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09/25/2020

Tax relief for Hurricane Sally victims

The Internal Revenie Service has announced that victims of Hurricane Sally now have until January 15, 2021, to file various individual and business tax returns and make tax payments.

09/25/2020

OFAC issues CAATSA designations and updates an SDN

OFAC has added two individuals and four entities to its SDN List under its CAATSA-IRAN sanctions program, and updated a listing for Nicolas Maduro Moros. For details, see BankersOnline's OFAC Update.

09/25/2020

September SCOOS posted

The Federal Reserve Board has posted its September 2020 Senior Credit Officer Opinion Survey (SCOOS), which collected qualitative information on changes in credit terms and conditions in securities financing and over-the-counter (OTC) derivatives markets. In addition to the core questions, the survey included two sets of special questions. The first set asked about market functioning, funding terms, and demand for funding for commercial mortgage-backed securities (CMBS), and the second set asked about dealer funding terms for commercial mortgage real estate investment trusts (commercial mREITs). The 23 institutions participating in the survey account for almost all dealer financing of dollar-denominated securities to non-dealers and are the most active intermediaries in OTC derivatives markets.

09/25/2020

Enterprises: 2nd quarter foreclosure prevention report

The FHFA has released its Second Quarter 2020 Foreclosure Prevention and Refinance Report. The report shows that Fannie Mae and Freddie Mac (the Enterprises) completed 252,014 foreclosure prevention actions in the second quarter of 2020, bringing to 4.68 million the number of troubled homeowners who have been helped during conservatorships. Of these actions, 3.98 million of the foreclosure prevention actions have helped troubled homeowners stay in their homes.

  • Forbearance: newly initiated forbearance increased significantly to 1.5 million in the second quarter from 170,533 in the first quarter of 2020. The total number of loans in forbearance plans at the end of the quarter was 1.39 million, representing approximately 4.95 percent of the total loans serviced. A majority of the forbearance actions occurred as a result of the Enterprises' response to COVID-19 impacts.
  • Loan Modifications: of the 13,991 loan modifications completed, 41 percent reduced borrowers' monthly payments by more than 20 percent; 66 percent were extend-term only; and 19 percent were modifications with principal forbearance.
  • Foreclose starts and sales: 1,028 third-party and foreclosure sales were completed, down 87 percent compared with the first quarter. Foreclosure starts decreased 74 percent from 28,978 in the first quarter to 7,551 in the second quarter of 2020.
  • Refinances: increased to 1.5 million in the second quarter, from 747,463 in the first quarter of 2020.

09/25/2020

FHFA again extends loan processing flexibilities

The Federal Housing Finance Agency has announced a further extension of Fannie Mae's and Freddie Mac's purchase of qualified loans in forbearance and several loan origination flexibilities through October 31, 2020. As before, the changes are to ensure continued support for borrowers during the COVID-19 national emergency.

The extended flexibilities include:

09/24/2020

Cuban Assets Control Regs amended

OFAC has amended [85 FR 60068] the Cuban Assets Control Regulations (CACR) and published new and updated FAQs.

In a Treasury Department press release, the revisions were said to further implement the President’s foreign policy to deny the Cuban regime sources of revenue. They will restrict:

  • lodging at certain properties in Cuba
  • importing Cuban-origin alcohol and tobacco products
  • attending or organizing professional meetings or conferences in Cuba
  • participating in and organizing certain public performances, clinics, workshops, competitions, and exhibitions in Cuba

The changes are effective today.

09/24/2020

House Price Index rises nationwide

The FHFA has released the House Price Index (HPI) for July 2020, which was up 1.0 percent from June 2020. House prices rose 6.5 percent from July 2019 to July 2020. FHFA also revised its previously reported 0.9 percent price change for June 2020 to 1.0 percent.

For the nine census divisions, seasonally adjusted monthly house price changes from June 2020 to July 2020 ranged from +0.6 percent in the West North Central division to +2.0 percent in the New England division. The 12-month changes ranged from +5.4 percent in the West South Central division to +7.7 percent in both the Mountain and the East South Central divisions.

09/24/2020

FDIC regulatory relief for Alabama banks

FDIC FIL-92-2020, issued yesterday, announces steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Alabama affected by Hurricane Sally.

