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10/27/2021

OCC takes enforcement action against mortgage subservicer

The OCC on Tuesday announced it had issued a Consent Cease and Desist Order against Cenlar FSB (Ewing, NJ), the largest mortgage sub-servicer in the country, performing servicing duties on behalf of financial institution clients throughout the United States, and the second largest mortgage servicer in the United States.

The OCC's action was based on the bank’s failure to establish effective controls and risk management practices related to its mortgage servicing and subservicing activities. The order requires the bank to take comprehensive corrective actions to address identified deficiencies and implement internal controls and risk management practices that are appropriate to the bank’s risk profile and the size of its mortgage subservicing operations.

The order also limits excessive growth and prioritizes remediation by requiring the bank to receive no supervisory objection from the OCC before adding new subservicing clients and prior to declaring or paying dividends to shareholders while the order is effective.

10/27/2021

Treasury sanctions Libyan national

The Treasury Department on Tuesday announced that OFAC, acting in coordination with an action by the United Nations Security Council, sanctioned Libyan national Osama Al Kuni Ibrahim (Al Kuni), who is responsible for serious human rights abuse against migrants in Libya. Al Kuni is designated pursuant to Executive Order 13726 for being involved in, or having been involved in, the targeting of civilians through the commission of acts of violence, abduction, forced displacement, or attacks on schools, hospitals, religious sites, or locations where civilians are seeking refuge, or through conduct that would constitute a serious abuse or violation of human rights or a violation of international humanitarian law.

As a result of yesterday’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. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.

Al Kuni was designated by the UN Security Council’s Libya Sanctions Committee. Pursuant to that designation, all UN Member States are obligated to impose an asset freeze and travel ban.

For more information on Al Kuni, see the BankersOnline October 26, 2021, OFAC Update.

10/27/2021

FATF lists jurisdictions with AML/CTF/CPF deficiencies

FinCEN has issued a press release to inform U.S. financial institutions that the Financial Action Task Force (FATF), an intergovernmental body that establishes international standards to combat money laundering, counter the financing of terrorism, and combat weapons of mass destruction proliferation financing (AML/CFT/CPF), has issued public statements updating its lists of jurisdictions with strategic AML/CFT/CPF deficiencies following its plenary meeting this month. U.S. financial institutions should consider the FATF’s stance toward these jurisdictions when reviewing their obligations and risk-based policies, procedures, and practices.

On October 21, 2021, the FATF added Jordan, Mali, and Turkey to its list of the Jurisdictions under Increased Monitoring and removed Botswana and Mauritius.

The FATF’s list of High-Risk Jurisdictions Subject to a Call for Action remains the same with Iran and the Democratic People’s Republic of Korea still subject to the FATF’s countermeasures.

FATF issued two statements:

  1. Jurisdictions under Increased Monitoring, which publicly identifies jurisdictions with strategic deficiencies in their AML/CFT/CPF regimes that have committed to, or are actively working with, the FATF to address those deficiencies in accordance with an agreed upon timeline
  2. High-Risk Jurisdictions Subject to a Call for Action, which publicly identifies jurisdictions with significant strategic deficiencies in their AML/CFT/CPF regimes and calls on all FATF members to apply enhanced due diligence, and, in the most serious cases, apply counter-measures to protect the international financial system from the money laundering, terrorist financing, and proliferation financing risks emanating from the identified countries.

10/25/2021

Fed report on general-use prepaid cards

The Board has posted its annual report to the Congress on the use of general-use prepaid cards in federal, state, and local government-administered payment programs and on the interchange fees and cardholder fees charged with respect to the use of those cards.

Federal, state, and local government offices use government-administered prepaid cards to disburse funds at a lower cost than checks (or other paper-based payment instruments, such as vouchers or coupons) and to provide an alternative to direct deposit for payment recipients, especially those recipients who do not have bank accounts. As a result, government offices contract with financial institutions to issue prepaid cards, disburse program funds, and provide customer service.

For calendar year 2020, government agencies disbursed $408.9 billion through government- administered prepaid cards across the roughly 1,000 programs reported by issuers. The Board collected data on 10 types of government-administered payment programs that used prepaid cards as a method to disburse funds. Total funds disbursed through government-administered prepaid cards varied widely by program type. Unemployment disbursed the largest share of total funds through government-administered prepaid cards across all reported programs in 2020. In total, these prepaid disbursements represent approximately 0.6 percent of total government expenditures in 2020.

