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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.

12/01/2020

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 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

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.

11/25/2020

JPMorgan Chase Bank pays $250M for lax controls

The OCC has announced it has issued a Consent Order to JPMorgan Chase Bank, National Association (Columbus, Ohio) to pay a $250 million civil money penalty, based on the bank's failure to maintain internal controls and internal audit over its fiduciary business.

For additional information and a link to the Consent Order, see "OCC hits JPMorgan Chase with $250M CMP" in the BankersOnline Penalty pages.

11/25/2020

Navy FCU settles OD fees class action suit for $16M

The CreditUnionTimes reports the Navy Federal Credit Union will settle a class action suit for $16 million that will reimburse an estimated 700,000 current and former members who were charged fees for overdrafts.

An Alexandria, Virginia, U.S. District Court judge has issued a preliminary approval for the settlement in Lambert v. Navy Federal Credit Union, with final approval expected in March.

The suit was brought by Ruby Lambert in January 2019 after she was charged a second $29 NSF fee when a $96 check on her account was presented a second time after it was bounced to her insurance company. Although Lambert acknowledged that Navy Federal was allowed to charge her a single NSF fee, she argued in court documents that the credit union breached terms of member account agreements when it charged her a second NSF fee for the same insurance check payment.

Lambert's suit was dismissed in August 2019 because Navy Federal's account agreement gave the CU a contractual right to charge an NSF fee each time an NSF check is presented. Lambert appealed to the U.S. District Court for the Eastern District of Virginia. Navy Federal and Lambert's lawyers agreed to settle the suit.

The $16 million cash fund will pay for $5.2 million in attorney fees, a $5,000 “service award” for Lambert, and millions in NSF fee reimbursements for an estimated 700,000 current and former Navy Federal members who were assessed a second or third NSF fee for a single payment transaction that was rejected because of insufficient funds in their accounts from January 28, 2014, to October 27, 2020. Navy Federal will separately pay all settlement administration costs.

11/24/2020

New OCC Licensing Manual booklet issued

OCC Bulletin 2020-102, issued yesterday, announced the new “Mutual to Stock Conversions” booklet of the Comptroller’s Licensing Manual. The new booklet incorporates provisions of the revised regulation (12 CFR 192) that became effective August 13, 2020. The new booklet:

  • provides an overview of policy considerations and decision criteria that the OCC considers when reviewing applications by federal savings associations to convert from a mutual to stock form of ownership under 12 CFR 192.
  • describes various types of mutual to stock conversions including standard conversions, merger conversions, conversion mergers, and voluntary supervisory conversions.
  • describes the applications process, including the prefiling process, filing and review of the application, the decision, and the post-consummation phase of the mutual to stock conversion.
  • outlines requirements and procedures federal savings associations should follow when filing an application to convert from mutual to stock form of ownership.
  • lists references and links to informational resources and sample forms and documents that prospective filers may find helpful during the filing and conversion process.

11/24/2020

OCC updates Activities and Operations rules

The Office of the Comptroller of the Currency has announced a final rule that updates the agency's rules for national bank and federal savings association activities and operations, with amendments affecting 12 CFR parts 4, 5, 7, 145, and 160. The rule, which takes effect April 1, 2021, is part of the OCC’s continuous effort to modernize its rules and remove unnecessary requirements to relieve banks of unnecessary burdens, encourage economic opportunity, and promote the safe, sound, and fair operation of the federal banking system. The final rule changes 12 CFR part 7 to update or eliminate outdated regulatory requirements that no longer reflect the modern financial system and to clarify and codify recent OCC interpretations. The Rule includes changes:

  • incorporating and streamlining interpretations addressing permissible derivatives activities for national banks;
  • codifying interpretations to permit national banks and federal savings associations to engage in certain tax equity finance transactions;
  • codifying interpretations regarding national bank membership in payment systems and clarifying that federal savings associations are subject to the same requirements as national banks;
  • expanding the ability of national banks and federal savings associations to choose corporate governance provisions under state law;
  • clarifying the extent to which national banks may adopt anti-takeover provisions permissible under state corporate governance law;
  • clarifying when national bank participation in a financial literacy program on the premises of, or a facility used by, a school or other organization would not be a branch;
  • codifying interpretations of the National Bank Act relating to capital stock issuances and repurchases; and
  • applying rules relating to finder activities, indemnification, equity kickers, postal services, independent undertakings, and hours and closings to federal savings associations.

11/23/2020

FDIC sets reserve ratio for 2021

The FDIC has published a notice [85 FR 74719] that the "Board of Directors of the Federal Deposit Insurance Corporation designates that the Designated Reserve Ratio for the Deposit Insurance Fund shall remain at 2 percent for 2021."

11/23/2020

FDIC proposes temporary rule to temper CECL transition effect

FDIC FIL-107-2020, issued November 20, 2020, announces an FDIC proposed rulemaking that would address the temporary deposit insurance assessment effects resulting from certain optional regulatory capital transition provisions relating to the implementation of the current expected credit losses (CECL) methodology. The proposal would remove the double counting of a specified portion of the CECL transitional amount or the modified CECL transitional amount, as applicable, in the calculation of certain financial measures that are used to determine assessment rates for large and highly complex insured depository institutions (IDIs).

The proposal would affect only those institutions with $10 billion or more in total assets. In order to implement these adjustments, the proposal would require large and highly complex IDIs that elect a CECL transition provision to report one additional, temporary item on the Consolidated Reports of Condition and Income (Call Report).

Comments on the proposed rule will be accepted for 30 days after publication in the Federal Register.

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