statement released yesterday reports that the settlement with the Bureau "resolves a disagreement between SNAAC and the CFPB over the interpretation of part of a Consent Order issued by the Bureau in October 2015," and that SNAAC agreed to the settlement "to close the matter and move forward in serving customers in the respectful, honorable manner that has been the company's tradition."

The CFPB complaint snapshot for April 2017 highlights consumer complaints about student loans. The April summary shows that both private and federal student loan borrowers nationwide report persistent servicing breakdowns that may sideline their path to repayment. The report's geographic focus for April was on complaints coming from Nevada.

The Financial Action Task Force (FATF) has conducted an assessment of Sweden’s anti-money laundering and counter-terrorist financing (AML/CFT) system, based on the 2012 FATF Recommendations. The FATF indicates all the elements of Sweden’s AML/CFT supervisory system are in place, but there are weaknesses in applying risk-based supervision. Compliance by financial institutions and by designated non-financial businesses and professions (DNFBPs) of their obligations is generally adequate: large banks have made significant efforts to enhance AML/CFT compliance, but there is a need to improve smaller financial institutions’ and DNFBPs’ understanding of the risks they are exposed to. There are also several remaining areas where Sweden’s AML/CFT regulations should be updated to reflect the 2012 FATF standards, reports the FATF. The full report and an executive summary were made available