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Top Story Compliance Related

01/06/2021

CFPB releases Taskforce report

The CFPB has announced that its Taskforce on Federal Consumer Financial Law has released a report in two volumes [Volume I; Volume II] with recommendations on how to improve consumer protection in the financial marketplace. The Taskforce Report uses five interrelated principles that serve as the foundation for proposed systematic changes to the current legal and regulatory framework: consumer protection, information and education, competition and innovation, regulatory modernization and flexibility, and inclusion and access.

In its report, the Taskforce makes approximately 100 recommendations to the Bureau, Congress, and state and federal regulators to strengthen consumer protection. Among the Taskforce recommendations are:

  • Authorize the Bureau to issue licenses to non-depository institutions that provide lending, money transmission, and payments services;
  • Expand access to the payment system by unbanked and underbanked consumers and ensure consistent treatment by applying the same rules to similar financial products;
  • Identify competitive barriers and make appropriate recommendations to policymakers and regulators for expanding access to the payments systems by non-bank providers;
  • Research and develop policies tailored to the unique challenges of formerly incarcerated people, and work with state and federal authorities to improve protection of this population;
  • Research and develop policies to address problems of financial inclusion in rural communities;
  • Facilitate creditor access to immigrants’ credit information prior to their arrival in the United States in order to use that information in credit decisions;
  • Research consumer reporting issues that arise in connection with a consumer’s bankruptcy;
  • Consider the benefits and costs of preempting state law where conflicts can impede the provision of valuable products and services, such as the regulation of FinTech companies engaged in money transmission;
  • Identify opportunities to coordinate regulatory efforts. For example, the Bureau and prudential regulators should eliminate overlapping examination subject areas and reconcile inconsistent examination standards that unnecessarily expend multiple resources and can cause confusion;
  • Continue to increase dialogue with state regulators to bridge knowledge gaps and streamline regulation;
  • Work with other agencies to create a unified regulatory regime for new and innovative technologies providing services similar to banks;
  • Establish independent review of the Bureau’s regulatory cost-benefit analyses by staffing an office of cost-benefit analysis at the Bureau and or by submitting its analyses to OIRA for review;
  • Evaluate any positive or negative effect on inclusion as part of the Bureau’s cost-benefit analyses as appropriate;
  • Exercise caution (a recommendation for the Bureau, Congress, and other federal and state regulators) in restricting the use of nonfinancial alternative data, which can be very useful indicators of creditworthiness.
  • Clarify the obligations of CRAs and furnishers with respect to disputes under the FCRA;
  • Assess periodically the accuracy and completeness of consumer credit reports.

01/06/2021

OFAC targets key actors in Iran's steel sector

OFAC has designated a China-based supplier of graphite electrodes, a key element in steel production, as well as twelve Iranian producers of steel and other metals products, and three foreign-based sales agents of a major Iranian metals and mining holding company. This action was taken pursuant to Executive Order 13871, which imposes sanctions on several sectors of the Iranian economy, including Iran’s steel sector, that continue to generate significant revenue for the Iranian regime.

In concurrent actions, the State Department has sanctioned entities and an individual, Majid Sajdeh, under the Iran Freedom and Counter-Proliferation Act of 2012 (IFCA).

The names and identification information on the sanctioned individual and entities are list in BankersOnline's OFAC Update.

OFAC also updated its CAATSA FAQs yesterday.

01/05/2021

OFAC issues Venezuela-related license and updates FAQ

OFAC has posted a Notice of Recent Actions announcing it has issued General License 31A, "Certain Transactions Involving the IV Venezuelan National Assembly, the Interim President of Venezuela, and Certain Other Persons Authorized" (replacing and superseding General License 31, dated August 5, 2019). In addition, OFAC has amended related Frequently Asked Question 679.

