Top Story Compliance Related

The OCC has released its schedule of Community Reinvestment Act (CRA) evaluations to be conducted in the third quarter of 2016.

The OCC will host two workshops in Sioux Falls, South Dakota, at the Sheraton Sioux Falls & Convention Center, July 19-20, for directors of national community banks and federal savings associations. The Compliance Risk workshop on July 19 combines lectures, discussion, and exercises on the critical elements of an effective compliance risk management program. Topics of discussion include the Bank Secrecy Act, Community Reinvestment Act, and the Truth-in-Lending (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA) Integrated Disclosures Rule, also known as TRID. The Operational Risk workshop on July 20 focuses on the key components of operational risk—people, processes and systems. The workshop also covers governance, third-party risk, vendor management, and cybersecurity.

The Treasury Department is calling for Large Position Reports from those entities whose positions in the 1-5/8% Treasury Notes of May 2026 equaled or exceeded $2.3 billion as of close of business Monday, May 16, 2016. This call for reports is a test. Entities with positions in this note equal to or exceeding the $2.3 billion threshold must report these positions to the Federal Reserve Bank of New York. Reports must be received by the Government Securities Dealer Statistics Unit of the Federal Reserve Bank of New York before 5:00 PM ET on June 8, 2016, and must include the required position and administrative information.

HUD has announced that an Administrative Law Judge has ruled against a northern Minnesota landlord charged with refusing to rent an apartment to prospective tenants because of their disabilities. Landlord Deane Woodard of Detroit Lakes, Minnesota, was ordered to pay $27,000 to one woman, a $16,000 civil penalty, and $1,000 in other court sanctions.

The Consumer Financial Protection Bureau announced today its anticipated proposed rule [PDF, 1334 pages] that would require lenders who offer covered loan products to determine whether borrowers can afford the full amount of each payment when it is due without having to reborrow within the next month and limit lenders' ability to roll such debt over. Covered loans would include payday loans, single-payment auto title loans and certain high-cost installment loans (those with an "all-in" APR over 36 percent to be repaid by creditor access to the consumer's deposit account or paycheck or secured by a vehicle title).

Under the proposal, loans of $500 or less could be offered with a "principal reduction feature" designed to keep consumers from being trapped in debt. Lenders could also offer two longer-term loan options with more flexible underwriting by adhering to certain limits, such as loans generally meeting the parameters of the NCUA's "payday alternative loans" program or loans payable in equal installments with terms not over two years with an all-in cost of 36 percent or less, plus a reasonable origination fee.

Another provision of the proposal would require a notice in advance of a lender's attempt to collect a payment on a covered loan from the consumer's deposit account, and cut off a lender's authorization for such account access after two unsuccessful attempts, unless the lender obtains a new authorization. Comments on the proposed rule will be accepted through September 14, 2016.

• Fact sheet on proposed rule
• Proposed model disclosure forms

The Bureau also announced an inquiry into other potentially high-risk loan products and practices that are not specifically covered by the proposed rule. A Request for Information was issued with a comment deadline of October 14, 2016. Also released was the text of CFPB Director Cordray's prepared remarks introducing the proposal and inquiry at the Field Hearing on Small-Dollar Lending, to be held today by the Bureau in Kansas City, Missouri.

Update: The September 14, 2016, comment deadline for the proposed rule has been added. The October 14 deadline is for the inquiry into other potentially high-risk loan products and practices.

The U. S. Treasury Department has announced a Notice of Finding that the Democratic People’s Republic of Korea (North Korea) is a jurisdiction of “primary money laundering concern” under Section 311 of the USA PATRIOT Act. Treasury, through its Financial Crimes Enforcement Network (FinCEN), also released a notice of proposed rulemaking (NPRM) recommending a special measure to further isolate North Korea from the international financial system by prohibiting covered U.S. financial institutions from opening or maintaining correspondent accounts with North Korean financial institutions, and prohibiting the use of U.S. correspondent accounts to process transactions for North Korean financial institutions.The Notice of Finding was published by FinCEN in today's Federal Register.

While current U.S. law already generally prohibits U.S. financial institutions from engaging in both direct and indirect transactions with North Korean financial institutions, this NPRM, if finalized, would require U.S. financial institutions to implement additional due diligence measures in order to prevent North Korean banking institutions from gaining improper indirect access to U.S. correspondent accounts. While North Korea’s financial institutions do not maintain correspondent accounts with U.S. financial institutions, North Korean financial institutions frequently conduct transactions on behalf of the North Korean government and state-controlled corporations. The NPRM, if finalized, would prohibit the use of third-country banks’ U.S. correspondent accounts to process transactions for North Korean financial institutions.

6/3/16 Update: The Special Measure NPRM was published in the 6/3/16 Federal Register, at 81 FR 35665, with a comment deadline of August 2, 2016.

The FDIC has issued FIL-36-2016 on the Summary of Deposits (SOD), the annual survey of branch office deposits as of June 30 for all FDIC-insured institutions, including insured U.S. branches of foreign banks. All institutions with branch offices are required to submit the survey; institutions with only a main office are exempt. All survey responses are required by July 31, 2016. The FDIC emphasized two key instructions for this year's submission:

• Beginning this year, the SOD survey will be collected using the Federal Financial Institutions Examination Council's (FFIEC) Central Data Repository (CDR). The use of FDICconnect to submit the survey has been discontinued. The notice was issued earlier than usual this year to provide ample time for institutions to prepare for this change.
• The individual responsible for submitting an institution's SOD survey must have an account with the CDR. A separate CDR account is not necessary if the SOD submitter and Call Report submitter are the same individual. Instructions for requesting a CDR account are provided under "Accessing the Central Data Repository" on page 2 of the FIL. SOD reporting instructions, survey worksheets, access to the CDR, and additional details are available on the FDIC's Bank Financial Reports webpage.

The FDIC has issued a list of institutions that the agency has scheduled for a Community Reinvestment Act (CRA) examination during the third quarter of 2016.

The Federal Deposit Insurance Corporation has released a list of orders of administrative enforcement actions taken against banks and individuals in April, 2016. The 44 orders listed included one cease and desist order; three consent orders; 15 removal and prohibition orders; seven Section 19 orders; seven civil money penalties; one amended order to pay; eight terminations of consent orders and cease and desist orders; and two notices. A Minnesota bank was ordered to pay $2,000 for violations of the Flood Disaster Protection Act. CMPs were levied against five individuals in amounts ranging from $25,000 to $90,000 for unspecified infractions. Each of the five was also issued a removal and prohibition order.

The NCUA has begun a multi-pronged outreach effort to collect experiences and ideas from credit union system stakeholders through its Exam Flexibility Initiative. Credit unions are requested to evaluate the agency’s examination and supervision program. The initiative will include meetings and teleconferences, and the agency has already opened an email account for credit unions to provide comments, and created a webpage to provide information about the initiative.