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Top Story Compliance Related

03/23/2020

DHS Form I-9 flexibility

The Department of Homeland Security has announced that, due to precautions being implemented by employers and employees related to physical proximity associated with COVID-19, it will exercise discretion to defer the physical presence requirements associated with Employment Eligibility Verification (Form I-9) under Section 274A of the Immigration and Nationality Act (INA). Employers with employees taking physical proximity precautions due to COVID-19 will not be required to review the employee’s identity and employment authorization documents in the employee’s physical presence.

03/20/2020

Joint statement on CRA and COVID-19

The Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency (the agencies) have issued a Joint Statement on CRA Consideration for Activities in Response to COVID-19. The agencies recognize the potential for the Coronavirus Disease (COVID-19) to adversely affect the customers and operations of financial institutions. The agencies encourage financial institutions to work with affected customers and communities, particularly those that are low- and moderate-income. The agencies will provide favorable consideration under the Community Reinvestment Act of certain retail banking services, retail lending activities, and community development activities related to this national emergency.

The FDIC's FIL-19-2020 reports that the statement will be effective through the six-month period after the national emergency declaration is lifted, unless extended by the agencies.

03/20/2020

OCC announces enforcement actions

The OCC has released a list of enforcement actions recently taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations.

  • A civil money penalty of $50,000 was imposed on Michael S. Fontaine, former chief operational risk officer of U.S. Bank, N.A., Cincinatti, Ohio. This penalty is in addition to the previously reported $450,000 penalty imposed by FinCEN. The Comptroller found that Fontaine failed to take action to address inadequate staffing in the bank's BSA/AML program, allowing them to remain deficient for at least five years; and allowing the bank to implement alert suppression techniques to maintain suspicious activity alert volumes at a level commensurate with those inadequate staffing levels.
  • A formal agreement with Mutual Savings Bank, Hartsville South Carolina, to address concerns relating to board and management oversight, credit oversight and administration, internal controls, internal audit, and liquidity risk management.
  • Removal/prohibition orders were issued to:
    • a former teller at Bank of America, N.A., Charlotte, North Carolina (misappropriation of funds for her own use);
    • a former employee of Bank of America, N. A., Charlotte, North Carolina (misappropriation of at least $29,500 from bank customers for his own use);
    • a former service manager of Wells Fargo Bank, N.A. Sioux Falls, South Dakota (misappropriation of approximately $9,000 from her teller drawer); and
    • a former regional banking private banker at Wells Fargo Bank, N.A., Sioux Falls, South Dakota, who opened an account on behalf of a customer without authorization or knowledge of the customer and designated himself as sole owner and signer for the account. He collected funds as charitable contributions, deposited the funds into the account, and made repeated unauthorized transfers to his personal account.

03/20/2020

Facilitators of Iran petroleum sales targeted

A Treasury press release reports that OFAC has targeted five United Arab Emirates (UAE)-based companies that facilitate the Iranian regime’s petroleum and petrochemical sales. In 2019, these five companies collectively purchased hundreds of thousands of metric tons of petroleum products from the National Iranian Oil Company (NIOC). For identification information, see BankersOnline's OFAC Update.

03/19/2020

OFAC actions on Wednesday

On Wednesday, March 18, OFAC designated four individuals and nine entities under its Counter terrorism and Iran-related sanctions programs.

See BankersOnline's OFAC Update for the names and identifying information for the designated individuals and entities.

03/18/2020

Comments requested on Industrial Bank proposed rule

The FDIC is seeking comment on a proposed rule that would require certain conditions and commitments for approval or non-objection to certain filings involving an industrial bank or industrial loan company (ILC) whose parent company is not subject to consolidated supervision by the Federal Reserve Board. The proposed rule would apply to deposit insurance, change in bank control, and merger filings that involve industrial banks.

The proposal would require a covered parent company to enter into written agreements with the FDIC and the industrial bank to: address the company's relationship with the industrial bank; require capital and liquidity support from the parent to the industrial bank; and establish appropriate recordkeeping and reporting requirements. The proposed rule would codify the FDIC's current supervisory processes and policies with respect to covered industrial banks and ensure the safe and sound operation of these institutions as well as provide the necessary transparency regarding the FDIC's supervisory practices.

A Fact Sheet and statements from Chairman McWilliams and Board Member Gruenberg were also posted. Comments will be accepted for 60 days following Federal Register publication.

03/18/2020

Regulator actions to support household lending

The Fed, FDIC, and OCC have issued a joint press release announcing the following two actions to support the U.S. economy and allow banks to continue lending to households and businesses:

  • A statement encouraging banks to use their resources to support households and businesses; and
  • A technical change to phase in gradually, as intended, the automatic distribution restrictions if a firm's capital levels decline.

The technical rule will be effective upon publication. Issued as an interim final rule, it will have a 45-day comment period. UPDATE: Published at 85 FR 15909 on 3/20/20, with a comment period ending 5/4/20.

03/18/2020

Fed issues Regulatory Capital/Stress Test Rules

The Federal Reserve Board has published [85 FR 15576] a final rule that simplifies the Board's capital framework while preserving strong capital requirements for large firms. The final rule would integrate the Board's regulatory capital rule (capital rule) with the Comprehensive Capital Analysis and Review (CCAR), as implemented through the Board's capital plan rule (capital plan rule). The final rule makes amendments to the capital rule, capital plan rule, stress test rules, and Stress Testing Policy Statement. Under the final rule, the Board will use the results of its supervisory stress test to establish the size of a firm's stress capital buffer requirement, which replaces the static 2.5 percent of risk-weighted assets component of a firm's capital conservation buffer requirement.

The rule, which amends Regulations Q, Y and YY, becomes effective May 18, 2020.

03/18/2020

OFAC actions on March 17

On Tuesday, OFAC added one individual to its Specially Designated Nationals List under Syria-related Executive Order 13894, and removed a number of listings from that list, four of which were also removed from OFAC's Foreign Sanctions Evaders List. The individuals and entities affected are identified in BankersOnline's OFAC Update..

03/17/2020

Fed revises internal appeals and ombudsman policies

The Board of Governors of the Federal Reserve System has published [85 FR 15175] a final policy revising its internal appeals process for institutions wishing to appeal an adverse material supervisory determination and its policy regarding the Ombudsman for the Federal Reserve System. The final appeals process will apply to all material supervisory determination appeals initiated after the effective date, which is April 1, 2020.

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