09/24/2020

Mortgage performance declines

The OCC reported yesterday that the performance of first-lien mortgages in the federal banking system declined during the second quarter of 2020.

The OCC Mortgage Metrics Report, Second Quarter 2020 showed 91.1 percent of mortgages included in the report were current and performing at the end of the quarter, compared to 96.1 percent a year earlier. The percentage of seriously delinquent mortgages — mortgages that are 60 or more days past due and all mortgages held by bankrupt borrowers whose payments are 30 or more days past due — increased 5.4 percent from the previous quarter and 5.3 percent from a year ago.

Servicers initiated 249 new foreclosures during the second quarter of 2020, a 98.7 percent decrease from the previous quarter and a 98.8 percent decrease from a year ago. Events associated with COVID-19, including foreclosure moratoriums during the second quarter of 2020, caused significant decreases in these metrics. Servicers completed 10,984 mortgage modifications in the second quarter of 2020, and 89.0 percent of the modifications reduced borrowers' monthly payments.

The first-lien mortgages included in the OCC's quarterly report comprise 28 percent of all residential mortgages outstanding in the United States or approximately 15 million loans totaling $2.97 trillion in principal balances.

09/24/2020

Western Union refunds on the way

The Federal Trade Commission reported yesterday that $147 million is being mailed to 33,000 consumers in the second distribution of refunds resulting from the law enforcement actions brought against Western Union in 2017 by the FTC, the Department of Justice, and the Postal Inspection Service. Affected consumers are receiving compensation for 100 percent of their verified losses.

The FTC’s 2017 complaint against Western Union alleged that for many years, Western Union was aware that fraudsters around the world used the company’s money transfer system to bilk consumers, and that some Western Union agents were complicit in the frauds. The complaint alleged that Western Union failed to put in place effective anti-fraud policies and procedures and to act promptly against problem agents.

09/24/2020

Fannie and Freddie databases updated

The Federal Housing Finance Agency has released new and revised datasets for the Public Use Databases (PUDBs) of single-family and multifamily mortgage acquisitions by Fannie Mae and Freddie Mac. New data for 2019 are now available, as well as final versions of data for 2018 that replace the interim files uploaded last September. The PUDBs contain additional loan-level data that increases their alignment with information reported under the Home Mortgage Disclosure Act (HMDA), enhances transparency about the Enterprises’ effects on local economies, and provides more information to the public about the secondary mortgage market.

09/24/2020

More OFAC pressure on Russian financier

On Wednesday, Treasury reported that OFAC had taken further action against the network of Kremlin-connected Russian operative Yevgeniy Prigozhin by targeting entities and individuals working on behalf of Prigozhin to advance Russia’s influence in the Central African Republic (CAR). Concurrently, OFAC is targeting those that have supported the Russian Federal Security Service directly, as well as those that assist persons helping designated Russian actors to evade U.S. sanctions.

See BankersOnline's OFAC Update for the names and identification information of the individuals and entities that OFAC has added to its SDN List.

09/23/2020

OFAC targets more Maduro regime officials

The Treasury Department has announced that OFAC has designated five key figures that have facilitated the illegitimate Maduro regime’s efforts to undermine democracy in Venezuela. The designations were made under Executive Order 13692. For names and other identification information, see BankersOnline's OFAC Update.

09/23/2020

SBA announces $5.5M in PRIME grants

The SBA has announced that 30 organizations across the country that assist disadvantaged entrepreneurs are set to receive nearly $5.5 million in grants from its Program for Investment in Micro-Entrepreneurs (PRIME). The SBA has placed emphasis on projects that will offer training and technical assistance to strengthen economically disadvantaged businesses, particularly those that service entrepreneurs in Opportunity Zones, rural areas, and HUBZones. The PRIME grants range from $75,000 to $250,000, and typically require at least 50 percent in matching funds or in-kind contributions. In total, over 120 organizations applied for PRIME grants for 2020.

09/23/2020

Telecom firm to pay $1.9M for facilitating credit card relief scheme

The Federal Trade Commission has announced that Globex Telecom, Inc. and an affiliated company will pay a total of $1.9 million to settle charges that they facilitated a scheme that peddled bogus credit card interest rate relief, illegally charging consumers millions of dollars. The settlement marks the end of the FTC's first consumer protection case against a Voice over Internet Protocol service provider. The FTC and Ohio alleged that Globex provided a company called Educare Centre Services with the means to make calls to U.S. consumers, including illegal robocalls, to market Educare’s phony credit card interest rate reduction services.

