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Banker's Toolbox, Inc., leaders in compliance solutions for financial institutions, announced the acquisition of Georgia-based MainStreet Technologies (MST). MST is an industry leader in the loan risk management space. This acquisition adds to a strong and growing portfolio of compliance-related solutions and will continue to enhance the value Banker's Toolbox brings to both their customers and the industry. (Read full press release here.)

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FEMA suspending IL and ND communities

The Federal Emergency Management Agency has published a final rule in today's Federal Register announcing that it will suspend unincorporated areas of Mason County, Illinois, and the City of Harvey, Wells County, North Dakota, from the National Flood Insurance Program on June 6, 2018, for failure to comply with the floodplain management requirements if the program.


$5M awarded to rural communities

Four rural community organizations in California, Minnesota, and Washington, D.C. have been awarded $5,000,000 by HUD to continue its community and organizational development strategies to improve the lives of low-income persons. The funding is provided through HUD's Rural Capacity Building for Community Development and Affordable Housing Program.


Fair Housing assessment tool withdrawn

The Department of Housing and Urban Development has announced that it is withdrawing a computer assessment tool originally intended to be helpful to local governments in meeting their obligations under the Fair Housing Act to affirmatively further fair housing. After a month-long technical evaluation, HUD found that rather than assisting local governments in formulating acceptable Assessments of Fair Housing, the Local Government Assessment Tool was confusing, difficult to use, and frequently produced unacceptable assessments.


NCUA Board to meet

The NCUA Board has published [83 FR 23491] a notice of its May 24, 2018, 10:00–10:45 a.m. EDT, open meeting. On the agenda are discussions of two NCUA regulations: Involuntary Liquidation and Claims Procedures and Payday Alternative Loans.


OFAC targets Venezuelan corruption network

OFAC announced on Friday it has designated Diosdado Cabello Rondón (Cabello), for being a current or former official of the Government of Venezuela. OFAC also designated three other individuals (one with addresses in the U.S.) for being current or former officials, or for acting for or on behalf of designated individuals as key figures in the Cabello corruption network, and three companies and 14 properties in Florida and New York owned by one of those individuals. Identifying information is available in our May 18 OFAC Update.


Fed and OCC extend comment period

The Federal Reserve Board and OCC have announced they are extending the comment period on their previously announced proposal to modify the enhanced supplementary leverage ratio standards for U.S. top-tier bank holding companies identified as global systemically important bank holding companies, or GSIBs, and certain of their insured depository institution subsidiaries. The proposal also included conforming modifications to the Board’s total-loss absorbing capacity and long-term debt rules. The end of the comment period has been changed from May 21 to June 25, 2018.


Treasury targets Hizballah financing network and Iranian conduit

Treasury's Office of Foreign Assets Control has designated Hizballah financier Mohammad Ibrahim Bazzi and Hizballah’s representative to Iran Abdallah Safi-Al-Din as Specially Designated Global Terrorists (SDGTs) pursuant to Executive Order 13224, which targets terrorists and those providing support to terrorists or acts of terrorism. Also designated on Thursday as SDGTs are five companies located in Europe, West Africa, and the Middle East for being owned or controlled by Mohammad Bazzi and another SDGT. For identity information on the individuals and companies targeted by OFAC's actions, see our OFAC Update.


OCC reports enforcement actions

The OCC has released information on recent enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with such institutions. The list includes previously announced cease and desist and civil money penalty orders issued to Wells Fargo Bank. Also included were a $207,245 Civil Money Penalty for Flood Act violations and a $15 million UDAP Civil Money Penalty, both issued to PNC Bank, N.A., Wilmington, Delaware. The former Chairman/President/CEO, former EVP/Director, and a former Director of Merchants Bank of California, N.A. were assessed Civil Money Penalties of $175,000, $70,000 and $5,000, respectively, and the former Chairman/President/CEO and former EVP/Director were both issued orders of prohibition. A former director of a Walden, NY, bank was assessed a $5,000 Civil Money Penalty for violations of 12 CFR § 163.200 (Conflicts of Interest) while a member of the bank's board of directors and of the board's loan workout committee. A consent prohibition order was issued to a former teller of Santander Bank for misappropriation of $13,300 from her cash drawer for personal use, and making false entries to disguise the theft.


