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Yesterday, the Treasury Department reported that OFAC has designated 12 individuals in connection with the Iranian regime’s ongoing, violent repression of the Iranian people, both within Iran’s borders and abroad. These designations target members of the Islamic Revolutionary Guard Corps (IRGC), officials of Iran’s Prisons Organization, and those responsible for lethal operations overseas.

For the names and identification information of the designated parties, see yesterday's BankersOnline OFAC Update.

The OCC has reported it has approved a final rule updating its regulations for business combinations involving national banks and federal savings associations and a policy statement clarifying its review of applications under the Bank Merger Act (BMA).

The final rulemaking is part of the OCC’s effort to enhance transparency around its process of reviewing transactions under the BMA. It also provides additional guidance to stakeholders around the OCC’s review of applications. The policy statement specifically discusses:

• general principles for the OCC’s review of applications under the BMA, including:
  • indicators for applications that are more likely to withstand scrutiny and be approved expeditiously; and
  • indicators for applications that raise supervisory or regulatory concerns which most likely need to be resolved prior to OCC approval;
• the OCC’s consideration of the financial stability; managerial and financial resources and future prospects; and convenience and needs statutory factors under the BMA; and
• the OCC’s decision process for extending the public comment period or holding a public meeting.

The CFPB has announced it has published Consumer Financial Protection Circular 2024-05 on "Improper Overdraft Opt-In Practices" to address whether a financial institution can violate the law if there is no proof that it has obtained consumers' affirmative consent before levying overdraft fees for ATM and one-time debit card transactions.

According to CFPB Director Rohit Chopra, “The CFPB has found instances where banks have no evidence that they obtained consent for overdraft. No Americans should be hit with bank account fees that they never agreed to.”

The CFPB reports it has observed that in many circumstances, financial institutions have created serious obstacles to consumers taking steps to anticipate and avoid overdraft fees, and cites several enforcement actions the Bureau has taken against banks that failed to properly adhere to the requirements of section 1005.17 of Regulation E.

The Bureau's press release suggests that consumer protection law enforcers "should assume consumers have not opted into overdraft [service for ATM and one-time debit card transactions] unless the banks can prove otherwise," and that "some banks have been unable to provide such evidence." The Circular lists three examples of forms of records that banks might use to document consumer consent, depending on the channel through which the consumer opts in. The examples are not all-inclusive or exhaustive:

• For consumers who opt into covered overdraft services in person or by postal mail, a copy of a form signed or initialed by the consumer indicating the consumer’s affirmative consent to opting into covered overdraft services would constitute evidence of consumer consent to enrollment.
• For consumers who opt into covered overdraft services over the phone, a recording of the phone call in which the consumer elected to opt into covered overdraft services would constitute evidence of consumer consent to enrollment.
• For consumers who opt into covered overdraft services online or through a mobile app, a securely stored and unalterable “electronic signature” as defined in the E-Sign Act (15 U.S.C. 7006(5)) conclusively demonstrating the specific consumer’s action to affirmatively opt in and the date that the consumer opted in would constitute evidence of consumer consent to enrollment.

The FDIC Board of Directors approved yesterday a notice of proposed rulemaking that would strengthen recordkeeping for bank deposits received from third party, non-bank companies accepting those deposits on behalf of consumers and businesses. The proposal seeks to address risks related to these third-party arrangements, protect depositors, and promote public confidence in insured deposits.

Non-banks may deposit funds together into a single custodial account at a bank. These custodial accounts may hold funds of many thousands of consumers and businesses, and the bank may not readily know or be able to determine the individual owners of funds in the custodial account. Under the proposed rule, FDIC-insured banks holding certain custodial accounts, as defined in the proposal, would be required to take certain steps to ensure accurate account records are maintained in order to determine the individual owner of the funds, including a requirement to reconcile the account for each individual owner on a daily basis. These requirements, as well as others, apply if the bank uses a third party to maintain records.

The proposal’s provisions also provide for oversight by the banks’ primary federal supervisor to review for compliance with this rule and enforcement authority to compel compliance if the bank fails to meet these requirements.

The FDIC invites public comments on all aspects of the proposal. Public comments on the proposal are due 60 days after publication in the Federal Register.