09/23/2020

IRS gives additional time for replacement of livestock

Farmers and ranchers who were forced to sell livestock due to drought may have an additional year to replace the livestock and defer tax on any gains from the forced sales, according to the Internal Revenue Service. To qualify for relief, the farm or ranch must be in an applicable region. This is a county or other jurisdiction designated as eligible for federal assistance plus counties contiguous to it. The relief generally applies to capital gains realized by eligible farmers and ranchers on sales of livestock held for draft, dairy or breeding purposes.

09/22/2020

Blocked property report reminder

OFAC has posted a Treasury Department Bulletin with a reminder that holders of property blocked in accordance with OFAC regulations have a mandatory annual reporting requirement on that blocked property. That report, of all blocked property held as of June 30 is due by September 30 (one week from today).

09/22/2020

OFAC targets key Iran nuclear and ballistic missile program actors

On Monday, Treasury announced that OFAC had sanctioned three deputy directors of the Atomic Energy Organization of Iran and a number of its subsidiaries. Companies supplying equipment for Iran’s ballistic missile production overseen by Iran’s Aerospace Industries Organization and senior officials working on Iran’s missile programs were also designated. The actions by Treasury, the Department of State, and the Department of Commerce target entities and personnel directly involved in Iran’s nuclear, ballistic missile, and conventional arms programs.

Identification information on the designated individuals and entities and several updates to OFAC's SDN lists can be found in BankersOnline's OFAC Update.

09/22/2020

'Seasoned QM' comment period extended three days

The CFPB has reported it will extend the comment period on its proposal for a new "seasoned qualified mortgage" definition by three days to end on October 1, 2020, to accommodate the Yom Kippur Jewish holiday occurring on the original comment deadline, September 28.

09/22/2020

FTC review of Affiliate Marketing Rule

The Federal Trade Commission has published [85 FR 59466] in today's Federal Register a notice of proposed rulemaking and request for public comment on its Affiliate Marketing Rule as part of the agency's systematic review of Commission regulations and guides. Included is a proposal to amend the Rule to correspond to changes made to the FCRA by the Dodd-Frank Act.

Comments are due by December 7, 2020.

09/22/2020

CARES Act funds for 12 states

HUD has announced over half a million dollars in additional funding to HUD Fair Housing Assistance Program (FHAP) agencies in 12 states to support activities related to COVID-19.

09/22/2020

Former Wells Fargo execs settle with OCC

The OCC has announced settlements with three former senior executives of Wells Fargo Bank, N.A., Sioux Falls, South Dakota, for their roles in the bank’s systemic sales practices misconduct.

  • a prohibition order with a $925,000 civil money penalty to former Community Bank Group Finance Officer Matthew Raphaelson
  • a cease and desist order with a $400,000 civil money penalty to the former Head of Community Bank Deposit Products Group Kenneth Zimmerman
  • a cease and desist order with a $350,000 civil money penalty to the former Head of Community Bank Human Resources Tracy Kidd

09/22/2020

CFPB settles with auto lender over unfair loss damage waiver practices

The CFPB reports it has settled with Lobel Financial Corporation, an auto-loan service based in Anaheim, California. The Bureau found that Lobel engaged in unfair practices with respect to its Loss Damage Waiver (LDW) product, in violation of the Consumer Financial Protection Act (CFPA). When a borrower has insufficient insurance, rather than force-placing collateral-protection insurance, Lobel places the LDW product, which is not itself insurance, on borrower accounts and charges a monthly premium of approximately $70 for the LDW coverage.

The LDW product provides that Lobel will pay for the cost of covered repairs and, in the event of a total vehicle loss, cancel the borrower’s debt. The Bureau found that Lobel continued to bill certain consumers for LDW coverage but then failed to provide it, and assessed fees from consumers that they were not obligated to pay.

The Bureau's consent order requires Lobel to pay $1,345,224 in consumer redress to approximately 4,000 harmed consumers and a $100,000 civil money penalty. The order also prohibits Lobel from failing to provide consumers with LDW coverage or similar products or services for which it has charged consumers or from charging consumers fees that are not authorized by its LDW contracts.