01/05/2021

OCC proposes rule on permissible bank premises

The OCC has issued and invited comments on a proposed rule to codify permissibility standards for real estate used a national bank or federal savings association premises. The proposed rule would clarify standards for determining when real estate is necessary for the transaction of an institution's business. Comments on the proposal will be accepted for 45 days following its Federal Register publication.

01/04/2021

2019 Terrorist Assets Report

OFAC has released the 2019 Terrorist Assets Report. This is the 28th annual report to Congress on assets in the U.S. relating to terrorist countries and organizations engaged in international terrorism.

12/31/2020

OCC publishes CMP inflation adjustments

The Office of the Comptroller of the Currency has published at 85 FR 86795 in this morning's Federal Register a notice of its maximum civil money penalties as adjusted for inflation. The inflation adjustments are required to implement the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended. The adjusted penalty amounts are applicable to penalties assessed on or after January 1, 2021, for conduct occurring on or after November 2, 2015. Selected common penalties from the list include:

  • Flood insurance: $2,252 per violation
  • Appraisal independence requirements: $11,906 for first violation; $23,811 for subsequent violations
  • Reporting requirements violations: Tier 1 $10,366; Tier 2 $51,827; Tier 3 lesser of $2,073,133 or 1 percent of total assets

12/31/2020

Bureau issues approval order for dual usage credit cards

The Consumer Financial Protection Bureau has announced it has issued a compliance assistance sandbox (CAS) approval order to Synchrony Bank regarding their proposal to develop a “dual-feature credit card.”

The card is designed for consumers with a limited or damaged credit history as a tool that can be used to establish or reestablish a favorable credit history. Synchrony intends to offer a lower rate on secured use with the opportunity for eligible accountholders to graduate to unsecured use after 12 months. The terms of both secured use and unsecured use will be disclosed at the opening of the dual-feature credit card account. The terms will then be redisclosed with the opportunity to opt-in to unsecured use.

A CAS approval offers an entity confronting regulatory uncertainty a “safe harbor” from liability under specified legal provisions. Entities are offered safe harbor for specified conduct that the Bureau finds compliant with those legal provisions, subject to good faith compliance with the terms of the approval. The Synchrony CAS approval order implements the existing safe harbor approval mechanisms provided under the Truth in Lending Act, and is valid for three years.

12/31/2020

CFPB issues approval order for earned wage access product

The Consumer Financial Protection Bureau has issued a compliance assistance sandbox (CAS) approval order to PayActiv, Inc. covering specific aspects of some of its earned wage access (EWA) products, which allow employees access to their earned but unpaid wages prior to payday. A CAS approval offers an entity confronting regulatory uncertainty a “safe harbor” from liability under specified legal provisions. Entities are offered safe harbor for specified conduct that the Bureau finds compliant with those legal provisions, subject to good faith compliance with the terms of the approval. In this case, the CAS approval order implements the existing safe harbor approval mechanisms provided under the Truth in Lending Act, and is valid for two years.

12/31/2020

OFAC targets two Venezuelan officials

On Wednesday, the Treasury Department announced that OFAC has designated Venezuelan judge Lorena Carolina Cornielles Ruiz and Venezuelan prosecutor Ramon Antonio Torres Espinoza, the Venezuelan government officials who presided over and prosecuted the November 2020 trial and sentencing of six U.S. persons in Venezuela. The six U.S. persons, known as the “Citgo 6,” are Citgo executives who were imprisoned in Venezuela in November 2017 after being lured to Caracas under false pretenses.

For identity information on Cornielles Ruiz and Torres Espinoza, see BankersOnline's OFAC Update.

12/29/2020

FinCEN issues COVID-19 scam alert

The Financial Crimes Enforcement Network (FinCEN) issued Notice FIN-2020-NTC4 yesterday to alert financial institutions about the potential for fraud, ransomware attacks, or similar types of criminal activity related to COVID-19 vaccines and their distribution. The notice also provides specific instructions for filing Suspicious Activity Reports (SARs) regarding such suspicious activity related to COVID-19 vaccines and their distribution.

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