Yesterday, the FDIC's Board of Directors approved a final Statement of Policy on Bank Merger Transactions (Final SOP). The Final SOP addresses the scope of transactions subject to FDIC approval, the FDIC’s process for evaluating merger applications, and the principles that guide the FDIC’s consideration of the applicable statutory factors as set forth in the Bank Merger Act.

With respect to the statutory factors, the Final SOP:

• Confirms that the FDIC’s evaluation of a merger’s competitive effects may take into account concentrations beyond deposits, including small business or residential loan originations;
• Clarifies that the proposed merger should result in less financial risk than the risk posed by the institutions on a standalone basis;
• Elaborates on the FDIC’s expectation that a merger will enable the resulting institution to better meet the convenience and needs of the community to be served;
• Applies additional scrutiny to the evaluation of financial stability for transactions resulting in an institution with $100 billion or more in total assets; and
• Communicates the FDIC’s expectation to hold public hearings for mergers resulting in an institution with over $50 billion in total assets.

The Final SOP supersedes the existing Statement of Policy, which was last updated in 2008. The updates approved by the FDIC Board yesterday account for the significant changes that have occurred in the banking industry and financial system over the last several decades. The Final SOP refines, and in some cases, broadens the description of the analytical considerations for each statutory factor.

The Federal Housing Finance Agency yesterday released an interactive tool for tracking data on multifamily mortgages that enables users to review details about loans and properties at both the state and national levels. The tool, known as a data visualization dashboard, provides a more accessible way to view and understand data on multifamily mortgages. It is derived from the Enterprise Multifamily Public Use Database (PUDB) of mortgage acquisitions by Fannie Mae and Freddie Mac (the Enterprises).

The Enterprise Multifamily PUDB Dashboard includes data snapshots of key statistics, time series charts, and state maps of multifamily housing characteristics such as median loan amount, number of properties, average number of units per property, and unit affordability. The underlying aggregate statistics presented in the dashboard come from three multifamily data files in the Enterprise PUDB, updated annually since 2008, including two property-level datasets and a data file on the size and affordability of individual units. The dashboard shows characteristics about multifamily loan, property, and unit characteristics at the national level and loan and property characteristics at the state level.

The Securities and Exchange Commission yesterday announced charges against a dozen municipal advisors for failures by the firms and their personnel to maintain and preserve certain electronic communications. The firms agreed to pay combined civil penalties of more than $1.3 million to settle the SEC’s charges.

According to the SEC, the 12 firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, have begun implementing improvements to their compliance policies and procedures to address these violations, and agreed to pay the following civil penalties:

• Acacia Financial Group Inc. — $52,000
• Caine Mitter and Associates Inc. — $94,000
• cfX Inc. — $42,000
• CSG Advisors Inc. — $40,000
• Kaufman Hall & Associates LLC, together with Ponder & Company — $324,000
• Montague DeRose & Associates LLC — $40,000
• PFM Financial Advisors LLC — $250,000
• Phoenix Advisors LLC — $40,000
• Public Resources Advisory Group Inc. — $184,000
• Specialized Public Finance Inc. — $250,000
• Zions Public Finance Inc. — $47,000

FinCEN has published [89 FR 76187] in this morning's Federal Register a notice and request for comments on its proposed renewal, without change, of existing information collection requirements found in Bank Secrecy Act regulations [31 CFR § 1010.415] that require financial institutions to maintain records related to the issuance or sale of bank checks and drafts, cashier’s checks, money orders, and traveler’s checks when the issuance or sale involves the use of currency in an amount between $3,000 and $10,000, inclusive.

Comments will be accepted through November 18, 2024.

OFAC has published [89 FR 75955] in this morning’s Federal Register a final rule updating provisions related to blocking and other actions related to specific property or interests in property.

The rule is meant to clarify OFAC’s process for issuing certain orders that block or identify as blocked specific property or interests in property, or that impose other prohibitions less than full blocking with respect to specific property or interests in property. OFAC is adding information about these orders in regulatory notes in 35 of OFAC’s sanctions regulations — 31 CFR Parts 510, 525, 526, 536, 542, 544, 546, 547, 548, 549, 550, 551, 552, 553, 555, 558, 560, 562, 569, 570, 576, 578, 579, 582, 583, 584, 585, 587, 588, 589, 590, 591, 594, 598, and 599. The rule is effective upon publication.