09/22/2020

Fed ANPR on CRA regs modernization

The Federal Reserve Board announced Monday an Advance Notice of Proposed Rulemaking inviting public comment on an approach to modernize the regulations that implement the Community Reinvestment Act by strengthening, clarifying, and tailoring them to reflect the current banking landscape and better meet the core purpose of the CRA. The ANPR seeks feedback on ways to evaluate how banks meet the needs of low- and moderate-income (LMI) communities and address inequities in credit access.

Board Chair Jerome H. Powell said, "By releasing a thoughtful and balanced ANPR and providing a long period for comment, the Federal Reserve is hoping to build a foundation for the banking agencies to come together on a consistent approach to CRA that has the broad support of the intended beneficiaries as well as banks of different sizes and business models."

The Office of the Comptroller of the Currency published a final rule to modernize its CRA regulations on June 5, 2020, with an October 1, 2020, effective date (but a compliance date of January 1, 2023). The FDIC did not join the OCC in issuing a final rule at that time, although the OCC and FDIC had jointly issued a proposal.

The Federal Reserve said its proposal will have a 120-day comment period starting when it is published in the Federal Register.

09/22/2020

FDIC Summary of Deposits

The FDIC has released results of its annual survey of branch office deposits for all FDIC-insured institutions as of June 30, 2020. The Summary of Deposits provides deposit totals for each of the more than 85,000 domestic offices operated by more than 5,000 FDIC-insured commercial and savings banks, savings associations, and U.S. branches of foreign banks.

The "SOD" includes historical data going back to 1994 that can be analyzed using online reports, tables, and downloads. SOD users can locate bank offices in a particular geographic area and create custom market share reports for areas such as state, county, and metropolitan statistical area. Market share reports have been expanded to allow users to see market growth and market presence for specific institutions.

09/22/2020

OCC clarifies stablecoin-related activities

The OCC yesterday published an interpretive letter clarifying national banks' and federal savings associations' authority to hold "reserves" on behalf of customers who issue certain stablecoins. The term "stablecoins" refers to cryptocurrency backed by an asset such as a fiat currency, including U.S. dollars or other foreign currency.

The letter responds to questions regarding the application of stablecoin-related bank activities. It concludes that national banks and federal savings associations may hold "reserves" on behalf of customers who issue stablecoins, in situations where the coins are held in hosted wallets. The letter addresses the use of stablecoins backed by a single fiat currency on a one-to-one basis where the bank verifies at least daily that reserve account balances meet or exceed the number of the issuer's outstanding stablecoins.

09/21/2020

U.S. households faring better but facing uncertainty

The Federal Reserve Board has reported that data collected to supplement the Board's seventh annual Survey of Household Economics and Decisionmaking showed that U.S. families were faring better financially in July than in April, but many still faced uncertainty regarding layoffs and prospects for returning to work. In July, 77 percent of adults said they were doing at least okay financially, up from 72 percent in early April, and 75 percent in October 2019. This increase is likely due to some people returning to work as well as the availability of assistance programs either from the government or from charitable organizations. A substantial number of families received one or more forms of financial assistance, and the effects of these programs were apparent in people's overall financial well-being and ability to cover expenses.

The July survey demonstrated that people appeared better able to handle small financial emergencies than they were nine months prior in October 2019. Seventy percent of adults said in July that they would be able to pay an unexpected $400 emergency expense entirely by using cash, savings, or a credit card paid off at the next statement—an increase from 63 percent last October.

09/21/2020

FEMA suspends communities in AK, AZ, IA and WA

FEMA published [85 FR 58294] in Friday's Federal Register a notice that it was suspending, as of September 18, communities in Alaska, Arizona, Iowa and Washington from the National Flood Insurance Program for noncompliance with the floodplain management requirements of the program.

  • Alaska: Fairbanks Northstar Borough and the City and Borough of Juneau
  • Arizona: Goodyear
  • Iowa: Harpers Ferry, Lansing, Postville, Waterville, and unincorporated areas of Allamakee County
  • Washington: Chehalis Reservation, Elma, Montesano, Oakville, and unincorporated areas of Grays Harbor County

09/21/2020

SBA awards $3M in small business support

The SBA has announced it has awarded 24 grants of up to $125,000 each for specialized training, mentoring, and technical assistance for R&D-focused small businesses under the Federal and State Technology (FAST) Partnership Program administered by the SBA’s Office of Innovation and Technology. FAST seeks to improve outcomes in the Small Business Innovation Research and Small Business Technology Transfer programs for underserved communities by increasing participation from women-owned, rural-based, and socially economically disadvantaged small businesses.

