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Top Story Compliance Related

03/29/2024

FDIC advisory on CIP rule

FDIC Financial Institution Letter FIL-15-2024, issued yesterday in coordination with today's FinCEN Federal Register request for information and comment, is an advisory to reemphasize the requirements under the Customer Identification Program (CIP) Rule as it relates to collecting identifying information from customers. The advisory reminds institutions of the information required to be collected from the customer prior to account opening. The CIP rule has been in effect for more than 20 years (since October 1, 2003).

  • The CIP Rule requires a bank to implement a program that includes risk-based verification procedures that enable the bank to form a reasonable belief that it knows the true identity of its customers. These requirements exist regardless of whether the bank establishes this relationship directly with the customer or through an intermediary.
  • These procedures must include collecting, at a minimum, the customer’s name, date of birth (for an individual), address, and identification number.
  • A bank is required to collect the taxpayer identification number (TIN) from a customer that is a U.S. person prior to account opening or another approved identification from a non-U.S. person. This applies to all accounts with the exception of credit card accounts.

03/29/2024

FinCEN seeks comment on CIP TIN collection requirement

FinCEN has published [89 FR 22231] in this morning's Federal Register a notice and request for information and comment regarding the Customer Identification Program (CIP) Rule requirement for banks to collect a taxpayer identification number (TIN), among other information, from a customer who is a U.S. person, prior to opening an account (the “TIN collection requirement”).

Generally, for a customer who is an individual and a U.S. person (“U.S. individual”), the TIN is a Social Security number (SSN). FinCEN specifically seeks information to understand the potential risks and benefits, as well as safeguards that could be established, if banks were permitted to collect partial SSN information directly from the customer for U.S. individuals and subsequently use reputable third-party sources to obtain the full SSN prior to account opening. FinCEN seeks this information to evaluate and enhance its understanding of current industry practices and perspectives related to the CIP Rule's TIN collection requirement, and to assess the potential risks and benefits associated with a change to that requirement.

The notice also serves as a reminder from FinCEN, and staff at the Agencies, that banks must continue to comply with the current CIP Rule requirement to collect a full SSN for U.S. individuals from the customer prior to opening an account (“SSN collection requirement”).

Comments will be accepted for 60 days, through May 28, 2024.

03/28/2024

CFPB warns remittance transfer providers about false ads

The CFPB yesterday announced it has issued a new circular warning remittance transfer providers that false advertising about the cost or speed of sending a remittance transfer can violate federal law. The Bureau said that companies in the marketplace are charging junk fees on international money transfers and making false claims about the speed of transfers. The circular highlights several marketing practices relating to sending international money transfers that may violate the Consumer Financial Protection Act’s (CFPA) prohibition on deceptive acts or practices. This prohibition is enforced by the CFPB, states, and other regulators. Guidance in the circular applies both to traditional providers of international money transfers and to “digital wallets” that offer the capability to send money internationally from the United States.

Specifically, today’s circular addresses the following practices by remittance providers, including digital wallet providers that offer remittance services, that consumers have complained to the CFPB about and that the CFPB has observed in its market monitoring:

  • Falsely marketing “no fee” or “free” services
  • Burying promotional conditions in fine print
  • Deceptively advertising how long transfers will take

03/28/2024

U.S. sanctions Hamas-aligned fundraisers and actors financing DPRK weapons

Yesterday, the Treasury Department announced that OFAC, in coordination with the Republic of Korea (ROK), has sanctioned six individuals and two entities based in Russia, China, and the United Arab Emirates that generate revenue and facilitate financial transactions for the Democratic People’s Republic of Korea (DPRK). Funds generated through these actors are ultimately funneled to support the DPRK’s weapons of mass destruction (WMD) programs.

The Department also reported OFAC has designated two individuals and three entities as key financial facilitators involved in fundraising for Hamas.

For the names and identification information of the designated parties, see ourMarch 27, 2024, BankersOnline OFAC Update.