The Treasury Department has issued announcements of designations under OFAC's Global Magnitsky and Cyber-related sanctions programs.

The Global Magnitsky sanctions designations included individuals who have undermined fundamental freedoms, including freedom of expression, in the country of Georgia. Specifically, the Department of the Treasury sanctioned two Georgian government officials associated with brutal crackdowns on peaceful protestors and political opponents, and two private Georgian citizens that are responsible for or complicit in, or have directly or indirectly engaged in violently suppressing the exercise of the freedom of peaceful assembly of Georgians engaged in the democratic process and peaceful expression.

OFAC also designated five individuals and one entity associated with the Intellexa Consortium under its Cyber-related sanctions for their role in developing, operating, and distributing commercial spyware technology that presents a significant threat to the national security of the United States.

For the names and identification information of the designated parties covered by both announcements, see the September 16, 2024, BankersOnline OFAC Update.

The FDIC has issued FIL-62-2024 with guidance to provide regulatory relief to financial institutions and facilitate recovery in areas of Pennsylvania — Lycoming, Potter, Tioga, and Union Counties — affected by Tropical Storm Debby August 9–10, 2024.

The CFPB has announced it has sued Horizon Card Services and its CEO Robert Kane for tricking consumers into signing up for its expensive membership credit card. Horizon’s credit card, which could come with almost $300 in annual fees on a card with a $500 credit limit, could only be used to purchase goods from the company’s overpriced online store and nowhere else. The CFPB alleges Horizon and Kane lured consumers into the membership program through deceptive marketing. Horizon charged consumers illegal and excessive fees, and also made it unreasonably difficult for consumers to cancel memberships and obtain refunds. The CFPB is asking the court to end Horizon and Kane’s illegal conduct, and to order them to pay a fine and redress to consumers.

The Horizon Card Services membership came with periodic fees, and was targeted toward financially vulnerable, subprime consumers. Between 2017 and 2021, Horizon enrolled nearly 900,000 consumers in its membership program who collectively paid more than $51 million in fees. 93% of those consumers never used any Horizon product yet paid over $45 million in fees.

Although marketed as a regular credit card, the line of credit from Horizon could be used only to purchase goods from an online store called Horizon Outlet. The outlet has a limited selection of overpriced or off-brand goods. Between 2017 and 2021, only 6% of consumers ever used their cards at the outlet.

According to the CFPB's Complaint, from 2017 to 2021, Horizon required customers to pay up to $24.99 a month, or about $300 a year, in “membership fees” for the credit line. These fees amounted to 60% of the $500 credit limit provided by Horizon for the first year of membership, which far exceeds the 25% cap set by the Truth in Lending Act and its implementing regulation, Regulation Z.

The FDIC, OCC, and Federal Reserve Board have jointly announced they will extend until October 30, 2024, the comment period on a request for information on bank-fintech arrangements involving banking products and services.

The agencies are seeking input on the nature and implications of bank-fintech arrangements and effective risk management practices. Extending the comment period will allow the public more time to consider the request, prepare comments, and address the questions posed by the agencies. Comments were originally due by September 30, 2024.

• Federal Register Extension Notice

Yesterday, the CFPB announced it has filed a proposed stipulated final judgment and order against the student loan servicer Navient for years of failures and lawbreaking. If entered by the court, the proposed order would permanently ban the company from servicing federal Direct Loans and would forbid the company from directly servicing or acquiring most loans under the Federal Family Education Loan Program . These bans would largely remove Navient from a market where it, among other illegal actions, steered numerous student loan borrowers into costly repayment options. Navient also illegally deprived student borrowers of opportunities to enroll in more affordable income-driven repayment plans and forced them to pay much more than they should have. Under the terms of the order, Navient would have to pay a $20 million penalty and provide $100 million in redress for harmed borrowers.

