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Top Story Compliance Related

08/05/2020

FDIC releases CRA evaluation ratings

The FDIC has released a list of 64 banks recently evaluated for compliance with the Community Reinvestment Act whose evaluation ratings were made public in August. Sixty of the banks received a Satisfactory rating. One was rated Needs to Improve, and the following three were rated Outstanding:

08/04/2020

FTC sues merchant cash advance lender for UDAP

The Federal Trade Commission has filed a complaint in the U.S. District Court for the Southern District of New York against Yellowstone Capital LLC and Fundry LLC, both New York limited liability companies; and Yitzhak D. Stern, also known as Isaac Stern, and Jeffrey Reece, individually and as officers of the two LLCs; seeking permanent injunctive and other equitable relief. Yellowstone and Fundry are providers of merchant cash advances, and used deception to lure small business customers, then regularly withdrew money from their accounts without consent even after the customers had repaid the money they owed, according to the Commission's complaint.

Merchant cash advances are a form of financing in which the defendants provide money to a small business up front in exchange for a larger amount repaid through daily automatic payments. The Commission alleges that the defendants unlawfully withdrew millions of dollars in excess payments from their customers' accounts, and took weeks or months to provide refunds when challenged by those customers.

In addition, the complaint alleges that for years Yellowstone deceived potential customers about the amount of money they would receive, with the amount shown on the contract not reflecting additional fees that would be deducted. According to the complaint, these fees totaled hundreds and even thousands of dollars, and were not revealed to business owners until, in some cases, after their contracts were signed, The FTC also alleges that the defendants relied on deceptive marketing to promote their services. Specifically, the complaint states that Yellowstone promised that business owners would not be required to provide collateral or be subject to a personal guaranty. These promises appeared in online ads and other forms of marketing, but in many instances Yellowstone’s contracts actually required business owners to be personally liable if their business failed to make repayments, as well as put the business and all of its property up as collateral.

08/04/2020

FinCEN adds FAQs on CDD requirements

FinCEN has issued Guidance FIN-2020-G002 in the form of three new FAQs regarding customer due diligence requirements for covered financial institutions. The three FAQs clarify the regulatory requirements related to—

  • obtaining customer information;
  • establishing a customer risk profile; and
  • performing ongoing monitoring of the customer relationship in order to assist covered financial institutions with their compliance obligations in these areas.

The new FAQs, developed in consultation with federal financial regulators, are in addition to those that were published on July 19, 2016, and April 3, 2018.

08/03/2020

FATF webinars on COVID-19 and money laundering

The Financial Action Task Force has made two webinars on money laundering, terrorist financing and COVID-19 available for viewing:

  • COVID-19 and the Changing Money Laundering and Terrorist Financing Risk Landscape
  • The Impact of COVID-19 on the Detection of Money Laundering and Terrorist Financing

08/03/2020

OFAC sanctions Chinese entity and officials

OFAC sanctioned a Chinese government entity and two current or former government officials on July 31 in connection with serious rights abuses against ethnic minorities in the Xinjiang Uyghur Autonomous Region (XUAR). These designations include the Xinjiang Production and Construction Corps (XPCC), Sun Jinlong, a former Political Commissar of the XPCC, and Peng Jiarui, the Deputy Party Secretary and Commander of the XPCC. The entity and officials were designated for their connection to serious human rights abuse against ethnic minorities in Xinjiang, which reportedly include mass arbitrary detention and severe physical abuse, among other serious abuses targeting Uyghurs, a Turkic Muslim population indigenous to Xinjiang, and other ethnic minorities in the region.

For details on the identity of the designated entity and individuals, and information on a new General License issued in connection with the designations, see the BankersOnline OFAC Update.

07/31/2020

NCUA Board approves membership rule changes and proposals

The NCUA Board has announced it approved a final rule and two proposed rules yesterday:

  • A final rule amending the chartering and field-of-membership rules for credit unions applying for a community charter approval, expansion, or conversion.
  • A proposed rule that would phase-in the day-one adverse effects on regulatory capital that may result from the adoption of the current expected credit losses accounting methodology over a three year period.
  • A proposed rule that amends the NCUA’s regulation governing the assessment of an annual operating fee on federal credit unions.

The rule amending the chartering and field-of-membership regulations re-adopts a provision to allow an applicant to designate a combined statistical area, or an individual, contiguous portion thereof, as a well-defined local community if the chosen area has a population of 2.5 million or fewer. Credit unions that had their combined statistical areas removed from their fields of membership because of litigation will be contacted by the agency to determine if they would like those reinstated. If they would, then NCUA will do so as soon as the rule is effective (30 days after Federal Register publication).

07/31/2020

FinCEN Advisory on cybercrime during pandemic

Advisory FIN-2020-A005 has been issued by FinCEN to alert financial institutions to potential indicators of cybercrime and cyber-enabled crime observed during the COVID-19 pandemic. Many illicit actors are engaged in fraudulent schemes that exploit vulnerabilities created by the pandemic.

The advisory contains descriptions of COVID-19-related malicious cyber activity and scams, associated financial red flag indicators, and information on reporting suspicious activity. FinCEN will continue issuing COVID-19-related information to financial institutions to help enhance their efforts to detect, prevent, and report suspected illicit activity on its website www.fincen.gov/coronavirus.

07/30/2020

Treasury and State target Assad regime supporters

The Treasury Department announced Wednesday that OFAC and the State Department have sanctioned four individuals and ten entities for enriching the regime of Syrian President Bashar al-Assad or obstructing or preventing a ceasefire in the Syrian conflict. For identity information on those sanctioned, see BankersOnline's OFAC Update.

07/29/2020

CFPB requests input on creating inclusive fair credit environment

The CFPB has issued a request for information to seek public input on how best to create a regulatory environment that expands access to credit and ensures that all consumers and communities are protected from discrimination in all aspects of a credit transaction. The information provided will help the Bureau continue to explore ways to address regulatory compliance challenges while fulfilling the Bureau's core mission to prevent unlawful discrimination and foster innovation.

The Bureau is substituting the request for information for a symposium on Equal Credit Opportunity Act issues that had been planned for the fall.

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

PUBLICATION UPDATE: Published at 85 FR 46600 on August 3, 2020. Comments will be due by October 2, 2020.

07/29/2020

Key ISIS financial facilitators in Middle East designated

On Tuesday, OFAC designated two Islamic State of Iraq and Syria (ISIS) financial facilitators located respectively in Syria and Turkey for providing financial support to ISIS.

These individuals have been designated in accordance with Executive Order (E.O.) 13224, which, among other things, targets those who commit acts of terrorism and those who have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of such acts and of persons previously designated under the E.O.

For identity information on these individuals, see BankersOnline's OFAC Update.

As a result of Tuesday’s action, all property and interests in property of the designated individuals that are in or come within the United States or the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of blocked persons. In addition, persons that engage in certain transactions with the individuals designated Tuesday may themselves be exposed to sanctions or subject to an enforcement action.

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