Two Ohio companies charged with discrimination

HUD has announced that it has charged two Ohio corporations, Epcon Communities, Inc., and Epcon Communities Franchising, Inc. (Epcon), with housing discrimination for failing to design and construct 32 multifamily housing communities throughout Ohio that meet the accessibility requirements of the Fair Housing Act. HUD’s charge resulted from complaints by the Fair Housing Advocates Association (FHAA), an Ohio-based fair housing organization, and HUD’s Assistant Secretary for Fair Housing and Equal Opportunity. FHAA first filed a complaint with HUD alleging that five Epcon communities in Ohio had numerous inaccessible features in violation of the Fair Housing Act. During its investigation, HUD discovered additional properties, built by Epcon or throughout its franchisees and filed its own complaint alleging that a total of 32 Epcon communities were inaccessible.


Results of May 17 seven-day term deposit offering

The Federal Reserve has announced the results of an offering of seven-day term deposits held on May 17, 2018. The Fed awarded $3.686 billion in deposits to 23 participants.


Record of FAC and Board of Governors meeting

The Federal Reserve has released a record of the May 11, 2018 meeting of the Federal Advisory Council and the Board of Governors.


OCC to host Innovation Office Hours meeting

The OCC has announced it will hold Innovation Office Hours, July 17–19, in San Francisco to promote responsible innovation in the federal banking system. Office Hours are one-on-one meetings with OCC officials to discuss financial technology (fintech), new products or services, partnering with a bank or fintech company, or other matters related to responsible innovation in the federal banking system. OCC staff will provide feedback and respond to questions. Interested parties should request an Office Hours session by June 1, and are asked to provide information on why they are interested in meeting with the OCC.


Congress fails to void Payday Lending rule

Congress has failed to act within the 60-legislative-day deadline under the Congressional Review Act to disapprove the CFPB's Payday Lending rule, according to a CNBC report. Resolutions in both houses seeking to void the rule have expired, and the rule will now become effective April 1, 2019. The CFPB has said that it intends to revisit the rule.


Bureau updates TRID resources

The Bureau has updated its two versions of the Small Entity Compliance Guides (versions 4.1 and 5.2) and Guides to Forms (versions 1.5 and 2.1) to incorporate the changes made by the 2018 TRID rule (which becomes effective June 1, 2018). Due to the 2017 TRID Rule’s optional compliance period, which ends October 1, 2018, the Bureau has kept an old version and new version of each guide to provide implementation support during the optional compliance period. However, it has updated all versions for the 2018 TRID Rule, which will apply whether or not a creditor is choosing to comply early with the 2017 Rule. All four updated guides are available on the Bureau's TRID Rule Implementation page.


FinCEN delays Beneficial Ownership rule for rollovers and renewals

On Wednesday, five days after the effective date of its Beneficial Ownership Requirements rule, FinCEN issued Administrative Ruling 2018-R002, granting a 90-day limited exceptive relief to covered financial institutions with respect to certificates of deposit and loan accounts that automatically roll over or renew that were established before May 11, 2018. The 90-day relief period started on May 11 and will end on August 9, 2018. The ruling says that, during this time, "FinCEN will determine whether and to what extent additional exceptive relief may be appropriate for such financial products and services that were established before May 11, 2018, but are expected to rollover [sic.] or renew after such date."


OFAC sanctions Hizballah's senior leadership

Yesterday, in partnership with Saudi Arabia and the other member nations of the Terrorist Financing and Targeting Center, OFAC designated members of Hizballah’s Shura Council, the primary decision-making body of Hizballah. For details on the designees, see our OFAC Update.


