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Top Story Compliance Related


FTC presses first cases under BOTS Act

The Federal Trade Commission has taken legal action against three ticket brokers based in New York who allegedly used automated software to illegally buy up tens of thousands of tickets for popular concerts and sporting events, then subsequently made millions of dollars reselling the tickets to fans at higher prices.

The three ticket brokers will be subject to a judgment of more than $31 million in civil penalties for violating the Better Online Ticket Sales (BOTS) Act, under a proposed settlement reached with the FTC. Due to their inability to pay, the judgment will be partially suspended, requiring them to pay $3.7 million.

These are the first cases brought under the BOTS Act, which was enacted in 2016 and gives the FTC authority to take law enforcement action against Individuals and companies that use bots or other means to circumvent limits on online ticket purchases.


Acting chairs of FTC and SEC named

President Biden has named Rebecca Kelly Slaughter the acting chair of the Federal Trade Commission, and Allison Herren Lee the acting chair of the Securities and Exchange Commission.


OCC enforcement actions

The OCC has issued a list of enforcement actions taken in November and December 2020 and January 2021 against OCC-supervised institutions and individuals now or formerly affiliated with such institutions. In addition to the previously announced civil money penalty and cease and desist order against the former General Counsel for Wells Fargo Bank, N.A., the list includes:

  • a civil money penalty of $382,500 against USAA FSB, San Antonio, Texas, for Flood Act violations
  • a civil money penalty of $10,000 against a former CFO of Golden Pacific Bank, N.A., Sacramento, California, for deliberately filing false Call Report data
  • a prohibition order against a former mortgage specialist at First National Bank of Omaha, Omaha, Nebraska, for initiating unauthorized internal fund transfers totaling $10,233 from bank general ledger accounts to a personal mortgage account, and making false entries to conceal the transfers
  • a Notice of Charges for a cease and desist order and a $30,000 civil money penalty against a former president, CEO and board chairman of cfsbank, Charleroi, Pennsylvania, involving significant overdraft activity of a bank customer, bank loans to that customer, and failure to supervise bank employees to whom he had delegated supervision of account overdrafts.


SAR exemption proposals published

The OCC's, NCUA's, and FDIC's December 2020 proposals to permit, with FinCEN agreement, certain exceptions to SAR filing requirements, have been published in this morning's Federal Register, with a comment period ending on February 22, 2021. The Federal Reserve Board has published a similar proposal, with the same comment period.


Kraninger resigns as CFPB Director

CFPB Director Kraninger announced Wednesday that she is resigning from her position at the request of the Biden administration. Her resignation was effective yesterday. President Biden will reportedly nominate Federal Trade Commission head Rohit Chopra to head the CFPB.

Pending the nomination and confirmation of a new CFPB director, President Biden has designated David Uejio, the Bureau's chief strategy officer, to be the CFPB's acting director.

Other acting leaders of departments and agencies pertinent to banks include:

  • Matt Ammonn, acting secretary, Department of Housing and Urban Development
  • Andy Baukol, acting secretary, Department of the Treasury
  • Rob Fairweather, acting director, Office of Management and Budget
  • Tami Perriello, acting administrator, Small Business Administration
  • Kevin Shea, acting secretary, Department of Agriculture
  • Al Stewart, acting secretary, Department of Labor


Some pending rules may be slowed

As is typically the practice when there is a change of Administrations in Washington, Executive Branch agencies will temporarily slow their implementation of pending or proposed rules to allow President Biden's appointees or designees the opportunity to review them.

In a Memorandum for the Heads of Executive Departments and Agencies, the White House has directed that no rules (with exceptions for emergency situations or urgent circumstances) should be proposed, issued, or sent to the Federal Register until a department or agency head appointed or designated by the president after yesterday's inauguration reviews and approves the rule. Rules sent to the Office of the Federal Register but not yet published will immediately be withdrawn. Departments and agencies that have published rules that have not taken effect, should consider postponing their effective dates for 60 days to review any questions of fact, law and policy they might raise.

Rules subject to statutory or judicial deadlines will not be delayed or postponed.

Independent agencies such as the Fed, FDIC, and OCC are generally considered not to be subject to the memorandum.


FAQs on SARs and other AML considerations

The FDIC, Federal Reserve Board, FinCEN, NCUA, and OCC have issued responses to frequently asked questions regarding suspicious activity reporting and other AML considerations for financial institutions that are required to submit Suspicious Activity Reports (SARs).

The answers clarify SAR/AML requirements in order to assist financial institutions with their compliance obligations and enable them to focus resources on activities that produce the greatest value to law enforcement agencies and other government users of Bank Secrecy Act (BSA) reporting.

The FAQs address the following topics:

  • requests by law enforcement to maintain accounts
  • receipt of grand jury subpoenas and law enforcement inquiries
  • maintaining customer relationships following the filing of SARs
  • filing SARs based on negative news media searches
  • information provided in SAR data and narrative fields
  • SAR character limits

The FAQs neither alter existing BSA/AML requirements, nor establish new supervisory expectations.


FDIC revises appeals guidelines

The FDIC Board has adopted revised Guidelines for Appeals of Material Supervisory Determinations. The revised guidelines are intended to enhance the independence of appeals decisions and to clarify the procedures and timeframes that apply to appeals when the FDIC is taking a formal enforcement action. The revised guidelines generally replace the existing Supervision Appeals Review Committee (SARC) with an independent, standalone office within the FDIC, known as the Office of Supervisory Appeals (Office). The revised guidelines will take effect when the Office is fully operational; the current guidelines will remain in effect until that time. The FDIC will publish a notice to inform institutions when this occurs. Chairman McWilliams issued a statement on the changes.


OCC Community Development Investments Newsletter

The OCC has published the latest edition of its Community Developments Investments newsletter, “Strengthening Communities With Opportunity Zone Investments.” This edition of Community Developments Investments explains how banks can support distressed communities by making investments in tax-advantaged qualified opportunity funds (QOF) as part of their community development strategies. For example, the newsletter highlights transactions in which a national bank created and sponsored its own QOF. The newsletter also highlights banks that invested in QOFs sponsored by third-party intermediaries. The newsletter discusses tools that banks can use to evaluate the social and economic benefits created by QOF-financed projects in designated opportunity zones.


Fed updates capital planning requirements

The Federal Reserve Board has announced a final rule that updates the Board's capital planning requirements to be consistent with other Board rules that were recently modified. The final rule is generally similar to the proposal. In 2019, the Board finalized a framework that sorts large banks into different categories based on their risks, with requirements that are tailored to the risks of each category. The Board's capital planning requirements for these large banks help ensure they plan for and determine their capital needs under a range of different scenarios.

The rule finalized yesterday reflects that new framework. In particular, firms in the lowest risk category are on a two-year stress test cycle and not subject to company-run stress test requirements. In a change from the proposal, the final rule applies capital planning requirements to large savings and loan holding companies that are not predominantly engaged in insurance or commercial activities.

The rule will become effective 60 days after publication in the Federal Register.


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