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Top Story Compliance Related


OCC releases enforcement actions

The OCC has released a list of enforcement actions taken in April. Included was the execution of a Formal Agreement with Milton Savings Bank, Milton, Pennsylvania.


U.S. sanctions Houthi military officials

The Treasury Department announced yesterday that OFAC has taken against a key senior military official of Ansarallah, sometimes referred to as the Houthis, whose actions prolong Yemen’s civil war and exacerbate the country’s humanitarian crisis. Muhammad Abd Al-Karim al-Ghamari is responsible for orchestrating attacks by Houthi forces impacting Yemeni civilians.

In a separate action, the Department of State designated Yusuf al-Madani on the basis that he poses a significant risk of committing acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of the United States. Al-Madani is a prominent Houthi military leader and is the commander of the fifth military zone in Al Hudaydah, Hajjah, Al Mahwit, and Raymah, Yemen.

For identification information on these two individuals, see the May 20, 2021, BankersOnline OFAC Update.


Terrorism Sanctions regs amended

OFAC reported yesterday that it has amended the Terrorism List Governments Sanctions Regulations at 31 CFR part 596 to implement the rescission of the designation of Sudan as a State Sponsor of Terrorism. The update, effective today, was published at 86 FR 27273 in this morning's Federal Register.


COBRA tax breaks under American Rescue Plan

The IRS has announced it has issued Notice 2021-31 to provide guidance on tax breaks under the American Rescue Plan Act of 2021 for continuation health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).

The American Rescue Plan provides a temporary 100% reduction in the premium that individuals would have to pay when they elect COBRA continuation health coverage following a reduction in hours or an involuntary termination of employment. The new law provides a corresponding tax credit for the entities that maintain group health plans, such as employers, multi-employer plans, and insurers. The 100% reduction in the premium and the credit are also available with respect to continuation coverage provided for those events under comparable state laws, sometimes referred to as "mini-COBRA." Notice 2021-31 provides information regarding the calculation of the credit, the eligibility of individuals, the premium assistance period, and other information vital to employers, plan administrators, and insurers to understand the credit.


OCC to reconsider June 2020 CRA rule

The OCC has announced it has determined that it will reconsider the final Community Reinvestment Act rule published on June 5, 2020. While this reconsideration is ongoing, the OCC will not object to the suspension of the development of systems for, or other implementation of, provisions with a compliance date of January 1, 2023, or January 1, 2024, under the 2020 rule.

At this time, the OCC also does not plan to finalize the December 4, 2020, proposed rule that requested comment on an approach to determine the CRA evaluation measure benchmarks, retail lending distribution test thresholds, and community development minimums under the June 2020 rule. In addition, the OCC is discontinuing the CRA information collection pursuant to the Paperwork Reduction Act (PRA) notice published in the Federal Register in December 2020.

While this reconsideration is ongoing, the OCC will not implement or rely on the evaluation criteria in the June 2020 rule pertaining to:

  • quantification of qualifying activities (12 CFR 25.07 and 25.08);
  • assessment areas (12 CFR 25.09);
  • general performance standards (12 CFR 25.10 through 25.13);
  • data collection (12 CFR 25.21);
  • recordkeeping (12 CFR 25.25); and
  • reporting (12 CFR 25.26).

The OCC will continue to implement the provisions of the June 2020 CRA rule that had a compliance date of October 1, 2020. The OCC interpreted and explained these provisions in OCC Bulletin 2020-99. These implementation efforts include:

  • issuance of OCC Bulletin 2021-5 providing bank type determinations, lists of distressed and underserved areas, and the median hourly compensation value for community development service activities;
  • deployment of the CRA Qualifying Activities Confirmation Request process for banks and other stakeholders to request confirmation whether an activity meets the qualifying criteria under the June 2020 CRA rule; and
  • provision of training on provisions of the June 2020 rule with the October 1, 2020, compliance date in a series of webinars for examiners and bankers.


OCC report on key risks and effect of pandemic

The OCC has released a report on the key issues facing the federal banking system and the effects of the COVID-19 pandemic on the federal banking industry in its Semiannual Risk Perspective for Spring 2021. Highlights from the report include:

  • Credit risk is elevated and transitioning as the economic downturn continues to affect some borrowers’ ability to service debts. Assistance programs and federal, state, and local stimulus programs have suppressed past-due levels.
  • Strategic risks associated with banks’ management of Net Interest Margin compression and efforts to improve earnings is elevated. Banks attempting to improve earnings may implement measures including cost cutting, increasing credit risk (both credit and investments) or extending duration.
  • Operational risk is elevated due to a complex operating environment and increasing cybersecurity threats.
  • Compliance risk is elevated as banks’ expedited efforts to implement assistance programs continue to challenge established change management, product, and service risk management practices.

The report also highlights the low interest rate environment as a special topic in emerging risks.


