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Top Story Compliance Related


CFPB rescinds Abusiveness Policy Statement

The CFPB has announced it is rescinding its January 24, 2020 policy statement, “Statement of Policy Regarding Prohibition on Abusive Acts or Practices.” Going forward, the CFPB intends to exercise its supervisory and enforcement authority consistent with the full scope of its statutory authority under the Dodd-Frank Act as established by Congress. The CFPB has made these changes to better protect consumers and the marketplace from abusive acts or practices, and to enforce the law as Congress wrote it.

The CFPB intends to consider good faith, company size, and all other factors it typically considers as it uses its prosecutorial discretion. The Bureau said a policy of declining to enforce the full scope of Congress’s definition of an abusive practice harms both the consumers who were taken advantage of and the honest companies that have to compete against those that violate the law.

The CFPB's notice of rescission of the 2020 policy statement will be effective on publication in the Federal Register.

Publication and effective date update: Scheduled for publication on March 19, 2021.


Agencies propose new private flood insurance Q&As

The Fed, Farm Credit Administration, FDIC, NCUA, and OCC are requesting public comment on 24 proposed Interagency questions and answers regarding private flood insurance. The proposal is intended to help lenders comply with the agencies' 2019 joint rule to implement the private flood insurance provisions of the Biggert-Waters Flood Insurance Reform Act of 2012. The proposal incorporates new questions and answers in a number of areas including mandatory acceptance, discretionary acceptance and private flood insurance general compliance.

The proposed Q&As would supplement the 118 Interagency Questions and Answers Regarding Flood Insurance that the agencies proposed on July 6, 2020. Comments will be accepted for 60 days following publication in the Federal Register.

Publication and comment period update: Published at 86 FR 14696 on 3/18/2021. The comment period will end on 5/17/2021.


Federal Reserve CRA evaluations

In our review of the Federal Reserve Board's archive of Community Reinvestment Act evaluations, we found that the Fed issued 25 evaluations in the months of January and February 2021. Eighteen of those evaluations were rated Satisfactory.. One was rated Needs to Improve. We congratulate the six banks whose evaluations were rated Outstanding:


U.S. targets family of Burmese coup leader

The Department of the Treasury reported Wednesday that OFAC has sanctioned the two adult children of the commander-in-chief of the Burmese military forces, Min Aung Hlaing, who is the leading actor in the overthrow of Burma’s democratically elected government, as well as six companies of his two adult children. Treasury took these actions in response to the Burmese military’s coup against the democratically elected civilian government of Burma and its brutal killing of peaceful protesters.

For the names and identification information of the designated individuals and businesses, see BankersOnline's OFAC Update.


Investment advisor charged by SEC

The SEC yesterday charged George Heckler, of Charleston, South Carolina, for operating a decade-long investment adviser fraud through two private hedge funds, Cassatt Short Term Trading Fund LP (Cassatt) and CV Special Opportunity Fund LP (CV Special), that Heckler formed to conceal massive losses incurred by Conestoga Holdings LP (Conestoga), another fund controlled by Heckler. According to the SEC's complaint, Heckler, after forming Cassatt and CV Special, transferred Conestoga's poorly performing assets to those funds and then misrepresented the funds' objectives and performance to Cassatt and CV Special investors. Heckler has agreed to settle the SEC's charges by consenting to a bifurcated judgment that permanently enjoins him from future violations of the charged provisions and bars him from the securities industry, with disgorgement and penalties to be resolved at a future date.


Harper urges focus on diversity, equity, inclusion and social justice

At a Town Hall meeting hosted by Inclusiv, NCUA Chairman Harper said the National Credit Union Administration and federally insured credit unions must do all they can to advance economic equity and justice. “Many minority-owned businesses and communities have been acutely affected by the suddenness and depth of the economic shock resulting from the lockdowns that were put in place to contain the spread of the virus,” Harper said. “By staying focused on diversity, equity, inclusion, and social justice, credit unions can help ease the financial impact of COVID-19 and systemic racism on communities of color. And the end result will be a more vibrant economic outcome for everyone in society.”


Regulators to treat ECIP investments as capital

The federal bank regulatory agencies yesterday announced an interim final rule that supports the Treasury Department's implementation of a program established by Congress to make capital investments in minority depository institutions and community development financial institutions. Treasury’s Emergency Capital Investment Program (ECIP) will support the efforts of these financial institutions to provide loans, grants, and forbearance to small businesses, minority-owned businesses, and consumers, especially in low-income and underserved communities, which may be disproportionately affected by COVID-19. To facilitate implementation of ECIP, the agencies are revising their capital rules to provide that Treasury's investments under the program qualify as regulatory capital of insured depository institutions and holding companies.

The rule will become effective upon publication in the Federal Register. Comments will be accepted for 60 days following publication.

Publication, effective date and comment period update: Published at 86 FR 15076 and effective on 3/22/2021. Comments accepted through 5/21/2021.


CFPB interpretive rule on prohibition against sex discrimination

The CFPB has announced it has issued an interpretive rule clarifying that the prohibition against sex discrimination under the Equal Credit Opportunity Act and Regulation B includes sexual orientation discrimination and gender identity discrimination. This prohibition also covers discrimination based on actual or perceived nonconformity with traditional sex- or gender-based stereotypes, and discrimination based on an applicant’s social or other associations.

Publication and effective date update: Scheduled for publication on 3/16/2021, when it will also become effective.

BankersOnline has added a note about the interpretive rule to the Commentary on the definition of "prohibited basis" in section 1002.2 of Regulation B in BOL's Regulations pages.


FinCEN issues notice on trade in antiquities and art

FinCEN has issued Notice FIN-2021-NTC2 to inform financial institutions about:

  1. the Anti-Money Laundering Act of 2020 (the AML Act) efforts related to trade in antiquities and art,
  2. select sources of information about existing illicit activity related to antiquities and art, and
  3. specific instructions for filing Suspicious Activity Reports (SARs) related to trade in antiquities and art.

    FinCEN encourages financial institutions to continue filing SARs regarding these topics.


NCUA publishes proposal and ANPR

The National Credit Union Administration has published two rulemaking documents for comment in this morning's Federal Register.

  • A proposal published at 86 FR 13494 to add the "S" (Sensitivity to Market Risk) component to the existing CAMEL rating system and redefine the “L” (Liquidity Risk) component, thus updating the rating system from CAMEL to CAMELS. The proposal to add the “S” component will enhance transparency and allow the NCUA, State Supervisory Authorities, and federally insured credit unions to better distinguish between liquidity risk (“L”) and sensitivity to market risk (“S”). The amendment would also enhance consistency between the regulation of credit unions and other financial institutions. The Board is proposing to implement the addition of the “S” rating component and a redefined “L” rating as early as the first quarter of 2022. Comments are due by May 10, 2021.
  • An advance notice of proposed rulemaking published at 86 FR 13498 to solicit comments on two approaches to simplify its risk-based capital requirements. The first approach would replace the risk-based capital rule with a Risk-based Leverage Ratio (RBLR) requirement, which uses relevant risk attribute thresholds to determine which complex credit unions would be required to hold additional capital (buffers). The second approach would retain the 2015 risk-based capital rule (currently scheduled to become effective on January 1, 2022) but enable eligible complex FICUs to opt-in to a “complex credit union leverage ratio” (CCULR) framework to meet all regulatory capital requirements. The CCULR approach would be modeled on the “Community Bank Leverage Ratio” framework, which is available to certain banks. Comments will be accepted through May 10, 2021.


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