Top Story Compliance Related

The CFPB has published in today's Federal Register its previously-announced proposal (see our May 5 Top Story) to establish a new part 1040 in Chapter X in title 12 of the Code of Federal Regulations, which would contain regulations governing two aspects of consumer finance dispute resolution. First, the proposed rule would prohibit covered providers of certain consumer financial products and services from using an agreement with a consumer that provides for arbitration of any future dispute between the parties to bar the consumer from filing or participating in a class action with respect to the covered consumer financial product or service. Second, the proposal would require a covered provider that is involved in an arbitration pursuant to a pre-dispute arbitration agreement to submit specified arbitral records to the Bureau. The Bureau proposes that the rulemaking would apply to certain consumer financial products and services. The Bureau is also proposing to adopt official interpretations to the proposed regulation. Comments on the proposal are due by August 22, 2016.

The Department of Labor's Wage and Hour Division has published the previously announced (see our May 18 Top Story) final rule revising its regulations under the Fair Labor Standards Act implementing the exemption from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees. These exemptions are frequently referred to as the “EAP” or “white collar” exemptions. The rule also adds provisions for automatic updates every three years for its standard salary level for EAP employees, and for Highly Compensated Employee (HCE) compensation requirements. The revisions made by the rule published today will become effective December 1, 2016.

• 81 FR 32391

The Federal Deposit Insurance Corporation (FDIC) has announced it is extending the comment period for proposed recordkeeping requirements for FDIC-insured institutions with a large number of deposit accounts. The proposed recordkeeping requirements, which are designed to facilitate rapid payment of insured deposits to customers if large institutions were to fail, was published in the Federal Register on February 26 with a 90-day comment period. All comments must now be received on or before June 27. The 30-day extension will allow interested parties additional time to consider the proposal and the issues and questions posed for comment, particularly those related to the estimated cost of compliance. To assist commenters, the FDIC has published a report prepared for the agency on the estimated cost of compliance.

The proposed rule would apply to insured depository institutions with at least 2 million deposit accounts. The FDIC is not proposing or considering making these requirements applicable to smaller institutions, including community banks.

UPDATE: The comment deadline was corrected to June 27 in the Federal Register notice of the extension.

OCC Bulletin 2016-17, issued on May 19, 2016, highlights actions that national banks and federal savings associations (collectively, banks) should take and factors they should consider based on the SEC revised money market fund (MMF) rules in effect now and going into effect. Although these rules directly apply only to MMFs, the rules indirectly affect

• banks that make MMFs available to their customers through their fiduciary and custody activities;
• bank programs that automatically sweep funds between deposit accounts and MMFs; and
• banks that invest in MMFs.

The OCC will host risk governance and credit workshops in Milwaukee on June 28-29, for directors of national community banks and federal savings associations. The Risk Governance workshop on June 28 will provide 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 Credit Risk workshop on June 29 focuses on credit risk within the loan portfolio, such as identifying trends and recognizing problems. The workshop also covers the roles of the board and management, how to stay informed of changes in credit risk, and how to effect change.

The Treasury Department has announced actions taken to disrupt the fundraising and support networks of al-Qaida, al-Nusrah Front, al-Qaida in the Arabian Peninsula (AQAP), and ISIL by imposing sanctions on six individuals. Treasury's Office of Foreign Assets Control (OFAC) made related additions to its SDN List, and removed several listings for one individual. See our OFAC Update for additional information.

The Office of the Comptroller of the Currency has released a list of recent enforcement actions taken against national banks and federal savings associations. The list includes one cease and desist (C&D) order, two orders to pay civil money penalties (CMPs), one formal agreement, and five orders terminating previous enforcement actions. Stearns Bank, N.A., St. Cloud, Minnesota, received a C&D and an order to pay a $1 million CMP for violations of SAR filing requirements. A $56,500 CMP was assessed against TCF National Bank, Sioux Falls, South Dakota, for violations of the National Flood Protection Act.

The Financial Industry Regulatory Authority (FINRA) has announced it has fined Raymond James & Associates, Inc. (RJA) and Raymond James Financial Services, Inc. (RJFS) a total of $17 million for widespread failures related to the firms’ anti-money laundering (AML) programs. RJA was fined $8 million and RJFS was fined $9 million for failing to establish and implement adequate AML procedures, which resulted in the firms’ failure to properly prevent or detect, investigate, and report suspicious activity for several years. RJA’s former AML Compliance Officer, Linda L. Busby, was also fined $25,000 and suspended for three months. See "Brokers to pay $17 million for AML failures," in our Penalties pages, for more information.

The CFPB has issued a report finding that one in five borrowers who take out a single-payment auto title loan have their car or truck seized by their lender for failing to repay their debt. According to the Bureau’s research, more than four in five of these loans are renewed the day they are due because borrowers cannot afford to repay them with a single payment. More than two-thirds of auto title loan business comes from borrowers who wind up taking out seven or more consecutive loans and are stuck in debt for most of the year. The Bureau also posted an article on the report and prepared remarks from Director Cordray for the Bureau's press call.

NCUA Chairman Metsger has announced that briefings will be conducted by Board Directors prior to board meetings to discuss issues prior to taking action. Metsger stated, “What we’re doing is giving Board Members an opportunity to talk directly to one another, exchange thoughts and ideas. It also provides the broader credit union community with insight into our thought process. Since no action is being taken, stakeholders will also have the opportunity to consider our discussion and provide early input before any rulemaking begins.”