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06/22/2021

June 2021 FATF plenary

The Financial Action Task Force has announced that delegates representing 205 members of the Global Network and observer organizations including the International Monetary Fund, the United Nations and the Egmont Group of Financial Intelligence Units will take part in the virtual meeting of the FATF Plenary this week. During five days, they will discuss key issues to strengthen global action against the financial flows that fuel crime and terrorism.

Delegates will discuss the assessments of Japan and South Africa’s measures to combat money laundering and terrorist financing. They will hear the progress made by some jurisdictions identified as presenting a risk to the financial system.

The FATF will finalize key reports, including on money laundering and environmental crime, ethnically and racially motivated terrorist financing and two reports that explore the opportunities that technology can offer to improve anti-money laundering and counter-terrorist financing efforts. The FATF will also finalize its second 12-month review of the implementation of revised FATF standards for virtual assets and virtual asset service providers, and guidance on proliferation financing risk assessment and mitigation. The outcomes of the FATF Plenary will be published on Friday, June 25, at the close of the meeting.

06/22/2021

Offshore fund’s assets frozen

The SEC has announced it has filed an emergency complaint against an offshore fund and two individuals, charging them with engaging in a fraudulent scheme, and obtained an asset freeze to safeguard remaining investor funds at risk of immediate dissipation.

The complaint alleges that from at least 2018 to the present, Ofer Abarbanel of California and Victor Chilelli of Delaware and New York have engaged in a scheme to defraud investors in an offshore mutual fund they controlled, the Income Collecting 1-3 Months T-Bills Mutual Fund. According to the complaint, Abarbanel represented to investors that the fund would invest primarily in U.S. Treasury securities and also enter into certain types of reverse repurchase agreements with U.S. Treasury securities serving as collateral. As alleged, however, the fund invested only minimally in U.S. Treasuries, and did not enter into any reverse repurchase agreements along the lines described in offering documents. Instead, the complaint alleges, the fund routed nearly all investor funds to shell companies under the defendants’ control as part of uncollateralized sham lending arrangements with the fund. According to the complaint, when investors sought to redeem $106 million in investments last month, the defendants refused and instead took steps to transfer funds to an account from which no redemptions could be drawn.

The SEC seeks permanent injunctions, disgorgement with prejudgment interest, civil penalties, and permanent bars against participating in future securities offerings. The complaint also names as relief defendants six companies that either acted as purported counterparties with the fund or received fund assets in furtherance of the scheme: Institutional Syndication LLC, North American Liquidity Resources LLC, Institutional Secured Credit LLC, Growth Income Holdings LLC, CLO Market Neutral LLC, and Global EMEA Holdings LLC.

06/22/2021

OFAC sanctions Belarusian officials and entities

Yesterday, OFAC designated 16 individuals and five entities pursuant to Executive Order 13405 in response to the Lukashenka regime’s escalating violence and repression in Belarus, including its reckless forced diversion of a commercial Ryanair flight and arrest of journalist Raman Pratasevich and his companion, Sofia Sapega. The United States was joined in this action by Canada, the European Union, and the United Kingdom.

For identification information on the individuals and entities designated by OFAC yesterday, and links to a Belarus-related General License and FAQs, see the June 21, 2021, BankersOnline OFAC Update.

06/22/2021

President meets with financial regulators

President Biden met yesterday with top financial regulators to discuss how to build on the rapid economic turnaround since his inauguration and ensure there is sustainable and equitable growth that benefits every American family. The regulators reported that the financial system is in strong condition. They further indicated that financial risks are being mitigated by robust capital and liquidity levels in the banking system, and healthy household balance sheets stemming from fiscal support and the ongoing economic recovery. The regulators also said they were making steady progress on the President’s executive order on climate-related risk and discussed ideas for promoting financial inclusion and for responsibly increasing access to credit for potential homeowners and small businesses.

06/22/2021

Updates to FFIEC BSA/AML Exam Manual

The Federal Financial Institutions Examination Council (FFIEC) has released updates to four sections of the BSA/AML Examination Manual:

The FFIEC's press release indicates the updates should not be interpreted as new instructions or increased focus on certain areas; instead, they offer further transparency into the examination process and support risk-focused examination work.

The Manual provides instructions to examiners for assessing the adequacy of a bank’s or credit union’s BSA/AML compliance program and its compliance with BSA regulatory requirements. The Manual itself does not establish requirements for banks; such requirements are found in statutes and regulations.

06/21/2021

FHA updates student loan payment calculations

The FHA on Friday announced updates to its student loan monthly payment calculations to take steps to remove barriers and provide more access to affordable single family FHA-insured mortgage financing for creditworthy individuals with student loan debt, which has a disproportionate impact on people of color. The updated policy more closely aligns FHA student loan debt calculation policies with other housing agencies, helping to streamline and simplify originations for borrowers with student loan debt obligations.

