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Top Story Compliance Related

11/19/2020

Unchanged thresholds for Regs M and Z

The Consumer Financial Protection Bureau and the Board of Governors of the Federal Reserve System have announced that the dollar thresholds for exemptions from coverage in section 1013.2(e) of Regulation M (Consumer Leasing), section 226.3(b) of the Board's Regulation Z (Truth in Lending), and section 1026.3(b) of the Bureau's Regulation Z (Truth in Lending) will remain unchanged at $58,300 for calendar year 2021.

The BankersOnline pages for sections 1013.2 and 1026.3 of Bureau regulations M and Z have been updated.

11/18/2020

New Venezuela-related general license issued

OFAC has issued Venezuela-related General License 8G, "Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for the Limited Maintenance of Essential Operations in Venezuela or the Wind Down of Operations in Venezuela for Certain Entities."

OFAC also designated two individuals as Specially Designated Global Terrorists. See this BankersOnline OFAC Update for identity information.

11/17/2020

OCC updates licensing requirements

The OCC has released a final rule updating and clarifying licensing policies and procedures. The final rule makes various changes to the OCC’s Rules, Policies, and Procedures for Corporate Activities, (12 CFR part 5), including eliminating unnecessary requirements consistent with safe, sound, and fair operation of the federal banking system. It is part of the OCC’s continual effort to modernize its rules and reduce unnecessary regulatory burden.

The rule makes the following changes, among others:

  • Makes the definition of “well managed” consistent for all filing types.
  • Eliminates the filing requirement for FSAs that adopt without change the OCC’s model or optional bylaws.
  • Adds numerous provisions to 12 CFR 5.33 permitting national banks and FSAs to elect to follow the procedures applicable to state banks or state savings associations, respectively, for certain business combinations.
  • For operating subsidiaries:
    • Permits an eligible operating subsidiary of a qualifying national bank or FSA to engage in an activity that is substantively the same as a previously approved bank or FSA activity, respectively, by filing a notice with the OCC (national banks) or an application through expedited review (FSAs).
    • Removes the annual national bank operating subsidiary reporting requirement.
  • For non-controlling investments by a national bank and pass-through investments by an FSA:
    • With prior OCC approval, permits investments in enterprises that have not agreed to OCC supervision.
    • Provides an expedited review procedure for these investments under certain conditions.
    • Expands the investments eligible for notice.
    • Permits investments without a filing in enterprises conducting activities limited to those previously reported by the national bank or FSA in a previous non-controlling investment or pass-through investment filing.
  • Provides procedures for granting and revoking citizenship and residency waivers for national bank directors.
  • Permits national banks to request approval for a reduction in capital over more than four quarters.
  • Changes the definition of “troubled condition” for purposes of changes in directors and senior executive officers to align with OCC supervisory practices. The updated definition specifies that an enforcement action (a cease-and-desist order, consent order, or formal written agreement) must require the national bank or FSA to improve its financial condition for it to be considered in “troubled condition” solely as a result of the enforcement action.

Conforming changes to 12 CFR parts 3 and 7 are also made. The final rule is effective January 1, 2021, except for a change to paragraph 5.20(e)(2) relating to the OCC's taking into account a proposed insured national bank's or FSA's description of how it will meet its CRA objectives, which will be effective on publication of the final rule.

11/16/2020

Former Wells CEO and chairman charged by SEC

The SEC has charged former Wells Fargo & Company CEO and Chairman John G. Stumpf and former head of Wells Fargo’s Community Bank Carrie L. Tolstedt for their roles in allegedly misleading investors about the success of the Community Bank, Wells Fargo’s core business. The SEC’s filings include settled charges against Stumpf, who agreed to pay a $2.5 million penalty, and a litigated action alleging Tolstedt committed fraud.

According to the SEC’s complaint against Tolstedt, from mid-2014 through mid-2016, Tolstedt publicly described and endorsed Wells Fargo’s “cross-sell metric” as a means of measuring Wells Fargo’s financial success despite the fact that this metric was inflated by accounts and services that were unused, unneeded, or unauthorized. The complaint further alleges that Tolstedt signed misleading sub-certifications as to the accuracy of Wells Fargo’s public disclosures when she knew or was reckless in not knowing that statements in those disclosures regarding Wells Fargo’s cross-sell metric were materially false and misleading.

An SEC order against Stumpf finds that in 2015 and 2016 he signed and certified statements filed with the Commission, which he should have known were misleading, regarding both Wells Fargo’s Community Bank cross-sell strategy and its reported metric. According to the order, Stumpf failed to ensure the accuracy of his certifications after being put on notice that Wells Fargo was misleading the public about the cross-sell metric.