The CFPB’s investigation of Navient kicked off a series of efforts by state and federal agencies to examine forbearance steering and other breakdowns in the income-driven repayment program. Those efforts have resulted in more than $50 billion in debt relief for more than 1 million borrowers who were wrongly steered into forbearance, as well as those who had payments miscounted. Yesterday’s order complements actions already taken by the Department of Education and state attorneys general to provide redress to borrowers harmed by Navient.

According to the CFPB’s press release, Navient is a repeat offender with a long history of regulatory violations. After a referral from the CFPB, in 2014, the Department of Justice and the Federal Deposit Insurance Corporation ordered Navient and its predecessor, Sallie Mae, to pay almost $100 million for illegally overcharging nearly 78,000 servicemembers. In 2021, the Department of Education ordered Navient to return more than $22 million in overcharges. In 2022, 39 state attorneys general announced a $1.85 billion settlement with Navient for originating predatory student loans in addition to its forbearance steering practices.

In 2021, Navient’s contract with the Department of Education to service Direct Loans finally ended. Navient announced in early 2024 that it intended to transfer the servicing of its remaining loans to another servicer.

The OCC has announced it has entered into a Formal Agreement with Wells Fargo Bank, N.A.

The Formal Agreement identifies deficiencies relating to the bank’s financial crimes risk management practices and anti-money laundering internal controls in several areas including suspicious activity and currency transaction reporting, customer due diligence, and the bank’s customer identification and beneficial ownership programs.

The agreement requires the bank to take comprehensive corrective actions to enhance its Bank Secrecy Act/anti-money laundering and U.S. sanctions compliance programs.

The Treasury Department has reported that OFAC has sanctioned Cambodian businessman Ly Yong Phat, his conglomerate L.Y.P. Group Co., and O‑Smach Resort for their role in serious human rights abuse related to the treatment of trafficked workers subjected to forced labor in online scam centers. OFAC also designated Cambodia-based Garden City Hotel, Koh Kong Resort, and Phnom Penh Hotel for being owned or controlled by Ly.

Treasury also announced that OFAC has designated 16 Maduro-aligned officials who obstructed a competitive and inclusive presidential election process in Venezuela and violated the civil and human rights of the people. The individuals sanctioned under the authority of Executive Order 13692 include leaders of the Maduro-aligned National Electoral Council and the Supreme Tribunal of Justice who impeded a transparent electoral process and the release of accurate election results, as well as the military, intelligence, and government officials responsible for intensifying repression through intimidation, indiscriminate detentions, and censorship.

For a link to the names and identification information of the designated parties, see yesterday's BankersOnline OFAC Update, which also includes information on a new Global Magnitsky General License and new and amended FAQs.

The Federal Reserve Board has announced it has executed a written agreement among Fieldpoint Private Holdings, Inc., Fieldpoint Private Bank and Trust, both of Greenwich, Connecticut, the Federal Reserve Bank of New York, and the State of Connecticut Department of Banking, to address certain deficiencies at the holding company and the bank.

Topics listed in the agreement include Liquidity and Funds Management, Strategic Plan and Budget, Capital Plan, and Capital Conservation.

The Treasury Department on Wednesday announced that OFAC has sanctioned three individuals, five companies, and two vessels that are involved in smuggling oil and liquefied petroleum gas (LPG) to generate revenue for Hizballah.

For identification information on the individuals, entities, and vessels designated by OFAC, and other OFAC actions yesterday, see yesterday's BankersOnline OFAC Update.

The Consumer Financial Protection Bureau on Wednesday announced it had ordered TD Bank, N.A. to pay $7.76 million in consumer redress to thousands of victims for its illegal actions regarding credit reporting. The Bureau said the bank for years repeatedly shared inaccurate, negative information about its customers to consumer reporting companies. The information included systemic errors about credit card delinquencies and bankruptcies. In addition to the redress, the CFPB is ordering TD Bank to pay a $20 million civil money penalty.

Specifically, the CFPB said TD Bank harmed consumers by—

• Failing to fix its credit card reporting errors
• Sharing fraudulent information with consumer reporting companies after the bank identified hundreds of thousands of deposit account openings that were either confirmed or suspected to be fraudulent
• Failing to investigate and resolve consumer disputes

For additional information and the details of the Bureau's consent order, click HERE.

