Skip to content

How to gain more from operational risk management practices.
Modern risk management technology solutions improve efficiency and provide greater visibility into risks. Today’s tools provide real-time visibility, action plans, enhanced reporting and business intelligence, and proactive notifications for operational risk. Real-time data empowers banks and financial services organizations to proactively manage risks and instantly detect and mitigate emerging issues. Click here to learn more.

Top Story Compliance Related


Operators of work-from-home scheme settle with FTC

The operators of a work-from-home scheme and the CEO of their main affiliate marketing network will pay nearly $1.5 million to settle Federal Trade Commission allegations that they used misleading spam emails to lure consumers into buying work-from-home services.

In its complaint, the FTC alleges that Nevada-based Effen Ads, LLC and its owners, Jason Brailow and Brandon Harshbarger, worked with an affiliate marketing network called W4 LLC to promote a work-from-home scheme by sending bulk unsolicited email, or spam, to consumers, which generated more than 50,000 sales of the Effen Ads program. The emails included “from” lines that falsely claimed they were coming from news organizations like CNN or Fox News, and “subject” lines that falsely suggested the opportunity was endorsed by celebrities such as investor Warren Buffett and personal finance expert Suze Orman.

In addition to violations of the FTC Act’s prohibition against unfair and deceptive practices, the FTC also alleges that Effen Ads, Brailow, and Harshbarger, as well as Jason Walker, who was CEO of W4, violated the CAN-SPAM Act by disseminating spam emails containing misleading header information and subject lines.

As part of the settlement, Walker will pay $1.3 million, is permanently banned from marketing or selling any work-from-home program, and is prohibited from providing any affiliate marketer with ads containing false or misleading representations about celebrity endorsements, objective reviews, or news-source affiliations. The settlements with Harshbarger, Brailow, and Effen Ads impose an $11.3 million judgment, which will be suspended upon payment of $25,000 by Harshbarger and $121,948 by Brailow because of their inability to pay the full amount. In addition, they are permanently banned from marketing or selling business opportunities or business coaching products and are prohibited from making any misrepresentations in the marketing or sale of any product or service. Harshbarger, Brailow, and Effen Ads are also permanently prohibited from violating the CAN-SPAM Act and engaging in credit card laundering.


FTC prevails in case against mortgage relief scammers

The Federal Trade Commission has announced that the U.S. District Court for the District of Nevada has ruled in favor of the Commission in a case against the operators of a scheme that deceived financially distressed homeowners by falsely promising to make their mortgages more affordable. The defendants also charged consumers illegal advance fees and unlawfully told consumers not to pay their mortgages to or communicate with their lenders. The case was originally filed by the FTC in January 2018, and the court issued a temporary restraining order against the company at that time. The court found that the defendants’ practices violated the FTC Act and the Mortgage Assistance Relief Services Rule.

Under the terms of the newly issued final order, the defendants will be permanently banned from the debt relief business and will be banned from misleading consumers about the terms of other financial services they may offer, as well as from making misleading claims in advertisements. The ruling also imposes an $18.5 million judgment against the defendants. The order requires that the contents of numerous bank accounts be turned over to the FTC, along with the proceeds from selling assets belonging to the defendants. Among the assets that will be liquidated are a Park City, Utah ski chalet, an office building, a Mercedes Benz S550, and a Porsche Carerra.

The defendants subject to the order are Preferred Law PLLC; Consumer Defense LLC (Nevada); Consumer Defense LLC (Utah); Consumer Link Inc.; American Home Loan Counselors; American Home Loans LLC; Consumer Defense Group LLC, formerly known as Modification Review Board LLC; Brown Legal Inc.; AM Property Management LLC; FMG Partners LLC; Zinly LLC; Jonathan P. Hanley; and Sandra X. Hanley.


