Top Story Compliance Related

The Bureau has announced an opportunity to sign up for an email course to help consumers meet their financial goals. The "Get a Handle on Debt Boot Camp," a 21-day email course, will start in June.

On Friday, the FFIEC issued new examination procedures on the “Customer Due Diligence Requirements for Financial Institutions” rule finalized by FinCEN on May 11, 2016. The new examination procedures replace those in the current “Customer Due Diligence — Overview and Examination Procedures” section of the FFIEC’s Bank Secrecy Act/Anti-Money Laundering Examination Manual. In addition, a new overview and examination procedures were developed for the beneficial ownership requirements for legal entity customers. The revised procedures were issued on May 11, 2018, the day the rule became effective.

• Customer Due Diligence - Overview and Examination Procedures (PDF)
• Beneficial Ownership for Legal Entity Customers - Overview and Examination Procedures (PDF)

FinCEN has issued an Administrative Ruling (FIN-2018-R001) to provide exceptive relief to covered financial institutions with respect to the application of the Beneficial Ownership Requirements for Legal Entity Customers to premium finance lending products that allow for cash refunds. The regulation provides an exemption in § 1010.230(h)(1)(iii) for accounts of premium finance lenders to be used to "finance insurance premiums and for which payments are remitted directly by the financial institution to the insurance provider or broker," unless there is the possibility of cash refunds. FinCEN's ruling, issued Friday, allows a financial institution to open a new account for a premium finance lender when there is possibility of a cash refund.

OCC Bulletin 2018-11, issued Friday, announced a new "Military Lending Act" booklet for the Comptroller's Handbook. The new booklet replaces and rescinds the “Limitations on Terms of Consumer Credit Extended to Servicemembers and Dependents” procedures that were found in the “Other Consumer Protection Laws and Regulations” booklet of the Handbook.

The Bureau has posted its Spring 2018 Regulatory Agenda. There is no longer a mention of rulemaking for overdrafts. A final rule updating Regulation P with the legal exception to the annual privacy notice requirement (enacted in December 2015, with a proposed rule issued on July 1, 2016) is expected in June. Also on the agenda for June is a joint Notice of Proposed Rulemaking with the Federal Reserve System with amendments to Regulation CC.

The Bureau's plans for 2019 include a HMDA proposal in January, a new proposal on small dollar lending in February, and a proposal on third-party debt collection in March. Pre-rulemaking activities on a small business lending data rule should begin in the spring of 2019.

HUD has announced it has approved a Conciliation Agreement between the Fair Housing Council of Riverside County (FHCRC) and the owners and property managers of Sierra Vista Apartments, LLC, and Grand Oaks Apartments, LLC, in Lake Elsinore, California, resolving allegations that they discriminated against prospective tenants based on race.

The Treasury Department has announced a cooperative effort with the United Arab Emirates (UAE) to disrupt an extensive currency exchange network in Iran and the UAE that has procured and transferred millions in U.S. dollar-denominated bulk cash to Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) to fund its malign activities and regional proxy groups. Specifically, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated nine Iranian individuals and entities. For identity information, see our OFAC Update.

The Securities and Exchange Commission has charged a New York-based investment adviser, Premium Point Investments LP, with inflating the value of private funds it advised by hundreds of millions of dollars.  The SEC also charged Premium Point’s CEO and chief investment officer, Anilesh Ahuja, and Amin Majidi, a former partner and portfolio manager at the firm, and former trader Jeremy Shor.

In a separate action, the SEC charged Mario Hinojosa and his wholly-owned municipal advisor, Barcelona Strategies, LLC, with misrepresenting their municipal advisory experience and failing to disclose conflicts of interest to a south Texas school district in connection with multiple municipal bond offerings.

The Securities and Exchange Commission has announced the hedge fund advisory firm Visium Asset Management LP has agreed to settle charges related to asset mismarking and insider trading by its privately managed hedge funds and portfolio managers. Separately, the firm’s CFO agreed to settle charges that he failed to respond appropriately to red flags that should have alerted him to the asset mismarking.

The Financial Stability Board (FSB), a Basel, Switzerland-based international body that monitors and makes recommendations concerning the global financial system, has published a public consultation on Recommendations for consistent national reporting of data on the use of compensation tools to address misconduct risk.

The proposed data set included in the Recommendations is designed to help firms and supervisors answer a number of important questions, including whether governance and risk management processes surrounding compensation:

• appropriately include conduct considerations in the design of their compensation and incentive systems, including the setting of individual goals, ex ante performance measurement mechanisms and ex post compensation adjustments;
• support the effective use of compensation tools to help promote good conduct or to remediate individual conduct that is not in line with the firm’s expectations, including holding individuals accountable for any misconduct that occurs;
• promote wider risk management goals, including for conduct issues, consistent with the firm’s strategy and risk tolerance; and
• support the effective identification of emerging misconduct risks and where appropriate, review use of incentive systems and compensation decisions in response to conduct incidents to ensure alignment of incentives, risk and reward.

The FSB has been established to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with 65 other jurisdictions through its six regional consultative groups. The United States is represented by the Board of Governors of the Federal Reserve System, the U.S. Department of the Treasury, and the Securities and Exchange Commission.