Top Story Compliance Related

The FDIC has published [89 FR 1917] a notice in today's Federal Register of inflation adjustments to maximum civil money penalties under the FDIC's purview. The adjusted maximum amounts of civil money penalties in the notice are applicable to penalties assessed after January 15, 2024, for conduct occurring on or after November 2, 2015.

Yesterday, the Securities and Exchange Commission reported charges against global software company SAP SE for violations of the Foreign Corrupt Practices Act (FCPA) arising out of bribery schemes in South Africa, Malawi, Kenya, Tanzania, Ghana, Indonesia, and Azerbaijan. The company agreed to monetary sanctions of nearly $100 million in disgorgement and prejudgment interest to settle the SEC’s charges.

The SEC’s order finds that SAP, whose American Depositary Shares are listed on the New York Stock Exchange, violated the FCPA by employing third-party intermediaries and consultants from at least December 2014 through January 2022 to pay bribes to government officials to obtain business with public sector customers in the seven countries. According to the SEC’s order, SAP inaccurately recorded the bribes as legitimate business expenses in its books and records, despite the fact that certain of the third-party intermediaries could not show that they provided the services for which they had been contracted. The SEC’s order finds that SAP failed to implement sufficient internal accounting controls over the third parties and lacked sufficient entity-level controls over its wholly owned subsidiaries.

In 2016, the SEC charged SAP with books and records and internal accounting controls violations in connection with a bribery scheme in Panama.

SAP consented to the SEC’s order finding that it violated the anti-bribery, recordkeeping, and internal accounting controls provisions of the Securities Exchange Act of 1934. SAP agreed to cease and desist from committing or causing any violations of these provisions and to pay disgorgement of $85 million plus prejudgment interest of more than $13.4 million, totaling more than $98 million, which will be offset by up to $59 million paid by SAP to the South African government in connection with its parallel investigations into the same conduct.

The Federal Reserve Board, FDIC, and OCC have issued an overview video on the final rule issued on October 24, 2023, to strengthen and modernize their regulations implementing the Community Reinvestment Act.

The nearly one-hour video on the regulators' YouTube channels provides an overview of the new CRA rule and its objectives. Additional topics in the recording include assessment areas, community development, evaluation framework, performance tests, ratings, data collection and reporting, and applicability dates.

The OCC will host a public hearing of the FFIEC Appraisal Subcommittee on appraisal bias on February 13, 2024, from 10:00 a.m. to 1:00 p.m. ET, at its headquarters, 400 7th Street SW, Washington, D.C.

The subcommittee panel will include a representative from each of the five Federal Financial Institutions Examination Council (FFIEC) regulatory agencies, the U.S. Department of Housing and Urban Development and the Federal Housing Finance Agency. Witnesses will include representatives from the Appraisal Foundation, state appraiser licensing and regulatory organizations, and active appraisers.

The meeting is open to the public, but in-person and virtual attendees must register to attend no later than February 9. Registration for in-person attendance may close sooner if maximum capacity is reached.

OCC Bulletin 2024-2, issued yesterday, announced the OCC's publication [89 FR 872] on January 8, 2024, of a notice to adjust the maximum amount of each civil money penalty (CMP) within the OCC's jurisdiction pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended. The adjusted maximum penalties are effective as of January 8, 2024, for violations occurring on or after November 2, 2015.

The NCUA published [89 FR 1441] a notice this morning to adjust the maximum amount of each CMP within its jurisdiction.

Yesterday, FinCEN released a Financial Trend Analysis (FTA), Identity-Related Suspicious Activity: 2021 Threads and Trends, on information in BSA Reports filed in 2021. FinCEN’s analysis found that approximately 1.6 million reports (42% of the reports filed that year) related to identity—indicating $212 billion in suspicious activity.

The report, which is part of what FinCEN has previously referred to as its Identity Project, explores how bad actors exploit identity-related processes involved in processing transactions as well as opening and accessing accounts. FinCEN identified over 14 typologies commonly indicated in identity-related BSA reports. The most frequently reported were fraud, false records, identity theft, third-party money laundering, and circumvention of verification standards. These top five typologies accounted for 88% of identity-related BSA reports and 74% of the total identity-related suspicious activity amount reported during calendar year 2021.

Trends found in the BSA reporting include:

• Although identity-related suspicious activity impacted all types of financial institutions, depository institutions filed the most identity-related BSA reports, around 54% of all identity-related filings.
• While most financial institutions in the identity-related BSA dataset reported impersonation as their top identity exploitation, money services businesses most often reported circumvention of verification.
• The report found that compromised credentials have a disproportionate financial impact as compared to other types of identity exploitation.

FinCEN’s FTAs highlight the value of information filed by financial institutions in accordance with the BSA. Additional reports on a variety of topics are located on FinCEN’s website.

The Federal Trade Commission has reported it has issued its biennial report to Congress on the National Do Not Call (DNC) Registry that shows the number of consumers who have placed their telephone numbers on the Registry over the past two years has reached more than 249 million.

The report also notes that the FTC has received more than two million Do Not Call complaints in fiscal year (FY) 2023 with people overwhelmingly reporting these violations came via robocalls, as opposed to live telemarketing.

Imposter scam, medical needs and prescription scam calls led the list of commonly reported call topics in FY 2023, followed by calls related to reducing debt and energy, solar, and utilities. In response to the consistently high number of complaints from the public about impersonator scams, the FTC recently continued its rulemaking initiative to combat business and government impersonation fraud. A data spotlight issued in June 2023 found that bogus bank fraud warnings were the most common form of text message scam reported to the agency, and that many of the most common text scams impersonate well-known businesses.

On Monday, Secretary of the Treasury Janet L. Yellen offered remarks on the current status of the Beneficial Ownership Information Reporting initiative. She noted that in just the first week of reporting, over 100,000 filings have been made. She said, "We’re also making reporting as easy as possible for the small businesses at the heart of the American economy so that the benefits for small businesses, and for all of us, will far outweigh what should be a relatively straightforward effort to comply. The reporting process is simple, quick, and free. A small business shouldn’t need a certified public accountant or lawyer. To help companies understand the requirements, we’re hard at work getting the word out. We’re coordinating with federal and state government offices and partnering with the Small Business Administration to hold virtual and in-person events. We’ve published guidance in multiple languages, including specifically for small businesses. We have a Contact Center that is live and taking questions."

On other topics, Secretary Yellen said, "In line with the U.S. Strategy on Countering Corruption, we are ... pursuing increased transparency in our real estate and investment adviser sectors. We aim to issue a notice of proposed rulemaking early this year that will be an important step toward bringing greater transparency to residential real estate transactions, and we are considering next steps to address risks associated with commercial real estate."

The Consumer Financial Protection Bureau has announced its adoption of a final rule to adjust for inflation the maximum amount of each civil penalty within the CFPB’s jurisdiction. The adjustments are required by the Federal Civil Penalties Inflation Adjustment Act of 1990 (Inflation Adjustment Act), as amended.

The changes are effective January 15, 2024. The inflation multiplier used this year was 1.03241. The Bureau's notice has been published at 89 FR 1787 in the January 11, 2023, Federal Register.

The Federal Reserve Banks made public eight Community Reinvestment Act compliance evaluations in December 2023. Six of those evaluations were rated "Satisfactory." We congratulate two banks that earned ratings of "Outstanding" on their evaluations (links are to the public portion of the evaluations):

• Dokotah Bank, Aberdeen, South Dakota
• Heartland Bank, Whitehall, Ohio