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Top Story Compliance Related

10/05/2018

Bureau settles with Bluestem companies

The Bureau of Consumer Financial Protection has announced that the Bureau and Bluestem Brands, Inc.; Bluestem Enterprises, Inc.; and Bluestem Sales, Inc. (the Bluestem companies) have filed an administrative consent order resolving the Bureau’s allegations that after consumers made payments to the Bluestem companies on debts that the companies had already sold, the Bluestem companies substantially delayed sending those payments to the third-party debt buyers.

The Bureau found that the Bluestem companies violated the Consumer Financial Protection Act of 2010 by unfairly delaying the transfer of payments that customers had made to the Bluestem companies on charged-off accounts to the third-party debt buyers who had purchased those accounts. The Bureau found that between 2013 and 2016, Bluestem delayed forwarding payments for more than 31 days in 18,000 instances; in 3,500 of those instances, Bluestem delayed forwarding payments for more than a year. These delays likely subjected customers to misleading collection activity, including collection activity on accounts that they had completely paid off.

The Bluestem companies are now required to improve their processes to timely identify and forward customer payments on accounts sold to third parties, prevent consumers from making payments by phone or on the companies’ websites on sold accounts, and notify customers who do make payments to the Bluestem companies on sold accounts that their accounts have been sold. The companies will also pay a civil money penalty of $200,000.

10/04/2018

Fed update on expanded exam cycles

The Federal Reserve Board has issued Supervision and Regulation Letter SR-18-7 with an update on recent changes to the criteria for state member banks (SMB) and U.S. branches and agencies of foreign banks to be eligible for an expanded examination cycle of 18 months. The expanded cycles will apply to certain state member banks and U.S. branches and agencies of foreign banks with less than $3 billion in total assets meeting the criteria described in the letter.

10/04/2018

Regulators support BSA/AML resource sharing

The federal depository institutions regulators and FinCEN yesterday issued a joint statement to address instances in which certain banks and credit unions may decide to enter into collaborative arrangements to share resources to manage their Bank Secrecy Act (BSA) and anti-money laundering (AML) obligations more efficiently and effectively. Collaborative arrangements as described in the statement generally are most suitable for financial institutions with a community focus, less complex operations, and lower-risk profiles for money laundering or terrorist financing. The statement, which was issued by the Fed, the FDIC, FinCEN, the NCUA, and the OCC, explains how these institutions can share BSA/AML resources in order to better protect against illicit finance risks, which can in turn also reduce costs. The Fed also issued SR-18-8 about the joint statement.

10/04/2018

SEC updates and simplifies disclosure rules

The Securities and Exchange Commission has published a final rule [83 FR 50148] amending certain of its disclosure requirements that have become redundant, duplicative, overlapping, outdated, or superseded, in light of other Commission disclosure requirements, U.S. Generally Accepted Accounting Principles, or changes in the information environment. The amendments are intended to facilitate the disclosure of information to investors and simplify compliance without significantly altering the total mix of information provided to investors. The amendments affect Commission regulations at 17 CFR parts 210, 229, 230, 239, 240, 249, and 274, and will be effective November 5, 2018.

10/03/2018

OFAC sanctions parties associated with Yakuza syndicate

the U.S. Department of the Treasury has reported that its Office of Foreign Assets Control took action Tuesday against two companies and four individuals in Japan associated with the Yamaguchi-gumi, the largest and most prominent Japanese Yakuza syndicate. The companies and individuals were designated under Executive Order 13581, which targets significant transnational criminal organizations (TCOs) and their supporters. OFAC's action was designed to protect the U.S. financial system from the malign influence of TCOs and to expose the companies and individuals who are supporting them or acting on their behalf.

For identity information on the designated companies and individuals, and the names of two individuals removed from Kingpin Act sanctions, see our OFAC Update.

