Top Story Compliance Related

The OCC has released its Semiannual Risk Perspective for Spring 2016, which reports that strategic, credit, operational, and compliance risks remain top concerns. Highlights from the report include:

• Strategic risk remains high as banks struggle to execute their strategic plans and face challenges in growing revenue.
• Credit risk is increasing because of strong loan growth combined with easing in underwriting standards. An increase in concentrations and risk layering continues as banks strive for yield in an increasingly competitive environment. This is particularly evident in indirect auto, commercial and industrial, and commercial real estate.
• Operational risk concerns include increasing cyber threats, reliance on third-party service providers, and resiliency planning.
• Banks face challenges meeting the integrated mortgage disclosure requirements and amended Military Lending Act regulatory requirements, the latter of which takes effect on October 3, 2016, and managing Bank Secrecy Act risks.
• Low energy prices, the potential for rising interest rates, and risks associated with banks partnering with marketplace lending firms are of concern and being monitored, as they may develop into broader system-wide issues.

The Office of Foreign Assets Control has updated its Cuba-related FAQs to add questions about the use of the U.S. dollar in certain transactions.

The Federal Reserve Board has announced that it will extend until July 21, 2017, the conformance period for banking entities to divest ownership in certain legacy investment funds and terminate relationships with funds that are prohibited under section 619 of the Dodd-Frank Act, commonly known as the Volcker Rule. The Board announced in December 2014 that it would make this extension to provide for orderly divestitures and to prevent market disruptions. This is the last of the three one-year extensions that the Board is authorized to grant.

• Board Order

The Consumer Financial Protection Bureau has posted an article in Spanish and English on the recent action taken by the Bureau and the Justice Department that would require BancorpSouth Bank to pay millions to harmed consumers. The article describes how undercover testers were used to document disparate treatment afforded African-American and white consumers. For more information see “BancorpSouth pays $10.6 million for mortgage discrimination,” in our Penalties section.

The FDIC has issued FIL-45-2016 on changes the Federal Financial Institutions Examination Council (FFIEC) has approved to the Consolidated Reports of Condition and Income (Call Report), as well as certain new and revised data items and instructional revisions. Subject to approval by the U.S. Office of Management and Budget, these Call Report revisions will take effect September 30, 2016, or March 31, 2017.

The Office of the Comptroller of the Currency has released a list of Community Reinvestment Act evaluations received by 19 national banks and federal savings associations. The ratings became public during the month of June 2016. One institution was rated outstanding and 18 were rated satisfactory.

The Social Security Administration has posted a notice in today's Federal Register that for fiscal year 2017, which begins October 1, 2016, the transaction fee for SSA's Consent Based Social Security Number Verification (CBSV) service will be reduced from the current fee of $1.40 to $1.00 per SSN verification. The one-time non-refundable enrollment fee of $5,000 will remain unchanged. The CBSV service was first announced in a notice at 72 FR 45079 on August 10, 2007. A User Guide for the CBSV service is available on the ssa.gov website.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated top officials of the North Korean regime, including North Korean leader Kim Jong Un, ten other individuals, and five entities, for their ties to North Korea’s notorious abuses of human rights. As a result, any property or interest in property of those designated by OFAC within U.S. jurisdiction is frozen. Additionally, transactions by U.S. persons involving the designated persons are generally prohibited. See our OFAC Update for more information.

The fifth article in the Bureau Blog series on auto loans, “Don’t get taken for a ride: protect yourself from an auto loan you can’t afford,” has been posted. Consumers are warned to:

• Be prepared before shopping for an auto loan
• Know what they can negotiate
• Avoid long-term loans if possible
• Review the loan contract before signing

The FDIC has issued a list of 49 state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA). The list covers evaluation ratings that the FDIC assigned to institutions in April 2016. Three banks received an outstanding rating, forty-three were rated satisfactory, two were rated needs to improve, and one was rated substantial non-compliance.