11/13/2020

FDIC amends branch application requirements

The FDIC has published [85 FR 72551] a final rule to amend its application requirements for the establishment and relocation of branches and offices so that such applications no longer require statements regarding the compliance of such proposals with the National Historic Preservation Act of 1966 and the National Environmental Policy Act of 1969. The final rule amends the FDIC's regulations to remove those requirements embedded in its branch application procedures, and rescinds related FDIC statements of policy, consistent with branch application procedures for national banks and insured state member banks supervised by the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System.

The amendments become effective December 14, 2020.

11/13/2020

Debt Collector pays $500,000 for reporting violations

The CFPB has announced a settlement with Afni, Inc.to address its violations in providing information to consumer reporting agencies. Afni is a non-bank Illinois-based debt collector that specializes in collecting debt on behalf of telecommunications companies and furnishes information to consumer reporting agencies about consumers’ credit. The consent order requires Afni to take certain steps to prevent future violations and imposes a $500,000 civil money penalty.

Details of Afni's violations and a link to the Bureau's consent order can be found in BankersOnline's penalty page, "Afni, Inc. pays $500K for FCRA violations."

11/13/2020

Bureau reports on accuracy of payment info received by CRAs

The Bureau has released its quarterly consumer trends report regarding the prevalence of actual payment information in consumer credit reporting. Key findings of the report include

  • Across the three most common installment loan types (auto loans, student loans, and mortgages), shares of credit accounts with actual payment amount information furnished have generally trended upward, and by March 2020, contained actual payment information in more than 90 percent of credit accounts.
  • Shares of revolving and credit card accounts with actual payment information furnished significantly declined over the same time period. The share of credit card accounts containing actual payment data peaked in the fourth quarter of 2013 at 88 percent and has since declined by more than half to 40 percent. Compared to actual payment, other data variables in a consumer’s consumer report, such as balance amount and credit limit, are consistently furnished across loan types.
  • Furnishing actual payment information appears to be an either/or proposition for credit card issuers. Issuers either furnish actual payment information for nearly all accounts or not at all
  • In 2013, up to 70 percent of the largest credit card issuers furnished actual payment data for nearly all accounts. As of 2020, only about half of issuers with recent payments furnish these data.

11/12/2020

OFAC sanctions suppliers for Iranian military firm

OFAC has designated a network of six companies and four individuals that facilitated the procurement of sensitive goods, including U.S.-origin electronic components, for Iran Communication Industries (ICI), an Iranian military firm designated by the United States in 2008 and by the European Union in 2010 for being owned or controlled by Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL), the overall manager and coordinator of Iran’s ballistic missile program.

This action was taken in accordance with Executive Order 13382, an authority aimed at freezing the assets of proliferators of weapons of mass destruction and their supporters. Concurrent with Treasury’s designations, the U.S. Attorney’s Office for the District of Columbia is filing charges by criminal complaint against two of the entities (DES International Co. and Soltech Industry Co., Ltd.) and one of the individuals (Chin Hua Huang) designated today.

Identification information for the designated individuals and entities can be found in BankersOnline's OFAC Update.

11/10/2020

OCC: COVID-19 effects on federal banking system

The OCC has posted its Semiannual Risk Perspective for Fall 2020, reporting the key issues facing the federal banking system and the effects of the COVID-19 pandemic on the federal banking industry.

Although banks are still in strong financial condition, profitability is stressed due to low interest rates and increasing levels of problem loans. The OCC reported credit, strategic, operational, and compliance risks, among the key risk themes in the report:

  • Credit risk is increasing as the economic downturn impacts customer ability to service debts.
  • Strategic risk is an emerging issue due to the historically low rate environment, potential credit stress and their effect on bank profitability.
  • Operational risk is elevated as financial institutions respond to altered work environments and an evolving and complex operating environment. Cybersecurity threats contribute as a key driver of the heightened operational risk environment.
  • Compliance risk is elevated due to a combination of altered work environments, and the requirement to quickly implement federal, state, and proprietary programs designed to support businesses and consumers.

The report also highlights emerging trends in payment products and services as a special topic in emerging risks.

11/10/2020

Sanctions imposed on petroleum network, Syrian officials and entities

Treasury has announced the OFAC has taken action against Syrian military officials, members of the Syrian Parliament, Government of Syria entities, and Syrian and Lebanese persons attempting to revive Syria’s deteriorating petroleum industry. Seven individuals and ten entities were designated.

Treasury's press release said the State Department also took action against two Syrian persons in accordance with Section 2 of Executive Order 13894, “Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria.”

More information on the individuals and entities targeted in these actions, see BankersOnline's November 9, 2020, OFAC Update.

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