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Top Story Compliance Related

06/23/2021

ICO Issuer charged by SEC

The Securities and Exchange Commission has announced settled charges against Loci Inc. and its CEO John Wise for making materially false and misleading statements in connection with an unregistered offer and sale of digital asset securities in an Initial Coin Offering (ICO).

According to the SEC's order

  • Loci provided an intellectual property search service for inventors and others users through its software platform called InnVenn.
  • From August 2017 through January 2018, Loci and Wise raised $7.6 million from investors by offering and selling digital tokens called “LOCIcoin.”
  • In promoting the ICO, Loci and Wise made numerous materially false statements to investors and potential investors, including false statements concerning the company’s revenues, number of employees, and InnVenn’s user base.
  • Wise misused $38,163 in investor proceeds to pay his personal expenses.
  • Although LOCIcoins constituted securities, Loci’s offering was not registered with the SEC and no exemption from registration applied.

The SEC’s order imposes a $7.6 million civil penalty against Loci, and an officer and director bar as to Wise. Loci and Wise must destroy their remaining tokens, request the removal of the tokens from trading platforms, publish the SEC's order on Loci's social media channels, and refrain from participating in future digital asset securities offerings.

06/22/2021

June 2021 FATF plenary

The Financial Action Task Force has announced that delegates representing 205 members of the Global Network and observer organizations including the International Monetary Fund, the United Nations and the Egmont Group of Financial Intelligence Units will take part in the virtual meeting of the FATF Plenary this week. During five days, they will discuss key issues to strengthen global action against the financial flows that fuel crime and terrorism.

Delegates will discuss the assessments of Japan and South Africa’s measures to combat money laundering and terrorist financing. They will hear the progress made by some jurisdictions identified as presenting a risk to the financial system.

The FATF will finalize key reports, including on money laundering and environmental crime, ethnically and racially motivated terrorist financing and two reports that explore the opportunities that technology can offer to improve anti-money laundering and counter-terrorist financing efforts. The FATF will also finalize its second 12-month review of the implementation of revised FATF standards for virtual assets and virtual asset service providers, and guidance on proliferation financing risk assessment and mitigation. The outcomes of the FATF Plenary will be published on Friday, June 25, at the close of the meeting.

06/22/2021

OFAC sanctions Belarusian officials and entities

Yesterday, OFAC designated 16 individuals and five entities pursuant to Executive Order 13405 in response to the Lukashenka regime’s escalating violence and repression in Belarus, including its reckless forced diversion of a commercial Ryanair flight and arrest of journalist Raman Pratasevich and his companion, Sofia Sapega. The United States was joined in this action by Canada, the European Union, and the United Kingdom.

For identification information on the individuals and entities designated by OFAC yesterday, and links to a Belarus-related General License and FAQs, see the June 21, 2021, BankersOnline OFAC Update.

06/22/2021

Updates to FFIEC BSA/AML Exam Manual

The Federal Financial Institutions Examination Council (FFIEC) has released updates to four sections of the BSA/AML Examination Manual:

The FFIEC's press release indicates the updates should not be interpreted as new instructions or increased focus on certain areas; instead, they offer further transparency into the examination process and support risk-focused examination work.

The Manual provides instructions to examiners for assessing the adequacy of a bank’s or credit union’s BSA/AML compliance program and its compliance with BSA regulatory requirements. The Manual itself does not establish requirements for banks; such requirements are found in statutes and regulations.

06/21/2021

CFPB statement on Juneteenth holiday and mortgage closings

On Friday, CFPB Acting Director Dave Uejio issued the following statement:

“President Biden’s signing of the Juneteenth National Independence Day Act into law yesterday afternoon is a cause for celebration. Juneteenth is a moment for us to commemorate the emancipation of those enslaved. I am proud that we as a country are taking concrete steps to recognize and heal from the legacy of slavery, even as I recognize that there is much more work to do.