The policy updates published on Thursday evening for FHA Single Family Title II forward mortgages remove the current requirement that lenders calculate a borrower’s student loan monthly payment of one percent of the outstanding student loan balance for student loans that are not fully amortizing or are not in repayment. The new policy bases the monthly payment on the actual student loan payment, which is often lower, and helps home buyers who, with student debt, meet minimum eligibility requirements for an FHA-insured mortgage.

06/21/2021

CFPB statement on Juneteenth holiday and mortgage closings

On Friday, CFPB Acting Director Dave Uejio issued the following statement:

“President Biden’s signing of the Juneteenth National Independence Day Act into law yesterday afternoon is a cause for celebration. Juneteenth is a moment for us to commemorate the emancipation of those enslaved. I am proud that we as a country are taking concrete steps to recognize and heal from the legacy of slavery, even as I recognize that there is much more work to do.

“The CFPB, along with the other Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) regulators, is aware of concerns regarding implementation of the new Juneteenth Federal holiday, particularly as it relates to mortgage lender compliance with the Truth in Lending Act and TILA-RESPA Integrated Disclosure (TRID) timing requirements. The CFPB recognizes that some lenders did not have sufficient time after the Federal holiday declaration to consider whether and how to adjust closing timelines. The CFPB understands that some lenders may delay closings to accommodate the reissuance of disclosures adjusted for the new Federal holiday. The CFPB notes that the TILA and TRID requirements generally protect creditors from liability for bona fide errors and permit redisclosure after closing to correct errors. Any guidance ultimately issued by the CFPB would take into account the limited implementation period before the holiday and would be issued after consultation with the other FIRREA regulators and the Conference of State Bank Supervisors (CSBS) to ensure consistency of interpretation for all regulated entities.”

06/21/2021

'Blessing loom' operators charged

The Federal Trade Commission has announced that the Commission and the state of Arkansas have filed a joint complaint against the operators of a “blessing loom” investment program, alleging that it has operated as an illegal pyramid scheme that bilked tens of millions of dollars from thousands of consumers, and targeted African Americans and harmed people struggling financially during the COVID-19 pandemic.

The complaint charges that the operators of Blessings in No Time (“BINT”) have lured people into joining their program by falsely promising investment returns as high as 800 percent. The complaint also alleges that some BINT members paid as much as $62,700 to participate. In reality, though, as in other pyramid schemes, the vast majority of participants have lost money.

06/21/2021

'Cherry-pickers' charged by SEC

The Securities and Exchange Commission has announced that it has obtained an asset freeze and other emergency relief, and filed fraud charges, against a Miami-based investment professional and two investment firms for engaging in an alleged “cherry-picking” scheme in which they channeled millions of dollars in trading profits to preferred accounts.

According to the complaint filed by the Commission, defendants Ramiro Jose Sugranes, UCB Financial Advisers Inc., and UCB Financial Services Limited engaged in a scheme since at least September 2015 to divert profitable trades to two accounts believed to be held by Sugranes’ relatives and saddle other clients with losing trades. The defendants allegedly used a single account to place trades without specifying the intended recipients of the securities at the time they placed the trades. As alleged, after the defendants established a position, if the price of the securities increased during the trading day, the defendants usually closed out the position and allocated those profitable trades to the two preferred accounts. Conversely, the complaint alleges that if the price of the securities decreased during the trading day, the defendants usually allocated the unprofitable trades to other client accounts. According to the complaint, the preferred clients, who are named as relief defendants, received approximately $4.6 million from profitable trades while other clients sustained more than $5 million in first-day losses.

06/18/2021

OFAC issues COVID-19 general licenses

OFAC has issued general licenses under the Syria, Venezuela, and Iran sanctions authorizing certain activities in response to the COVID-19 pandemic, and six new FAQs relating to the licenses. For more information, see the June 17, 2021, BankersOnline OFAC Update.

06/18/2021

Juneteenth National Independence Day

President Biden yesterday signed the Juneteenth National Independence Day Act commemorating Juneteenth (June 19) as a federal holiday. As June 19 falls on a Saturday this year, federal employees will observe this holiday today, June 18, 2021. Financial markets and Federal Reserve Financial Services will operate normally. FDIC, OCC and the Federal Reserve Board (Washington) offices will be closed today.

According to the FDIC, when determining their operating status today (June 18), FDIC-supervised institutions should comply with applicable requirements of their state chartering authority and consider the impact on customers.