10/03/2018

Proposed Call Report revisions

FDIC FIL-54-2018, issued yesterday, reports that, in response to changes in the accounting for credit losses under the Financial Accounting Standards Board's Accounting Standards Update ASU 2016-13, the banking agencies, under the auspices of the FFIEC, are requesting comment on proposed revisions to the Call Report and certain other FFIEC reports. Other changes addressed in the proposal, which relate to the reporting of high volatility commercial real estate exposures and reciprocal deposits, result from the Economic Growth, Regulatory Relief, and Consumer Protection Act EGRRCPA.

The proposed changes are also explained in FIL-51-2018, issued on behalf of the FFIEC banking agencies, and were published at 83 FR 49160 in the Federal Register on September 28. Institutions are encouraged to comment on the proposal by November 27, 2018.

10/03/2018

Comptroller testifies on EGRRCPA implementation progress

Comptroller of the Currency Joseph M. Otting made an oral statement and offered written testimony yesterday on the implementation of the Economic Growth, Regulatory Reform, and Consumer Protection Act of 2018 before the Senate Committee on Banking, Housing, and Urban Affairs.

Comptroller Otting's testimony highlighted agency and interagency progress toward implementing the law. That progress includes OCC release of a notice of proposed rulemaking required to grant federal savings associations greater flexibilities afforded by the law and approval of an NPR to increase the threshold for required recovery planning to banks with total consolidated assets of $50 billion or more. Otting also discussed interagency actions to implement provisions of the law that exempt smaller banks from the Volcker Rule, require certain municipal securities to be treated as high quality liquid assets, expand eligibility for the 18-month examination cycle, modify the agencies’ capital rules for high volatility commercial real estate exposures, and amend the agencies' swap margin rule.

10/03/2018

OCC CRA evaluations released

The OCC has released 30 CRA performance evaluations that became public in September for national banks, federal savings associations and insured federal branches of foreign banks. Of the 30 evaluations listed, 23 are rated satisfactory, one is rated needs to improve, one is rated substantial noncompliance and five are rated outstanding.

The outstanding ratings were received by:

The rating of substantial noncompliance was received by a small bank in a suburb of Chicago that also received a substantial noncompliance rating in February 2015. The bank's loans were 13.8 percent of total assets as of December 31, 2017.

10/02/2018

FDIC requests feedback on improving communications

The FDIC is seeking comments on how the agency can maximize efficiency and minimize burden when communicating information to insured depository institutions, consumers, and others, about laws, rules, and related matters. The request for information (RFI) includes, for example, a request for ways to improve the FDIC's process for disseminating information through Financial Institution Letters (FILs), which are about new regulations, policies, publications and other matters of interest to banks or savings associations. Other questions asked in the RFI include:

  • How effective are the FDIC's current forms of communication? Are there other methods of communication the FDIC should consider?
  • Is FDIC information readily available and easy to find? If not, how can the FDIC make it easier to receive and find information?
  • How can the FDIC improve the FDIC.gov website?
  • Which types of communication are best suited for informing insured depository institutions about new policies, laws, and regulations as well as educational materials, news and other updates?

Comments will be accepted for 60 days following publication in the Federal Register.

UPDATE: Published at 83 FR 50369 on 10/5/18, with comment period ending 12/4/18.

10/02/2018

OCC updates PCA guidelines

OCC Bulletin 2018-33, issued September 28, sets forth the guidelines and procedures by which the Office of the Comptroller of the Currency (OCC) implements its authority under section 38 of the Federal Deposit Insurance Act, entitled “Prompt Corrective Action.” The bulletin rescinds Banking Circular 268, “Prompt Corrective Action,” and OCC Bulletin 1994-43, “Prompt Corrective Action – Capital Restoration Plans Guidelines.”

In a note to community banks, the Bulletin indicates that the OCC has not yet established the simplified leverage ratio capital framework required by the Economic Growth, Regulatory Relief, and Consumer Protection Act for qualified community banks for prompt corrective action purposes.

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