The FDIC has announced it Board of Directors will meet at 10:00 a.m. EDT September 17, 2024. The meeting will be open to the public for observation only by webcast.

On the agenda are—

• A notice of proposed rulemaking on custodial deposit accounts with transaction features and prompt payment of deposit insurance to depositors
• A final statement of policy on bank merger transactions

The Treasury Department yesterday announced that OFAC has sanctioned nine Mexican nationals and 26 Mexico-based entities linked to a fuel theft network that generates tens of millions of dollars benefiting the Cartel Jalisco Nueva Generacion (CJNG), a violent Mexico-based drug trafficking organization responsible for a significant proportion of fentanyl and other deadly drugs trafficked into the United States. Mexico-based drug trafficking cartels such as CJNG have turned to fuel theft in recent years, resulting in billions of dollars in lost revenue to the Mexican government. Today’s action was coordinated closely with the Drug Enforcement Administration and the Government of Mexico, including La Unidad de Inteligencia Financiera (UIF), Mexico’s Financial Intelligence Unit.

OFAC also designated ten individuals and six entities based in Iran and Russia and identified four vessels as blocked property that are enabling Iran’s delivery of weapons components and weapons systems, including unmanned aerial vehicles (UAVs) and close-range ballistic missiles (CRBMs), to Russia.

For identification information on the individuals, entities, and vessels designated or identified yesterday, see BankersOnline’s September 10, 2024, OFAC Update.

The OCC has announced that it has issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices in areas of Alabama, Louisiana, Mississippi and Texas affected by Tropical Storm Francine.

The OCC expects that only those bank offices directly affected by potentially unsafe conditions will close. Those offices should make every effort to reopen as quickly as possible to address the banking needs of their customers.

Yesterday, Federal Reserve Board Vice Chair for Supervision Michael S. Barr spoke on The Next Steps on Capital at the Brookings Institution in Washington. Governor Barr agreed that it is critical that banks have the capacity to continue lending to households and businesses through times of stress, and that bank capital rules help to ensure that banks are holding capital commensurate with the risks of their activities and the risks they pose to the U.S. financial system.

However, said Governor Barr, two current proposed rules that would modify risk-based capital requirements for big banks need broad and material changes to better balance the benefits and costs to increasing capital requirements. To that end, Governor Barr intends to recommend that the Board of Governors re-propose the Basel endgame and global systematically important banks surcharge rules to give the public the opportunity to fully review a number of changes to the original proposals and provide comments.

FinCEN has updated its Beneficial Ownership Information FAQs webpage, adding Reporting Company questions C.15 and C.16, and updating Reporting Company question C.14 and Initial Report question G.4.

The Federal Communications Commission has published [89 FR 73321] a proposed rule with steps to protect consumers from the abuse of Artificial Intelligence (AI) in robocalls alongside actions that clear the path for positive uses of AI, including its use to improve access to the telephone network for people with disabilities.

Specifically, the proposal would define AI-generated calls, adopt new rules that would require callers disclose to consumers when they receive an AI-generated call, adopt protections for consumers to ensure that callers adequately apprise them of their use of AI-generated calls when consumers affirmatively consent to receive such calls, and adopt protections to ensure that positive uses of AI that have already helped people with disabilities use the telephone network can thrive without threat of Telephone Consumer Protection Act (TCPA) liability. The document also seeks additional comment and information on developing technologies that can alert consumers to unwanted or illegal calls and texts, including AI-generated calls.

Comments on the proposal are due by October 10, 2024, and reply comments are due by October 25, 2024.

The Federal Housing Finance Agency yesterday released an online risk analysis tool that provides geographic estimates for physical risks from various types of natural disasters as well as nationwide data on housing and the mortgage market.