IMPORTANT COMPLIANCE NOTE: The Juneteenth holiday was immediately added to those holidays listed in 5 U.S.C. § 6103(a) as a fixed-date holiday (like July 4, December 25, and others). Accordingly, tomorrow, June 19, 2021, is a federal public holiday listed in the "specific" definition of "business day" in Regulation Z that factors into compliance with the rescission period for certain mortgage loans and private education loans, as well as the timing of delivery of certain disclosures. This can affect loans currently scheduled for closing under the TRID rules, and will affect the count of days in the rescission period for loans closed today, if they are subject to the right of rescission under §§ 1026.15, 1026.23, or 1026.46. Whether it will affect the rescission period for loans closed earlier this week (before the signing of the law) is uncertain. Please note that this should not be considered a legal opinion.

06/18/2021

2020 mortgage lending data available

The FFIEC has announced the availability of data on 2020 mortgage lending transactions at 4,475 U.S. financial institutions reported under the Home Mortgage Disclosure Act (HMDA). Covered institutions include banks, savings associations, credit unions, and mortgage companies. The FFIEC released yesterday several data products to serve a variety of data users —

06/18/2021

OCC releases enforcement actions

The OCC has released a list of recent enforcement actions taken against OCC-supervised financial institutions and individuals now or formerly affiliated with such institutions.

  • The former president of a Naples, Texas, bank was issued, with his consent, an order prohibiting him from participating in the banking industry, and directing that he pay a civil money penalty of $18,000.
  • Removal and prohibition orders were issued to:
    • A former vice president of information technology of Bradford National Bank of Greenville, Greenville, Illinois, for misappropriating $70,658 of customer funds and making false entries in the bank's books to conceal those misappropriations.
    • A former operations manager of Bank of America, Charlotte, North Carolina, for using his position to make unauthorized purchases of over $420,000 and selling the purchased items, retaining the proceeds for his personal benefit.
    • A former teller of JPMorgan Chase Bank, N.A., Columbus, Ohio, for misappropriating $6,000 in cash from her cash drawer and force-balancing the drawer to conceal her actions, depositing some of the funds in her personal account.
  • A Notice of charges for prohibition was filed in the matter of a former customer service specialist of JPMorgan Chase Bank, N.A., in which the individual is charged with alleged involvement in a scheme to order and sell goods using stolen debit and credit card information.

06/17/2021

FDIC launches Tech Sprint

The FDIC has announced a "tech sprint" designed to explore new technologies and techniques that would help expand the capabilities of banks to meet the needs of unbanked individuals and households. The FDIC seeks tech sprint participants to help answer the question, “Which data, tools, and other resources could help community banks meet the needs of the unbanked population in a cost-effective manner, and how might the impact of this work be measured?”

In a few weeks, FDITECH (the FDIC's tech lab) will open registration for the tech sprint. Interested parties will have two weeks to submit applications requesting participation. After a brief review of submissions, FDITECH will invite a select number of teams to participate. Selected teams will attend a kick-off meeting and then work on their proposed solutions for a period of approximately three weeks. FDITECH will host a "Demo Day," inviting teams to make short presentations to a panel of experts who will evaluate their submission.

06/17/2021

FOMC Statement following June meeting

The Federal Reserve Board has released the Federal Open Market Committee Statement following the Committee's June 15–16, 2021, meeting.

An excerpt:

"The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation having run persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee's maximum employment and price stability goals. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.

"In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals."

The Board also released the economic projections made by FOMC participants in conjunction with the meeting.

06/17/2021

Credit account delinquencies still low

The CFPB has posted the first in a series of blog articles documenting trends in consumer credit outcomes during the COVID-19 pandemic for auto loans, student loans, mortgages and credit cards.

New delinquencies remain low and have not returned to 2019 Levels. After June 2020, new delinquencies for auto loan and credit card accounts began to rise gradually, although by December 2020, the share of open accounts transitioning into delinquency was lower or approximately the same as it had been prior to the pandemic.

New delinquencies for student loans also ticked up slightly since the summer of 2020, although the rate of delinquencies for these loans is still quite low, since a large share of student loans continue to be subject to automatic payment suspension under the CARES Act and administrative action by the Department of Education. Indeed, for student loans that do not appear to be receiving payment assistance, new delinquencies began rising in April of 2020.

New delinquencies on mortgages remained low from July 2020 through April 2021, likely reflecting the forbearances available under the CARES Act, which have since been extended through September 30, 2021.

06/17/2021

Aggregate financial sector liabilities

The Federal Reserve Board's Regulation XX (12 CFR part 250) prohibits a merger or acquisition that would result in a financial company that controls more than 10 percent of the aggregate consolidated liabilities of all financial companies (“aggregate financial sector liabilities”). The Board has published a notice [86 FR 32267] that "Aggregate financial sector liabilities" is equal to $21,787,962,476,000, for the purposes of Regulation XX, from July 1, 2021 through June 30, 2022.

06/17/2021

Are digital IDs on the horizon?