Rise in industrial production continues

The Federal Reserve has released the April G.17 Industrial Production and Capacity Utilization Report. Industrial production rose 0.7 percent in April for its third consecutive monthly increase. The rates of change for industrial production for previous months were revised downward, on net; for the first quarter, output is now reported to have advanced 2.3 percent at an annual rate. After being unchanged in March, manufacturing output rose 0.5 percent in April. The indices for mining and utilities moved up 1.1 percent and 1.9 percent, respectively. At 107.3 percent of its 2012 average, total industrial production in April was 3.5 percent higher than it was a year earlier. Capacity utilization for the industrial sector climbed 0.4 percentage point in April to 78.0 percent, a rate that is 1.8 percentage points below its long-run (1972–2017) average.


Relief for areas of North Carolina and Indiana affected by weather

The FDIC has issued FIL-28-2018 and FIL-29-2018 announcing steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Indiana and North Carolina, respectively, affected by severe storms and a tornado.


Brokerage firms charged with AML laundering

The SEC has announced the settlement of charges against broker-dealers Chardan Capital Markets LLC and Industrial and Commercial Bank of China Financial Services LLC (ICBCFS) for failing to report suspicious sales of billions of penny stock shares. Broker-dealers are required to file Suspicious Activity Reports (SARs) for transactions suspected to involve fraud or with no apparent lawful purpose. According to the SEC, from October 2013 to June 2014, Chardan, an introducing broker, liquidated more than 12.5 billion penny stock shares for seven of its customers and ICBCFS cleared the transactions. Chardan failed to file any SARs even though the transactions raised red flags, including similar trading patterns and sales in issuers who lacked revenues and products. The SEC found that ICBCFS similarly failed to file any SARs for the transactions despite ultimately prohibiting trading in penny stocks by some of the seven customers.


New sources for free credit scores

The Bureau has posted an article announcing the availability of a new list that identifies more ways to access credit scores for free.


Summary of Deposits reminder from FDIC

The FDIC has circulated FIL-27-2018 concerning the Summary of Deposits, the annual survey of branch office deposits as of June 30 for all FDIC-insured institutions, including insured U.S. branches of foreign banks. All institutions with branch offices are required to submit the survey; institutions with only a main office are exempt. Survey responses are due by July 31, 2018. Filing extensions are not available.


Refi volume down with rising interest rates

The Federal Housing Finance Agency has reported that Fannie Mae and Freddie Mac completed 356,003 refinances in the first quarter of 2018, compared with 446,295 in the fourth quarter of 2017. FHFA's first quarter Refinance Report also shows that 4,139 loans were refinanced through the Home Affordable Refinance Program (HARP), bringing the total number of HARP refinances to 3,488,165 since inception of the program in 2009.


OFAC targets Iraqi bank and four individuals

Treasury has announced that OFAC has imposed sanctions on the Governor and a senior official of the Central Bank of Iran, an Iraq-based bank and its chairman, and a key Hizballah official, all of whom have moved millions of dollars on behalf of the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) to Hizballah. They were designated as Specially Designated Global Terrorists (SDGTs) pursuant to Executive Order 13224, which targets terrorists and those providing support to terrorists or acts of terrorism.

For identification information on the Iraq-based bank and the four individuals sanctioned by OFAC's action, see our OFAC Update.


Fed Governor Brainard on digital currencies

Federal Reserve Board Governor Lael Brainard spoke on "Cryptocurrencies, Digital Currencies, and Distributed Ledger Technologies: What Are We Learning?" at yesterday's session of the Decoding Digital Currency Conference sponsored by the Federal Reserve Bank of San Francisco.


March TIC data

Treasury has released the Treasury International Capital data for March 2018.


CFPB advises shopping for a mortgage

The Bureau has posted an article that provides tips on how to shop for a mortgage and the potential for real savings. It notes that saving a quarter of a point in interest on a mortgage saves thousands over the life of the loan. Suggestions include:

  • Talking to multiple lenders
  • Asking each lender about other loan products
  • Considering taking a homebuying class or working with a housing counselor
  • Checking credit reports for errors and ways to raise credit scores


Facing foreclosure after a natural disaster

The Bureau has posted an article that provides information on what to know when facing foreclosure after a natural disaster.