09/21/2020

FDIC Oregon wildfire and wind relief

The FDIC has issued FIL-91-2020 with guidance on steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Oregon affected by wildfires and straight-line winds starting September 7, 2020.

The Federal Emergency Management Agency declared a federal disaster for selected areas affected in Oregon on September 15, 2020. FEMA may make additional designations after damage assessments are completed in the affected areas. A current list of designated areas is available at www.fema.gov.

The FDIC encouraged banks to work constructively with borrowers experiencing difficulties beyond their control because of damage caused by the wildfires and straight-line winds. Banks that extend repayment terms, restructure existing loans, or ease terms for new loans in a manner consistent with sound banking practices, can contribute to the health of the local community and serve the long-term interests of the lending institution and may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery. The FDIC also will consider regulatory relief from certain filing and publishing requirements.

09/21/2020

FTC requests comments on Prescreen Opt-Out Notice Rule

The Federal Trade Commission has published [86 FR 59226] a notice of proposed rulemaking and request for public comment concerning its Prescreen Opt-Out Notice Rule. The Commission seeks public comment on the Rule and proposes to amend the Rule to conform to changes made to the Fair Credit Reporting Act by the Dodd-Frank Act, and to reinstate a model prescreen opt-put notice.

Comments are due by December 7, 2020.

09/21/2020

Same Day ACH changes due in March

FRBServices has posted a notice that the countdown to the March 19, 2021, new processing window for Same Day ACH now stands at six months. The ACH Rules change, initially announced in September 2018, will establish a third and later same day ACH processing and settlement window with a settlement deadline of 4:45 p.m. ET and settlement at 6 p.m. ET. In support of the new processing window, the Federal Reserve Board approved modifications to FedACH®Services, National Settlement Service (NSS) and Fedwire® Funds Service to also be implemented in March 2021.

To assist its customers with preparations and implementation of the new Same Day ACH processing window, FRBServices has released:

09/21/2020

Main Street Lending Program FAQs updated

The Federal Reserve Board has updated its frequently asked questions (FAQs) to clarify the Board and Department of Treasury's expectations regarding lender underwriting for the Main Street Lending Program. The revised FAQs emphasize that lender underwriting should look back to the borrower's pre-pandemic condition and forward to their post-pandemic prospects. The FAQs also clarify supervisory expectations for lenders originating Main Street loans.

The updated FAQs may have to be downloaded to be opened.

09/18/2020

Tech company settles liability for apparent OFAC violations

OFAC has announced an $894,111 settlement with Comtech Telecommunications Corp., based in Melville, New York, and its wholly-owned subsidiary, Comtech EF Data Corp., headquartered in Tempe, Arizona for four apparent violations of the Sudanese Sanctions Regulations.

Between June 2014 and October 2015, Comtech, through its subsidiary EF Data, indirectly exported warrantied satellite equipment and facilitated services and training to a government-owned entity in Sudan in apparent violation of the SSR. OFAC determined that Comtech voluntarily disclosed the apparent violations and that the apparent violations constituted an egregious case.

09/18/2020

Assistance for Oregon wildfire victims announced

HUD has announced federal disaster assistance for the State of Oregon to provide support to homeowners and low-income renters displaced from their homes in areas affected by wildfires and straight-line winds. A Presidential declaration allows HUD to offer foreclosure relief and other assistance to impacted families living in these counties.

09/18/2020

OFAC targets Hizballah and Iranian cyber actors

The Treasury Department announced Thursday that OFAC has sanctioned two Lebanon-based companies, Arch Consulting and Meamar Construction, for being owned, controlled, or directed by Hizballah. Additionally, OFAC designated Sultan Khalifah As’ad, a Hizballah Executive Council official, who is closely associated with both companies.