The Department of Homeland Security has published [86 FR 31987] a notice of public meeting and extension of the comment period to help inform a potential rulemaking that would amend DHS regulations to set the minimum technical requirements and security standards for mobile or digital driver's licenses/identification cards (collectively “mobile driver's licenses” or “mDLs”) to enable federal agencies to accept mDLs for official purposes under the REAL ID Act and regulation.

The virtual public meeting will be held on Tuesday, June 30, 2021, from 10:00 a.m. to 1:00 p.m. (EDT). Requests to attend the meeting and request for accommodations for a disability must be received by June 25, 2021.

The original Request for Information, "Minimum Standards for Driver's Licenses and Identification Cards Acceptable by Federal Agencies for Official Purposes; Mobile Driver's Licenses” (86 FR 20320), was published April 19, 2021. On April 27, 2021, DHS announced a 19-month extension of the REAL ID Act full enforcement date due to circumstances resulting from the COVID-19 pandemic. Beginning on May 3, 2023, federal agencies may only accept driver's licenses and state-issued identification documents for official purposes that are REAL ID-compliant and issued by a REAL ID compliant state.

Comments on the Request for Information are due by July 30, 2021.

06/17/2021

Yellen testifies before Senate Finance Committee

In testimony before the Senate Finance Committee yesterday, Treasury Secretary Yellen noted “destructive forces – the divergence in wages and of geographic regions, the decline in labor force participation, the rise of climate change, and the persistence of racial inequality – all these are combining to block tens of millions of Americans from the prosperous parts of our economy. There are clear reasons why these destructive forces have festered. The private sector does not make enough of the types of investments needed to reverse them – training programs that can lead to higher wages; childcare and paid leave that would help people rejoin the workforce; or infrastructure that would lower carbon emissions and spur growth in neglected communities. For 40 years we haven’t done that. Not as much as we should have. We need to make these investments at some point, and now is fiscally the most strategic time to make them. We expect the cost of federal debt payments will remain well below historical levels through the coming decade. We have a window to invest in ourselves."

06/17/2021

NY landlord charged by HUD

HUD has announced it has charged a landlord in Niagara Falls, New York, with violating the Fair Housing Act by denying a tenant’s reasonable accommodation request to keep an assistance animal and retaliating against the tenant by evicting her.

06/17/2021

Dollar liquidity swap lines extended

The Federal Reserve Board on Wednesday announced the extension of its temporary U.S. dollar liquidity swap lines with nine central banks through December 31, 2021. These arrangements were first announced on March 19, 2020, to ease strains in global dollar funding markets resulting from the COVID-19 shock and to mitigate the effect of such strains on the supply of credit to households and businesses, both domestically and abroad. The Board said extension of the temporary swap lines will help sustain improvements in global U.S. dollar funding markets by serving as an important liquidity backstop.

06/17/2021

Bureau resumes examining for MLA compliance

An Interpretive Rule has been issued by the CFPB explaining the basis for its authority to examine supervised financial institutions for risks to active duty servicemembers and their dependents (i.e. military borrowers) from conduct that violates the Military Lending Act (MLA).

In 2018, the CFPB’s leadership discontinued MLA-related examination activities, based on its stated belief that Congress did not specifically confer examination authority on the CFPB with respect to the MLA. The current CFPB leadership does not find those prior beliefs persuasive and the CFPB will now resume MLA-related examination activities.

06/16/2021

Scammers target older victims

The FBI announced yesterday it has issued a report that indicates people over 60 lost nearly $1 billion in online frauds and scams last year, The sudden need to shop online and the fear of COVID-19 made older Americans even more of a target for scammers and criminals than they had been in the past. For example, the report noted that the pandemic required many older people to shop online for the first time, and non-delivery of goods was one of the common fraud schemes that older victims experienced, The most common scams against seniors in 2020 were:

  • Extortion
  • Non-payment/non-delivery
  • Tech support fraud
  • Identity theft

06/16/2021

FATF reports Mexico AML/CFT actions

A report issued by the Financial Action Task Force (FATF) reports that an assessment of the measures Mexico has made to tackle money laundering and terrorist financing indicates progress has been made and the FATF has re-rated the country as follows:

  • Non-profit organizations, from partially compliant to largely compliant
  • Customer due diligence, from partially compliant to largely compliant
  • Politically exposed persons, from partially compliant to compliant
  • Wire transfers, from partially compliant to compliant
  • Reliance on third parties, from partially compliant to compliant

06/16/2021

FDIC Board approves statement on MDIs

The Board of Directors of the FDIC yesterday approved a final Statement of Policy to enhance the agency’s efforts to preserve and promote Minority Depository Institutions (MDIs). The updates, strengthens and clarifies the agency’s policies and procedures related to its existing MDI framework.

