Top Story Compliance Related

Treasury has announced that OFAC removed the Colombian professional soccer team, Envigado Futbol Club S.A. (also known as Envigado F.C.), from the list of Specially Designated Nationals and Blocked Persons (SDN List). Envigado F.C. recently completed a sale and restructuring of team management under the oversight of the Colombian government that eliminated ties to a Colombian crime group involved in international narcotics trafficking and other criminal activities and cut them off from any benefit from the sale. For identification information, see our OFAC Update.

The Bureau of Consumer Financial Protection announced yesterday it has finalized an amendment to its TRID rule that addresses when mortgage lenders with a valid justification may pass on increased closing costs to consumers and disclose them on a Closing Disclosure. The Bureau said the update is intended to provide greater clarity and certainty to the mortgage industry.

The Bureau's rule is in response to feedback from the mortgage lending industry that it needed clarification on when creditors may pass on increased costs to consumers and disclose them on a closing disclosure. Specifically, a timing restriction on when the creditor may use a closing disclosure to communicate closing cost increases to the consumer could prevent a creditor from charging the consumer for those cost increases despite a valid reason for doing so, such as a changed circumstance or borrower request. The rule announced yesterday, which finalizes amendments proposed in July 2017 with minor clarifying changes, will be effective 30 days after publication in the Federal Register.

UPDATE: The rule is scheduled for publication on 5/2/18; it will be effective 6/1/18.

The Bureau has also posted an executive summary of the rule. BankersOnline has updated its Regulations page for Regulation Z § 1026.19 to reflect the amendments.

The Federal Trade Commission has filed a complaint charging the San Francisco-based LendingClub Corporation with falsely promising consumers they would receive a loan with “no hidden fees,” when the company deducted hundreds or even thousands of dollars in hidden up-front fees from the loans. The company is charged with violating the FTC Act and the Gramm-Leach-Bliley Act.

• FTC press release

The OCC will host a workshop in Detroit, Michigan, June 5-6, for directors, senior management team members, and other key executives of national community banks and federal savings associations. The Building Blocks: Keys to Success for Directors and Senior Management workshop combines lectures, discussion, and exercises to provide practical information on the roles and responsibilities of board participation. The workshop focuses on duties and core responsibilities of directors and management, discusses major laws and regulations, and increases familiarity with the examination process.

The FDIC has published a final rule [83 FR 17737] rescinding certain capital regulations of the FDIC's codified rules that were no longer effective following the January 1, 2015 implementation of the revised capital rules. The final rule also makes conforming changes to sections in the FDIC's codified rules that refer to the superseded capital rules. The rule is effective today, April 24, 2018.

The rumors in this week's press weren't "fake news." Wells Fargo Bank, N.A. has reached a settlement with the CFPB and the OCC, agreeing to reimburse consumers harmed by the bank's administration of a mandatory insurance program related to automobile loans and by how the bank charged some borrowers for mortgage interest rate-lock extensions. The CFPB's press release says that Wells Fargo will remediate harmed consumers and undertake certain activities related to its risk management and compliance management. The Bureau assessed a $1 billion penalty against the bank and credited a $500 million penalty collected by the OCC toward the satisfaction of its fine.

The OCC's press release reports that the bank's actions were unsafe or unsound, and that it has ordered the bank to make restitution and to develop and implement an effective enterprise-wide compliance risk management program. The OCC reserved the right to "take additional supervisory action, including imposing business restrictions and making changes to executive officers or members of the bank’s board of directors." The OCC's order also modifies restrictions placed on the bank in November 2016 relating to the approval of severance payments to employees and the appointment of senior executive officers or board members. The original restrictions related to severance payments applied to all employees, which unnecessarily delayed severance payments to employees who were not responsible for the bank’s deficiencies or violations. This order maintains restrictions on the approval of severance payments to senior and executive officers and the appointment of senior executive officers or board members.

• CFPB consent order
• OCC CMP order
• OCC Cease and Desist order

The National Credit Union Administration Board held its fourth open meeting of 2018 at the agency’s headquarters on Thursday and unanimously approved two items:

• A final rule reducing regulatory burdens on federally insured credit unions with assets of $10 billion or greater by removing certain current capital planning and stress testing requirements.
• A final rule revising parts of the agency’s advertising rule to provide regulatory relief by allowing an additional advertising option, expanding exemptions, and eliminating one requirement. UPDATE: This rule was published [83 FR 17910] 4/25/2018 with an effective date of 5/25/2018.

The Federal Reserve Board has announced the execution of a Cease and Desist Order against Hua Nan Commercial Bank Limited, Taipei City, Taiwan and Hua Nan Commercial Bank Limited New York Agency, New York, New York. An examination of the Taiwanese bank's agency office identified significant deficiencies in its risk management and compliance with anti-money laundering compliance and its BSA/AML compliance.

The Federal Reserve Board has released Consumer Affairs Letter 18-3 with revised interagency examination procedures for Regulations X (RESPA) and Z (TILA), recently developed by the Task Force on Consumer Compliance of the Federal Financial Institutions Examination Council.

Treasury has released a joint statement on the formation of a U.S. – UK financial Regulatory Working Group with a view to the further promotion of financial stability; investor protection; fair, orderly, and efficient markets; and capital formation on both sides of the Atlantic. The Working Group will be a forum for Her Majesty’s Treasury and the Treasury Department of the United States staff, along with staff from applicable U.S. and UK financial regulatory authorities, to exchange views on the regulatory relationship between the United States and the UK. The group plans to meet twice a year, with additional technical meetings and calls, as appropriate. The Working Group will be used as a platform for furthering financial regulatory cooperation, with the general operational objective to improve transparency, reduce uncertainty, identify potential cross-border implementation issues, work towards avoiding regulatory arbitrage and towards compatibility, as appropriate, of each other’s national laws and regulations.