Top Story Compliance Related

The Federal Reserve Board has announced that on December 11, 2015, it issued a consent Cease and Desist order against Habib Bank Limited, Karachi, Pakistan, and its New York, New York, branch. The order was issued because recent examination of the Branch conducted by the Federal Reserve Bank of New York (the “Reserve Bank”) and the New York State Department of Financial Services (“NYSDFS”) identified significant breakdowns in the Branch’s risk management and compliance with applicable federal laws, rules, and regulations relating to anti-money laundering (“AML”) compliance, including the Bank Secrecy Act; the rules and regulations issued thereunder by the U.S. Department of the Treasury (31 C.F.R. Chapter X); and the requirements of Regulation K of the Board of Governors to report suspicious activity and to maintain an adequate BSA/AML compliance program resulting in a compliance program violation; and because the bank and branch had failed to achieve full compliance with a December 19, 2006, Written Agreement by and between the bank, the branch, the Reserve Bank and the New York State Banking Department (predecessor of the NYSDFS).

The Bureau has announced it has issued a Consent Order against EZCORP, Inc., a small-dollar lender, for illegal debt collection practices. The tactics included illegal visits to consumers at their homes and workplaces, empty threats of legal action, lying about consumers’ rights, and exposing consumers to bank fees through unlawful electronic withdrawals. The Bureau ordered EZCORP to refund $7.5 million to 93,000 consumers, pay $3 million in penalties, and stop collection of remaining payday and installment loan debts owed by roughly 130,000 consumers. It also bars EZCORP from future in-person debt collection. In addition, the Bureau issued an industry-wide warning about collecting debt at homes or workplaces. For details, see the BOL Penalties page entry.

Title LXXV of the Fixing America's Surface Transportation (FAST) Act of 2015 (Public Law 114-94), enacted on December 4, amended Section 503 of the Gramm-Leach-Bliley Act (GLBA) to create an exception to the annual privacy notice requirement for financial institutions. Institutions that don't share nonpublic personal information in any way that requires an opt-in under Regulation P, and haven't changed their policies and practices for disclosing nonpublic personal information from those most recently disclosed will no longer be required to provide an annual disclosure.We can expect a Bureau amendment to Regulation P to implement the change in the law, and we will report it when it happens, but the law behind Regulation P no longer requires those annual mailings.

The CFPB has announced the filing of a federal complaint against EOS CCA (EOS), a Massachusetts debt collection firm, for reporting and collecting on old cellphone debt that consumers disputed and EOS did not verify. The company also provided inaccurate information to credit reporting companies about the debt and failed to correct reported information that it had determined was inaccurate. The CFPB also filed a proposed consent order that, if entered by the court, would require EOS to overhaul its debt collection practices, refund at least $743,000 to consumers, and pay a $1.85 million civil money penalty.

The FDIC's FIL-59-2015, issued Friday, announces the revision of the agency's Compliance Examination Manual to reflect recent supervisory guidance. The manual provides guidance to FDIC examination staff for evaluating financial institutions for compliance with federal consumer protection laws and regulations. The manual, which is available on the FDIC's website, may help staff at institutions who are seeking to better understand the FDIC's consumer compliance examination process. The revised manual includes:

• Updated templates providing examples of a consumer compliance Report of Examination and a CRA Performance Evaluation for a hypothetical, FDIC-supervised bank (the Bank of Anytown);
• New guidance about Matters Requiring Board Attention (MRBA), a section of the Report of Examination that directs banks to important information about weaknesses in a compliance management system, depending on the facts and circumstances at a particular bank;
• Guidance on evaluating the impact of consumer harm on examination and supervisory activities;
• A new "Assessment of Risk of Consumer Harm" (ARCH), which provides pre-examination planning and scoping guidance to FDIC examination staff; and
• Additional enhancements, such as bookmarks to improve navigation, hyperlinks to many external references, and downloadable chapters.

The Consumer Financial Protection Bureau has expanded its eRegulations collection to include CFPB regulations B, D, E, J, K, L, M and Z.

The OCC has issued Bulletin 2015-48 announcing the update of its guidance regarding its risk assessment system (RAS). These updates are reflected in the “Bank Supervision Process,” “Community Bank Supervision,” “Federal Branches and Agencies Supervision,” and “Large Bank Supervision” booklets of the Comptroller’s Handbook and internal guidance for examiners. Other Comptroller’s Handbook booklets will be updated as they are revised.

The FDIC has released a list of 51 state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA). Included were two outstanding, 46 satisfactory, and three needs-to-improve ratings.

The October 2015 update of the Commercial Bank Examination Manual has bee released by the Federal Reserve Board.

The Consumer Financial Protection Bureau has added a Home Mortgage Disclosure (Regulation C) Small Entity Compliance Guide to its HMDA Rule implementation page to provide plain-language assistance for small entities in their efforts to comply with the upcoming changes to HMDA data collection and filing under amendments to Regulation C.