The tool — known as the Mortgage Loan and Natural Disaster Dashboard— is intended to give property owners, community leaders, financial institutions, policymakers, and other stakeholders better insight into which areas of the country are most likely to incur greater damages from hurricanes, flooding, wildfires, and other types of natural hazards. Users can combine FHFA’s Public Use Database (PUDB) with data on previous disasters and other analysis from the Federal Emergency Management Agency (FEMA). They can identify areas of the country with elevated disaster risk based on several factors, and which of those areas have concentrations of properties financed with loans acquired by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

The dashboard utilizes data from three publicly available sources. The PUDB provides a geographic breakdown of loans acquired by FHFA’s regulated entities. FEMA’s National Risk Index identifies communities most at risk for 18 types of natural hazards. The third source, FHFA’s Duty to Serve High-Needs Rural Areas data, pinpoints rural areas in the country that are characterized by a high concentration of poverty and substandard housing conditions.

The data on mortgages were updated as of 2022 and the data on past natural disasters reflected in the online tool were updated as of 2023, while the Census tracts were drawn from the 2020 U.S. Census. Dashboard users can view nationwide mortgage data at the Census-tract level overlaid with expected annual damages for 18 different types of natural disasters.

FinCEN on Monday released a Financial Trend Analysis on mail theft-related check fraud incidents based on Bank Secrecy Act data filed in the six months following FinCEN’s issuance of its 2023 alert on this same topic. During the review period, FinCEN received 15,417 BSA reports from 841 financial institutions on mail theft-related check fraud, amounting to more than $688 million in reported suspicious activity (the average amount reported was $44,774 per reported incident).

FinCEN identified three primary outcomes after checks were stolen from the U.S. Mail:

• 44 percent were altered and then deposited
• 26 percent were used as templates to create counterfeit checks
• 20 percent were fraudulently signed [indorsed] and deposited

Check manipulation methodologies ranged in sophistication, and many perpetrators tried to avoid interaction with bank personnel. FinCEN also found that banks filed 88 percent of all mail theft-related check fraud reports. Additionally, analysis revealed that financial institutions reported transactional activity or BSA filing subjects linked to every U.S. state, Washington, D.C., and Puerto Rico. While every state was affected, populous states with large urban areas had more reported incidents.

Mail theft-related check fraud losses can affect personal savings, checking accounts, business accounts, and retirement savings, as well as negatively impact financial institutions that typically cover the check fraud losses.

The FDIC has reported that Call Reports from 44,539 FDIC-insured commercial banks and savings institutions reported aggregate net income of $71.5 billion in second quarter 2024, an increase of $7.3 billion (11.4 percent) from the prior quarter. A decline in noninterest expense and one-time gains on equity security transactions contributed to the quarterly increase. These and other financial results for second quarter 2024 are included in the FDIC’s latest Quarterly Banking Profile released on Thursday.

Today is the closing day for comments on the CFPB's proposed amendments to Regulation X to streamline existing requirements when mortgage borrowers seek payment assistance in times of distress, add safeguards when borrowers seek help, and revise existing requirements with respect to borrower assistance. The proposed rule would also require loan servicers to provide certain communications in languages other than English, such as when a borrower is seeking payment assistance with their mortgage. The proposed rule, if finalized, would increase the likelihood that investors and borrowers can avert the costs of avoidable foreclosure.

The CFPB has released its annual report to Congress summarizing the Bureau's activities to administer the Fair Debt Collection Practices Act (FDCPA) in 2023 as the primary federal regulator of the consumer debt collection industry. The report also includes activities related to the debt collection industry that were conducted by the Federal Trade Commission in 2023 and highlights consumer protection issues in medical and rental debt collection.

The Federal Reserve Board has announced it is seeking public input around the operational practices of the discount window, which provides short-term credit for banks and credit unions. Feedback gathered through this process will be used by the Board and the Reserve Banks, which administer the discount window, to further improve the efficiency and ease of access to discount window and intraday credit.

The request for information seeks input on Federal Reserve operational practices, including: the collection of legal documentation; the process for pledging and withdrawing collateral; the process for requesting, receiving, and repaying discount window loans; the extension of intraday credit; and Reserve Bank communication practices related to the discount window and intraday credit.

The comment period will close 90 days after the request for information is published in the Federal Register.

Publication and comment period update: Published at 89 fr 73415 on 9/10/2024, with a 90-day comment period ending 12/09/2024.

The FDIC has released its September 2024 list of FDIC-supervised financial institutions whose CRA evaluations were recently made public. Of the 54 institutions listed, two banks — one based in Utah, the other in Pennsylvania — received "Needs to Improve" ratings. Satisfactory ratings were issued to the other 52 institutions.