Treasury also announced that OFAC has imposed sanctions on Iranian cyber threat group Advanced Persistent Threat 39, 45 associated individuals, and one front company, Rana Intelligence Computing Company, through which the Government of Iran (GOI) employed a years-long malware campaign that targeted Iranian dissidents, journalists, and international companies in the travel sector. Concurrent with OFAC’s action, the U.S. Federal Bureau of Investigation (FBI) released detailed information about APT39 in a public intelligence alert.

For identification information on the entities and individuals sanctioned by OFAC's actions, see BankersOnline's OFAC Update.

09/18/2020

SEC charges former tech company CEO

The Securities and Exchange Commission has announced it has filed an emergency action against Adam Rogas, the former CEO of Las-Vegas-based NS8 Inc., which purports to provide fraud detection and prevention software to e-commerce merchants, seeking an asset freeze and charging Rogas with defrauding investors by falsely claiming millions of dollars in revenue. The SEC complaint alleges Rogas, from at least 2018 through June 2020, altered NS8's bank statements to show millions of dollars in payments from customers. Rogas allegedly sent the falsified bank statements and revenue figures on a monthly basis to NS8's finance department, which used them to prepare NS8's financial statements. In at least two securities offerings, NS8 and Rogas allegedly provided investors and prospective investors the false financial statements, showing millions of dollars in revenue and assets and other information incorporating the falsified revenue figures. The SEC alleges that as a result of Rogas's fraud, NS8 raised approximately $123 million in 2019 and 2020, and that Rogas ultimately pocketed at least $17.5 million of investor funds.

09/18/2020

OCC enforcement actions

The OCC has released a list of enforcement orders issued in the month of August.

  • Two former senior vice presidents; the former chairman, CEO and president; and four former directors of City National Bank of New Jersey, Newark, New Jersey, were issued consent civil money penalty orders in amounts ranging from $3,000 to $70,000 (totaling $124,000) for their failures to ensure that the bank had an adequate BSA/AML compliance program, adequate risk controls, and adequate staffing of its BSA/AML function while the bank was taking on high-risk new accounts, including brokered deposits.
  • a former banker with People's United Bank, N.A., Bridgeport, Connecticut, was issued a consent prohibition order after the Comptroller found that she had stolen cash from her assigned cash drawer and made fraudulent entries so that the drawer appeared to be in balance

09/18/2020

Fed releases hypothetical stress test scenarios

The Federal Reserve Board has released its hypothetical scenarios for a second round of bank stress tests. Earlier this year, the Board's first round of stress tests found that large banks were well capitalized under a range of hypothetical events. An additional round of stress tests is being performed due to the continued uncertainty caused by the COVID event. Large banks will be tested against two scenarios featuring severe recessions to assess their resiliency under a range of outcomes. The Board will release firm-specific results from banks' performance under both scenarios by the end of this year.

The two hypothetical recessions in the scenarios feature severe global downturns with substantial stress in financial markets. The first scenario—the "severely adverse"—features the unemployment rate peaking at 12.5 percent at the end of 2021 and then declining to about 7.5 percent by the end of the scenario. Gross domestic product declines about 3 percent from the third quarter of 2020 through the fourth quarter of 2021. The scenario also features a sharp slowdown abroad.

The second scenario—the "alternative severe"—features an unemployment rate that peaks at 11 percent by the end of 2020 but stays elevated and only declines to 9 percent by the end of the scenario. Gross domestic product declines about 2.5 percent from the third to the fourth quarter of 2020.

The two scenarios also include a global market shock component that will be applied to banks with large trading operations. Those banks, as well as certain banks with substantial processing operations, will also be required to incorporate the default of their largest counterparty.

09/17/2020

FinCEN proposes amending AML program requirements

FinCEN has published [85 FR 58023] an advance notice of proposed rulemaking in today's Federal Register seeking public comment on potential regulatory amendments to establish that all covered financial institutions subject to an anti-money laundering program requirement must maintain an “effective and reasonably designed” anti-money laundering program.

The ANPRM says any such amendments would be expected to further clarify that such a program assesses and manages risk as informed by a financial institution’s risk assessment, including consideration of anti-money laundering priorities to be issued by FinCEN consistent with the proposed amendments; provides for compliance with Bank Secrecy Act requirements; and provides for the reporting of information with a high degree of usefulness to government authorities.

