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Top Story Compliance Related

07/30/2021

$2.3M in refunds to victims of debt relief schemes

The Federal Trade Commission is sending refund checks totaling nearly $2.3 million to people who lost money to credit card debt relief schemes. A complaint was filed by the FTC in July 2019 alleging that Educare Centre Services, Inc. and Tripletel, Inc. made false and unfounded promises that they would significantly reduce the interest rates on consumers’ credit cards, and also promised a 100 percent money-back guarantee if the promised rate reduction failed to materialize or if consumers were otherwise dissatisfied.

In December 2019, the FTC and Ohio amended the complaint and added Voice over Internet Protocol (VoIP) service provider Globex Telecom, Inc. as a defendant. The amended complaint alleged that Globex knowingly provided the Educare scheme with the means to make calls to U.S. consumers, including illegal robocalls, to market Educare’s phony credit card interest rate reduction services.

The FTC and Ohio filed a separate complaint in 2019 that alleged that Madera Merchant Services and B&P Enterprises generated and processed remotely created payment orders or checks that allowed dishonest merchants to withdraw money from their victims’ bank accounts. Madera and B&P Enterprises supported many unscrupulous merchants, including Educare’s deceptive telemarketing scheme.

As a result of the settlements reached with these defendants, the FTC is mailing 7,786 refund checks averaging about $293 each.

07/30/2021

Paid sick and family leave tax credits

The IRS has updated its frequently asked questions (FAQs) regarding the paid sick and family leave tax credits under the American Rescue Plan Act of 2021 (ARP). The updates clarify that eligible employers can claim the credits for providing leave to employees to accompany a family or household member or certain other individuals to obtain immunization relating to COVID-19 or to care for a family or household member or certain other individuals recovering from the immunization.

This new reason for paid sick or family leave also applies to the comparable credits for self-employed individuals.

07/30/2021

Libor transition capital rule FAQs

The OCC has issued Bulletin 2021-32 announcing frequently asked questions (FAQs). concerning the regulatory capital treatment of capital instruments whose terms reference the London Interbank Offered Rate (Libor). The Board of Governors of the Federal Reserve System (SR 21-12) and the Federal Deposit Insurance Corporation (FIL-54-2021) are issuing similar FAQs.

There are two FAQs on the topic, addressing:

  • Redemption or reissuance of regulatory capital instruments
  • Regulatory capital instruments with changing distribution rates

07/29/2021

OFAC sanctions Syrian regime prisons, officials and armed group

On Wednesday, The Treasury Department announced that OFAC had sanctioned eight Syrian prisons run by the Assad regime’s intelligence apparatus that have been sites of human rights abuses against political prisoners and other detainees. OFAC also designated five senior security officials of regime entities that control these detention facilities.

OFAC also sanctioned Syrian armed group Ahrar al-Sharqiya, which operates in northern Syria, and two of the group's leaders, for abuses against civilians.

For identification information on the designated individuals and entities, see our BankersOnline OFAC Update for July 28, 2021.

07/27/2021

Bureau advisory on SCRA rights

The CFPB has posted a Consumer Advisory, "Know Your Rights Under the Servicemember Civil Relief Act (SCRA)," with an explanation of the protections afforded servicemembers under the Act. The Advisory notes that the SCRA was amended this year to allow qualified individuals the ability to terminate residential and vehicle lease agreements electronically by sending a notice of termination along with a copy of their orders – or a letter from their commanding officer via email or through a communications portal designated by the lender or agent.

The Advisory advises servicemembers to check with a military legal assistance attorney or private legal counsel before signing any waiver of SCRA rights, and suggests options available to servicemembers who believe their SCRA rights have been violated. There are also links to several resources that can help servicemembers better understand the full range of legal protections available under the SCRA.

07/26/2021

Weather damage relief for areas of Michigan

FDIC FIL-52-2021, issued Friday, announced steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Michigan affected by severe storms, flooding, and tornadoes June 25–26, 2021. The FDIC is encouraging banks to work constructively with borrowers experiencing difficulties beyond their control because of damage caused by the severe weather. Banks that extend repayment terms, restructure existing loans, or ease terms for new loans in a manner consistent with sound banking practices can contribute to the health of the local community and serve the long-term interests of the lending institution. Banks may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery.

