Top Story Compliance Related

The Federal Trade Commission has published [89 FR 26760] a final rule with amendments to the Telemarketing Sales Rule (“TSR”) that, among other things, require telemarketers and sellers to maintain additional records of their telemarketing transactions, prohibit material misrepresentations and false or misleading statements in business to business (“B2B”) telemarketing calls, and add a new definition for the term “previous donor.” The amendments are being made to address technological advances and to continue protecting consumers, including small businesses, from deceptive or abusive telemarketing practices.

The amendments are effective May 16, 2024. However, compliance with 16 CFR 310.5(a)(2) — a recordkeeping requirement — is not required until October 15, 2024.

The Commission also published [89 FR 26798] a proposed rulemaking that would extend the coverage of the TSR to inbound telemarketing calls by consumers to technical support services—i.e., calls that consumers make in response to an advertisement through any medium or to a direct mail solicitation. The FTC said the proposed amendment is necessary in light of the widespread deception and consumer injury caused by tech support scams. The amendment would provide the Commission with the ability to obtain stronger relief in cases involving tech support scams, including civil penalties and consumer redress. Comments on the proposed amendments will be accepted through June 17, 2024.

Yesterday, the Treasury Department reported that OFAC had designated 12 entities and ten individuals under Executive Order 14038. This action built on U.S. sanctions imposed in response to Belarus’s fraudulent August 2020 election, as well as President Alyaksandr Lukashenka’s support for Russia’s illegal full-scale invasion of Ukraine. The action sustains U.S. financial pressure on the Lukashenka regime for its continuing support for Russia’s war against Ukraine and the financial benefit it derives from this activity.

For the names and identification information of the designated individuals and entities, see BankersOnline's April 15, 2024, OFAC Update.

FinCEN has issued a Notice [FIN-2024-NTC1] on the use of counterfeit U.S. passport cards to perpetrate identity theft and fraud schemes at financial institutions. The Notice, which was coordinated with the Department of State's Diplomatic Security Service, provides an overview of typologies associated with U.S. passport card fraud, highlights 17 select red flags to assist financial institutions in identifying and reporting suspicious activity, and reminds financial institutions of their reporting requirements under the Bank Secrecy Act (BSA).

FinCEN reports that, from 2018 to 2023, U.S. passport card fraud has resulted in $10 million in actual losses and $8 million in additional attempted losses with over 4,000 victims in the United States. However, DSS and other law enforcement agencies assess losses associated with U.S. passport card fraud and associated identity theft are likely significantly greater and seek increased reporting by financial institutions to identify additional illicit activity. Fraud, including financial crimes related to the use of counterfeit U.S. passport cards, is the largest source of illicit proceeds in the United States and represents one of the most significant money laundering threats to the United States, as highlighted in the U.S. Department of the Treasury’s National Money Laundering Risk Assessment, the National Strategy for Combatting Terrorist and Other Illicit Financing, and FinCEN’s Anti-Money Laundering and Countering the Financing of Terrorism National Priorities.

On Friday, the Treasury Department reported that OFAC had taken action against Hamas, targeting Gaza- and Lebanon-based leaders of the terrorist group’s offensive cyber and unmanned aerial vehicle (UAV) operations. Concurrent with this action, the European Union imposed sanctions targeting Hamas.

For the names and identification information of the designated parties, see the April 12, 2024, BankersOnline OFAC Update.

The OCC has announced it will extend until June 15, 2024, the comment period on its proposal to update its rules for business combinations to allow interested parties more time to provide comments.

The proposal also includes a policy statement to clarify the OCC’s review of applications under the Bank Merger Act.

Comments were originally due by April 15, 2024.

• Federal Register extension notice

The Federal Trade Commission reports it is sending $1.2 million in refunds to consumers who paid for the advice of supposed experts based on deceptive claims of substantial investment profits.

The FTC sued Wealthpress in January 2023 along with two of its owners, Roger Scott and Conor Lynch, alleging that the company used deceptive claims of likely profits to sell consumers investment advising services—often touting that the services’ recommendations were based on a specific “algorithm” or “strategy” created by a purported expert. The company charged consumers hundreds or even thousands of dollars for access to these services but could not show that services they offered purchasers were likely to reap substantial profits. However, many consumers lost substantial amounts of money in attempting to follow the services’ advice.

The FDIC has issued FIL-17-2024 with materials and guidance pertaining to the Consolidated Reports of Condition and Income (Call Report) for the March 31, 2024, report date. The FIL also carried attached Supplemental Instructions.

Except for certain institutions with foreign offices, completed Call Reports must be received by Tuesday, April 30, 2024, in accordance with the filing requirements discussed below. An institution with more than one foreign office, other than a “shell” branch or an International Banking Facility, is permitted an additional five calendar days to submit its Call Report data. Such an institution must electronically file its data to the Central Data Repository no later than Sunday, May 5, 2024.

The CFPB has released the 32nd edition of its Supervisory Highlights, which covers select examinations in connection with credit reporting and furnishing completed from April 1, 2023, through December 31, 2023.

In its press release announcing the release of this edition, the Bureau said it found consumer reporting companies failed to ensure the accuracy of credit reports, including by failing to exclude information resulting from alleged identity theft or human trafficking. The CFPB also found furnishers – companies that provide information to consumer reporting companies – failed to correct false or fraudulent information sent to consumer reporting companies. Specifically, the CFPB found that—

• Consumer reporting companies failed to block or remove information related to identity theft and human trafficking
• Consumer reporting companies accepted information from unreliable furnishers
• Furnishers provided information to consumer reporting companies they knew was false
• Furnishers did not follow requirements for dispute investigations and identity theft

The Conference of State Bank Supervisors has posted an NMLS Blog article reporting the results of a November 2023 survey of over 1,400 NMLS users to measure their satisfaction with the system. The survey consisted of two parts: customer satisfaction and system usability. Survey results suggested that, on average, 85% of users are satisfied with their NMLS experience. However, survey comments indicated there are aspects of the system where the user experience can be improved. This feedback is driving upcoming NMLS enhancements, according to the article.

The overall Customer Satisfaction (“CSAT”) score was 85% for the NMLS experience survey. This suggests that, on average, 85% of customers surveyed expressed satisfaction with NMLS. The highest CSAT scores were from mortgage loan originators (MLOs), and the lowest were from company users. This is expected since MLOs generally spend less time completing tasks and activities in NMLS than company users. An analysis of qualitative feedback revealed users feel NMLS is not user friendly or intuitive, difficult to navigate, and the password process is frustrating.

After completing the CSAT survey, respondents were given the option to complete the System Usability Scale (“SUS”) Survey, a 10-question survey for measuring NMLS usability. There were 981 respondents who completed this section. The total SUS score for the surveyed group was 61.64. This score falls within the “OK to Good” range, suggesting that on average, users find the system to be reasonably usable, but there is room for improvement. The highest scores were recorded for federal MLOs, whose score of 71.71 is slightly above the industry average. There were several ratings below a 20, which, along with the average score itself, should be a key metric to improve in the new system.

The Federal Reserve Board has announced the execution of:

• a cease and desist order issued with the consent of Mode Eleven Bancorp, the holding company of Summit National Bank, both located in Hulett, Wyoming, related to Bancorp's previous strategy focused on providing banking-related services to financial technology companies through certain nonbank subsidiaries
• a written agreement with Steele Bancshares, Inc., Tyler, Texas, and American State Bank, Arp, Texas, related to identified safety and soundness deficiencies at the bank.