The regulatory amendments under consideration are intended to modernize the regulatory regime to address the evolving threats of illicit finance, and provide financial institutions with greater flexibility in the allocation of resources, resulting in the enhanced effectiveness and efficiency of anti-money laundering programs.

The ANPRM also seeks comment on proposals to impose an explicit requirement for a risk assessment process and for the Director of FinCEN to issue a list of national AML priorities, to be called FinCEN’s Strategic Anti-Money Laundering Priorities, every two years.

Comments on the ANPRM will be accepted for 60 days following publication, through Monday, November 16, 2020.

09/17/2020

OFAC sanctions two Russians for virtual currency theft

Yesterday, in a coordinated action with the Departments of Justice and Homeland Security, OFAC sanctioned two Russian nationals for their involvement in a sophisticated phishing campaign in 2017 and 2018 that targeted customers of two U.S.-based and one foreign-based virtual asset service providers. American citizens and businesses were among the victims of this malicious cyber-enabled activity, which resulted in combined losses of at least $16.8 million.

Danil Potekhin and Dmitrii Karasavidi were designated pursuant to Executive Order 13694, as amended by E.O. 13757, which targets malicious cyber-enabled activities, including those related to the significant misappropriation of funds or personal identifiers for private financial gain. Potekhin and Karasavidi are also the subjects of an indictment unsealed today by the Department of Justice.

As a result of yesterday’s action, all property and interests in property of the designated persons that are in the possession or control of U.S. persons or within or transiting the United States are blocked, and U.S. persons generally are prohibited from dealing with them. for further identification information on Potekhin and Karasavidi, see BankersOnline's OFAC Update.

09/17/2020

Bank trading revenue increases

The OCC has released its Second Quarter 2020 Bank Trading Revenue Report, which reports trading revenue of U.S. commercial banks and federal savings associations of $14.7 billion in the second quarter 2020, which was $8.0 billion, or 119.3 percent, more than the previous quarter. Trading revenue in the second quarter 2020 increased by 81.5 percent compared with the $8.1 billion reported in the second quarter 2019. The report also indicated:

  • While four large banks held 86.7 percent of the total banking industry notional amount of derivatives, a total of 1,733 insured U.S. commercial banks and savings associations held derivatives at the end of the second quarter 2020.
  • Derivative contracts remained concentrated in interest rate products, which represented 73.5 percent of total derivative notional amounts.
  • The percentage of centrally cleared derivatives transactions decreased quarter-over-quarter to 40.3 percent in the second quarter 2020.

09/17/2020

States and FTC halt charity scam

The Federal Trade Commission reports a sprawling fundraising operation that allegedly scammed consumers out of millions of dollars will be permanently banned from charitable fundraising along with its owner and others involved in its operation as a result of a lawsuit brought by the Federal Trade Commission and Attorneys General of New York, Virginia, Minnesota, and New Jersey. A complaint filed by the Commission and the states alleges that the defendants served as the primary fundraisers for a number of sham charities that were the subject of numerous law enforcement actions. It also alleges that the sham charities claimed to use consumers’ donations to help homeless veterans, retired and disabled law enforcement officers, breast cancer survivors, and others in need. In fact, these organizations spent almost none of the donations on the promised activities.

Under the proposed settlements, all of the defendants will be permanently prohibited from participating in any charity fundraising, and from deceiving consumers in any other fundraising effort, including for political action committees (PACs). The defendants will be required to clearly inform consumers at the time they ask for money that any donations are not charitable and not eligible for tax deductions. In addition, the defendants will be subject to significant monetary judgments and required to surrender assets. The funds being surrendered by the defendants will be paid to the State of New York, which will contribute the funds on behalf of New York, Virginia, and New Jersey to legitimate charities that perform services that mirror those promised by the sham charities.

