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Top Story Compliance Related

07/16/2020

CFPB sues non-bank mortgage creditor for redlining

A CFPB press release reports that the Bureau has filed a lawsuit against Townstone Financial, Inc., a nonbank retail-mortgage creditor based in Chicago, for violations of the Equal Credit Opportunity Act, Regulation B; and the Consumer Financial Protection Act. ECOA and Regulation B prohibit mortgage lenders from discriminating against applicants in credit transactions on the basis of race, color, national origin, or other prohibited bases. ECOA and Regulation B also prohibit mortgage lenders from making statements, or engaging in acts or practices, that would discourage, on a prohibited basis, applicants or prospective applicants from applying for credit. The Bureau’s complaint alleges that Townstone violated ECOA and Regulation B by engaging in discriminatory mortgage-lending practices and that these violations also constituted violations of the CFPA. The complaint says that Townstone:

  • engaged in acts or practices, including making statements during its weekly radio shows and podcasts through which it marketed its services, that illegally discouraged prospective African-American applicants from applying to Townstone for mortgage loans;
  • engaged in illegal redlining by engaging in acts or practices that discouraged prospective applicants living in African-American neighborhoods in the Chicago MSA from applying to Townstone for mortgage loans, including by making discouraging statements during its weekly radio shows and podcasts through which it marketed its services; and
  • engaged in illegal redlining by engaging in acts or practices that discouraged prospective applicants living in other areas from applying to Townstone for mortgage loans for properties located in African-American neighborhoods in the Chicago MSA, including by making discouraging statements during its weekly radio shows and podcasts through which it marketed its services.

07/16/2020

Bureau article on military consumer protection

To mark Military Consumer Protection Month and National Consumer Protection Week, the CFPB has posted a blog article, "Alphabet soup: The ABCs of military consumer protection." The article summarizes and provides links to information on:

  • The Servicemembers Civil Relief Act (SCRA)
  • The Military Lending Act (MLA)
  • The Fair Debt Collection Practices Act (FDCPA)
  • The Fair Credit Reporting Act (FCRA)
  • Local and state laws

07/16/2020

OFAC targets entities facilitating Yevgeniy Prigozhin

Treasury has announced that OFAC has taken action as part of its ongoing sanctions efforts regarding financier Yevgeniy Prigozhin, by targeting entities located in Sudan, Hong Kong, and Thailand that have enabled his ability to evade U.S. sanctions. The actors targeted have directly facilitated Prigozhin’s global operations and attempted to suppress and discredit protestors seeking democratic reforms in Sudan.

OFAC’s action targets three individuals and five entities directly involved in furthering Prigozhin’s operations in Sudan and assisting his ability to evade sanctions. For information on the targeted individuals and entities, see BankersOnline's OFAC Update.

07/15/2020

FinCEN advisory on FATF list of AML/CFT-deficient countries

FinCEN has issued Advisory FIN-2020-A004 on the Financial Action Task Force-identified jurisdictions with AML/CFT deficiencies, which the FATF re-issued on June 30.

FinCEN advises that financial institutions should consider the FATF’s statements when reviewing their obligations and risk-based policies, procedures, and practices with respect to the jurisdictions identified for increased monitoring (Albania, The Bahamas, Barbados, Botswana, Burma (Myanmar), Cambodia, Ghana, Iceland, Jamaica, Mauritius, Mongolia, Nicaragua, Pakistan, Panama, Syria, Uganda, Yemen, and Zimbabwe).

The FATF made the initial determination that Iceland and Mongolia have substantially completed their action plans, and issued statements noting their progress. Iceland and Mongolia will remain identified as “Jurisdictions under Increased Monitoring” until the FATF can conduct on-site visits to verify that each country has begun implementing its reforms.

07/15/2020

$16M in refunds sent to victims of fake debt relief operations

The Federal Trade Commission has announced it is sending more than $16 million to individuals who lost money to a debt relief scam that targeted tens of thousands of consumers facing financial difficulty. The Commission and the Florida Office of the Attorney General alleged that a group of defendants known as Helping America Group got people to pay hundreds or thousands of dollars a month by falsely promising to pay, settle, or obtain dismissal of their debts and improve their credit scores. Over time, victims found their debts unpaid, their accounts in default, and their credit scores severely damaged—some were sued by their creditors, and some were forced into bankruptcy.

The FTC is providing 27,083 refund checks to victims of the scam. The FTC expects to collect additional money in this case, and plans to send a second round of checks at that time.

07/15/2020

Another "Outstanding" CRA rating released

Our review of the Federal Reserve Board's publication of CRA evaluation ratings in June revealed that eleven evaluations were made public, with ten banks garnering Satisfactory ratings. Our congratulations to Goldman Sachs Bank USA, New York, for its Outstanding rating.

07/14/2020

Student-loan debt-relief operator and attorneys sued by CFPB

The Consumer Financial Protection Bureau yesterday filed a complaint in the U.S. District Court for the Central District of California against GST Factoring, Inc., which runs a student-loan debt-relief business in Texas, and two of its owners, Rick Graff and Gregory Trimarche, as well as Champion Marketing Solutions, LLC, a customer service and marketing company, and its owner, Scott Freda. The Bureau also filed suit against four attorneys, California attorneys Amanda Johanson and Jacob Slaughter, Arizona attorney David Mize, and Florida attorney Daniel Ruggiero. The Bureau alleges that the companies, their owners, and the attorneys were part of a nationwide student-loan debt-relief operation that charged thousands of consumers saddled with private student-loan debt approximately $11.8 million in illegal upfront fees in violation of the Telemarketing Sales Rule. Concurrent with the complaint, the Bureau and four of the defendants filed proposed stipulated final judgments and orders to resolve the claims against them. If entered by the court, the orders will ban Trimarche, Slaughter, Mize, and Ruggiero from participating in certain activities, impose monetary judgments to provide consumer redress totaling approximately $11.8 million, and impose a civil money penalty.

07/14/2020

SEC charges app developer

The SEC reportedyesterday it had charged California-based Abra and a related firm in the Philippines for offering and selling security-based swaps to retail investors without registration and for failing to transact those swaps on a registered national exchange. According to the SEC’s order, Abra developed and owns an app that enabled users to bet on price movements of U.S.-listed equity securities. Using the app, individuals were able to enter into contracts that provide synthetic exposure to price movements of stocks and exchange-traded fund (ETF) shares trading in the U.S. through blockchain-based financial transactions with Abra or with related company Plutus Technologies Philippines Corp.

The order finds that Abra told users they could choose securities whose performance they wanted to mirror, and the value of their contract would go up or down the same amount as the price of the underlying security. The order further finds that these contracts were security-based swaps subject to U.S. securities laws.

As part of the settlement included in the order, Abra and Plutus agreed to cease and desist, and to jointly and severally pay a civil money penalty of $150,000.

07/13/2020

FATF Business Bulletin issued

The latest edition of the FATF Business Bulletin provides a summary of the decisions taken during the June 2020 Virtual Plenary and presents the objectives of the new FATF President, Marcus Pleyer, for the first two-year Plenary period.

07/13/2020

Amendments to SEC Form 13F proposed

The Securities and Exchange Commission has announced it has proposed to amend Form 13F to update the reporting threshold for institutional investment managers and make other targeted changes. The threshold has not been adjusted since the Commission adopted Form 13F over 40 years ago.

Form 13F was adopted to comply with a 1975 statutory directive designed to provide the Commission with data from larger managers about their investment activities and holdings, so that their influence and impact could be considered in maintaining fair and orderly securities markets.

Comments on the proposal will be accepted for 60 days following its publication in the Federal Register.

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