Specifically, the new Statement of Policy describes the FDIC’s actions to promote the preservation of MDIs and enhance communication between the agency and these minority-owned and managed institutions. It also defines the program terms for technical assistance, training, education, and outreach. Finally, it explains how the FDIC applies examination standards in assessing the performance of MDIs.

The FDIC also announced it is working with private sector and philanthropic organizations to establish a Mission-Driven Bank Fund to support FDIC-insured MDIs and Community Development Financial Institutions (CDFIs).

06/16/2021

FDIC proposes change to real estate lending guidelines

The FDIC has proposed a rule to amend the Interagency Guidelines for Real Estate Lending Policies to conform the method for calculating the ratio of loans in excess of the supervisory loan-to-value (LTV) limits with the capital framework established in the community bank leverage ratio (CBLR) rule. The proposed amendment would provide a consistent approach for calculating the ratio of loans in excess of the supervisory LTV limits at all FDIC-supervised institutions.

Comments on the proposed rule will be accepted for 30 days after publication in the Federal Register.

06/16/2021

FDIC Board votes not to increase assessment rates

At its May 16 meeting, the FDIC Board discussed the agency's Restoration Plan Semiannual Update to determine whether to increase deposit insurance assessments to increase the current 1.3 percent reserve ratio to at least 1.35 percent by September 2028. Following the discussion, the Board voted to maintain the current assessment rates and continue monitoring deposit trends, potential losses, and other factors that affect the reserve ratio.

06/16/2021

CDFIs awarded $1.25B for COVID-19 relief

Treasury yesterday awarded $1.25 billion in COVID-19 relief funds to 863 community development financial institutions (CDFIs). The awards were announced today by Vice President Kamala Harris at the White House with Treasury Secretary Janet L. Yellen. The grants will be made through Treasury’s CDFI Rapid Response Program (CDFI RRP) and will provide necessary capital for CDFIs to respond to economic challenges created by the COVID-19 pandemic, particularly in underserved communities. CDFI RRP award recipients are headquartered in 48 states, the District of Columbia, Guam, and Puerto Rico.

The award recipients include 58 organizations that committed to direct their awards to investments in Native American, Native Alaskan, and Native Hawaiian communities; they received a total of $54.6 million in awards. In addition, 28 organizations that primarily serve Puerto Rico received $47.3 million in awards, and 90 minority depository institutions received a total of $133.9 million in awards.

06/16/2021

Industrial production increases

The Federal Reserve has released G.17 Industrial Production and Capacity Utilization data for May 2021.

Total industrial production increased 0.8 percent in May. Manufacturing production advanced 0.9 percent, reflecting, in part, a large gain in motor vehicle assemblies; factory output excluding motor vehicles and parts increased 0.5 percent. The indexes for mining and utilities rose 1.2 percent and 0.2 percent, respectively.

In May, at 99.9 percent of its 2017 average, total industrial production was 16.3 percent higher than it was a year earlier but 1.4 percent lower than its pre-pandemic (February 2020) level. Capacity utilization for the industrial sector rose 0.6 percentage point in May to 75.2 percent, a rate that is 4.4 percentage points below its long-run (1972–2020) average.

06/16/2021

Hsu on reducing bias in RE appraisals

In remarks at an event hosted by the Consumer Financial Protection Bureau on reducing bias in real estate appraisals, Acting Comptroller of the Currency Michael J. Hsu highlighted the significant impact bias in appraisals has on minority families and how it contributes to a greater wealth gap between minority and majority populations. He stated, ”Holding banks accountable is necessary but not sufficient to solve the problem of bias in appraisals. The solution requires a collective effort by all the stakeholders participating and watching this event today. I applaud the civil rights leaders and others participating for holding us accountable on this issue and engaging in solutions-oriented discussions that can make appraisals fairer in the future while also meeting the underwriting needs of the $11 trillion in mortgage loans in our country.”

06/16/2021

Insider trading ring charged by SEC

The Securities and Exchange Commission has announced insider trading charges against a Silicon Valley trading ring whose members generated nearly $1.7 million in illegal profits and losses avoided by trading on the confidential earnings information of two local technology companies.

The SEC’s complaint alleges that Nathaniel Brown, who served as the revenue recognition manager for Infinera Corporation, repeatedly tipped Infinera’s unannounced quarterly earnings and financial performance to his best friend, Benjamin Wylam, from April 2016 until Brown left the company in November 2017. Wylam, a high school teacher and bookmaker, traded on this information and also tipped Naveen Sood, who owed Wylam a six-figure gambling debt. Sood allegedly traded on this information and tipped his three friends Marcus Bannon, Matthew Rauch, and Naresh Ramaiya, each of whom also illegally traded on the information. Bannon, Rauch, and Ramaiya consented to the entry of final judgments without admitting or denying the allegations in the complaint. Bannon agreed to pay a civil penalty of $281,497, Rauch agreed to pay $128,230, and Ramaiya agreed to pay $65,780. Sood also consented to the entry of a final judgment and agreed to pay a civil penalty of $178,320.