09/17/2020

FATF AML and Terrorist Financing report

The Financial Action Task Force (FATF) has released a report, Virtual Assets – Red Flag Indicators of Money Laundering and Terrorist Financing, to help national authorities detect whether virtual assets are being used for criminal activity. Based on more than 100 case studies collected by members of the FATF Global Network, it highlights the most important red flag indicators that could suggest criminal behavior. Key indicators in this report focus on:

  • Technological features that increase anonymity, such as the use of peer-to-peer exchanges websites, mixing or tumbling services or anonymity-enhanced cryptocurrencies
  • Geographical risks – criminals can exploit countries with weak, or absent, national measures for virtual assets
  • Transaction patterns that are irregular, unusual or uncommon, which can suggest criminal activity
  • Transaction size – if the amount and frequency has no logical business explanation
  • Sender or recipient profiles – unusual behavior can suggest criminal activity
  • Source of funds or wealth, which can relate to criminal activity

09/17/2020

Members of CFPB advisory groups announced

CFPB Director Kathleen Kraninger has announced the appointment of members to the Bureau's Consumer Advisory Board, Community Bank Advisory Council, Credit Union Advisory Council, and Academic Research Council. The experts on these advisory groups advise Bureau leadership on a broad range of consumer financial issues and emerging market trends.

09/17/2020

FOMC maintains course

The Federal Reserve Board has released the Federal Open Market Committee Statement following the September 15–16 meeting of the Committee. The FOMC agreed to continue to "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" and "expects to maintain an accommodative stance of monetary policy until these outcomes are achieved." It also intends to keep the target range for the federal funds at 0 to 1/4 percent "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."

09/16/2020

CFPB outlines proposals for small business lending data

The Consumer Financial Protection Bureau has released its Outline of Proposals Under Consideration and Alternatives Considered for Section 1071 of the Dodd-Frank Act governing small business lending data collection and reporting. The Bureau plans to convene a Small Business Advocacy Review panel in October 2020, to prepare a report that examines the impact of the potential rule on small businesses. The report, along with feedback received from small businesses, will be considered by the Bureau in its rulemaking to implement Section 1071.

Section 1071 requires financial institutions to collect certain data regarding applications for credit for women-owned, minority-owned, and small businesses, and to report that data to the Bureau on an annual basis. The Outline describes proposals that the Bureau is considering to implement Section 1071 along with the relevant law, the regulatory process, and an economic analysis of the potential impacts of the proposals on directly affected small entities.

Comments on the proposals under consideration should be received by the Bureau by December 14, 2020.

09/16/2020

Investment training firm to pay duped consumers

The Federal Trade Commission has announced a settlement that requires Online Trading Academy (OTA) to offer debt forgiveness to thousands of consumers who purchased its “training programs,” while the company’s founder and other individuals will together pay between $5 and $9.1 million and turn over assets. The settlement is expected to result in more than $10 million to benefit injured consumers.

The FTC alleged that OTA had no evidence that purchasers were likely to realize advertised profits, and that the company’s own surveys and third party trading data showed that most purchasers made little to no money. OTA also claimed that its instructors and salespeople were active, successful traders, pointing consumers to their supposed success as evidence the strategy worked. But the Commission alleged those claims were false or unsubstantiated, and that several high-profile OTA pitchmen admitted they did not make significant money trading. Finally, the FTC charged that when consumers realized the truth and asked for their money back, OTA illegally used form contracts to prevent them from telling the government or other consumers about OTA’s deception.

09/16/2020

CU Data Report for Q2 released

The NCUA Quarterly U.S Map Review has been released and indicates federally credit unions saw strong asset and share-and-deposit growth over the year ending in the second quarter of 2020. Nationally, median asset growth over the year ending in the second quarter of 2020 was 10.0 percent, compared to 1.7 percent during the year ending in the second quarter of 2019. The median growth rate of loans outstanding was 0.2 percent over the year ending in the second quarter of 2020, compared to 4.6 percent over the year ending in the second quarter of 2019. During the first half of 2020, 81 percent of federally insured credit unions had positive net income, compared to 88 percent during the first half of 2019. Nationally, the median annualized return on average assets was 39 basis points during the first half of 2020, compared to 63 basis points during the first half of 2019.

09/16/2020

$3.7M COVID-19 grants awarded to credit unions

The NCUA has awarded $3.7 million in grants and no-interest loans to 162 low-income credit unions, helping them provide affordable financial services to their members and communities during the COVID-19 pandemic. The grants and loans fell into four categories:

  • Rental, mortgage, and utility payment assistance to members such as entrepreneurs, small business owners, and hospitality and service industry employees;
  • Loan payment relief to affected members;
  • New products or services for affected members; and
  • Covering costs associated with moving credit union operations to remote locations, such as laptops, software, and short-term rentals.

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