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How to add predictive analytics into your risk program. Risk reports are often limited to historical insights and issues and do not provide guidance and insights into the future of the organization. Adding predictive analytics can allow your organization to detect emerging risks and create mitigation plans. This can be achieved by combining internal and external key risk indicators (KRIs) and key performance indicators (KPIs) with regulatory intelligence. This ensures that risk reports can detect more issues and highlight areas of concern. Click here to learn more.

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OCC releases enforocement actions

The OCC has released new enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations.

  • A former Managing Director and Chief Administrative Officer of Oversight and Controls at JPMorgan Chase Bank, N.A., was ordered to pay a $35,000 civil money penalty for retaining non-public OCC information on her departure from that bank and illegally sharing that information with employees at her subsequent employment with another bank.
  • A former Executive Director of the Global Regulatory Relations Group of MS Services Group, Inc., and Morgan Stanley & Co. LLC, and an institution-affiliated part of Morgan Stanley Private Bank, N.A. and Morgan Stanley Bank, N.A., was ordered to pay a $7,500 civil money penalty for retaining, on her departure from Morgan Stanley in 2017, confidential Morgan Stanley documents, at least 18 of which contained non-public OCC information regarding one or both of the banks, and after being employed by another financial institution, using the documents containing non-public OCC information, leaving them unsecured in her office, thereby disclosing them.
  • A former teller at Wells Fargo Bank, N.A. was issued a consent prohibition order based on the Comptroller's finding, which was neither admitted nor denied, that she processed nine unauthorized over-the-counter cash withdrawals totaling $22,000 from the checking account of a bank customer and disbursed the cash to an individual she knew was not an authorized user of the account, receiving $500 herself for her actions.


Fed announces annual reserves exemption amount

The Federal Reserve Board has announced the annual indexing of the reserve requirement exemption amount and the low reserve tranche. These amounts are used in the calculation of reserve requirements for depository institutions. The Board also announced the annual indexing of nonexempt deposit cutoff and the reduced reporting limit.

For net transaction accounts in 2020, the first $16.9 million, up from $16.3 million in 2019, will be exempt from reserve requirements. A 3 percent reserve ratio will be assessed on net transaction accounts over $16.9 million up to and including $127.5 million, up from $124.2 million in 2019. A 10 percent reserve ratio will be assessed on net transaction accounts in excess of $127.5 million.

The new low reserve tranche and reserve requirement exemption amount will apply to the 14-day reserve maintenance period that begins January 16, 2020. For depository institutions that report deposit data weekly, this maintenance period aligns with the 14-day computation period that begins Tuesday, December 17, 2019. For depository institutions that report deposit data quarterly, this maintenance period aligns with the seven-day computation period that begins Tuesday, December 17, 2019.

Related to the annual indexing of reserve requirements is the Fed's update of its Reserve Maintenance Manual, which provides information regarding reserve calculations and account maintenance for depository institutions that file the Federal Reserve (FR) 2900 form (Report of Transaction Accounts, Other Deposits and Vault Cash) with the Federal Reserve, either weekly or quarterly. The November 2019 edition of the manual is now available.

  • [Editor's Note: The table appearing in the Board's Federal Register submission document is missing the row with the reserve requirement for net transaction accounts in excess of $127.5 million. We have contacted the Federal Reserve Board staff to call the omission to their attention. We determined that the reserve amount on the missing line should be $3,318,000 plus 10% of the amount over $127.5 million.]


FDIC proposes two new rules

The FDIC’s Board of Directors has proposed two new rules:

  • Withdrawal and reenactment of 12 CFR part 303 subpart L (Applications Under Section 19 of the Federal Deposit Insurance Act) and amendment of 12 CFR part 308, subpart M (Procedures and Standards Applicable to Applications Pursuant to Section 19 of the FDIA) to formalize a longstanding agency policy related to individuals seeking to work in the banking industry with minor criminal offenses. The FDIC released a Fact Sheet on the proposal.
  • Amendments to 12 CFR part 331 (Federal Interest Rate Authority) to clarify the Federal law governing interest rates state banks may charge their customers by addressing marketplace uncertainty in the wake of a 2015 court ruling that called into question the enforceability of interest rate terms following the sale or assignment of a loan originated by a national bank to a third-party non-bank. A Fact Sheet on this proposal was also released.