The Federal Reserve Board's archive of CRA evaluation reports include ten that were made public in August 2024. Eight of the ten evaluated banks received Satisfactory ratings. One, in Greenwich, Connecticut, received a Needs to Improve. And one bank, Central Savings Bank, Sault Sainte Marie, Michigan, received an Outstanding rating on its evaluation.

The Federal Reserve Board has announced it has issued enforcement actions against two banks.

• First Interstate Bank, Billings, Montana, was assessed a $70,000 civil money penalty for a pattern or practice of violations of Regulation H, 12 C.F.R. § 208.25, which implements the requirements of the National Flood Insurance Act.
• United Texas Bank, Dallas, Texas, received a consent cease and desist order issued jointly by the Federal Reserve Board and the Texas Department of Banking after a May 2023 examination identified deficiencies in its BSA/AML compliance program.
  

The Treasury Department yesterday announced that OFAC has designated 10 individuals and two entities as part of a coordinated U.S. government response to Moscow’s malign influence efforts targeting the 2024 U.S. presidential election. Beginning in early 2024, executives at RT—Russia’s state-funded news media outlet—began a nefarious effort to covertly recruit unwitting American influencers in support of their malign influence campaign. RT used a front company to disguise its own involvement or the involvement of the Russian government in content meant to influence U.S. audiences.

Yesterday’s designations complement law enforcement actions taken by the Department of Justice and the Department of State’s designation of the Rossiya Segodnya media group and five of its subsidiaries, RIA Novosti, RT, TV-Novosti, Ruptly, and Sputnik, as Foreign Missions, steps to impose visa restrictions, and release of a Rewards for Justice (RFJ) reward offer of up to $10 million relating to information pertaining to foreign interference in a U.S. election.

For the names and identification information of the designated parties, and information on related OFAC actions, see this September 4, 2024, BankersOnline OFAC Update.

Yesterday, the FDIC announced that its Board selected Boston Consulting Group (BCG) Federal Corporation to advise and assist the agency as it implements its Action Plan for a Safe, Fair, and Inclusive Work Environment, which includes recommendations from a separate independent third-party review and the FDIC Office of the Inspector General. These initiatives are intended to improve FDIC workplace culture, policies, procedures and structures affecting interpersonal misconduct. BCG Federal will report directly to the Board.

The Securities and Exchange Commission yesterday announced charges against six nationally recognized statistical rating organizations, or NRSROs, for significant failures by the firms and their personnel to maintain and preserve electronic communications. The firms admitted the facts set forth in their respective SEC orders; acknowledged that their conduct violated recordkeeping provisions of the federal securities laws; agreed to pay combined civil penalties of more than $49 million; and have begun implementing improvements to their compliance policies and procedures to address these violations.

• Moody’s Investors Service, Inc. agreed to pay a $20 million civil penalty;
• S&P Global Ratings agreed to pay a $20 million civil penalty;
• Fitch Ratings, Inc. agreed to pay an $8 million civil penalty;
• HR Ratings de México, S.A. de C.V. agreed to pay a $250,000 civil penalty;
• A.M. Best Rating Services, Inc. agreed to pay a $1 million civil penalty; and
• Demotech, Inc. agreed to pay a $100,000 civil penalty.

The Federal Trade Commission reports that new data show a massive increase in the amount of money consumers report losing to scammers involving Bitcoin ATM machines. Since 2020, the amount consumers reported losing has increased nearly tenfold to over $110 million in 2023.

In a newly released data spotlight, the FTC says that fraud losses to Bitcoin ATMs have topped $65 million in just the first six months of 2024. During this timeframe, consumers over the age of 60 were more than three times as likely as younger adults to report losing money to Bitcoin ATM scams. Across all ages, the median loss reported in the first half of this year was a staggering $10,000.

The majority of scam losses involving Bitcoin ATMs come as a result of government impersonation, business impersonation, and tech support scams. The lies told by scammers vary, but they all create some urgent justification for consumers to take cash out of their bank accounts and put it into a Bitcoin ATM. As soon as consumers scan a QR code provided by scammers at the machine, their cash is deposited straight into the scammers’ crypto account.

