Top Story Compliance Related

The FDIC announced that it issued 10 administrative enforcement orders and two notices of charges and hearing in December 2017, including one consent order, two Section 19 orders, four removal and prohibition orders, a modification of a C&D, and the two notices.

Notices of charges and hearing are issued when the respondent has been made aware of a regulator's allegations of violations, and the respondent requests a hearing on the allegations. If a hearing is held, recommendations are made by an administrative law judge to the FDIC Board for final action. If the respondent waives the right to a hearing, or later agrees to end the hearing process, a consent order is issued. One of December's notices of charges and hearing was for an alleged series of Regulation O violations by a former CEO and chairman of an Alabama bank of which he and his son were majority shareholders. The FDIC Board requests approval of a removal and prohibition order and a civil money penalty of $70,000.

The second notice of charges and hearing was for unsafe or unsound banking practices constituting breaches of fiduciary duty by a branch manager of a Georgia bank. The notice alleges that the respondent made unauthorized withdrawals of over $130,000 from certificate of deposit accounts of deceased bank customers, causing the bank to charge off sums in excess of $130,000. The FDIC Board requests approval for a removal and prohibition order and a civil money penalty of $35,000.

The Federal Reserve, FDIC and OCC have issued an interagency statement that they will give favorable consideration under Community Reinvestment Act regulations to institutions that are located outside of the U.S. Virgin Islands and Puerto Rico, which were designated as major disaster areas in the aftermath of Hurricane Maria, for bank activities that help to revitalize or stabilize these areas.

OFAC has announced the designation of six individuals for provising support to the Taliban and Haqqani terrorist networks. As a result of yesterday’s designations, all property and interests in property of those persons subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. See BOL's OFAC Update for identification information.

The Federal Emergency Management Agency has published two final rules in today's Federal Register, suspending communities in Iowa, Louisiana and Texas from the National Flood Insurance Program for noncompliance with the floodplain management requirements of the program. The effective dates and communities affected are:

• 83 FR 3624, effective February 2, 2018, communities in Jefferson Parish, Louisiana
• 83 FR 3622, effective February 16, 2018, communities in Cameron County, Texas; and in Appanoose, Decatur, Lucas, Marion, Monroe, and Wayne counties, Iowa.

The CFPB has announced finalized updates to its 2016 Prepaid Accounts Rule. The changes finalized today adjust requirements for resolving errors on unregistered accounts, provide greater flexibility for credit cards linked to digital wallets, and extend the effective date of the rule by one year to April 1, 2019. The Bureau also included other clarifications and minor adjustments to the rule.

Update: Published in Federal Register at 83 FR 6364 on 2/13/2018.

The CFPB has released the Request for Information (RFI) about the Bureau’s Civil Investigative Demands (CIDs) that was announced as part of Acting Director Mick Mulvaney’s call for evidence last week. This RFI will provide an opportunity for the public, including covered entities, to submit feedback and suggest ways to improve outcomes for both consumers and investigation targets. The CFPB will accept comments for 60 days after publication (through March 27, 2018) in the Federal Register, which is scheduled for tomorrow, January 26. Update: Published at 83 FR 3686 on 1/26/18.

The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) has sanctioned nine entities, 16 individuals, and six vessels in response to North Korea's ongoing development of weapons of mass destruction (WMD) and continued violations of United Nations Security Council Resolutions (UNSCRs). The sanctions target agents of the Kim regime financing or otherwise supporting North Korea's WMD programs and other illicit businesses. As a result of this action, any property or interests in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked, and U.S. persons are prohibited from dealing with any of the designated parties. For identification of the individuals, entities and vessel sanctioned, see our OFAC Update.

The State Department has announced the designation of al-Qa’ida in the Arabian Peninsula (AQAP) leader Khalid Batarfi and two ISIS members as Specially Designated Global Terrorists. See the BOL OFAC Update for identification information.

The Federal Trade Commission has published a final rule implementing adjustments to the civil penalty amounts within its jurisdiction to account for inflation, effective January 22, 2018. Among the penalty caps adjusted are those for violations of portions of section 5 of the Federal Trade Commission Act (unfair or deceptive acts or practices), which are being increased to $41,484 per violation (the amount provided in the statute is $10,000). In the case of continuing violations, each day of continuance can be treated as a separate violation.

OFAC has posted a new Frequently Asked Question relating to a December 2017 announcement by Venezuelan President Nicolas Maduro of plans for the Venezuelan government to launch a digital currency. Because the proposed currency would reportedly carry rights to receive commodities in specified quantities at a later date, OFAC has determined that the currency would appear to be an extension of credit to the Venezuelan government, and U.S. persons that deal in the prospective Venezuelan digital currency may be exposed to U.S. sanctions risk.