07/26/2021

Payoneer settles with OFAC

OFAC has announced a settlement with Payoneer Inc., a publicly traded New York-based online money transmitter and provider of prepaid access. Payoneer agreed to remit $1,400,301.40 to settle its potential civil liability for 2,260 apparent violations of multiple sanctions programs. Payoneer processed payments for parties located in the Crimea region of Ukraine, Iran, Sudan, and Syria, and also processed payments on behalf of sanctioned persons on OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN List”).

According to OFAC's Enforcement Release, Payoneer’s sanctions compliance program deficiencies at the relevant times—including with respect to screening, testing, auditing, and transaction review procedures—enabled persons in these jurisdictions and regions and on the SDN List to engage in approximately $802,117.36 worth of transactions. The settlement amount reflects OFAC’s determination that 2,241 of Payoneer’s apparent violations were not voluntarily self-disclosed, 19 were voluntarily self-disclosed, and all transactions were non-egregious.

07/23/2021

OFAC sanctions Cuban defense minister and special forces unit

Yesterday, OFAC sanctioned one Cuban individual and one Cuban entity, targeting the Cuban Minister of Defense, Alvaro Lopez Miera, and the Brigada Especial Nacional del Ministerio del Interior of the Cuban Ministry of the Interior in connection with the repression of peaceful, pro-democratic protests in Cuba that began on July 11.

For identification information, see BankersOnline's July 22, 2021, OFAC Update.

07/22/2021

Tandy Leather and former CEO settle SEC charges

The Securities and Exchange Commission has announced that Fort Worth, Texas, specialty retailer Tandy Leather Factory Inc. and its former chief executive officer, Shannon Greene, have agreed to settle charges for accounting, reporting, and control failures that led to a multi-year restatement of the company’s financial statements.

According to the order filed by the SEC, Tandy’s inventory tracking system was incapable of supporting its disclosed inventory accounting methodology because it did not properly maintain historical cost information for its inventory. Data from this system populated Tandy’s financial statements with inaccurate financial information, which in turn impacted the company’s calculations for, among other things, inventory, net income, and gross profit for years. Greene and others at the company were aware of the inventory tracking system’s limitations, but did not adequately remedy them, and failed to design and maintain proper accounting controls to reasonably ensure that Tandy’s transactions were recorded in accordance with generally accepted accounting principles. Tandy also failed to properly design, maintain, and evaluate its disclosure controls and procedures (DCP) and internal control over financial reporting (ICFR), and Greene failed to properly assess and evaluate the effectiveness of the same. As a result, Greene inaccurately certified that Tandy’s DCP and ICFR were properly designed and effective. On June 22, 2021, Tandy issued restated financial statements for fiscal years 2017 and 2018, each quarter in fiscal year 2018, and the first quarter of fiscal year 2019.

Without admitting or denying the order’s findings, Tandy and Greene each consented to cease and desist from further committing or causing these violations and pay civil money penalties of $200,000 and $25,000, respectively. In accepting Tandy’s settlement offer, the SEC took into account remedial actions the company took promptly after learning of the issues detailed in the SEC’s order.

07/22/2021

FTC amends rules of practice

The Federal Trade Commission has published a final rule [86 FR 38542] amending its rules of practice in 16 CFR parts 0 and 1. The revised rules, effective today, modernize procedures for rulemakings to define unfair or deceptive acts or practices under the FTC Act to provide for more efficient conduct of rulemaking proceedings. The Commission is also revising these rules to better reflect the agency's organizational structure and authority.

The Commission is also making conforming edits to make the rule language more gender-neutral; use active voice instead of passive voice; replace ambiguous uses of “shall” with “may”, “will”, or “must” as appropriate; make nonsubstantive grammatical changes; and add and standardize citations to the U.S. Code where appropriate.

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