The OCC has released CRA evaluations for 17 national banks and federal savings associations whose evaluations became public in August. Ten of the evaluations are rated Satisfactory. We congratulate seven institutions for receiving evaluations with an Outstanding rating:

• Bank of Bridger, National Association, Bridger, MT
• (The) Citizens National Bank of Meridian, Meridian, MS
• Farmers National Bank, Phillipsburg, KS
• Home National Bank, Racine, OH
• Malaga Bank, F.S.B., Palos Verdes Peninsula, CA
• (The) Security National Bank of Sioux City, Iowa, Sioux City, IA
• Universal Bank, West Covina, CA

The NCUA has reported it has permanently prohibited Luz Araceli Davila-Hernandez, a former employee of Magnifi Financial Credit Union, Melrose, Minnesota, from ever working for a federally insured depository institution.

The FDIC has released a list of enforcement orders issued in July 2024.

• A Consent Order against The State Exchange Bank, Lamont, Oklahoma
• A Consent Order against Chesterfield State Bank, Chesterfield, Illinois
• Prohibition orders against:
  • Raqeel Rashida Alsalam, formerly affiliated with First-Citizens Bank & Trust Company, Raleigh, North Carolina
  • Brent D. Torgerson, formerly affiliated with The Union Bank, Beulah, North Dakota
  • Samuel Ortiz-Perez, formerly affiliated with FirstBank Puerto Rico, Santurce, Puerto Rico
  • Leann Athas, formerly affiliated with Bank of Montana, Missoula, Montana

The OCC has released its schedule of Community Reinvestment Act (CRA) evaluations to be conducted in the fourth quarter of 2024 and the first quarter of 2025.

The FDIC has also issued its Q4 2024 and Q1 2025 CRA exam schedules.

The CFPB has announced it has taken action against repeat offender New Day Financial (NewDay USA) for deceiving active duty servicemembers and veterans seeking cash-out refinance loans. The CFPB found that NewDay USA gave misleading and incomplete cost comparisons to borrowers refinancing in North Carolina, Maine, and Minnesota, which made the company’s loans appear less expensive relative to their existing mortgages. The CFPB is ordering NewDay USA to pay a $2.25 million civil penalty to the CFPB’s victims relief fund.

New Day Financial, LLC is a non-bank direct mortgage lender headquartered in West Palm Beach, Florida, and specializes in offering mortgage loans guaranteed by the United States Department of Veterans Affairs (VA). The company currently operates under the brand NewDay USA, and uses patriotic imagery and other marketing tactics to build trust with military-connected families. Since at least 2015, NewDay USA has provided cash-out refinance loans to consumers, including veterans and active-duty servicemembers.

The CFPB said that NewDay USA gave borrowers misleading information about the costs of its cash-out refinances. Specifically, for the “new loan” payment amount listed on disclosures provided to consumers, NewDay USA included only the principal and interest payments. It then presented a side-by-side comparison of the “new loan” payment amount with that of the “previous loan” payment amount, which included principal, interest, taxes, and insurance. This made NewDay USA cash-out refinance loans appear less expensive relative to consumers’ original mortgages, but for many consumers the refinanced loans were more expensive. NewDay USA originated at least 3,000 cash-out refinances in North Carolina and Maine through 2020 and Minnesota through 2018, most of which included the misleading comparisons.

The CFPB previously took action against New Day Financial in 2015 for paying illegal kickbacks and deceiving borrowers about a veterans’ organization’s endorsement of NewDay USA products.

In an August 29 company statement, NewDay USA CEO Rob Posner said, “Today, after yet another exhaustive, government-funded investigation, the CFPB has unearthed nothing more than clerical errors that caused no financial harm to Veteran borrowers.... NewDay operates in 44 states and the District of Columbia. The CFPB claims involved only three of those states, and focused on a single type of disclosure that was accurately provided to these consumers on a half-dozen other federally mandated disclosures and closing documents.”

Editor's Note: This story first appeared on August 30, 2024. It has been revised to remove a reference to "loan churning," which the CFPB did not accuse NewDay USA of, and to include part of Mr. Posner's statement.