CFPB email course on meeting financial goals

The Bureau has announced an opportunity to sign up for an email course to help consumers meet their financial goals. The "Get a Handle on Debt Boot Camp," a 21-day email course, will start in June.


Congress approves resolution to scrap Bureau ECOA interpretation

The House of Representatives approved last week Senate Joint Resolution 57, which disapproves the rule submitted by the Bureau of Consumer Financial Protection relating to "Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act" (CFPB Bulletin 2013-02, March 21, 2013), which the Government Accountability Office has considered to be a rule under the Congressional Review Act. The Resolution has been delivered to the president. If signed by the president, the Resolution will void the Bureau's 2013 action.


HUD Strong Families initiative launched

A video message from Secretary Carson was utilized by HUD to launch HUD Strong Families, a new effort in coordination with public housing authorities, federal partners, and service organizations to support families living in HUD-assisted housing by connecting them with resources that expand economic opportunity and promote engagement with their children.


FinCEN grants Beneficial Ownership relief for premium finance cash refunds

FinCEN has issued an Administrative Ruling (FIN-2018-R001) to provide exceptive relief to covered financial institutions with respect to the application of the Beneficial Ownership Requirements for Legal Entity Customers to premium finance lending products that allow for cash refunds. The regulation provides an exemption in § 1010.230(h)(1)(iii) for accounts of premium finance lenders to be used to "finance insurance premiums and for which payments are remitted directly by the financial institution to the insurance provider or broker," unless there is the possibility of cash refunds. FinCEN's ruling, issued Friday, allows a financial institution to open a new account for a premium finance lender when there is possibility of a cash refund.


FFIEC updates CDD/Beneficial Ownership exam procedures

On Friday, the FFIEC issued new examination procedures on the “Customer Due Diligence Requirements for Financial Institutions” rule finalized by FinCEN on May 11, 2016. The new examination procedures replace those in the current “Customer Due Diligence — Overview and Examination Procedures” section of the FFIEC’s Bank Secrecy Act/Anti-Money Laundering Examination Manual. In addition, a new overview and examination procedures were developed for the beneficial ownership requirements for legal entity customers. The revised procedures were issued on May 11, 2018, the day the rule became effective.


Comptroller's Handbook update

OCC Bulletin 2018-11, issued Friday, announced a new "Military Lending Act" booklet for the Comptroller's Handbook. The new booklet replaces and rescinds the “Limitations on Terms of Consumer Credit Extended to Servicemembers and Dependents” procedures that were found in the “Other Consumer Protection Laws and Regulations” booklet of the Handbook.


Bureau posts spring 2018 rulemaking agenda

The Bureau has posted its Spring 2018 Regulatory Agenda. There is no longer a mention of rulemaking for overdrafts. A final rule updating Regulation P with the legal exception to the annual privacy notice requirement (enacted in December 2015, with a proposed rule issued on July 1, 2016) is expected in June. Also on the agenda for June is a joint Notice of Proposed Rulemaking with the Federal Reserve System with amendments to Regulation CC.

The Bureau's plans for 2019 include a HMDA proposal in January, a new proposal on small dollar lending in February, and a proposal on third-party debt collection in March. Pre-rulemaking activities on a small business lending data rule should begin in the spring of 2019.


Fed to continue 7-day term deposit offerings

The Federal Reserve has announced plans to continue its previously announced periodic testing of the Term Deposit Facility (TDF) with one operation in May. These operations are aimed at ensuring the operational readiness of the TDF and providing eligible institutions with an opportunity to maintain familiarity with term deposit procedures. The TDF test operations are a matter of prudent planning and have no implications for the near-term conduct of monetary policy. The Federal Reserve plans to conduct a similar routine TDF test operation in the second half of 2018. The schedule and terms of future test operations will be announced at later dates.