03/27/2024

FATF upgrades U.S. to largely compliant on beneficial ownership

The Treasury Department has reported that the Financial Action Task Force—the global standard-setting body for anti-money laundering, countering the financing of terrorism, and countering proliferation financing (AML/CFT/CPF)—announced that the United States has been upgraded to “largely compliant” with FATF Recommendation 24, which relates to beneficial ownership transparency for legal persons.

The FATF published the updated rating in the Seventh Enhanced Follow-Up Report of the United States, recognizing Treasury’s historic efforts to increase beneficial ownership transparency and address key vulnerabilities in the U.S. AML/CFT framework.

03/27/2024

OFAC actions announced

Yesterday, the Treasury Department reported that OFAC had sanctioned six entities, one individual and two tankers that are based or registered in Liberia, India, Vietnam, Lebanon, and Kuwait that have engaged in facilitating commodity shipments and financial transactions for the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), the Houthis, and Hizballah.

Treasury also reported that OFAC had sanctioned 11 individuals and entities supporting the regime of Syrian President Bashar Al-Assad through the facilitation of illicit financial transfers and trafficking of illegal drugs, as well as the extraction and export of Syrian commodities.

For the names and identification information of the designated individuals, entities, and vessels, see our March 26, 2024, BankersOnline OFAC Update.

03/26/2024

HUD charges Texas housing authority with disability discrimination

The U.S. Department of Housing and Urban Development announced yesterday that the agency has charged the Grapevine Housing Authority (“GHA”); Jane Everett, Executive Director of GHA; and Bonnie McHugh, Vice-Chair of the GHA Housing Commission, with discriminating against, and failure to provide a reasonable accommodation for a tenant with a disability.

HUD’s Charge of Discrimination alleges that the Grapevine Housing Authority, Ms. Everett, and Ms. McHugh terminated the lease of a tenant with diabetes following a medical episode caused by his blood sugar levels. They subsequently denied his reasonable accommodation request and continued eviction proceedings against him even after his doctor had provided evidence that his symptoms were managed following a change in medication and purchase of a medical alert bracelet.

A United States Administrative Law Judge will hear HUD’s charge unless any party to the charge elects to have the case heard in federal district court.

03/26/2024

Hsu discusses fairness and compliance risk management

The OCC has reported that Acting Comptroller of the Currency Michael J. Hsu yesterday discussed fairness and effective compliance risk management in remarks at CBA LIVE 2024, hosted by the Consumer Bankers Association. Mr. Hsu discussed how banks can improve their ability to anticipate and adapt to emerging compliance risk issues by elevating and developing a strong internal sense of fairness.

03/26/2024

OFAC sanctions Russian companies and Chinese hackers

Yesterday, the Treasury Department reported that OFAC had sanctioned thirteen entities and two individuals for operating in the financial services and technology sectors of the Russian Federation economy including persons developing or offering services in virtual assets that enable the evasion of U.S. sanctions. Five entities were designated for being owned or controlled by OFAC-designated persons.

Treasury also reported that OFAC had sanctioned Wuhan Xiaoruizhi Science and Technology Company, Limited (Wuhan XRZ), a Wuhan, China-based Ministry of State Security (MSS) front company that has served as cover for multiple malicious cyber operations. OFAC also designated Zhao Guangzong and Ni Gaobin, two Chinese nationals affiliated with Wuhan XRZ, for their roles in malicious cyber operations targeting U.S. entities that operate within U.S. critical infrastructure sectors, directly endangering U.S. national security.

For the names and identification information of all the designated parties, see the March 25, 2024, BankersOnline OFAC Update.

03/25/2024

FHFA issues 2023 Q4 UAD aggregate stats

The Federal Housing Finance Agency on Friday published its 2023 fourth-quarter data for the Uniform Appraisal Dataset (UAD) Aggregate Statistics. The Data File and Dashboards also include new property characteristics and a new statistic.

The UAD Aggregate Statistics Data File and Dashboards give stakeholders and the public continued access to a broad set of data points and trends found in appraisal reports. Today’s release includes the full year of 2023 data at all geographic levels (National, State, County, Metropolitan Statistical Area, and Census Tract). The data also now include six new measures of property structure and site, three new measures of neighborhood market conditions, and one new value statistic.

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