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Top Story Compliance Related

12/16/2019

OFAC designated Hizballah money launderers

On Friday, December 13, OFAC took action against two prominent Lebanon and the Democratic Republic of the Congo (DRC)-based money launderers and their affiliated companies, including those that have generated tens of millions of dollars for Hizballah, its financiers, and their malign activities. For identification information and other OFAC SDN List activity, see BankersOnline's OFAC Update.

12/16/2019

Labor updates Regular Rate regs

The Department of Labor has issued a final rule [84 FR 68736, amending 29 CFR parts 548 and 778] updating a number of regulations on the calculation of overtime compensation both to provide clarity and to better reflect the 21st-century workplace. The changes were made to promote compliance with the Fair Labor Standards Act, provide appropriate and updated guidance in an area of evolving law and practice, and encourage employers to provide additional and innovative benefits to workers without fear of costly litigation. The rule is effective January 15, 2020.

12/16/2019

FEMA to suspend communities in 5 states from flood program

FEMA has published a notice [84 FR 68346] in today's Federal Register identifying communities in five states scheduled for suspension from the National Flood Insurance Program on Friday, December 20, 2019, for noncompliance with the floodplain management requirements of the program:

  • California: Carlsbad, Chula Vista, Coronado, Del Mar, Encinitas, National City, and Oceanside
  • Colorado: Arvada, Georgetown, Golden, Idaho Springs, and unincorporated areas of Clear Creek and Jefferson Counties
  • Iowa: Atkins, Beaman, Belle Plaine, Blairstown, Conrad, Dike, Ellsworth, Garrison, Grundy Center, Holland, Jewell, Kamrar, Morrison, Newhall, Norway, Reinbeck, Shellsburg, Urbana, Vinton, Webster City, Wellsburg, and unincorporated areas of Benton and Grundy Counties
  • Minnesota: Halstad
  • Texas: Austin, Leroy, Mount Calm, Taylor, Weir, West, and unincorporated areas of Aransas County

If any of the identified communities adopts and submits the required documentation of legally enforceable floodplain management measures before its actual suspension date, the community will not be suspended.

12/16/2019

FDIC proposes to update Section 19 regs

The FDIC has published [84 FR 68353] a proposal to revise the existing regulations requiring persons convicted of certain criminal offenses to obtain prior written consent before participating in the conduct of the affairs of any depository institution to incorporate the FDIC's existing Statement of Policy, and to amend the regulations setting forth the FDIC's procedures and standards applicable to an application to obtain the FDIC's prior written consent.

The proposed incorporation of the Statement of Policy into the FDIC's regulations would provide for greater transparency as to its application, provide greater certainty as to the FDIC's application process and help both insured depository institutions and affected individuals to understand its impact and to potentially seek relief from its provisions. Comments on the proposal will be accepted for 60 days, through February 14, 2020.

Update: On 1/27/2020, the FDIC published [85 FR 4614] a notice extending the comment period on this proposal through 3/16/2020.

12/13/2019

NCUA Board actions

The NCUA board has announced its approval of two measures at its meeting on December 12:

  • The operating, capital, and National Credit Union Share Insurance Fund budgets for 2020 and 2021
  • A two-year delay of the effective date of the agency's risk-based capital rule

12/13/2019

FDIC proposes to modernize brokered deposit regs

The FDIC has issued a notice of proposed rulemaking that would modernize its brokered deposit regulations. The proposal would, among other things, modernize the regulatory framework to remove regulatory disincentives to offering deposit accounts to customers through different channels.

The proposal would—

  • establish a new framework for analyzing whether deposits placed through deposit placement arrangements qualify as brokered deposits. These include arrangements between insured depository institutions (IDIs) and third parties, such as financial technology companies, for a variety of business purposes, including access to deposits, as well as IDIs' increasing reliance on new technologies to engage and interact with their customers.
  • revise the "facilitation" prong of the deposit broker definition so that it applies to any person that engages in specified activities, and provide that a wholly owned operating subsidiary be eligible for the "IDI exception" to the "deposit broker" definition under certain circumstances.
  • amend the "primary purpose" exception to apply when the primary purpose of an agent's or nominee's business relationship with its customers in the placement of funds with IDIs. The availability of the primary purpose exception would be clarified for third parties that place deposits through brokerage sweep accounts, under certain conditions, and to third parties whose primary purpose is enabling customers to make payments, under certain conditions.
  • establish an application process for any third party that wishes to use the primary purpose exception, and would require ongoing reporting.
  • continue to consider an agent's placement of brokered CDs as deposit brokering, and such deposits would continue to be reported as brokered

Comments on the proposal will be accepted for 60 days following publication in the Federal Register.
UPDATE: Published at 85 FR 7453 on 2/10/2020, with 60-day comment period ending 4/10/2020.

12/13/2019

FDIC and OCC proposal to modernize CRA

The FDIC and the OCC have announced a proposal to modernize the agencies’ regulations under the Community Reinvestment Act (CRA) that have not been substantively updated for nearly 25 years. The proposed rules are intended to increase bank activity in low- and moderate-income communities where there is significant need for credit, more responsible lending, greater access to banking services, and improvements to critical infrastructure. The proposals will clarify what qualifies for credit under the CRA, enabling banks and their partners to better implement reinvestment and other activities that can benefit communities. The agencies will also create an additional definition of “assessment areas” tied to where deposits are located—ensuring that banks provide loans and other services to low- and moderate-income persons in those areas.

Comptroller Otting and FDIC Chairman McWilliams issued statements regarding the publication of the joint notice of proposed rulemaking to modernize the Community Reinvestment Act (CRA) regulations. Comments on the proposal will be accepted for 60 days following Federal Register publication.

UPDATE: Published at 85 FR 1204 on 1/9/2020, with a 60-day comment period ending 3/9/2020.

12/13/2019

Ortega son sanctioned for money laundering and corruption

Treasury has announced that OFAC has designated Rafael Antonio Ortega Murillo, son of Nicaraguan President Daniel Ortega, and two companies he owns or controls and uses to finance and launder money for the Ortega regime. OFAC also designated Distribuidor Nicaraguense de Petroleo S.A., a company owned or controlled by Rafael Antonio Ortega Murillo as well as by Nicaraguan Vice President and First Lady Rosario Maria Murillo De Ortega, and two other companies owned or controlled by Rafael Ortega.

For identification information on Rafael Ortega and the three companies designated, see BankersOnline's OFAC Update.

12/13/2019

Update on status of Payday Lending Rule

The U.S. District Court for the Western District of Texas (Austin Division) has again continued its stays of the litigation of pending case Community Financial Services Association of America, Ltd. et al v. Consumer Financial Protection Bureau et al and of the August 19, 2019, compliance date of the Bureau's Payday Lending Rule, and ordered that the parties file a Joint Status Report about proceedings related to the Rule and litigation no later than April 24, 2020.

12/12/2019

Operators of debt collection scheme banned

The Federal Trade Commission has announced that, under the terms of a settlement agreement with the Commission, the operators of a scheme that conned consumers into paying non-existent debts will be permanently banned from the debt collection business and from misleading consumers about debt. A complaint filed by the FTC against Global Asset Financial Services Group, LLC alleges that the operators of the company falsely claimed to be attorneys or affiliated with attorneys to pressure consumers into making payments on debts they did not owe, and threatened to take legal action against consumers if they did not pay. In addition to being banned from debt collection, debt brokering activities, and misleading consumers, the defendants also will be banned from misrepresenting to consumers whether they are attorneys.

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