Allegations of California housing discrimination resolved by HUD

HUD has announced it has approved a Conciliation Agreement between the Fair Housing Council of Riverside County (FHCRC) and the owners and property managers of Sierra Vista Apartments, LLC, and Grand Oaks Apartments, LLC, in Lake Elsinore, California, resolving allegations that they discriminated against prospective tenants based on race.


U.S. and United Arab Emirates target currency exchange network

The Treasury Department has announced a cooperative effort with the United Arab Emirates (UAE) to disrupt an extensive currency exchange network in Iran and the UAE that has procured and transferred millions in U.S. dollar-denominated bulk cash to Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) to fund its malign activities and regional proxy groups. Specifically, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated nine Iranian individuals and entities. For identity information, see our OFAC Update.


SEC charges NY and TX fund advisors

The Securities and Exchange Commission has charged a New York-based investment adviser, Premium Point Investments LP, with inflating the value of private funds it advised by hundreds of millions of dollars.  The SEC also charged Premium Point’s CEO and chief investment officer, Anilesh Ahuja, and Amin Majidi, a former partner and portfolio manager at the firm, and former trader Jeremy Shor.

In a separate action, the SEC charged Mario Hinojosa and his wholly-owned municipal advisor, Barcelona Strategies, LLC, with misrepresenting their municipal advisory experience and failing to disclose conflicts of interest to a south Texas school district in connection with multiple municipal bond offerings.


FDIC deposit insurance seminars

FDIC FIL-25-2018, issued yesterday, announces four identical live seminars on FDIC deposit insurance coverage for bank employees and bank officers between May 24, 2018, and November 26, 2018. In addition to a comprehensive overview of FDIC deposit insurance rules, the seminars now include deposit insurance coverage information on signature card requirements for joint accounts, prepaid cards, bank trade names, health savings accounts, 529 plan accounts, and 529 Achieving a Better Life Experience (ABLE) plan accounts. The presentation provides an overview of some of the most popular deposit insurance resources, including:

  • the FDIC's Electronic Deposit Insurance Estimator (EDIE), an interactive tool used to calculate deposit insurance coverage;
  • the FDIC's BankFind Directory, which allows users to confirm if a bank is FDIC-insured; and
  • the FDIC's Financial Institution Employee's Guide to Deposit Insurance, developed to assist bankers in providing detailed information about deposit insurance coverage to their customers.


Illinois bank reports counterfeit cashier's checks

The OCC has issued an alert that the Community National Bank, Monmouth, Illinois, has reported that counterfeit cashier's checks using the bank's routing number are being presented nationwide in connection with an online secret survey analyst/store evaluator employment opportunity scam. Details can be found in our Alerts and Counterfeits pages.


FinCEN posts CTR deadline reminder

FinCEN has circulated a reminder on May 8 that "Currency Transaction Reports (CTRs) will no longer be accepted in ACSII format effective June 1, 2018. Financial institutions that batch file must file using the new XML format. If a financial institution is unable, then it must revert to the discrete option to file its reports until it is able to file using the new XML format."


FSB recommendation on compensation reporting

The Financial Stability Board (FSB), a Basel, Switzerland-based international body that monitors and makes recommendations concerning the global financial system, has published a public consultation on Recommendations for consistent national reporting of data on the use of compensation tools to address misconduct risk.

The proposed data set included in the Recommendations is designed to help firms and supervisors answer a number of important questions, including whether governance and risk management processes surrounding compensation:

  • appropriately include conduct considerations in the design of their compensation and incentive systems, including the setting of individual goals, ex ante performance measurement mechanisms and ex post compensation adjustments;
  • support the effective use of compensation tools to help promote good conduct or to remediate individual conduct that is not in line with the firm’s expectations, including holding individuals accountable for any misconduct that occurs;
  • promote wider risk management goals, including for conduct issues, consistent with the firm’s strategy and risk tolerance; and
  • support the effective identification of emerging misconduct risks and where appropriate, review use of incentive systems and compensation decisions in response to conduct incidents to ensure alignment of incentives, risk and reward.

