Top Story Compliance Related

Treasury and the federal banking agencies have issued a joint fact sheet on foreign correspondent banking that outlines supervisory and enforcement processes with respect to anti-money laundering and sanctions in the area of correspondent banking. The report indicates that about 95% of BSA/OFAC compliance deficiencies identified by the regulators are corrected by the institution’s management without the need for any enforcement action or penalty. Treasury also posted a blog article, "Complementary Goals - Protecting the Financial System from Abuse and Expanding Access to the Financial System," about the joint agency report.

The Summer 2016 issue of Money Smart News has been posted by the FDIC, featuring articles on enhancements for small business; an easier way to join the Money Smart Alliance; tips on cybersecurity for bank customers; a discussion of mobile business and modernization of the payment system; and lending practices in financial education for postsecondary students. English and Spanish versions are available.

The Federal Trade Commission requests public comment on its Standards for Safeguarding Customer Information (16 CFR Part 314, the “Safeguards Rule”). The Rule, which took effect in 2003, requires financial institutions to develop, implement and maintain a comprehensive information security program for handling customer information. The Commission seeks comments on a number of questions, including the economic impact and benefits of the Rule; possible conflict between the Rule and state, local or other federal laws or regulations; and the effect on the Rule of any technological, economic or other industry changes. The comment deadline is November 7, 2016.

Update: Published at 81 FR 61632 on 9/7/2016.
Update: The FTC extended the comment period deadline to November 21, 2016, with a notice published on 11/15/2016.

The Federal Reserve Board has announced it has issued a notice of intent seeking a $1.2 million civil money penalty and a permanent ban on employment in the banking industry in an enforcement action against Christopher Ashton, a foreign exchange (FX) trader at Barclays PLC who is alleged to have manipulated FX pricing benchmarks. The trader is alleged to have used electronic chat rooms to coordinate FX trading, facilitate manipulation of FX pricing benchmarks, disclose confidential customer information to traders at other organizations, and engage in other unsafe and unsound practices.

The FDIC has released a list of 21 enforcement actions involving banks and individuals in July. Included was one consent order issued jointly with the Illinois Department of Financial and Professional Regulation, Division of Banking, for affirmative action by Sauk Valley Bank & Trust, Sterling, Illinois, relating to deficiencies in that bank's BSA/AML compliance program. Among other actions, the bank was ordered to arrange for a two-year look back by an independent and qualified auditor, on deposit account and transaction activity to determine whether SAR filings need to be completed, and an internal review of CTRs filed over the same period to determine which CTRs include errors. There were also nine removal and prohibition orders issued to institution-affiliated individuals formerly employed by nine separate institutions, and five Section 19 orders. The list also included six orders terminating prior enforcement actions.

The NCUA has encouraged credit unions to work with their members and consider options for assisting them that include offering new loans with special loan terms or rates and reduced documentation, providing payment flexibility for current loans, or potentially restructuring existing loans. Federal credit unions with questions about these options should contact their examiners. Credit Unions are also reminded that NCUA Letter 11-CU-13 provides they may provide emergency financial services to nonmembers as part of their authority to engage in charitable activities under their incidental powers. Such services could include check cashing for nonmembers, access to ATM networks, or other means to access cash, to meet the short-term, emergency needs of nonmembers. Federal credit unions providing these emergency services must do so on a charitable basis, meaning that service charges cannot exceed direct costs.

The Department of Defense has published at 81 FR 58840 in the August 26, 2016, Federal Register an "Interpretive rule" in the form of an FAQ on its Military Lending Act regulation at 32 CFR Part 232. The series of 19 questions and answers "provides guidance on certain questions the Department has received regarding compliance with the July 2015 final rule." The rule became effective upon publication.

The First National Bank of Omaha has been issued orders by the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau to pay a total of $7.5 million in civil money penalties and approximately $27.75 million in restitution to affected consumers for unfair or deceptive acts or practice under the Federal Trade Commission Act (OCC order) and unfair, deceptive or abusive acts or practices under the Consumer Protection Act (Bureau) in the marketing and sale of debt-cancellation add-on products and the billing of consumers for credit monitoring services they did not receive. This is the eighth action the Bureau has taken in coordination with another regulator to address illegal practices with respect to credit card add-on products and the 12th action the Bureau has taken in total to address such practices. See "FNB of Omaha hit with $7.5 CMPs and $27.75 M restitution" in our Penalties pages, for more on this story.

FinCEN has published at 81 FR 58425 in today's Federal Register a proposed rule that would amend portions of 31 CFR parts 1010 and 1020 to remove the anti-money laundering program exemption for banks that lack a Federal functional regulator, including, but not limited to, private banks, non-federally insured credit unions, and certain trust companies. The proposed rule would prescribe minimum standards for anti-money laundering programs for banks without a Federal functional regulator to ensure that all banks, regardless of whether they are subject to Federal regulation and oversight, are required to establish and implement anti-money laundering programs, and would extend customer identification program requirements and beneficial ownership requirements to those banks not already subject to these requirements. Comments on the proposal are due by October 24, 2016.

The Consumer Financial Protection Bureau has created a new webpage, Know Before You Owe: The settlement professional's guide, to help settlement professionals navigate through the changes that are a part of the Know Before You Owe (a/k/a "TRID") mortgage initiative. The new page includes links leading to explanations of—

• how the previous four disclosures (early TIL, GFE, TIL and HUD-1) were consolidated into the Loan Estimate and Closing Disclosure;
• what has and hasn't changed about settlement agent and creditor responsibilities, consumer privacy and electronic delivery; and
• key areas to focus on when selected as the settlement agent for a transaction.