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12/03/2020

IRS ID protection program expanded to all taxpayers

The IRS has announced that starting in January the Identity Protection PIN Opt-In Program will be expanded to all taxpayers who can properly verify their identities. The IP PIN is a six-digit number assigned to eligible taxpayers to help prevent the misuse of their Social Security number on fraudulent federal income tax returns. An IP PIN helps the IRS verify a taxpayer's identity and accept their electronic or paper tax return. The online "Get An IP PIN" tool at IRS.gov/ippin will immediately display the taxpayer's IP PIN.

Additional IP PIN information for taxpayers:

  • The "Get an IP PIN" tool will be available in mid-January. This is the preferred method of obtaining an IP PIN and the only one that immediately reveals the PIN to the taxpayer.
  • The online tool uses Secure Access authentication which uses several different ways to verify a person's identity. Before using the "Get an IP PIN" tool, the IRS encourages taxpayers to review the requirements at www.IRS.gov/secureaccess.
  • Taxpayers who want to voluntarily opt into the IP PIN program do not need to file a Form 14039, Identity Theft Affidavit.
  • The IP PIN is valid for one year. Each January, the taxpayer must obtain a newly generated IP PIN.
  • The IP PIN must be properly entered on electronic and paper tax returns to avoid rejections and delays.
  • Taxpayers with either a Social Security number or Individual Tax Identification Number who can verify their identities are eligible for the opt-in program.
  • Any primary taxpayer (listed first on the return), secondary taxpayer (listed second on the return) or dependent may obtain an IP PIN if they can pass the identity proofing requirements.
  • The IRS plans to offer an opt out feature to the IP PIN program in 2022 if taxpayers find it is not right for them.

12/03/2020

OFAC sanctions associate of major fugitive drug lord

The Treasury Department has announced that OFAC has designated Mexican national Lucio Rodriguez Serrano as a Specially Designated Narcotics Trafficker in accordance with the Foreign Narcotics Kingpin Designation Act. Rodriguez Serrano engages in various activities on behalf of Rafael Caro Quintero, a major Mexican narcotics trafficker and the mastermind behind the murder of Drug Enforcement Administration Special Agent Enrique “Kiki” Camarena in 1985. Caro Quintero remains a fugitive from U.S. justice.

As a result of OFAC’s action, all property and interests in property of the designated individual that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC’s regulations generally prohibit all transactions by U.S. persons or persons within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons.

For further identification information on Rodriguez Serrano and several other OFAC changes, see BankersOnline's OFAC Update.

12/03/2020

Law enforcement act against money mules

The Department of Justice yesterday announced that the Department, the FBI, the U.S. Postal Inspection Service, and six other federal law enforcement agencies have completed their third annual Money Mule Initiative, a coordinated operation to disrupt the networks through which transnational fraudsters move the proceeds of their crimes. Europol announced a simultaneous effort, the European Money Mule Action (EMMA).

Over the last two months, U.S. law enforcement agencies took action against over 2,300 money mules. Actions occurred in every state in the country. The initiative targeted money mules involved in a wide range of schemes including lottery fraud, romance scams, government imposter fraud, technical support fraud, business email compromise or CEO fraud, and unemployment insurance fraud. Many of these schemes target elderly or vulnerable members of society.

12/03/2020

FHA 2021 single family home limits announced

The Federal Housing Administration has announced the agency's new schedule of loan limits for calendar year 2021 for its Single Family Title II forward and Home Equity Conversion (reverse) Mortgage (HECM) insurance programs. Loan limits for most of the country will increase in the coming year due to robust house price appreciation, which is factored into the statutorily mandated calculations FHA uses as part of its methodology for determining the limits each year. The new loan limits are effective for FHA case numbers assigned on or after January 1, 2021.

The FHA is required by the National Housing Act, as amended by the Housing and Economic Recovery Act of 2008 (HERA), to set Single Family forward loan limits at 115 percent of area median house prices, subject to a floor and a ceiling on the limits. FHA calculates forward mortgage limits by Metropolitan Statistical Area and county. In high-cost areas of the country, FHA’s loan limit ceiling will increase to $822,375 from $765,600. FHA will also increase its floor to $356,362 from $331,760. Additionally, the FHA-insured HECM maximum claim amount for reverse mortgages will increase to $822,375 from $765,600. FHA’s current HECM regulations do not allow the HECM limit to vary by MSA or county; instead, the single HECM limit applies to all HECMs regardless of where the property is located.

