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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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OFAC extends general licenses

OFAC has announced it has extended the expiration date of certain general licenses related to En+ Group plc (EN+), United Company RUSAL PLC (RUSAL), and JSC EuroSibEnergo (ESE) from January 21, 2019 to January 28, 2019. This short-term extension enables En+, RUSAL, and ESE to continue to operate as they execute technical steps that must be taken prior to the completion of the agreement between OFAC and these entities.


Bureau adjusts CMPs for inflation

The Consumer Financial Protection Bureau has posted an announcement of a Final Rule adjusting for inflation the maximum amount of each civil penalty within the Bureau’s jurisdiction. The inflation adjustments mandated by the Inflation Adjustment Act serve to maintain the deterrent effect of civil penalties and to promote compliance with the law. The Final Rule will be effective on publication in the Federal Register. They represent a 2.522 percent increase over the limits published for 2018. The Bureau's CMP limits are found in its "Civil Penalty Adjustments" regulation at 12 CFR Part 1083.


NCUA supervisory priorities for 2019

The National Credit Union Administration has outlined its primary areas of supervisory focus for 2019 in its Letter 19-CU-01 to credit unions. The NCUA's extended exam cycle will be fully implemented, and agency examiners will continue using the streamlined small credit union exam program procedures for most credit unions that have assets under $50 million. For all other credit unions, examiners will conduct risk-focused examinations, concentrating on the areas of highest risk, new products and services, and compliance with federal regulations.

NCUA examiners will have increased flexibility to conduct suitable examination work offsite. In the agency’s Flexible Examination Program (FLEX) pilot, examiners were able to conduct as much as 35 percent of examination time offsite. The NCUA expects this increased flexibility will reduce the time impact on credit unions, save on travel costs and increase staff productivity.

The Letter briefly described examiners' focus in several areas.

  • BSA Compliance: Examiners will perform more in-depth reviews of credit unions’ Bank Secrecy Act and anti-money laundering policies, procedures, and processes to assess compliance with regulatory requirements for customer due diligence and for identifying and verifying beneficial owner(s) of legal entity members.
  • Concentrations of Credit: Examiners will have a continued focus on large concentrations of loan products and concentrations of specific risk characteristics.
  • Consumer Compliance: As in 2018, examiners will continue to perform limited reviews of Home Mortgage Disclosure Act (HMDA) quarterly Loan/Application Registers, or full-year Loan/Application Registers when applicable. The reviews will evaluate federal credit unions’ good faith efforts to comply with 2018 HMDA data collection and reporting requirements. These reviews will account for the statutory partial exemptions that took effect on May 24, 2018. The NCUA will continue to focus on Military Lending Act (MLA) compliance, and examiners will evaluate credit unions’ efforts to comply with the MLA. Examiners will review credit unions’ compliance with Regulation B’s notification requirements following adverse action taken on consumer credit applications. They will also review overdraft policies and procedures for compliance with Regulation E.
  • Current Expected Credit Losses (CECL): examiners will inquire about efforts a credit union has taken to prepare for the new accounting standard, and whether a credit union has performed analysis for how CECL would alter the Allowance for Loan and Lease Losses funding needs.
  • Information Systems and Assurance: Examiners will continue conducting information security maturity assessments with the Automated Cybersecurity Examination Toolbox (ACET). Examiners will use the ACET to assess credit unions with over $250 million in assets that have not previously received an assessment. The security, confidentiality, and integrity of credit union member information remains a key supervisory priority for the NCUA. Two additional areas of supervisory focus for 2019 are the assessment of credit union IT risk management to ensure it effectively identifies, remediates, and controls inherent risks to appropriate residual risk levels, and oversight of service provider arrangements to ensure credit unions implement effective risk-based supply chain management.
  • Liquidity and Interest Rate Risks: Examiners will assess liquidity and interest rate risk management in light of upward rate trends.