Comments on both proposed rules will be accepted for 60 days following publication in the Federal Register.

Press releases:


State updates Cuba Restricted List

The Department of State has published an update [84 FR 63953] to its List of Restricted Entities and Subentities Associated with Cuba (the Cuba Restricted List) with which direct financial transactions are generally prohibited under the Cuban Assets Control Regulations (CACR). The updated list is effective November 19, 2019.


OFAC designates ISIS support networks

On Monday, OFAC designated two Turkey-based Islamic State of Iraq and Syria (ISIS) procurement agents and four ISIS-linked companies operating in Syria, Turkey, and across the Persian Gulf and Europe for providing critical financial and logistical support to ISIS. Additionally, Treasury is acting against an Afghanistan-based organization, Nejaat Social Welfare Organization, for using false charitable pretenses as a cover to facilitate the transfer of funds and support the activities of the terrorist group’s branch in Afghanistan, ISIS – Khorasan (ISIS-K). Treasury also took action against two senior officials affiliated with this organization.

These targets have been designated pursuant to Executive Order 13224, which targets terrorists and those who have materially assisted, sponsored, or supported terrorists. Identity information for the five entities and four individuals designated on Monday can be found in BankersOnline's OFAC Update.


NCUA Board meeting agenda

The NCUA has posted the agenda for its 10:00 a.m. EST November 21, 2019, Board meeting. The matters to be discussed include the quarterly report of the Share Insurance Fund, guidance on prohibitions imposed by statute, and Part 722 (Real Estate Appraisals) of NCUA Rules and Regulations.


FFIEC IT exam handbook revised

The Federal Financial Institutions Examination Council (FFIEC) has revised the "Business Continuity Management" booklet, one of a series of booklets that make up the FFIEC Information Technology Examination Handbook (IT Handbook). The revised "Business Continuity Management" booklet provides information for examiners to assess the adequacy of a bank’s risk management related to the availability of critical financial products and services. The revised booklet replaces the "Business Continuity Planning" booklet issued in February 2015 and rescinds OCC Bulletin 2015-9, "FFIEC Information Technology Examination Handbook: Strengthening the Resilience of Outsourced Technology Services, New Appendix for Business Continuity Planning Booklet."


FFIEC advisory on FATF-identified jurisdictions with AML/CFT deficiencies

FinCEN has issued Advisory FIN-2019-A007 on "Financial Action Task Force-Identified Jurisdictions with AML/CFT Deficiencies and Relevant Actions by the United States Government."

FinCEN has outlined in the Advisory the countermeasures against the AML/CFT deficiencies of the Democratic Peoples Republic of Korea (North Korea) and Iran, and listed the FATF-identified jurisdictions with strategic AML/CFT deficiencies. If a SAR is filed on suspicious activity connected to any of the jurisdictions or activities highlighted in Advisory FIN-2019-A007, the key term "October 2019 FATF FIN-2019-A007" should be included.


FDIC Board agenda released

The FDIC Board's agenda for its 10:00 a.m. EST, November 19, 2019, meeting has been released. The summary agenda includes memoranda and resolutions regarding:

  • Regulatory Capital Rule: Revisions to the Supplementary Leverage Ratio to Exclude Certain Central Bank Deposits of Banking Organizations Predominantly Engaged in Custody, Safekeeping and Asset Servicing Activities.
  • Regulatory Capital Treatment for High Volatility Commercial Real Estate (“HVCRE”) Exposures.
  • Final Rule Removing Transferred OTS Regulation, Part 390 Subpart M – Deposits.
  • Notice of Final Rulemaking Re: The Use and Remittance of Certain Assessment Credits.
  • Establishment of the FDIC Advisory Committee of State Regulators.

The Board's discussion agenda includes memoranda and resolutions regarding:

  • Regulatory Capital Rule: Standardized Approach for Calculating the Exposure Amount of Derivative Contracts.
  • Notice of Proposed Rulemaking on Conversion of the Statement of Policy for Section 19 of the Federal Deposit Insurance Act to a Regulation.
  • Notice of Proposed Rulemaking on Federal Interest Rate Authority.


Regulators to host CBLR webinar

The FDIC, OCC, and FRB will host an interagency webinar on November 21, 2019, from 2:00 p.m. to 3:30 p.m. Eastern Time to discuss the community bank leverage ratio (CBLR). A question and answer session will follow the presentation.


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