12/03/2020

Foreclosure and REO eviction moratoriums extended

The Federal Housing Finance Agency has announced that Fannie Mae and Freddie Mac (the Enterprises) will extend the moratoriums on single-family foreclosures and real estate owned (REO) evictions until at least January 31, 2021. The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on December 31, 2020.

12/03/2020

Beige Book released

The Federal Reserve Board has published the December 2, 2020 Beige Book, which summarizes anecdotal information on current economic conditions in each Reserve Bank District through reports from Reserve Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources.

12/03/2020

New executives announced by OCC

The OCC has announced new executive assignments:

  • Karen Boehler - Deputy Comptroller of the Western District
  • Joel Denkert - Deputy Comptroller for Midsize Bank Supervision
  • Enice Thomas - Deputy Comptroller for Credit Risk Policy

12/02/2020

OFAC targets network aiding Colombian DTO

The Treasury Department has announced OFAC has designated Jhon Fredy Zapata Garzon (Zapata Garzon) under authority of the Foreign Narcotics Kingpin Designation Act (Kingpin Act) for materially assisting the international narcotics trafficking activities of the Clan del Golfo drug trafficking organization (DTO). Three of his family members and associates are also being designated along with four businesses they own or control.

Since June 2000, more than 2,100 entities and individuals have been named pursuant to the Kingpin Act for their role in international narcotics trafficking. Penalties for violations of the Kingpin Act range from civil penalties of up to $1,503,470 per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines of up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals could face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

For identification information on all of the individuals and entities affected in OFAC's action, see BankersOnline's OFAC Update.

12/02/2020

Interim rule mitigating COVID-19-related transition costs published

The OCC, Federal Reserve Board, and FDIC have published [85 FR 77345] in today's Federal Register their interim final rule to mitigate temporary transition costs on banking organizations related to the coronavirus disease 2019 (COVID event). See the November 23, 2020, BankersOnline Top Story for details.

12/02/2020

Discount rate meeting minutes Oct. 5 – Nov. 5

The Federal Reserve Board has released the minutes of its interest rate meetings from October 5 through November 5, 2020.

12/02/2020

OCC reduces 2021 assessments

The OCC has announced it is reducing the rates in all Fee Schedules by three percent for the 2021 calendar year.

The 2021 reduction is in addition to the ten percent reduction to all Fee Schedules in 2020 and to the General Assessment Fee Schedule in 2019. The reduction reflects increased operating efficiencies that the agency has achieved over the last several years. The reduced assessments go into effect January 1, 2021, and will be reflected in assessments paid on March 31, 2021, and September 30, 2021.

12/02/2020

OCC reports 14 outstanding CRA evaluations

The OCC has released a list of Community Reinvestment Act performance evaluations that became public during November. Of the 39 evaluations made public last month, 25 are rated Satisfactory, and these 14 institutions' evaluations are rated Outstanding (links are to the banks’ evaluations):

12/02/2020

CFPB files lawsuit for TSR violations

The Bureau has filed a complaint against DMB Financial, LLC (DMB), headquartered in Beverly, Massachusetts, that alleges DMB violated the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act of 2010 (CFPA) in connection with its debt-settlement and debt-relief services by requesting and receiving fees before it performed its promised services and before consumers started payments under any debt settlement. The Bureau also alleges that, after settling individual debts, DMB collected fees based on increased debt amounts after enrollment rather than the amount of each debt at the time of enrollment.

The Bureau's complaint requests that the court permanently enjoin DMB from future violations, provide additional injunctive relief, order DMB to pay redress to harmed consumers and to disgorge ill-gotten gains, and impose civil money penalties on DMB.