FRBServices announces quality improvement initiative

The January 15 issue of FED360° introduces a quality improvement initiative for Federal Reserve Check Adjustment Services. The Federal Reserve Banks will charge a quality fee to depositing institutions for quality issues within work deposited with the Federal Reserve Banks. Additionally, the Federal Reserve Banks will charge a quality fee for cases submitted with incorrect or incomplete information that resulted in the prevention of automatic resolution of the request. These quality fees are designed to encourage greater efficiency through proper case submission and improved deposit practices.

A per item fee of $0.50 will be charged to a depositing bank when an adjustment case is opened with the Reserve Banks for an item that was either incorrectly encoded or deposited more than once by the same institution. A fee of $2.50 will be imposed on a financial institution that provides incorrect or incomplete information when opening an adjustment case with the Reserve Banks. The $2.50 fee is only applicable to adjustment cases that would have resolved automatically had the case been submitted correctly. The fees apply to items processed on or after January 2, 2019, and any adjustment cases received on or after January 14, 2019.


Regulators post Call Report information

FDIC FIL-02-2019, issued also on behalf of the OCC and Federal Reserve, provides instructions for completion of Call Reports for the quarter ended December 31, 2018. The FIL also reminds banks of pending proposals to modify Call Reports that have not yet been finalized.


U.S. and Argentina hold AUDIF meeting

A statement was issued by the Treasury Department after the conclusion of the fifth meeting of the Argentina-United States Dialogue on Illicit Finance (AUDIF) on January 9-10 in Buenos Aires, Argentina. The main objective of the AUDIF is to advance shared goals on countering money laundering, terrorist financing, proliferation financing, corruption and other illicit finance threats and typologies.


Mnuchin on Russia Sanctions

Treasury Secretary Mnuchin issued a statement in advance of yesterday's classified briefing for Members of the House of Representatives on the sanctions against Russian oligarch and Specially Designated National Oleg Deripaska and three companies he controlled at the time sanctions were imposed, En+ Group PLC (En+), United Company RUSAL PLC (Rusal), and EuroSibEnergo (ESE).


A new look at

The NCUA has unveiled redesigned versions of its and websites. NCUA Board Chairman J. Mark McWatters said "Both of these websites are now more intuitive and accessible, and they will improve our ability to communicate with the broader credit union community and the public." Both of the sites now allow users access on a variety of platforms, including smartphones, tablets, laptops and desktops.


Texas bank gets C&D for BSA/AML shortcomings

The Federal Reserve Board and the Banking Commissioner of the Texas Department of Banking have issued a Consent Cease and Desist Order to Commercial State Bank, Andrews, Texas, directing that the bank take specified actions following identification in a recent examination of the bank by the Federal Reserve Bank of Dallas and the Department of significant deficiencies in the bank’s risk management and compliance with applicable laws, rules, and regulations relating to anti-money laundering. Those deficiencies resulted in a compliance program violation.

The bank was directed to take action with regard to board oversight; the bank's BSA/AML compliance program; customer due diligence; suspicious activity monitoring and reporting; the bank's transaction monitoring system; and independent testing.


OFAC targets Venezuela currency exchange network

On Tuesday, January 8, OFAC sanctioned Venezuelan individuals and companies involved in a significant corruption scheme designed to take advantage of the Government of Venezuela’s currency exchange practices, generating more than $2.4 billion in corrupt proceeds. This designation, pursuant to Executive Order (E.O.) 13850, targets seven individuals, including former Venezuelan National Treasurer Claudia Patricia Diaz Guillen (Diaz) and Raul Antonio Gorrin Belisario (Gorrin), who bribed the Venezuelan Office of the National Treasury (ONT, or Oficina Nacional del Tesoro) in order to conduct illicit foreign exchange operations in Venezuela.

In addition to Diaz and Gorrin, OFAC designated or blocked five other individuals and 23 entities, pursuant to E.O. 13850, for their roles in the bribery scheme, and identified one private aircraft as blocked property.

For information on a General License issued in connection to these designations and on the identities of the designated individuals, entities and aircraft, see our OFAC Update.


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