In parallel proceedings, the U.S. Attorney’s Office for the Northern District of California announced related criminal charges against Brown, Wylam, and Sood.

06/16/2021

First American Financial Corp settles SEC charges

The Securities and Exchange Commission has announced it has settled charges against real estate settlement services company First American Financial Corporation for disclosure controls and procedures violations related to a cybersecurity vulnerability that exposed sensitive customer information.

According to an SEC order, on the morning of May 24, 2019, a cybersecurity journalist notified First American of a vulnerability with its application for sharing document images that exposed over 800 million images dating back to 2003, including images containing sensitive personal data such as Social Security numbers and financial information. In response, according to the order, First American issued a press statement on the evening of May 24, 2019, and furnished a Form 8-K to the Commission on May 28, 2019.

However, according to the order, First American’s senior executives responsible for these public statements were not apprised of certain information that was relevant to their assessment of the company’s disclosure response to the vulnerability and the magnitude of the resulting risk. In particular, the order finds that First American’s senior executives were not informed that the company’s information security personnel had identified the vulnerability several months earlier, but had failed to remediate it in accordance with the company’s policies.

The SEC’s order charges First American with violating Rule 13a-15(a) of the Exchange Act. Without admitting or denying the SEC’s findings, First American agreed to a cease-and-desist order and to pay a $487,616 penalty.

06/16/2021

New FTC Chair Khan sworn in

Lina Khan was sworn in yesterday as chair of the Federal Trade Commission. Khan was previously an associate professor of law at Columbia Law School. She also served as counsel to the U.S. House Judiciary Committee’s Subcommittee on Antitrust, Commercial, and Administrative Law, legal adviser to FTC Commissioner Rohit Chopra, and legal director at the Open Markets Institute.

06/15/2021

FTC to review Business Opportunity Rule

The Federal Trade Commission has announced that, as part of its systematic review of all current Commission rules and guides, it will review 16 CFR 437, the Business Opportunity Rule, in 2021. The Rule requires business opportunity sellers to give prospective buyers specific information to help them evaluate a business opportunity, thus ensuring that the prospective purchasers have the information they need in order to assess the risks of buying a work-at-home program or any other business opportunity.

06/15/2021

Bureau blog on HMDA threshold report

The CFPB posted a blog article, "HMDA Threshold Report Blog," announcing the release yesterday of a report analyzing differences in lending patterns for lenders below and above the 100-loan closed-end threshold set by the 2020 Home Mortgage Disclosure Act rule. While this analysis is necessarily limited and preliminary, the report does find some differences in lending patterns for lenders above and below the threshold.

Lenders below the 100-loan threshold appear to make more investment purpose loans to higher income borrowers and non-natural person borrowers (i.e., trusts, partnerships, and corporations), as well as more loans secured by properties in low-to-moderate income census tracts. These findings are consistent with a possible explanation that lenders below the 2020 rule’s 100-loan closed-end threshold are making more loans to investors buying up property in low-to-moderate income census tracts for rental or resale.

06/15/2021

FTC amends complaint against RCG Advances

In a newly filed amended complaint, the Federal Trade Commission alleges that merchant cash advance provider RCG Advances and other defendants made multiple unauthorized withdrawals from small businesses’ banks, sometimes taking thousands of dollars more than the agreed repayment amount. The amended complaint also alleges that RCG, formerly known as Richmond Capital Group, LLC and also doing business as Viceroy Capital Funding and Ram Capital Funding, violated the Gramm-Leach-Bliley Act’s prohibition on using false or deceptive information to obtain a consumer’s bank account information.

The amended complaint also alleges wanton and egregious behavior by the defendants, including laughing at consumer requests for refunds from RCG’s unauthorized withdrawals from customer bank accounts; abusing the legal system to seize the business and personal assets of their customers; and threatening to break their customers’ jaws or falsely accusing them of child molestation during collection calls. The FTC asks the court to assess civil penalties against the defendants, along with injunctive relief and requiring the defendants to turn over ill-gotten gains.

The case was originally filed in June 2020.

06/15/2021

FDIC Board meets today

The FDIC Board will meet today [Sunshine Act notice] in open session, with public observation via webcast only. Included on the summary agenda for the meeting are memoranda and resolutions regarding:

  • a Final Policy Statement Regarding Minority Depository Institutions
  • a Notice of Proposed Rulemaking on Real Estate Lending Standards

06/15/2021

New IRS tool for non-filer signups for Child Credits and more

The Treasury Department and the Internal Revenue Service yesterday unveiled an online Non-filer Sign-up tool designed to help eligible families who don't normally file tax returns to register for the monthly Advance Child Tax Credit payments, which are scheduled to begin July 15. This tool, which is an update of last year's IRS Non-filers tool, is also designed to help eligible individuals who don't normally file income tax returns register for the $1,400 third round of Economic Impact Payments (also known as stimulus checks) and claim the Recovery Rebate Credit for any amount of the first two rounds of Economic Impact Payments they may have missed.

