Top Story Compliance Related

The Bureau has announced the launch of a research pilot in collaboration with Credit Karma to improve understanding of consumer financial well-being. The new research pilot builds on work the Bureau has done previously. This project is designed to help the CFPB to better understand how consumer financial well-being relates to consumers’ use of financial information and educational tools.

The Consumer Financial Protection Bureau announced Monday it has taken action against the National Collegiate Student Loan Trusts and their debt collector, Transworld Systems, Inc., for illegal student loan debt collection lawsuits. The Bureau said consumers were sued for private student loan debt that the companies couldn’t prove was owed or was too old to sue over. These lawsuits relied on the filing of false or misleading legal documents. The proposed judgment requires an independent audit of all 800,000 student loans in the National Collegiate Student Loan Trusts’ portfolio. It prohibits the National Collegiate Student Loan Trusts, and any company they hire, from attempting to collect, reporting negative credit information, or filing lawsuits on any loan the audit shows is unverified or invalid. In addition, it requires the National Collegiate Student Loan Trusts to pay at least $19.1 million, which includes initial redress to harmed consumers, relinquished funds to the Treasury, and a civil money penalty. Under a separate consent order, Transworld Systems, Inc. is ordered to pay a $2.5 million civil money penalty.

• Complaint against National Collegiate Student Loan Trusts
• Proposed final judgment against National Collegiate Student Loan Trusts
• Consent order against Transworld Systems, Inc.

OFAC has issued an invitation to attend its 2017 Fall Symposium to be held at the Walter E. Washington Convention Center in Washington, DC on Wednesday, November 1, 2017. OFAC has provided an information and registration page.

The OCC released on Friday new enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. A civil money penalty was issued against a former Georgia bank director. A civil money penalty of $183,920 was issued against a Cincinnati, Ohio, bank for violations of flood insurance requirements. Also included was a personal cease and desist order issued to the president of mortgage banking of an Arkansas bank, whom the OCC found to have participated in the origination and sale on the secondary market of residential mortgage loans to family members of an executive officer based on false income and employment information, and to have participated in the origination of his own residential mortgage loans with the bank.

The SEC has charged the investment services subsidiary of SunTrust Banks with collecting more than $1.1 million in avoidable fees from clients by improperly recommending more expensive share classes of various mutual funds when cheaper shares of the same funds were available. SunTrust Investment Services has agreed to pay a penalty of more than $1.1 million to settle the charges. SunTrust separately began refunding the overcharged fees plus interest to affected clients after the SEC started its investigation. SEC examiners cited the practice during a compliance review of the firm in mid-2015. More than 4,500 accounts were affected. According to an Order issued by the SEC, the Atlanta-based firm breached its fiduciary duty to act in clients’ best interests by recommending and purchasing costlier mutual fund share classes that charge a type of marketing and distribution fee known as 12b-1 fees. Investors were not informed that they were eligible for less costly share class options that did not charge 12b-1 fees. The avoidable fees flowed back to SunTrust in the form of higher commissions from the funds.

OFAC has announced it has designated 11 entities and individuals for engaging in support of designated Iranian actors or malicious cyber-enabled activity. The persons sanctioned in today’s actions include one entity engaging in activities in support of Iran’s Islamic Revolutionary Guard Corps (IRGC) ballistic missile program; two Ukraine-based entities providing support to designated airlines, including one affiliated with the IRGC-Qods Force (IRGC-QF); and two Iran-based networks responsible for malicious cyber-enabled attacks against the U.S. financial system.

OFAC also announced it has designated four Mexican entities and three Mexican individuals linked to the Cartel de Jalisco Nueva Generacion (CJNG), the Los Cuinis Drug Trafficking Organization (Los Cuinis DTO), the Los Cuinis DTO leader Abigael Gonzalez Valencia, or their associates as Specially Designated Narcotics Traffickers (SDNTs) pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act).

All property and interests in property of those designated subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. In addition, foreign financial institutions that facilitate significant transactions for, or persons that provide material or certain other support to, the entities and individuals designated today risk exposure to sanctions that could sever their access to the U.S. financial system or block their property and interests in property under U.S. jurisdiction.

For identity information, see our OFAC Update.

FinCEN has posted a notice that Hurricane Irma victims in affected areas of the U.S. Virgin Islands, Puerto Rico, and Florida have until January 31, 2018, to file their Report of Foreign Bank and Financial Accounts (FBAR) report for the 2016 calendar year. The FBAR for calendar year 2016 would otherwise be due October 15, 2017.

The OCC will host two workshops in San Diego on October 24 and 25 for directors of national community banks and federal savings associations supervised by the agency.

• The Compliance Risk workshop on October 24 will focus on the critical elements of an effective compliance risk management program, and on major compliance risks and critical regulations. Topics of discussion include the Bank Secrecy Act, Flood Disaster Protection Act, Fair Lending, Home Mortgage Disclosure Act, Community Reinvestment Act, and other compliance areas of interest.
• The Operational Risk workshop on October 25 will focus on the key components of operational risk—people, processes, and systems— and on governance, third-party risk, vendor management, and cybersecurity.

The Federal Reserve, FDIC, and OCC have announced a joint notice of proposed rulemaking to amend their respective Community Reinvestment Act (CRA) regulations primarily to conform to changes made by the Consumer Financial Protection Bureau (CFPB) to Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). In particular, the agencies are proposing to amend their CRA regulations to revise the definitions of "home mortgage loan" and "consumer loan," as well as the public file content requirements. These revisions would maintain consistency between the CRA regulations and the recent changes to Regulation C, which generally become effective on January 1, 2018. Comments on the proposal will be accepted for 30 days after publication in the Federal Register.

UPDATE: Published in the Federal Register on September 20, 2017, with comments due by October 27, 2017.

The CFPB has announced that recent supervisory actions have resulted in $14 million in relief to more than 104,000 harmed consumers from January through June 2017. Findings in the Bureau's Summer 2017 Supervisory Highlights report include that some banks misled consumers about checking account fees or overdraft coverage, and some credit card companies deceived consumers about pay-by-phone fees. The report also found some auto lenders had wrongly repossessed consumers’ vehicles, and some debt collectors improperly communicated with consumers about debts. CFPB’s examiners also found some companies did not follow the Know Before You Owe mortgage rules and some servicers failed to follow steps required by the Bureau’s mortgage servicing rule to work with borrowers trying to avoid foreclosure.