Top Story Compliance Related

In a court filing Wednesday, the Department of Labor said it has submitted to the Office of Management and Budget a proposal to delay implementing the remaining parts of its fiduciary rule for 18 months, reports CNBC.com. If approved by the OMB, the move would push out the effective date to July 1, 2019, from January 1, 2018.

The Department of Housing and Urban Development has approved an agreement between a Northern California fair housing organization and the owners and managers of two apartment complexes in Greenbrae, California. The agreement resolves allegations the owners and their agents discriminated against a female tenant with disabilities who requires an assistance animal.

The Federal Reserve Board and the FDIC have jointly announced an extension of the resolution plan filing deadline for 19 foreign banking organizations and two large domestic bank holding companies to December 31, 2018, to give the firms an additional year to address any supervisory guidance in their next plan submissions. The foreign banks are: Banco Bilbao Vizcaya Argentaria, S.A., Banco Santander, S.A., Bank of China Limited, Bank of Montreal, BNP Paribas, BPCE, Coöperatieve Rabobank U.A., Crédit Agricole S.A., HSBC Holdings plc, Industrial and Commercial Bank of China Ltd., Mitsubishi UFJ Financial Group, Inc., Mizuho Financial Group, Inc., Royal Bank of Canada, Société Générale, Standard Chartered PLC, Sumitomo Mitsui Financial Group, Inc., The Bank of Nova Scotia, The Norinchukin Bank, and The Toronto-Dominion Bank. The two domestic firms are: CIT Group, Inc. and Citizens Financial Group, Inc.

Also, the agencies announced that they would allow two smaller foreign firms, Canara Bank and Mercantil Servicios Financieros, C.A., to file reduced-content resolution plans moving forward. The firms have submitted prior plans that provide the agencies with an understanding of their limited U.S. operations.

The Federal Trade Commission has announced it has charged 12 defendants with laundering millions of dollars in credit card charges through fraudulent merchant accounts. According to the complaint filed by the FTC, the defendants arranged for a deceptive operation known as Money Now Funding (MNF) to obtain and maintain merchant accounts that allowed it to process almost $6 million through the credit card networks.

The Commission's court filing alleges that the defendants – an Independent Sales Organization (ISO), sales agents, and their principals – provided the MNF scheme access to the credit card networks by submitting and approving fraudulent applications in the names of more than 40 fictitious MNF companies. According to the FTC’s complaint, the defendants did so despite obvious signs that the companies were likely fictitious and being used to conceal the true identity of the underlying merchant. By processing the fraudulent MNF scheme’s transactions through merchant accounts opened in the names of fictitious companies, the ISO defendants allegedly also evaded the anti-fraud monitoring efforts of the credit card networks.

The ISO defendants are Electronic Payment Systems LLC, Electronic Payment Transfer LLC, John Dorsey, Thomas McCann and Michael Peterson. The sales agent defendants are Electronic Payment Solutions of America Inc., Electronic Payment Services Inc., KMA Merchant Services LLC, Dynasty Merchants LLC, Jay Wigdore, Michael Abdelmesseh (also known as Michael Stewart), and Nikolas Mihilli.

In a press release, Bureau Blog article and remarks prepared for Director Cordray's press call today, all released shortly after midnight EDT, the CFPB revealed four prototypes of disclosures designed to better explain a financial institution's overdraft fees and the risks to consumers in opting in to overdraft coverage (and fees) for ATM and one-time debit card transactions.

The Bureau is testing the prototypes as potential replacements for the current Regulation E disclosure form A-9, used to inform consumers of their financial institution's overdraft fee policies and consumers' option to have overdraft coverage and fees extend to transactions at ATMs and one-time debit card transactions. The CFPB is unveiling the prototypes to solicit public comment that will inform the Bureau's decision to adopt one or more of the prototypes—or variations of them—to replace the current A-9 form. In the meantime, the current form must be used.

The Federal Reserve Board has announced it is requesting public comment on two proposals. Comments will be accepted for 60 days following Federal Register publication.

• A corporate governance supervisory guidance proposal to enhance the effectiveness of boards of directors. The proposal would refocus the Federal Reserve's supervisory expectations for the largest firms' boards of directors on their core responsibilities, which will promote the safety and soundness of the firms. UPDATE: Published at 82 FR 37219 on August 9, 2017, with comments due by October 10, 2017.
• A proposal to better align the Board's rating system for large financial institutions with the post-crisis supervisory program for these firms. The proposed rating system would only apply to large financial institutions, such as domestic bank holding companies and savings and loan holding companies with $50 billion or more in total consolidated assets, as well as the intermediate holding companies of foreign banking organizations operating in the United States.

The CFPB has taken action against JPMorgan Chase Bank, N.A. for failures related to information it provides for checking account screening reports. The Bureau said that Chase broke the law by failing to comply with its obligations outlined in the Fair Credit Reporting Act by not having adequate policies in place regarding the accuracy of information it reported about consumers’ checking account behavior. The Bureau also said that Chase failed to provide consumers who disputed their information with the results of its investigation, and failed to tell certain consumers which consumer reporting company supplied the information that resulted in Chase’s denial of their checking account application. Under the Consent Order issued by the Bureau, Chase will pay a $4.6 million civil money penalty. For more information, see our Penalty Page.

The OCC announced yesterday it is seeking public comment on revising the final regulation implementing section 619 of the Dodd–Frank Act (commonly known as the Volcker Rule). The agency will publish a request for input on whether certain aspects of the implementing regulation should be revised to better accomplish the purposes of section 619, while decreasing the compliance burden on banks and fostering economic growth. In particular, the seeks input on ways to tailor the rule’s requirements and clarify key provisions that define prohibited and permissible activities. The agency also seeks input on how the federal regulatory agencies could implement the existing rule more effectively without revising the regulation.

UPDATE: Published at 82 FR 36692 on August 7, 2017. Comments due by September 21, 2017.

The Office of the Comptroller of the Currency has released a list of 26 Community Reinvestment Act (CRA) performance evaluations received by national banks, federal savings associations, and insured federal branches of foreign banks that became public in July. Three institutions were rated outstanding, and 23 were rated satisfactory.

The Office of the Comptroller of the Currency will host two workshops in Baltimore on September 12-13, for directors of financial institutions supervised by the OCC. The Compliance Risk workshop on September 12 focuses on the critical elements of an effective compliance risk management program. The Operational Risk workshop on September 13 focuses on the key components of operational risk—people, processes, and systems.