Top Story Compliance Related

The Federal Reserve Board encouraged consumers to closely monitor their financial accounts for unauthorized activity and know where to find help if they spot unauthorized activity. Signs of potential problems may include a notice, bill, or debit card for an account that was not activated or authorized, as well as a notice of fees for unsolicited products or services tied to an existing account. The Federal Reserve maintains the Federal Reserve Consumer Help (FRCH) website, which offers an online complaint form and information on filing complaints by fax and phone for consumers.

The Federal Reserve Board has announced its adoption of a a final rule to strengthen the ability of government authorities to resolve in an orderly way the largest domestic and foreign banks operating in the United States without any support from taxpayer-provided capital. These institutions will be required to meet a new long-term debt requirement and a new "total loss-absorbing capacity" (TLAC) requirement. The final rule applies to domestic firms identified by the Board as global systemically important banks (GSIBs) and to the U.S. operations of foreign GSIBs. The final rule also will require the parent holding company of a domestic GSIB to avoid entering into certain financial arrangements that would create obstacles to an orderly resolution. These "clean holding company" requirements will include bans on issuance of short-term debt to external investors and on entering into derivatives and certain other types of financial contracts with external counterparties. Board Chair Yellen and FDIC Chairman Gruenberg issued statements on the final rule.

The OCC has announced in Bulletin 2016-44 an update to the "Consigned and Other Customer Services" booklet of the Comptroller's Handbook. This booklet provides updated guidance to examiners assessing the risks associated with consigned items and other customer services. Consigned items include traveler’s checks, money orders, and U.S. commemorative coins. Other customer services include safe deposit boxes and messenger services.

The Office of the Comptroller of the Currency has released its December 2016 list of new enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. There were nine orders listed, all against individuals. An order issued to a former director of Landmark Community Bank, N.A., Isanti, Minnesota, is the fifth order issued to former directors of that bank in connection with the alleged diversion of bank capital while the bank remains under an enforcement order to maintain capital minimums. In each case, the director was ordered to make restitution to the bank, to pay a civil money penalty and was banned from the industry. The other eight orders included in the December list, each imposing a $5,000 civil money penalty, were issued to current directors of a Platteville, Wisconsin, bank in connection with late filings or erroneous filings of Call Reports.

The Financial Crimes Enforcement Network (FinCEN) has announced its assessment of a $500,000 civil money penalty against Bethex Federal Credit Union, Bronx, New York, for significant violations of anti-money laundering (AML) regulations. Bethex was liquidated by the NCUA in 2015 as insolvent with no prospects of returning to viability. FinCEN's assessment is a claim against any assets remaining after the completion of the liquidation process. In 2011, Bethex took on a lot of new business with money services businesses without revising its AML program to handle the additional business and the change in customer activity it entailed. As a result, it failed to detect and report significant volumes of suspicious activity, and when it was forced to file late SARs on that activity, the SARs were inadequately completed. For further information, see our Penalty page for this FinCEN action.

The CFPB has released its 2016 Student Banking Report, which raises new concerns about costly fees and risky features that can be attached to certain college-sponsored accounts. The Bureau’s analysis of roughly 500 marketing deals between schools and large banks found that many deals allow for risky features that can lead students to rack up hundreds of dollars in fees per year. The report also examines trends in the school-sponsored credit card market. The CFPB also issued a bulletin reminding colleges and universities they are required to publicly disclose marketing agreements with credit card companies.

FinCEN has announced that it hosted last week the third annual International Supervisors Forum (ISF). The ISF was established in 2013 by similar government regulatory agencies from the United States, Canada, the United Kingdom, Australia, and New Zealand to address issues pertaining to anti-money laundering and countering the financing of terrorism (AML/CFT) and other financial crimes, as well as strengthen domestic and international compliance and supervisory regimes.

The FDIC Board has approved a $2.18 billion operating budget for 2017, down 2.4 percent from 2016 and 46 percent lower than the peak in 2010 at the height of the financial crisis. The Board also approved an authorized staffing level of 6,363 positions for 2017, a 2.6 percent decrease from 2016 and 32 percent lower than the peak in 2011. Chairman Gruenberg said, “This is the seventh consecutive reduction in the FDIC's annual operating budget. These reductions are made possible by continuing steady improvement in the health of the U.S. banking industry. The FDIC remains focused on fulfilling its mission while prudently managing costs."

The OCC has announced the release of a third-party review of its efforts to enhance the agency’s supervision of large and midsize national banks and federal savings associations. The review assessed the OCC’s implementation of recommendations from the 2013 International Peer Review of the agency’s approach to supervising large and midsize institutions. The current assessment and the original 2013 review were conducted by senior regulators from Australia, Canada, and Singapore along with former staff of the International Monetary Fund.

A joint press release from the FDIC and Federal Reserve Board announced that Bank of America, Bank of New York Mellon, JP Morgan Chase, and State Street adequately remediated deficiencies in their 2015 resolution plans. The agencies also announced that Wells Fargo did not adequately remedy all of its deficiencies and will be subject to restrictions on certain activities until the deficiencies are remedied. Resolution plans, required by the Dodd-Frank Act and commonly known as "living wills," must describe the company's strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure of the company.