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Top Story Compliance Related

01/24/2020

Agencies publish rule on measuring derivatives contracts risk

The Federal Reserve, OCC and FDIC have published [85 FR 4362] their final rule, announced in November, to implement a new approach—the standardized approach for counterparty credit risk (SA-CCR)—for calculating the exposure amount of derivative contracts under these agencies' regulatory capital rule.

01/24/2020

OCC acts against former Wells Fargo Bank management

The OCC announced Thursday it has issued a notice of charges against five former senior executives of Wells Fargo Bank, N.A., Sioux Falls, South Dakota, and announced settlements with the bank’s former Chief Executive Officer (CEO) and other members of the bank’s operating committee. These actions stem from the executive's role in the bank's systemic sale practices misconduct (see "Incentive program costs Wells Fargo $185 M in CMPs," 9/9/2016).

The current or former executives charged and the relief sought by the notice of charges include:

  • Carrie Tolstedt, head of Wells Fargo's Community Bank -- Prohibition order and $25 million civil money penalty (CMP)
  • Claudia Russ Anderson, Community Bank group risk officer -- Prohibition order and $5 million CMP
  • James Strother, general counsel, Cease & Desist (C&D) order and $5 million CMP
  • David Julian, chief auditor -- C&D order and $2 million CMP
  • Paul McLinko, executive audit director -- C&D order and $500,000 CMP

The OCC stated the notice of charges alleges those executives failed to adequately perform their duties and responsibilities, which contributed to the bank’s systemic problems with sales practices misconduct from 2002 until October 2016, and the misconduct of those individuals allowed the practices to continue for years, affecting millions of bank customers and thousands of lower level bank employees. Additionally, the notice states that Ms. Russ Anderson also made false and misleading statements to the OCC and actively obstructed the OCC’s examinations of the bank’s sales practices. Under federal law, each of those individuals may request a hearing challenging the allegations and relief sought.

The OCC's press release also announced it had issued consent orders against three former Wells Fargo executives for their roles in the bank's sales practices misconduct:

01/24/2020

Treasury targets network supporting Iran

The Treasury Department has announced that OFAC took action Thursday against four international petrochemical and petroleum companies that have collectively transferred the equivalent of hundreds of millions of dollars’ worth of exports from the National Iranian Oil Company (NIOC), an entity instrumental in Iran’s petroleum and petrochemical industries, which helps to finance Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and its terrorist proxies. Treasury stated that Iran’s petroleum and petrochemical industries are major sources of revenue for the Iranian regime and funds its malign activities throughout the Middle East, and the entities targeted Thursday facilitate Iran’s petrochemical and petroleum exports in contravention of U.S. economic sanctions.

Concurrently with the U.S. Department of Treasury’s designations, the U.S. Department of State designated several companies and senior executives pursuant to E.O. 13846 in connection with significant transactions for the transport of petrochemical products from Iran, on or after November 5, 2018.

All property and interests in property of the persons designated Thursday subject to U.S. jurisdiction are blocked, and U.S persons are generally prohibited from engaging in transactions with them. In addition, foreign financial institutions that knowingly facilitate significant transactions for, or persons that provide material or certain other support to, the persons designated today risk exposure to sanctions that could sever their access to the U.S. financial system or block their property and interests in property under U.S. jurisdiction.

For identifying information on the individuals and entities designated, see BankersOnline's OFAC Update

01/22/2020

FEMA to suspend communities in 3 states today

The Federal Emergency Management Agency has published a notice [85 FR 3548] in today's Federal Register announcing the suspension, effective today, of communities in Kansas, Missouri, and Texas from the National Flood Insurance Program for noncompliance with the floodplain management requirements of the program.

  • Kansas: Unincorporated areas of Butler County
  • Missouri: City of Maryville
  • Texas: Bee Cave, Creedmoor, Gonzales, Lakeway, Mustang Ridge, Point Venture, Rollingwood, San Leanna, The Hills, Volente, West Lake Hills, and unincorporated areas of Gonzales County

In the event that any of the named communities adopt and submit required documentation of legally enforceable floodplain management measures prior to actual suspension, those communities will not be suspended.

01/22/2020

Marijuana scheme halted by SEC

The Securities and Exchange Commission has announced it has filed charges against Guy S. Griffithe, Robert W. Russell, and three companies they controlled, for an alleged scheme that defrauded investors, who thought they were purchasing interests in a Washington-licensed recreational cannabis company, out of approximately $4.85 million. The SEC's complaint, filed in federal court in California, charges Griffithe, Russell, Renewable, SMRB, and Green Acres Pharms LLC with violating the antifraud provisions of the federal securities laws. In addition, the complaint charges Griffithe, Renewable, and Green Acres Pharms with violating the registration provisions of federal securities laws. Russell's wife, Sonja Marie Russell, is named as Relief Defendant in the complaint.

01/22/2020

OFAC adds Venezuela designations

The Treasury Department has announced that OFAC has identified fifteen aircraft as blocked property of Petróleos de Venezuela, S.A. (PdVSA) pursuant to Executive Order 13884, which blocks the property and interests in property of the Government of Venezuela. Identification of those aircraft is provided in BankersOnline's OFAC Update.

01/22/2020

OCC levies $18 million Flood Act penalty

The OCC announced Tuesday it has assessed a $17,998,510 civil money penalty against Citibank, N.A., Sioux Falls, South Dakota, for violations of the Flood Disaster Protection Act of 1973 and the OCC's implementing regulations.

The OCC found the bank engaged in a pattern or practice of violating 42 U.S.C. § 4012a(e) and 12 C.F.R. § 22.7(a). Specifically, the bank failed to purchase regulatory required flood insurance on behalf of borrowers with loans secured by buildings and mobile homes located in special flood hazard areas where flood insurance is available in a timely manner. The failure to purchase the required flood insurance in a timely manner resulted from Citibank’s deficient FDPA policies and procedures, which allowed the bank’s third-party service provider to extend the 45-day notification period after the initial borrower notification.

01/21/2020

Operators of credit repair scheme banned

The Federal Trade Commission has announced the operators of a bogus credit repair scheme have been banned from the credit repair business and are subject to a wide array of other requirements under settlement terms with the Commission. The settlements relate to an FTC complaint filed in June 2019 alleging that the defendants targeted consumers with false promises of substantially improving consumers’ credit scores by claiming to remove all negative items and “hard” credit inquiries (which can often change a consumer’s credit score) from consumers’ credit reports. In addition, the FTC alleged the defendants illegally charged upfront fees for their services and advised consumers to mislead credit bureaus and lenders, as well as threatening consumers with lawsuits when they complained or disputed charges.

01/21/2020

Amended Venezuela-related general licenses

On Friday, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued amended Venezuela-related General License 5B "Authorizing Certain Transactions Related to the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or After April 22, 2020" and General License 8E "Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for Maintenance of Operations for Certain Entities in Venezuela."

01/21/2020

FDIC purging duplicative rules

The FDIC published in today's Federal Register three final rules removing transferred OTS regulations relating to requirements for state savings associations.

  • 85 FR 3250, rescinding and removing subpart T of 12 CFR part 390, which included duplicative rules regarding accounting requirements
  • 85 FR 3247, rescinding and removing subpart R of 12 CFR part 390, which included duplicative regulatory reporting requirements
  • 85 FR 3232, rescinding and removing subpart S of 12 CFR part 390, which included duplicative rules on operations, and making conforming changes to cross references and technical changes in 12 CFR parts 303, 326, 337, and 353.

All of the amendments will be effective February 20, 2020.

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