The FSB has been established to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with 65 other jurisdictions through its six regional consultative groups. The United States is represented by the Board of Governors of the Federal Reserve System, the U.S. Department of the Treasury, and the Securities and Exchange Commission.


Iran sanctions to be reinstated

On Tuesday, May 8, 2018, the Treasury Department announced that the president released his decision to cease the United States’ participation in the Joint Comprehensive Plan of Action (JCPOA) [with regard to Iran], and to begin re-imposing the U.S. nuclear-related sanctions that were lifted to effectuate the JCPOA sanctions relief, following a wind-down period. In conjunction with this announcement, the president directed the U.S. Department of the Treasury and other federal departments and agencies to take the actions necessary to implement his decision.

Treasury's statement said, "consistent with the President’s guidance, Departments and Agencies will begin the process of implementing 90-day and 180-day wind-down periods for activities involving Iran that were consistent with the U.S. sanctions relief specified in the JCPOA. To effectuate the wind-down periods, today the State Department issued the necessary statutory sanctions waivers to provide for a wind-down period and plans to take appropriate action to keep such waivers in place for the duration of the relevant wind-down periods. As soon as is administratively feasible, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) expects to revoke, or amend, as appropriate, general and specific licenses issued in connection with the JCPOA. At that time, OFAC will issue new authorizations to allow the wind down of transactions and activities that were authorized pursuant to the revoked or amended general and specific licenses. At the end of the 90-day and 180-day wind-down periods, the applicable sanctions will come back into full effect."

OFAC posted related FAQs that provide guidance on the sanctions that are to be re-imposed and the relevant wind-down periods.


Fed welcomes global strategy to reduce payments fraud

The Board of Governors of the Federal Reserve System has issued a statement welcoming the release of a report by the Bank for International Settlement’s Committee on Payments and Market Infrastructures of a global strategy for reducing wholesale payments fraud. The seven elements of the strategy are designed to address all areas relevant to preventing, detecting, responding to, and communicating about, payments fraud. The high-level nature of the elements provides participants in the ecosystem with the flexibility to implement the strategy in accordance with their unique architecture and processes.

The Board reaffirmed its commitment to work collaboratively with domestic and international stakeholders to promote the safety and resiliency of the wholesale payments ecosystem worldwide.


April SCOOS released

The April 2018 Senior Loan Officer Opinion Survey on Bank Lending Practices, which addresses changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally corresponds to the first quarter of 2018, has been released by the Federal Reserve Board.


FTC gets injunction against bogus mortgage relief operation

The Federal Trade Commission has charged a mortgage relief operation with deceiving distressed homeowners by falsely promising to make their mortgages more affordable and prevent foreclosure. A federal court has temporarily halted the scheme and froze the defendants’ assets. The defendants were charged with violating the Federal Trade Commission Act and the Mortgage Assistance Relief Services Rule (BCFP Regulation O).


Hedge fund firm and CFO charged by SEC

The Securities and Exchange Commission has announced the hedge fund advisory firm Visium Asset Management LP has agreed to settle charges related to asset mismarking and insider trading by its privately managed hedge funds and portfolio managers. Separately, the firm’s CFO agreed to settle charges that he failed to respond appropriately to red flags that should have alerted him to the asset mismarking.


BCFP tips to protect against Medicare ID fraud

The BCFP has posted an article has been posted an article that provides tips on protecting one's Medicare ID card from ID fraud.


Consumer credit increases

The Federal Reserve Board has posted March 2018 G.19 consumer credit data, which indicate consumer credit increased at a seasonally adjusted annual rate of 4-1/4 percent during the first quarter 2018. Revolving credit decreased at an annual rate of 1 percent, while nonrevolving credit increased at an annual rate of 6 percent. In March, consumer credit increased at an annual rate of 3-1/2 percent.


Kingpin Act designations

Treasury has announced the imposition of Kingpin Act sanctions against a drug trafficking and money laundering network lead by Venezuelan national Pedro Luis Martin Olivares. Three individuals and 20 entities were designated. For identification of those entities and individuals, see our OFAC Update.


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