Top Story Compliance Related

In one of the largest sanctions actions in its history, OFAC yesterday designated 271 employees of Syria's Scientific Studies and Research Center (SSRC), the Syrian government agency responsible for developing and producing non-conventional weapons and the means to deliver them. The action was taken in response to the April 4, 2017 sarin attack on innocent civilians in Khan Sheikhoun, Syria, by the regime of Syrian dictator Bashar al-Assad. This action was taken pursuant to E.O. 13582, which targets the Government of Syria and its supporters. As a result of this action, any property or interest in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked, and U.S. persons are generally prohibited from dealing with them. For further information, see our OFAC Update.

The Securities and Exchange Commission is extending the comment period for its request for comment seeking public input as to the disclosures called for by Industry Guide 3, Statistical Disclosure by Bank Holding Companies. The original comment period is scheduled to end on May 8, 2017. The Commission is extending the time period in which to provide the Commission with comments until July 7, 2017.

Have you ever wondered when and how OFAC determines that an SDN listing should be removed? As you might imagine, the agency has a procedure for removals, and it has now released an FAQ on "Filing a Petition for Removal from an OFAC List."

The CFPB has announced the filing of a lawsuit against Ocwen Financial Corporation and its subsidiaries for failing borrowers at every stage of the mortgage servicing process. The Bureau's complaint alleges that Ocwen, one of the country’s largest non-bank mortgage loan servicers, allegedly mishandled basic functions like sending accurate monthly statements, properly crediting payments, and handling taxes and insurance. In addition, Ocwen also allegedly illegally foreclosed on struggling borrowers, ignored customer complaints, and sold off the servicing rights to loans without fully disclosing the mistakes it made in borrowers' records. The Bureau's announcement reported that the Florida Attorney General took a similar action against Ocwen in a separate lawsuit, and that many state financial regulators are also independently issuing cease-and-desist and license revocation orders against Ocwen for escrow management and licensing issues.

The Consumer Financial Protection Bureau has announced a final rule delaying by six months the general effective date of the CFPB rule governing prepaid accounts. The rule will now take effect on April 1, 2018. The Bureau also reported it would revisit at least two substantive issues in the prepaid accounts rule through a separate notice and comment rulemaking process:

• The linking of credit cards to digital wallets that are capable of storing funds
• Error resolution and limitations on liability for prepaid accounts that cannot be registered, have not yet been registered, or for which consumers have attempted but have not successfully completed the registration process

• Federal Register document at 82 FR 18975

The Federal Reserve Board has announced two enforcement actions against Deutsche Bank AG that will require the bank to pay a combined $156.6 million in civil money penalties. The bank will pay a $136.9 million fine for unsafe and unsound practices in the foreign exchange (FX) markets, as well as a $19.7 million fine for failure to maintain an adequate Volcker rule compliance program prior to March 30, 2016.

• FX enforcement action
• Volcker rule enforcement action

The Office of the Comptroller of the Currency has announced new enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations.

• A California bank was ordered to pay a $58,000 civil money penalty for a pattern or practice of violating the Flood Disaster Protection Act and its implementing regulations.
• A former Wisconsin banker was issued an order to pay $1.6 in restitution to his former bank and a $100,000 civil money penalty, and was banned from the industry for having "recklessly engaged in unsafe or unsound practices in conducting the affairs of the Bank and/or breached his fiduciary duties to the Bank. Respondent also acted with personal dishonesty and a willful and continuing disregard for the safety or soundness of the Bank that constituted a pattern of misconduct, during an extended period of time, that caused the Bank loss and from which he received a benefit."
• A former Citibank, N.A. foreign exchange trader found by the Comptroller to have engaged in a conspiracy with other ForEx traders to suppress or eliminate competition by fixing prices for foreign currencies traded in the U.S. and elsewhere, was issued an order of prohibition banning him from banking.
• A Massachusetts bank was issued a Cease and Desist order requiring improvements in corporate governance, management and staffing, and the adoption of strategic and capital plans.
• The New York, New York, licensed branch of USB, AG, signed a written agreement to address identified deficiencies in the branch's compliance with BSA/AML laws and regulations.

OFAC has announced the addition to its SDN Lists of two Mexican property management companies linked to Abigael Gonzalez Valencia, the leader of the Los Cuinis Drug Trafficking Organization (Los Cuinis DTO). OFAC designated these two Mexican companies today as Specially Designated Narcotics Traffickers (SDNTs) pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). As a result of that action, any assets the designees may have under U.S. jurisdiction are frozen, and U.S. persons are generally prohibited from engaging in transactions with them. For additional information, see our OFAC Update.

The Federal Trade Commission has announced it is seeking comment on proposed changes to TRUSTe's safe harbor program under the agency’s Children’s Online Privacy Protection Rule (COPPA). A notice will be published shortly in the Federal Register of proposed changes to the existing safe harbor program, including the addition of a new requirement that participants conduct an annual internal assessment of third-parties' collection of personal information from children on their websites or online services. Among the questions on which the Commission is seeking comment is whether the mechanisms used to assess compliance with the proposed modified program requirements are effective. The comment period will last for 30 days, until May 24.

The Department of Housing and Urban Development has announced a conciliation agreement with a group of California mortgage lenders to resolve allegations they discriminated against a mortgage applicant based on his national origin. A complaint filed by HUD alleged that American Financial Network of Brea, Benchmark Communities of Fresno, Brigantino Enterprise of Hollister, and an employee of Benchmark Communities failed to prequalify the applicant to purchase a home in Hollister because he is Hispanic. The case came to HUD's attention when the applicant filed a fair housing complaint alleging that he was unfairly denied an opportunity to prequalify for a mortgage loan, precluding him from purchasing a home because he is Hispanic. American Financial Network will pay the man $5,000; Benchmark Communities will provide annual fair housing training for its employees who interact with prospective homebuyers; and American Financial Network will provide annual fair housing training to current and new employees as they are hired.