Regulators issue statement regarding extension of credit for Reg O

The OCC, Federal Reserve Board, and the FDIC have issued a “Statement Regarding Status of Certain Investment Funds and Their Portfolio Investments for Purposes of Regulation O and Reporting Requirements Under Part 363 of FDIC Regulations.” This interagency statement explains that the agencies will exercise discretion not to take action against banks, or against certain asset managers that become principal shareholders of banks (principal shareholder fund complexes), with respect to certain extensions of credit by banks to portfolio companies of the principal shareholder fund complex (fund complex-controlled portfolio companies) that otherwise would violate Regulation O, provided certain eligibility criteria are satisfied.

The federal banking agencies are providing this temporary relief while the Fed, in consultation with the other federal banking agencies, considers whether to amend Regulation O to address this issue.


Agencies adjust CRA bank size definitions

The FDIC, Federal Reserve Board and OCC have published [84 FR 71738] a final rule adjusting for inflation the definition thresholds for small and intermediate-small financial institutions under their Community Reinvestment Act regulations at 12 CFR Parts 25, 195, 228 and 345.

Effective January 1, 2020, a small bank will be a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.305 billion. An intermediate small bank will be a small bank with assets of at least $326 million as of December 31 of both of the prior two calendar years and less than $1.305 billion as of December 31 of either of the prior two calendar years.


Extension of comment period on use of CAMELS ratings

On October 31, the FDIC and the Federal Reserve Board published [84 FR 58383] a Request for Information seeking information and comments from interested parties regarding the consistency of ratings assigned by the agencies under the Uniform Financial Institutions Rating System UFIRS (commonly known as CAMELS ratings). The agencies also sought feedback concerning the current use of CAMELS ratings by the agencies in their bank application and enforcement action processes. The RFI stated that the comment period would close on December 30, 2019. The agencies have received requests to extend the comment period. An extension of the comment period will provide additional opportunity for the public to prepare comments to address the questions posed by the agencies. Therefore, the agencies are extending the end of the comment period for the proposal from December 30, 2019, to February 28, 2020. The notice of that extension was published in today's Federal Register.


SECURE Act changing the IRA rules

With the signing of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), many of the longstanding rules for IRAs and other retirement accounts have been radically changed. Starting with tax year 2020—

  • The maximum age (70½) for IRA contributions has been eliminated.
  • The age at which required minimum distributions must begin has been pushed up from 70½ to 72.
  • Inherited IRAs (except those inherited by the decedent's spouse and certain other individuals) will have to be distributed within 10 years.

Those are just the changes you have probably already heard about. Deborah Crawford will present a special ONE-HOUR BOL Learning Connect webinar on January 24 that will cover the SECURE Act changes that will affect your bank's IRA program starting with the 2020 tax year.


CFPB annual report on financial literacy

The CFPB has issued its Financial Literacy Annual Report for fiscal year 2019. The Dodd-Frank Act requires the Bureau to report on its work to provide consumers with information to make informed decisions about financial products.


FBAR deadline pushed back yet again

FinCEN has announced a further extension of time for certain Report of Foreign Bank and Financial Accounts (FBAR) filings in light of the notice of proposed rulemaking FinCEN issued on March 10, 2016, which proposes to revise the regulations implementing the Bank Secrecy Act regarding FBARs. It addresses only those with signature authority over but no financial interest in foreign financial accounts. Other persons required to file FinCEN Form 114 - FBAR must meet the April 15, 2020, deadline. [Editorial Comment: This one has been kicked down the road every year since 2011.]


FinCEN updated SAR data maps available

FinCEN has made available a new tool that is useful for visualizing aggregate Suspicious Activity Reports (SAR) filed by financial institutions in the United States. The new interactive maps will be accompanied by downloadable SAR data in the near future. The maps are available on FinCEN's SAR Stats web page.


Treasury and IRS propose rule on misdirected refunds

The IRS has published [84 FR 70462] proposed regulations concerning the procedures for identification and recovery of a misdirected direct deposit refund. The regulations reflect changes to the law made by the Taxpayer First Act. The proposed regulations affect taxpayers who have made a claim for refund, requested the refund be issued as a direct deposit, but did not receive a refund in the account designated on the claim for refund. Comments and requests for a public hearing must be received by February 21, 2020.


Training View All

Penalties View All

Search Top Stories