Top Story Compliance Related

The U.S. Department of the Treasury announced on Friday that OFAC acted to target ISIS’s global facilitation network by designating three individuals and three entities as Specially Designated Global Terrorists under Executive Order 13224, which targets terrorists and those providing support to terrorists or acts of terrorism. As a result of Friday’s designations, all property and interests in property of these persons subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. Identifying information on the designated individuals and entities can be found in our OFAC Update.

The Federal Reserve Board has issued a Notice of Intent to Prohibit Jacob H. Goldstein, former president and CEO of NBRS Financial, Rising Sun, Maryland (a former state member bank merged with assistance into Howard Bank, Ellicott City, Maryland). The Notice of Intent alleges that Goldstein, who also served as chief lending officer for the bank, received the benefit of loans to third parties without disclosing to the bank's board that he benefited from those loans, which violated Regulation O, breached his fiduciary responsibilities to the bank, and caused the bank to operate in an unsafe and unsound manner.

The Notice of Intent gives Goldstein 20 days to file an answer and notifies him of his right to an administrative hearing to issue recommendations to the Board of Governors concerning its intent to prohibit Goldstein from further involvement with any financial institution.

FinCEN has issued a notice to e-filers that announces an update to the Suspicious Activity Report (SAR) filing format, to be live in June 2018. The announcement says that the revisions adhere to the changes listed in FinCEN's February 2, 2017, Federal Register notice. Beginning with the new SAR filings, batch submissions will have to be made in an XML-based file, rather than the current ASCII fixed-length delimited file format. Other notable changes:

• A new text field to alert FinCEN that a SAR is being filed in response to a current GTO, advisory or other activity
• A new "Cyber Event" suspicious activity type category
• New or modified subtype selections associate with Structuring, Fraud, Gaming activities, Money laundering, Identification/Documentation, Other suspicious activities, Securities/Futures/Options, and Mortgage fraud.
• New text fields with the IP Address field to record the date and/or timestamp of the first instance of the reported IP address
• New category of fields to record up to 99 cyber events associated with the suspicious activity
• New product type selections
• New subtype selections for securities and futures institutions

Discrete filers will start using the new online e-filing form in June 2018. Batch filers may start sending XML-format files with the revised fields beginning in June, but must complete their changeover to XML within 6 months of the yet-to-be-announced June "go-live" date. ASCII batch files will be accepted until January 1, 2019.

The Securities and Exchange Commission has announced its 2018 examination priorities, which include compliance and risks in critical market infrastructure, matters of importance to retail investors (including seniors and those saving for retirement), FINRA and MSRB, cybersecurity, and anti-money laundering programs.

The OCC has announced a $50 million civil money penalty against Rabobank, N.A., of Roseville, California, for deficiencies in the bank’s Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance program and the termination of a consent order. The bank’s deficiencies were the subject of a cease and desist order which the bank consented to on December 5, 2013. The bank is a subsidiary of the Netherlands-based Coöperatieve Rabobank U.A.

The civil money penalty partially satisfied a $369 million criminal forfeiture order imposed by the Justice Department in exchange for the bank's guilty plea to a felony conspiracy charge for "impairing, impeding and obstructing its primary regulator..., by concealing deficiencies in its anti-money laundering (AML) program and for obstructing the OCC’s examination of Rabobank."

For more information on the Rabobank case and links to the OCC and Justice Department announcement and orders, see "Rabobank pays $369M for BSA/AML violations and obstruction", in our Penalties pages.

OFAC has announced it has acted to disrupt South Asian terrorist support networks by designating three individuals, Rahman Zeb Faqir Muhammad, Hizb Ullah Astam Khan, and Dilawar Khan Nadir Khan, as Specially Designated Global Terrorists (SDGTs) pursuant to Executive Order 13224, which targets terrorists and those providing support to terrorists or acts of terrorism. See our BOL OFAC Update for identifying information.

The CFPB has released the third in its series of "calls for evidence" to ensure that the Bureau is fulfilling its proper functions to best protect consumers. The latest Request for Information (RFI), expected to be published on Monday, asks for feedback on the CFPB's enforcement processes. If the RFI is published as scheduled, the 60-day comment period will expire on Friday, April 13, 2018.

The FDIC has released the economic scenarios that will be used by certain financial institutions with total consolidated assets of more than $10 billion for stress tests required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The baseline, adverse, and severely adverse scenarios include key variables that reflect economic activity, including unemployment, exchange rates, prices, income, interest rates, and other salient aspects of the economy and financial markets.

Comptroller of the Currency Joseph M. Otting issued a statement yesterday after meeting with Mick Mulvaney, Office of Management and Budget Director and Acting Director of the Consumer Financial Protection Bureau.

Editor's note: The OCC news release (NR 2018-14) reports that Comptroller Otting said that "Acting Director Mulvaney has helped reduce the burden on the banking system by delaying implementation of his agency's Home Mortgage Disclosure Act rule, committing to reconsider its payday lending rule, and deferring action on additional regulations until completing a more thorough review of those matters." There is no record of a delay in implementation of the HMDA rule. We believe Otting (or his staff) meant to refer to the delay of the Prepaid Accounts rule.

The CFPB announced Tuesday that Acting Director Mick Mulvaney has named Kirsten Sutton Mork chief of staff for the agency. Ms. Sutton Mork has been serving as staff director of the House Financial Services Committee under Chairman Jeb Hensarling.