“The CFPB, along with the other Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) regulators, is aware of concerns regarding implementation of the new Juneteenth Federal holiday, particularly as it relates to mortgage lender compliance with the Truth in Lending Act and TILA-RESPA Integrated Disclosure (TRID) timing requirements. The CFPB recognizes that some lenders did not have sufficient time after the Federal holiday declaration to consider whether and how to adjust closing timelines. The CFPB understands that some lenders may delay closings to accommodate the reissuance of disclosures adjusted for the new Federal holiday. The CFPB notes that the TILA and TRID requirements generally protect creditors from liability for bona fide errors and permit redisclosure after closing to correct errors. Any guidance ultimately issued by the CFPB would take into account the limited implementation period before the holiday and would be issued after consultation with the other FIRREA regulators and the Conference of State Bank Supervisors (CSBS) to ensure consistency of interpretation for all regulated entities.”

06/18/2021

2020 mortgage lending data available

The FFIEC has announced the availability of data on 2020 mortgage lending transactions at 4,475 U.S. financial institutions reported under the Home Mortgage Disclosure Act (HMDA). Covered institutions include banks, savings associations, credit unions, and mortgage companies. The FFIEC released yesterday several data products to serve a variety of data users —

06/18/2021

OCC releases enforcement actions

The OCC has released a list of recent enforcement actions taken against OCC-supervised financial institutions and individuals now or formerly affiliated with such institutions.

  • The former president of a Naples, Texas, bank was issued, with his consent, an order prohibiting him from participating in the banking industry, and directing that he pay a civil money penalty of $18,000.
  • Removal and prohibition orders were issued to:
    • A former vice president of information technology of Bradford National Bank of Greenville, Greenville, Illinois, for misappropriating $70,658 of customer funds and making false entries in the bank's books to conceal those misappropriations.
    • A former operations manager of Bank of America, Charlotte, North Carolina, for using his position to make unauthorized purchases of over $420,000 and selling the purchased items, retaining the proceeds for his personal benefit.
    • A former teller of JPMorgan Chase Bank, N.A., Columbus, Ohio, for misappropriating $6,000 in cash from her cash drawer and force-balancing the drawer to conceal her actions, depositing some of the funds in her personal account.
  • A Notice of charges for prohibition was filed in the matter of a former customer service specialist of JPMorgan Chase Bank, N.A., in which the individual is charged with alleged involvement in a scheme to order and sell goods using stolen debit and credit card information.

06/18/2021

OFAC issues COVID-19 general licenses

OFAC has issued general licenses under the Syria, Venezuela, and Iran sanctions authorizing certain activities in response to the COVID-19 pandemic, and six new FAQs relating to the licenses. For more information, see the June 17, 2021, BankersOnline OFAC Update.

06/18/2021

Juneteenth National Independence Day

President Biden yesterday signed the Juneteenth National Independence Day Act commemorating Juneteenth (June 19) as a federal holiday. As June 19 falls on a Saturday this year, federal employees will observe this holiday today, June 18, 2021. Financial markets and Federal Reserve Financial Services will operate normally. FDIC, OCC and the Federal Reserve Board (Washington) offices will be closed today.

According to the FDIC, when determining their operating status today (June 18), FDIC-supervised institutions should comply with applicable requirements of their state chartering authority and consider the impact on customers.

IMPORTANT COMPLIANCE NOTE: The Juneteenth holiday was immediately added to those holidays listed in 5 U.S.C. § 6103(a) as a fixed-date holiday (like July 4, December 25, and others). Accordingly, tomorrow, June 19, 2021, is a federal public holiday listed in the "specific" definition of "business day" in Regulation Z that factors into compliance with the rescission period for certain mortgage loans and private education loans, as well as the timing of delivery of certain disclosures. This can affect loans currently scheduled for closing under the TRID rules, and will affect the count of days in the rescission period for loans closed today, if they are subject to the right of rescission under §§ 1026.15, 1026.23, or 1026.46. Whether it will affect the rescission period for loans closed earlier this week (before the signing of the law) is uncertain. Please note that this should not be considered a legal opinion.

06/17/2021

NY landlord charged by HUD

HUD has announced it has charged a landlord in Niagara Falls, New York, with violating the Fair Housing Act by denying a tenant’s reasonable accommodation request to keep an assistance animal and retaliating against the tenant by evicting her.

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