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07/01/2020

FATF 31st Plenary Meeting

The Treasury Department has reported that the Financial Action Task Force (FATF) concluded its 31st plenary meeting by calling on its members to tackle new threats and vulnerabilities posed by criminals during the COVID-19 crisis. The FATF also completed a 12-month review of progress made by jurisdictions on implementing the new FATF standards on virtual assets adopted during the U.S. presidency of the FATF. The international task force further agreed upon draft text, on which it will seek public consultation, revising its standards to incorporate measures to counter proliferation financing, and adopted a groundbreaking report on money laundering and illegal wildlife trafficking.

07/01/2020

HUD awards $40M to fight housing discrimination

The U.S. Department of Housing and Urban Development (HUD) has awarded $40.8 million to support dozens of fair housing organizations working to help end housing discrimination. These funds are provided through the Department’s Fair Housing Initiatives Program (FHIP) both to help people who believe they have been victims of housing discrimination and to educate housing providers about fair housing laws.

HUD’s FHIP grants support a wide range of fair housing enforcement, education, and outreach activities. The grants allow organizations to provide fair housing enforcement through testing in the rental and sales markets, to file fair housing complaints with HUD, and to conduct investigations. Additionally, the education and outreach activities the organizations conduct also help to educate the public, housing providers, and local governments about their rights and responsibilities under the Fair Housing Act.

07/01/2020

FDIC releases list of May enforcement orders

The FDIC has released a list of enforcement decisions and orders issued in May 2020.

  • The former president, CEO and chairman of a Virginia bank was assessed a $15,000 civil money penalty for reckless unsafe and unsound practices and breaches of fiduciary duty.
  • A former teller at a Washington bank was issued an order of prohibition after a finding that she had embezzled over $49,000 and falsified bank records.
  • A former teller at a South Carolina bank received an order of prohibition after a finding that she had caused unauthorized ATM access cards to be issued on bank customer accounts without those customers' knowledge, and, alone or with others, used the cards to complete unauthorized withdrawals of more than $60,000 from those accounts.

07/01/2020

Fed assesses flood penalty on Virginia bank

The Federal Reserve Board has issued an order assessing an $8,500 civil money penalty on Benchmark Community Bank, Kenbridge, Virginia, for unspecified violations of section 208.25 of Regulation H, which implements the National Flood Insurance Act.

06/30/2020

CFPB announces first Tech Sprints

The CFPB yesterday announced its first-ever Tech Sprints to reduce regulatory burden and improve consumer understanding of financial services. The Bureau’s Tech Sprints program will bring together regulators, technologists, software providers, consumer groups, and financial institutions to develop technological solutions to shared compliance challenges. The first Tech Sprint will kick off in October with another in March 2021.

The focus of the October session will be improving upon existing consumer disclosures, the use of digital technology and alternative delivery mechanisms such as online and mobile, for notification of adverse credit actions.

The March 2021 session will focus on the HMDA data submission process.

06/30/2020

New UDAP/UDAAP booklet from OCC

OCC Bulletin 2020-65, issued yesterday, announced a new "Unfair or Deceptive Acts or Practices and Unfair, Deceptive, or Abusive Acts or Practices" booklet for the Comptroller's Handbook. This booklet is part of the Consumer Compliance series of the Handbook.

The booklet contains information for examiners regarding supervision of a bank's practices related to section 5 of the Federal Trade Commission (FTC) Act, which prohibits banks from engaging in unfair or deceptive acts or practices (UDAP), and sections 1031 and 1036 of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which prohibit unfair, deceptive, or abusive acts or practices (UDAAP).

06/30/2020

OCC report on key risks for banking system

An OCC press release has reported the agency's publication of its Semiannual Risk Perspective for Spring 2020, listing the key issues facing the federal banking system and the effects of the COVID-19 pandemic on the federal banking industry.

Banks entered the national health emergency related to COVID-19 in sound condition but face weak economic conditions resulting from the economic shutdown in response to the pandemic that will stress financial performance in 2020. The OCC reported weak financial performance, and increasing credit, operational, and compliance risks, among the key risk themes in the report.

Highlights from the report include:

  • Financial performance will be affected by higher credit losses, overhead expenses, and lower net interest income.
  • The onset of the national health emergency created an uncertain credit environment that will test the resiliency of commercial and retail loan portfolios. Credit risk management practices will need to be flexible and proactive to meet the challenges of the current environment.
  • Operational risk is heightened as banks amended business processes and engaged third parties to support widespread remote work capabilities, increased technological capacity, and solutions to maintain operations under elevated operational volumes.
  • Compliance risk is elevated because of a combination of altered operations, employees working remotely, and several new federal and state programs designed to support consumers such as the CARES Act, Paycheck Protection Program, and a variety of forbearance and deferred payment programs. Among other challenges, these conditions complicate the compliance responsibilities associated with managing high volumes and various programs of consumer and business lending in a weakened economy.

06/30/2020

FinCEN guidance on due diligence for hemp-related customers

FinCEN has issued Guidance FIN-2020-G001 to address questions related to Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulatory requirements for hemp-related business customers. The guidance:

  • Explains how financial institutions can conduct due diligence for hemp-related businesses
  • Identifies the type of information and documentation financial institutions can collect from hemp-related businesses to comply with BSA regulatory requirements
  • Is intended to enhance the availability of financial services for, and the financial transparency of, hemp-related businesses in compliance with federal law
  • Supplements the December 3, 2019, interagency statement on providing financial services to customers engaged in hemp-related businesses
  • Does not replace or supersede FinCEN’s previous guidance on the BSA expectations regarding marijuana-related businesses

Join Deborah Crawford on July 20, 2020, for a special one-hour update on FinCEN's new guidance to address questions related to Bank Secrecy Act/Anti-Money Laundering (BSA/AML) regulatory requirements for hemp-related business customers.

06/30/2020

Fed releases new terms sheet and FAQ for PMCCF

The Federal Reserve Board has released a new term sheet and FAQ for the Primary Market Corporate Credit Facility, adding pricing and other information. As detailed in the FAQ, pricing will be issuer-specific and informed by market conditions. Prices will also be subject to minimum and maximum spreads over comparable maturity Treasury securities.

06/30/2020

SCOTUS rules on CFPB constitutionality

The Supreme Court, in a 5-4 decision delivered by Chief Justice John G. Roberts, Jr., has ruled that the CFPB's leadership by a sole director removable only for cause violates the separation of powers rule under the U.S. Constitution.

The Court ruled that the Bureau can continue operating, because the provision of the law providing for removal only for cause is severable, but the director must be removable by the president "at will." The earlier judgment of the Ninth Circuit Court of Appeals (in Seila Law LLC v. Consumer Financial Protection Bureau) that the CFPB's structure did not violate the separation of powers was vacated and remanded. The Ninth Circuit must now revisit the case but analyze it in light of the Supreme Court's decision.

Justice Kagan filed an opinion concurring in the judgment with respect to severability and dissenting in part, in which Justices Ginsburg, Breyer and Sotomayor joined.

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