06/14/2021

New American Rescue Plan FAQs from IRS

The IRS has announced it has posted two new, separate sets of frequently-asked-questions (FAQs) to assist families and small and min-sized employers in claiming credits under the American Rescue Plan (ARP):

  • Child and dependent care credit - For 2021, the ARP increased the maximum amount of work-related expenses for qualifying care that may be taken into account in calculating the credit, increased the maximum percentage of those expenses for which the credit may be taken, modified how the credit is reduced for higher earners, and made it refundable.
  • Paid sick and family leave credits - The FAQs include information on how eligible employers may claim the paid sick and family leave credits, including how to file for and compute the applicable credit amounts, and how to receive advance payments for and refunds of the credits. Under the ARP, eligible employers, including businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, may claim tax credits for qualified leave wages and certain other wage-related expenses (such as health plan expenses and certain collectively bargained benefits) paid with respect to leave taken by employees April 1, 2021, through September 30, 2021.

06/14/2021

CFPB spring 2021 rulemaking agenda

The Bureau has published its Spring 2001 Regulatory Agenda, which is part of the Unified Agenda of Federal Regulatory and Deregulatory Actions. The Bureau's agenda lists the regulatory matters that, to further its consumer protection mission and mandate, the Bureau is currently pursuing under interim leadership pending the appointment and confirmation of a permanent Director.

COVID-19 pre-foreclosure review period. The CFPB expects to issue a final rule by the end of June amending Regulation X to help ensure that borrowers impacted by the COVID-19 pandemic have an opportunity to be evaluated for loss mitigation before the initiation of foreclosure. The Bureau issued proposed amendments on April 5 that would prevent initial foreclosure actions until after December 31, 2021.

Extension of FDCPA rules.The Bureau expects to finalize its April 7 proposal to extend by 60 days the effective date of two recent final rules issued to implement the Fair Debt Collection Practices Act for third-party collectors.

Small business lending data. The Bureau expects to issue a notice in September 2021 of proposed rulemaking to implement section 1071 of the Dodd-Frank Act, which requires financial institutions to collect, report, and make public certain information about credit applications by women-owned, minority-owned, and small businesses.

Availability of consumer financial account data. The Bureau continues to review comments from its November 2020 advance notice of proposed rulemaking to implement section 1033 of the Dodd-Frank Act to address the availability of consumer financial account data in electronic form.

Standards for Automated Valuation Models (AVMs). The Bureau is pursuing an interagency rulemaking with the Federal Reserve Board, OCC, FDIC, NCUA, and FHFA to develop regulations to implement the amendments made by the Dodd-Frank Act to FIRREA concerning appraisals. The FIRREA amendments require implementing regulations for quality control standards for automated valuation models (AVMs).

Transition from LIBOR. The Bureau expects to issue a final rule in January 2022 amending Regulation Z to lessen the financial impact to consumers and facilitate creditor compliance by providing examples of replacement indices that meet Regulation Z requirements.

06/14/2021

Other agency agendas

Other agencies also published their Spring 2021 Regulatory Agendas.

The Federal Reserve and FinCEN plan to issue a final rule in September that would apply information collection requirements to domestic and cross-border transactions involving cryptocurrencies.

FinCEN intends to issue a final rule in November to impose BSA recordkeeping and identity verification requirements to transactions involving convertible virtual currency or digital assets with legal tender status.

The Fed, FDIC and OCC continue to work toward modernization of their CRA regulations.

06/14/2021

Non-profits and private firms compete for SBA funding

The SBA has announced that non-profit organizations and private sector firms are now eligible to compete for funding of up to $500,000 to deliver federal procurement training to veteran and service-disabled veteran entrepreneurs. The application period began on Friday and runs thru through July 12, 2021. Awards will be made for a base project period of 12 months, with three option periods of 12 months each. Funding will be used to cover the costs of educating veterans and service-disabled veterans who intend to pursue, or are already engaged in, federal procurement.

Eligible organizations must submit applications for the Veteran Federal Procurement Entrepreneurship Training Program by 11:59 p.m. ET on July 12, 2021, through Grants.gov. Search for opportunity number SB-OVVT-21-001. Applications not submitted via Grants.gov will not be evaluated.

SBA’s Office of Veterans Business Development will host a conference call on Tuesday, June 22, 2021, at 2 p.m. EDT to answer questions related to the Veteran Federal Procurement Entrepreneurship Training Program grant announcement.