10/22/2021

Tech companies ordered to provide info to CFPB

The Consumer Financial Protection Bureau (CFPB) has issued a series of orders to collect information on the business practices of large technology companies operating payments systems in the United States. The information will help the CFPB better understand how these firms use personal payments data and manage data access to users so the Bureau can ensure adequate consumer protection.

The orders were issued pursuant to Section 1022(c)(4) of the Consumer Financial Protection Act. The CFPB has the statutory authority to order participants in the payments market to turn over information to help the Bureau monitor for risks to consumers and to publish aggregated findings that are in the public interest. The CFPB’s work is one of many efforts within the Federal Reserve System to make payments safer, faster, and more competitive. The initial orders were sent to Amazon, Apple, Facebook, Google, PayPal, and Square. The Bureau will also be studying the payment system practices of Chinese tech giants, including Alipay and WeChat Pay.

10/22/2021

NCUA board approves final rules on CUSOs and CAMELS

The NCUA Board yesterday announced it has approved:

  • a final rule that adds the sensitivity to market risk or “S” component to the existing CAMEL rating system and redefines the liquidity risk or “L” component.
  • a final rule that (1) expands the list of permissible activities and services for CUSOs to include originating any type of loan that a federal credit union may originate; and (2) grants the NCUA Board additional flexibility to approve permissible activities and services outside of notice-and-comment rulemaking.

10/22/2021

OCC updates Payment Systems booklet

The OCC has issued a revised “Payment Systems” booklet of the Comptroller’s Handbook. The booklet:

  • provides examiners with information regarding payment systems, types of payments, risks associated with payment systems, and associated risk management practices
  • discusses requirements of 12 CFR 7.1026 regarding payment systems memberships
  • includes expanded examination procedures for examiners to use when assessing payment products and services
  • includes supplemental procedures for deeper review of certain payment activities

10/22/2021

OCC September enforcement actions released

The OCC has released a list of new enforcement actions taken in the month of September. Included were:

  • The previously announced cease-and-desist order against MUFG Union Bank, National Association, of San Francisco
  • A civil money penalty of $2.5 million was assessed against Washington Federal Bank, National Association, Seattle, for BSA/AML compliance failures
  • A consent order of prohibition and for a $140,000 civil money penalty was issued to Jared P. Schultz, former senior vice president, First National Bank in Fairfield, Fairfield, Iowa, upon a finding that he failed to comply with the bank's loan policies; authorized loans from which he personally benefited, in violation of Regulation O; and otherwise engaged in violations of policy and law, reckless unsafe or unsound practices, and breaches of his fiduciary duty to the bank
  • A consent order for a $16,000 civil money penalty and to cease-and-desist was issued to Patrick Hurley, former president, CEO and director of First National Bank in Fairfield, Fairfield, Iowa, upon a finding that he failed to adequately supervise Jared P. Schultz; failed to adequately review the banks problem loan and exception reports to detect unsafe or unsound lending activities that Schultz engaged in; and failed to ensure the bank's internal controls were sufficient

    10/21/2021

    FedNow Explorer announced

    The Federal Reserve's FedNow Instant Payments group has announced the availability of the FedNow Explorer website, which provides a customized learning path with tools and content to meet the needs of those who want to learn more about the service. From instant payment basics and how the FedNow Service works to information about features, functionality and use cases, FedNow Explorer will offer the information and guidance needed to start getting ready for the future of instant payments. The Fed has confirmed the service will be available in 2023.

    10/21/2021

    OCC report on interest rate risk

    The OCC has issued Bulletin 2021-47 to announce its publication of the fall 2021 edition of its Interest Rate Risk Statistics Report, which presents interest rate risk data gathered during examinations of OCC-supervised midsize and community banks and federal savings associations.

    The fall 2021 report provides statistics on interest rate risk exposures and risk limits for different midsize and community bank populations, including

    • all OCC-supervised midsize and community banks with reported data.
    • banks by asset size.
    • banks by charter type.
    • minority depository institutions.

    In addition, the fall 2021 report includes statistics on average lives for non-maturity deposits for all bank populations. The report excludes statistics on exposures and policy limits for a –200 basis point change because of the current market environment of low interest rates.

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