12/01/2020

Debt parking scheme halted

The Federal Trade Commission has filed an action in U.S. District Court and received a stipulated Order for Permanent Injunction and Monetary Judgment against a debt collection company that allegedly placed bogus or highly questionable debts on consumers’ credit reports to coerce them to pay the debts. The FTC alleged that the company and its owners, Brandon M. Tumber, Kenny W. Conway, and Joseph H. Smith, had collected more than $24 million from consumers. Under a settlement with the FTC, the company, Midwest Recovery Systems (Midwest Recovery), is prohibited from the practice, known as “debt parking,” and required to delete the debts it previously reported to credit reporting agencies.

The settlement includes a monetary judgment of $24.3 million, which is partially suspended based on an inability to pay. Tumber and the company will be required to pay $56,748, and Tumber will also be required to sell his stake in another debt collection company and provide the proceeds from that sale to the FTC. In addition, Midwest Recovery will be required to surrender all of its remaining assets. If the defendants are found to have misrepresented their ability to pay, the full amount of the judgment would become immediately payable.

12/01/2020

NCUA prohibition notices issued

The NCUA issued two prohibition notices in November 2020, to individuals who are now prohibited from participating in the affairs of any federally insured financial institution.

  • A former employee of Groton Municipal Employees Federal Credit Union in Groton, Connecticut, who had entered into a pretrial diversion or similar program resulting from a charge of third degree larceny in connection with her employment.
  • A former employee of Beacon Credit Union in Lynchburg, Virginia, who had been sentenced on a charge of embezzlement in connection with her employment.

12/01/2020

Bureau adds to executive team

The CFPB has announced additions to its executive team:

  • Matthew R. Bettenhausen serves as Senior Advisor and Counselor to the Director
  • Chris Chilbert is the Chief Information Officer in the Bureau’s Operations Division
  • Janis K. Pappalardo is the Associate Director for Research, Markets and Regulations
  • Donna Roy is the Bureau’s Chief Operating Officer
  • Deborah Royster is the Assistant Director, Office for Older Americans

12/01/2020

Bureau no-action letter issued

The Consumer Financial Protection Bureau has announced it has granted a no-action letter to Upstart Network, Inc., regarding its automated model for underwriting and pricing applications for unsecured closed-end loans.

12/01/2020

Bureau issues Advisory Opinions Policy and two opinions

On Monday, November 30, 2020, the Consumer Financial Protection Bureau issued its final Advisory Opinions Policy. The policy is meant to provide a way to clarify ambiguities in the Bureau's regulations or in statutory requirements. The Bureau has said that the program "provides a mechanism through which the Bureau can more effectively carry out its statutory purposes and objectives by better enabling compliance in the face of regulatory and statutory uncertainty." Information about the Advisory Opinions program is available on the Bureau's website.

The Bureau also released its first two Advisory Opinion Letters on these topics:

The two Advisory Opinion Letters will be effective upon publication in the Federal Register.

  • Publication and effective date update: The Bureau's Advisory Opinions Policy was published at 85 FR 77987 on December 3, 2020, and was effective November 30, 2020.

12/01/2020

FDIC and OCC list CRA exam schedules

The FDIC and the OCC have issued their respective schedules for CRA examinations during the first and second quarters of 2021.

12/01/2020

Revisions to small business size standards proposed

The SBA is requesting public comments on a proposed rule that would revise the small business size standards for businesses in five North American Industrial Classification System (NAICS) sectors to increase small business eligibility for SBA’s loan and contracting programs. The NAICS sectors reviewed in the proposed rule are: Education Services; Health Care and Social Assistance; Arts, Entertainment and Recreation; Accommodation and Food Services; and Other Services. SBA proposes to increase size standards for 70 industries in those sectors.

Comments on the proposal will be accepted through January 26, 2021.

12/01/2020

HUD awards $54.7M in new rental grants for low-income persons

HUD has announced the awarding of over $54.7 million in capital advance and project rental assistance grants to 15 organizations, to expand the supply of affordable rental housing for extremely low-income persons with disabilities. The capital advance awards will support integrated affordable housing by providing funding for the development of permanent supportive rental housing through it’s Section 811 Supportive Housing for Persons with Disabilities program.

12/01/2020

OFAC sanctions Chinese tech company for Maduro support

The Treasury Department has announced that OFAC has designated China National Electronic Import-Export Company (CEIEC) for supporting the illegitimate Maduro regime’s efforts to undermine democracy in Venezuela, including its efforts to restrict internet service and conduct digital surveillance and cyber operations against political opponents.