FDIC seeks info on digital assets activities

The FDIC has issued a Request for Information and comments regarding insured depository institutions’ current and potential digital assets activities. In FIL-35-2021, the agency reported that—

  • Banks are increasingly exploring several roles in the emerging digital asset ecosystem, and consumers are beginning to seek access to digital assets products and services, such as being custodians, reserve holders, issuers, and exchange or redemption agents; performing node functions; and holding digital asset issuers’ money deposits.
  • The FDIC recognizes there are novel and unique considerations related to digital assets. This Request for Information is intended to help inform the FDIC’s understanding and any potential policymaking in this area.
  • Part 362 of the FDIC’s Rules and Regulations may apply to certain digital asset activities or investments. FDIC-supervised institutions are encouraged to engage in discussions with FDIC supervisors, as appropriate, before engaging in such activities or investments.
  • Comments will be accepted through July 16, 2021.


Agencies extend comment period for info gathering on uses of AI

The Fed, CFPB, FDIC, NCUA, and OCC have announced they are extending the comment period on their request for information on financial institutions' use of artificial intelligence (AI) until July 1, 2021.

The agencies are seeking information from the public on how financial institutions use AI in their activities, including fraud prevention, personalization of customer services, credit underwriting, and other operations. More specifically, the RFI seeks comments to better understand the use of AI, including machine learning, by financial institutions; appropriate governance, risk management, and controls over AI; and challenges in developing, adopting, and managing AI.

  • PUBLICATION UPDATE: Published at 86 FR 27960 on 5/24/2021


CFPB proposes settlement with DMB Financial

The CFPB has requested a federal district court to enter a final judgment and order that, if entered by the court, would require DMB Financial, LLC to pay consumers at least $5.4 million for charging unlawful fees and failing to provide required disclosures to its customers, and a civil penalty. The CFPB alleges that DMB’s actions violated the Federal Trade Commission's Telemarketing Sales Rule and the Consumer Financial Protection Act.

DMB Financial is a Beverly, Massachusetts-based debt-settlement company that operates in at least 24 states. DMB offers and provides services to settle or renegotiate unsecured debt on behalf of consumers. In December 2020 the CFPB filed a lawsuit against DMB Financial in federal district court in Massachusetts alleging that the company had charged unlawful upfront frees before it performed its promised services, and before consumers began making payments under any debt settlement.

The CFPB alleges that DMB Financial violated the TSR and CFPA. DMB’s violations center around:

  • Unlawful fees: DMB Financial allegedly charged fees before some consumers had made at least one payment to a creditor under a settlement agreement and charged some consumers fees even though it did not negotiate a settlement. The company also allegedly collected fees that were calculated on the consumer’s debt amount after their time of enrollment in one of DMB’s debt-settlement programs.
  • Improper disclosures: DMB Financial allegedly failed to disclose the amount that a consumer must save before making a settlement offer and the time by which it would make a settlement offer. The company also allegedly deceived consumers about settlement fees, including by charging settlement fees greater than what was disclosed in the enrollment agreement.

The proposed judgment and order, if entered by the court, would require DMB Financial to:

  • Refund harmed consumers: The order, if entered by the court, would impose a judgment of $7.7 million against DMB Financial, LLC, which would be suspended upon its paying consumers $5.4 million.
  • Stop deceptive practices: DMB Financial would be prohibited from engaging in the unlawful and deceptive practices alleged by the CFPB.
  • Pay a civil penalty: The order would also impose a penalty of $1 to be paid to the Bureau and deposited into the CFPB’s Civil Penalty Fund. By requiring the DMB Financial to pay a penalty of $1, the order may make consumers eligible for additional relief from the CFPB Civil Penalty Fund in the future, although that determination has not yet been made.


OFAC targets ISIS facilitators and Burmese military officials

The Treasury Department has announced that OFAC has designated three individuals — Alaa Khanfurah, Idris Ali Awad al-Fay, and Ibrahim Ali Awad al-Fay — and one entity — Al-Fay Company — in connection with the Islamic State of Iraq and Syria (ISIS). The individuals and company played a crucial role connecting ISIS with a network of international donors and enabled ISIS to access the financial system in the Middle East. This action coincides with the fourteenth meeting of the Counter ISIS Finance Group (CIFG), which includes nearly 70 countries and international organizations, and plays a fundamental role in coordinating efforts to deny ISIS access to the international financial system and eliminate its sources of revenue.

Treasury also reported that OFAC sanctioned designated 16 individuals and one entity connected to Burma’s military regime. Thirteen of the individuals are key members of Burma’s military regime. The other three individuals are adult children of previously designated senior Burmese military officials. The entity is the State Administration Council (SAC), the body created by the military to support its unlawful overthrow of the democratically elected civilian government. These designations were made under the authority of Executive Order 14014, “Blocking Property with Respect to the Situation in Burma.” These sanctions are not directed at the people of Burma. In concurrent actions, the U.K. and Canada also sanctioned persons and/or entities in relation to the on-going coup in Burma.

Identification information on the individuals and entities added to OFAC's SDN List in these two actions can be found in this BankersOnline OFAC Update.


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