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Top Story Compliance Related


San Antonio software company settles with OFAC

OFAC has announced an $189,483 settlement with NewTek, Inc., a company headquartered in San Antonio, Texas, that develops and supplies live production and 3D animation hardware and software systems. The agreement settles NewTek’s potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR) that occurred between December 2013 and May 2018 when NewTek indirectly exported goods, technology, and services from the United States to Iran through third-country distributors.

OFAC determined that NewTek voluntarily self-disclosed the apparent violations and that the apparent violations constitute a non-egregious case.


Fed fines and bans former BNP Paribas banker

The Federal Reserve Board has issued a consent prohibition and civil money penalty order against Bhushan Bhangale, a former data management and data quality professional at BNP Paribas New York Branch, and a former institution-affiliated party of BNP Paribas USA, Inc., New York, New York, and of BNP Paribas RCC Inc., Jersey City, New Jersey.

The Board found that Bhangale received at least $100,000 in kickbacks in exchange for hiring contingent workers from certain information technology sourcing companies for work on projects at the bank, in violation of the bank's written policies.

The Board's order prohibits Bhangale from participating in any manner in the affairs of any insured depository institution or any bank holding company or subsidiary, and directs that he pay a civil money penalty of $100,000.


OCC proposal to rescind 2020 CRA Rule

The OCC has announced publication of Bulletin 2021-41 with a notice soliciting comments on proposed rules that would rescind the OCC's Community Reinvestment Act (CRA) rule issued in 2020 and replace it with rules adopted jointly by the Federal banking agencies in 1995, as amended. This action facilitates the ongoing interagency work to modernize the CRA regulatory framework and promote consistency for all insured depository institutions.

The proposed rules would apply to all national banks and all federal and state savings associations. Comments must be received on or before October 29, 2021.


Reserve Banks' August CRA ratings

Our monthly review of the Federal Reserve Board's CRA Evaluation and Ratings archive reveals that the Reserve Banks publicly released 13 evaluation ratings in August 2021. Twelve of the evaluations were rated "Satisfactory." One bank—Security Financial Bank, Durand, Wisconsin—received an "Outstanding" rating.

The archive is a searchable database of all CRA evaluation ratings completed by the Federal Reserve Banks since 1995.


Guidance for 2021 reporting qualified sick and family leave wages

Treasury and the IRS have announced the issuance of Notice 2021-53, which provides guidance to employers about reporting on Form W-2 the amount of qualified sick and family leave wages paid to employees for leave taken in 2021. The notice provides guidance under recent legislation, including: the Families First Coronavirus Response Act (FFCRA), as amended by the COVID-Related Tax Relief Act of 2020, and the American Rescue Plan Act of 2021. Employers will be required to report these amounts to employees either on Form W-2, Box 14, or in a separate statement provided with the Form W-2. The guidance provides employers with model language to use as part of the Instructions for Employee for the Form W-2 or on the separate statement provided with the Form W-2.The wage amount that the notice requires employers to report on Form W-2 will provide employees who are also self-employed with the information necessary to determine the amount of any sick and family leave equivalent credits they may claim in their self-employed capacities.


Comment period for proposed Risk Management Guidance extended

The Federal Reserve Board, FDIC, and OCC have announced that they will extend until October 18, 2021, the comment period on proposed guidance designed to help banking organizations manage risks associated with third-party relationships, including relationships with financial technology-focused entities. The proposed guidance is intended to assist banking organizations in identifying and addressing the risks associated with third-party relationships and responds to industry feedback requesting alignment among the agencies with respect to third-party risk management guidance. The agencies extended the comment period to allow interested persons more time to analyze the issues and prepare their comments. Originally, comments were due by September 17, 2021.


Kraft Heinz pays $62M to settle SEC charges

The SEC has announced that it has charged The Kraft Heinz Company with engaging in a long-running expense management scheme that resulted in the restatement of several years of financial reporting and also charged Kraft's former Chief Operating Officer Eduardo Pelleissone and its former Chief Procurement Officer Klaus Hofmann for their misconduct related to the scheme. The SEC complaint and order alleged that Kraft failed to design and maintain effective internal accounting controls for its procurement division. As a result, finance and gatekeeping personnel repeatedly overlooked indications that expenses were being improperly accounted for.

Without admitting or denying the SEC's findings as to them, Kraft consented to cease and desist from future violations and pay a civil penalty of $62 million; Pelleissone consented to cease and desist from future violations, pay disgorgement and prejudgment interest of $14,211.31, and pay a civil penalty of $300,000;and Hofmann consented to a final judgment permanently enjoining him from future violations, ordering him to pay a civil penalty of $100,000, and barring him from serving as an officer or director of a public company for five years.


FDIC releases 59 CRA evaluation ratings

The FDIC has issued its monthly list of 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 June 2021. Of the fifty-nine banks examined, 55 were rated Satisfactory, and one Ohio bank was rated Needs to Improve. We congratulate three banks that received evaluation ratings of Outstanding:


Discrimination charge against Florida homeowners association

HUD has charged The Links South at Harbour Village Condominium Association> Inc., in Ponce Inlet, Florida, with discrimination because of disability when it denied a reasonable accommodation request. Specifically, because of the husband’s respiratory disabilities (linked to his work removing debris from the World Trade Center 9/11 disaster site), a couple asked to be able to keep their shoes outside their unit in order to limit exposure to outdoor allergens, chemicals or pollutants inside their home.


Treasury targets Iranian intelligence network

On Friday, September 3, 2021, Treasury announced that OFAC had designated four Iranian intelligence operatives who targeted a U.S. citizen in the United States and Iranian dissidents in other countries as part of a wide-ranging campaign to silence critics of the Iranian government. Senior intelligence official Alireza Shahvaroghi Farahani led a network that plotted the kidnapping of a U.S. journalist and human rights activist, a failed plot that led to the indictment of members of the network in late July.

For identification information on Farahani and the other three designated Iranians, see the September 3, 2021, BankersOnline OFAC Update.


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