CEIEC has over 200 subsidiaries and offices around the world. Concurrent with this action, OFAC is issuing a general license that, for 45 days, authorizes all transactions and activities prohibited by E.O. 13692, as amended, that are ordinarily incident and necessary to the wind-down of transactions involving CEIEC.

See BankersOnline's OFAC Update for CEIEC identification details and links to the general license and a related FAQ.

12/01/2020

Fed lending programs extended through first quarter

Treasury and the Federal Reserve Board have announced an extension of four of the Fed's credit facilities through March 31, 2021:

  • Commercial Paper Funding Facility
  • Money Market Mutual Fund Liquidity Facility
  • Primary Dealer Credit Facility
  • Paycheck Protection Program Liquidity Facility

12/01/2020

LIBOR transition statement issued

The Federal Reserve Board, FDIC, and the OCC have issued a statement encouraging banks to cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021, in order to facilitate an orderly—and safe and sound— LIBOR transition.

12/01/2020

Fed releases senior financial officer survey data

The Federal Reserve Board has released results of a survey of senior financial officers at banks about their strategies and practices for managing reserve balances. The Senior Financial Officer Survey (SFOS) is used by the Board to obtain information about deposit pricing and behavior, bank liability management, the provision of financial services, and reserve management strategies and practices. The most recent survey was conducted in collaboration with the Federal Reserve Bank of New York between September 18, 2020, and October 2, 2020, and includes responses from banks that held approximately three quarters of total banking system's reserve balances at the time of the survey.

12/01/2020

Powell discusses CARES Act with Senate Committee

Yesterday, Federal Reserve Board Chair Jerome H. Powell updated the Senate Committee on Banking, Housing, and Urban Affairs on the actions of the Federal Reserve to use its policies to help alleviate the economic burden resulting from the pandemic.

He noted economic activity has continued to recover from its depressed second-quarter level. The reopening of the economy led to a rapid rebound in activity, and real gross domestic product, or GDP, rose at an annual rate of 33 percent in the third quarter. In recent months, however, the pace of improvement has moderated. Household spending on goods, especially durable goods, has been strong and has moved above its pre-pandemic level. In contrast, spending on services remains low largely because of ongoing weakness in sectors that typically require people to gather closely, including travel and hospitality.

Powell said the Federal Reserve's response has been guided by its mandate to promote maximum employment and stable prices for the American people, along with its responsibilities to promote the stability of the financial system. The CARES Act assigns sole authority over its funds to the Treasury Secretary, subject to the statute's specified limits. The Secretary has indicated that these limits do not permit the CARES Act-funded facilities to make new loans or purchase new assets after December 31 of this year. Accordingly, the Federal Reserve will return the unused portion of funds allocated to the lending programs that are backstopped by the CARES Act in connection with their termination at the end of this year. As the Secretary noted in his letter, non-CARES Act funds in the Exchange Stabilization Fund are available to support emergency lending facilities if they are needed.

12/01/2020

Webinar on use of artificial intelligence

FDIC FIL-109-2020 has announced the FDIC, Fed, OCC, and CFPB will conduct an Ask the Regulators webinar event for their supervised institutions on the use of artificial intelligence (AI), including machine learning (ML) on Wednesday, December 16, 2020, at 1:00 p.m. EST.

During the “Ask the Regulators: Banks’ Use of Artificial Intelligence, including Machine Learning” webinar, the agencies will discuss issues and common questions raised about banks’ use of AI/ML, including risk management and controls, data usage, explainability and transparency, independent review, and consumer protection considerations. The agencies will also highlight several existing laws, regulations, supervisory guidance, and other resources that may be relevant to AI/ML usage.

Pregistration is required.

12/01/2020

Fed CRA ratings for October and November

Our review of the Federal Reserve Board's archive of CRA evaluation ratings indicates that in the months of October and November, 2020, the Federal Reserve Banks made public 21 ratings. Of the Federal Reserve member banks listed, one received a "Needs to Improve" rating, 17 were rated "Satisfactory," and these three banks received ratings of "Outstanding" (links are to the banks' evaluations):

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