06/11/2021

FHFA seeks guidance on exec compensation

the Federal Housing Finance Agency has issued a Request for Input on executive compensation at the regulated entities: Fannie Mae and Freddie Mac as well as the Federal Home Loan Banks. The information that FHFA is requesting will enhance the Agency's oversight of executive compensation as required by the Housing and Community Development Act of 1992 and the Housing and Economic Recovery Act of 2008.

The RFI asks 25 questions designed to enhance the FHFA's ability to ensure that the regulated entities operate in a safe and sound manner and fulfill their statutory missions while limiting executive officers to reasonable and comparable compensation, considering relevant factors including their status as government-sponsored enterprises, their public missions, and their obligation to operate and carry out their activities in the public interest. The last time FHFA reviewed executive compensation at the Enterprises was in 2012.

The FHFA will accept comments on the RFI submitted electronically or by mail through August 9, 2021.

06/11/2021

OFAC sanctions smuggling network

Yesterday, OFAC designated members of a smuggling network that helps fund Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and the Houthis in Yemen. OFAC's action was taken under the counterterrorism authority Executive Order (E.O.) 13224, as amended. The IRGC-QF was designated under E.O. 13224 in 2007 for support to numerous terrorist groups.

OFAC and the Department of State also lifted sanctions on three former Government of Iran officials, and two companies formerly involved in the purchase, acquisition, sale, transport, or marketing of Iranian petrochemical products. These delistings are a result of a verified change in behavior or status on the part of the sanctioned parties,

For details on the parties affected by OFAC's actions, see the June 10, 2021, BankersOnline OFAC Update.

06/11/2021

FDIC guidance on recovery after Louisiana storms

The FDIC has issued FIL-40-2021 with guidance and steps to provide regulatory relief to financial institutions and facilitate recovery in areas of Louisiana affected by severe storms, tornadoes, and flooding May 17–21..

06/11/2021

Fed publishes proposed Reg J amendments

The Federal Reserve Board published its proposal to amend Regulation J to govern funds transfers over the Federal Reserve Banks' FedNow℠ Service at 86 FR 31376 in Friday's Federal Register. Comments on the proposal are due by August 10, 2021.

06/10/2021

SEC updates PAUSE list

The SEC has announced that it has updated its Public Alert: Unregistered Soliciting Entities (PAUSE) list of unregistered entities that use misleading information to solicit primarily non-U.S. investors, adding 55 soliciting entities, four impersonators of genuine firms, and five bogus regulators.

06/10/2021

FTC sends $30M in refunds to schools scam victims

The Federal Trade Commission is sending nearly $30 million in refunds to people tricked by agents working on behalf of Career Education Corporation (currently operating as Perdoceo Education Corporation), the operator of several post-secondary schools. CEC’s lead generators tricked consumers into providing their information and enrolling at CEC schools using a variety of deceptive methods, including pretending to be U.S. military recruiters, or affiliated with the military, and falsely promising to provide assistance with job placement and various public benefits, according to the FTC’s complaint. CEC’s lead generators tricked consumers into providing their information and enrolling at CEC schools using a variety of deceptive methods, including pretending to be U.S. military recruiters, or affiliated with the military, and falsely promising to provide assistance with job placement and various public benefits.

The FTC mailed approximately $30 million to more than 8,000 recipients yesterday. The average refund is more than $3,700 per person, the largest per person average in the agency’s history.

06/10/2021

Reserve Banks released two outstanding CRA evals in May

The Federal Reserve Banks released two CRA evaluations rated Outstanding in May 2021. We congratulate:

The Reserve Banks also released 13 CRA evaluations in May with Satisfactory ratings.

06/10/2021

OFAC sanctions Nicaraguan officials

The Treasury Department has reported that OFAC has designated four individuals who support the Ortega regime in Nicaragua. The individuals sanctioned on June 9 are Camila Antonia Ortega Murillo, the Coordinator of the Creative Economy Commission and daughter of Nicaraguan President Daniel Ortega; Leonardo Ovidio Reyes Ramirez, President of the Central Bank of Nicaragua (BCN); Edwin Ramon Castro Rivera, a deputy of the Nicaraguan National Assembly (NNA); and Julio Modesto Rodriguez Balladares, a Brigadier General of the Nicaraguan Army and Executive Director of the Military Social Welfare Institute (IPSM).

Yesterday’s action, taken under the authority of Executive Order 13851, “Blocking Property of Certain Persons Contributing to the Situation in Nicaragua,” targets individuals who are officials of the Government of Nicaragua or who have served as officials of the Government of Nicaragua at any time on or after January 10, 2007.

As a result of this action, all property and interests in property of these individuals that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by such individuals are also blocked. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.

For identification information on the four designated individuals, see the June 9, 2021, BankersOnline OFAC Update.

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