Top Story Compliance Related

The Federal Reserve Board has released Consumer Affairs Letter 18-3 with revised interagency examination procedures for Regulations X (RESPA) and Z (TILA), recently developed by the Task Force on Consumer Compliance of the Federal Financial Institutions Examination Council.

Treasury has released a joint statement on the formation of a U.S. – UK financial Regulatory Working Group with a view to the further promotion of financial stability; investor protection; fair, orderly, and efficient markets; and capital formation on both sides of the Atlantic. The Working Group will be a forum for Her Majesty’s Treasury and the Treasury Department of the United States staff, along with staff from applicable U.S. and UK financial regulatory authorities, to exchange views on the regulatory relationship between the United States and the UK. The group plans to meet twice a year, with additional technical meetings and calls, as appropriate. The Working Group will be used as a platform for furthering financial regulatory cooperation, with the general operational objective to improve transparency, reduce uncertainty, identify potential cross-border implementation issues, work towards avoiding regulatory arbitrage and towards compatibility, as appropriate, of each other’s national laws and regulations.

The Office of the Comptroller of the Currency has released its April 2018 report of enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. The report includes one action taken in February, and seven in March.

• A Seattle, Washington, bank was issued an Order to Cease and Desist based on findings that the bank had deficiencies in its BSA/AML compliance program.
• Three individuals now or formerly affiliated with Merchants Bank of California, NA, of Carson, California, were issued orders to pay civil money penalties totaling $60,000. Two of those individuals were also issued personal cease and desist orders.
• Two former personal bankers with JPMorgan Chase Bank, NA, Columbus, Ohio (theft of bank funds from vault on two occasions) , and Wells Fargo Bank, NA, Sioux Falls, South Dakota (misappropriation of over $59,000 from a bank customer), were issued removal/prohibition orders.

The U.S. Senate yesterday approved S.J.Res.57, a joint resolution providing for congressional disapproval under the Congressional Review Act of the CFPB's guidance relating to "Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act." The CFPB's guidance (CFPB Bulletin 2013-02, March 21, 2013) constitutes a rule under the Congressional Review Act, according to a December 5, 2017, opinion from the Government Accountability Office, and the sixty-legislative-day period provided in the Congressional Review Act was reset when the GAO opinion was issued. The resolution now goes to the House and, if approved there, to the president for signing.

The Federal Trade Commission has obtained a settlement order banning from negative-option sales the ringleader of an operation that lured people into an expensive negative-option scam using a low-cost “trial” offer for tooth whiteners and other products. The settlement order is one of three orders resolving FTC charges against Blair McNea, Jennifer Johnson, Danielle Foss and 59 corporate defendants. The defendants’ deceptive claims, hidden disclosures and confusing terms tricked people into providing their billing information, supposedly to pay shipping and a nominal cost for a trial product. They charged consumers for two ongoing subscriptions to nearly identical products until the consumers canceled. As a result, consumers who believed they had agreed to buy a single trial product for about $5 were charged about $200 a month until they canceled both unauthorized subscriptions.

The orders impose a judgment of $92,011,601, which represents the amount consumers lost to the scam. The remaining portion of the judgment will be suspended upon the surrender of the defendants’ assets, including money, vehicles, and proceeds from the sale of two homes.

The Federal Reserve System has released testimony of Vice Chairman for Supervision Randal K. Quarles before the House Committee on Financial Services, in the Board of Governors' semiannual report on supervision and regulation. His presentation (1) reviewed the current condition of the nation's banking institutions; (2) reviewed the Board's regulatory and supervisory agenda in light of the efficiency, transparency, and simplicity principles that enhance effectiveness; and (3) touched upon the Board's engagement with foreign regulators.

The OCC will host two workshops at the Hilton Omaha, May 22 and 23, for directors of national community banks and federal savings associations.

• The Risk Governance workshop on May 22 provides practical information for directors to effectively measure and manage risks. The workshop also focuses on the OCC’s approach to risk-based supervision and major risks in the financial industry.
• The Compliance Risk workshop on May 23 focuses on the critical elements of an effective compliance risk management program. The workshop also covers major compliance risks and critical regulations. Topics of discussion include the Bank Secrecy Act, Flood Disaster Protection Act, Fair Lending, Home Mortgage Disclosure Act, Community Reinvestment Act, and other compliance areas of interest.

As part of its most recent semi-annual report to Congress (see also our earlier Top Story on the report), the CFPB listed its plans for upcoming rules.

• "Payday loans" rule: The Bureau intends to open a rulemaking to reconsider the 2017 final rule. The current rule's applicable compliance date isn't until August 2019.
• Regulation CC: The CFPB intends to work with the Federal Reserve to issue jointly a rule that addresses provisions within the Bureau's purview (those affecting funds availability and disclosures).
• Debt collection: The agency will work toward releasing a proposal concerning FDCPA collectors' communications practices and consumer disclosures.
• HMDA: The Bureau intends to open a rulemaking to reconsider various aspects of the 2015 rule, which could involve issues such as the institutional and transactional coverage tests and the rule's discretionary data points (those not specifically mandated by HMDA as amended by the Dodd-Frank Act).
• Regulation P: The Bureau is working toward finalizing an amendment to the regulation on annual notice requirements.
• Regulation Z: The CFPB also intends to finalize a proposed amendment related to the use of closing disclosures to determine good faith disclosure of estimated closing costs.

No projected dates were included with these objectives.

The Federal Trade Commission has announced that three marketers who allegedly sold phony debt relief services, including fake loans, have agreed to be banned from selling debt relief, credit repair and financial products and services, to be banned from telemarketing, and to turn over assets worth approximately $35 million dollars, under settlements with the Commission and the State of Florida. The settlement orders, if entered by the court, will resolve charges against the marketers, who allegedly convinced people to pay hundreds or thousands of dollars a month by falsely promising to resolve their debts and improve their credit. Over time, victims found their debts unpaid, their accounts in default, and their credit scores lower, some were sued by their creditors, and some were forced into bankruptcy.

OFAC has announced John E. Smith will be leaving his position as its Director in early May 2018. Mr. Smith has served as OFAC's Director or Acting Director since February 2015 and has been with the agency for over 11 years, previously serving as its Deputy Director and as an Associate Director. Following Mr. Smith’s departure, Deputy Director Andrea M. Gacki will serve as the Acting Director of OFAC.