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01/29/2019

OFAC targets Venezula's state-owned oil company

Treasury announced on Monday that OFAC has designated Petroleos de Venezuela, S.A. (PdVSA) pursuant to Executive Order 13850 for operating in the oil sector of the Venezuelan economy. PdVSA is a Venezuelan state-owned oil company and a primary source of Venezuela’s income and foreign currency, to include U.S. dollars and Euros.

As a result of Monday’s action, all property and interests in property of PdVSA subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. However, concurrent with this action, OFAC issued general licenses that authorize certain transactions and activities related to PdVSA and its subsidiaries within specified timeframes.

For identification information, see our OFAC Update.

01/29/2019

Risk Governance and Credit Risk workshops announced

The OCC will host two workshops at the OCC Southern District Office in Dallas, Texas, March 5-6, for directors of national community banks and federal savings associations supervised by the OCC.

  • The Risk Governance: Improving Director Effectiveness workshop on March 5 provides practical information for directors to effectively measure and manage risks. The workshop also focuses on the OCC’s approach to risk-based supervision and major risks in the financial industry.
  • The Credit Risk: Directors Can Make a Difference workshop on March 6 focuses on credit risk within the loan portfolio, and discusses methods to manage it such as identifying trends and recognizing problems. The workshop also covers the roles of the board and management, how to stay informed of changes in credit risk, and how to effect change.

01/29/2019

Ponzi scheme operators pay $1B

The SEC has announced that a federal court in Florida ordered Woodbridge Group of Companies LLC and its former owner to pay over $1 billion in penalties and disgorgement for operating a Ponzi scheme that targeted retail investors. A U.S. District Court Order approved judgments against Woodbridge and its 281 related companies, ordering them to pay $892 million in disgorgement. The court ordered former owner and CEO Robert H. Shapiro to pay a $100 million civil penalty and to disgorge $18.5 million in ill-gotten gains plus $2.1 million in prejudgment interest.

01/28/2019

SEC takes emergency action against Texas developer

The Securities and Exchange Commission has announced that it filed charges against Texas resident and real estate developer Phillip Michael Carter, two other individuals, and several related entities for conducting a multi-million dollar offering fraud. The SEC's complaint alleges that Carter, along with Bobby Eugene Guess and Richard Tilford, raised almost $45 million from over 270 investors across the United States by selling short-term, high-yield promissory notes issued by a number of shell companies intentionally named to confuse investors. The complaint alleges that Carter, Guess, and Tilford claimed to offer investments in Carter's legitimate real estate development companies, which were purportedly backed by hard assets from actual real estate development projects. Instead, the complaint alleges, the individual defendants sold securities issued by unrelated, but closely-named, entities that had no assets. Carter then misappropriated investor funds to pay $1.2 million towards a personal IRS tax lien, operate a luxury hunting ranch, fund his lifestyle, and make over $3 million in Ponzi payments to investors.

01/28/2019

Tax season and refunds

The January 2019 FDIC Consumer News has been posted and lists tips on taking advantage of changes in banking technology that help consumers manage their refunds more safely and easily.

01/28/2019

December 2018 FDIC enforcement actions

The FDIC has released the list of orders of administrative enforcement actions taken against banks and individuals in December 2018. A total of 15 orders were issued, including one issued in October 2018. The administrative enforcement actions in those orders consisted of two Section 19 orders; one civil money penalty; three removal and prohibition orders; four consent orders; one prompt corrective order; three terminations of consent orders; and one notice.

Prairie State Bank and Trust, Springfield, Illinois, was assessed a $12,416 civil money penalty for a pattern or practice of violations of the Flood Disaster Protection Act. Two former head tellers of The Peoples Bank, Eatonton, Georgia, were issued Removal/Prohibition orders,having been found to have embezzled and misapplied bank funds by transferring them into their accounts or those of family members, to have taken cash from teller drawers and the bank's vault, and to have issued cashier's checks for their own benefit without having paid for them. A former teller of First Commercial Bank, Gideon, Missouri was issued a Removal/Prohibition order for having made multiple unauthorized withdrawals from three bank customers' accounts.

01/28/2019

OFAC lifts sanctions from three Russian entities

The Department of the Treasury announced on Sunday afternoon that OFAC had lifted sanctions imposed on En+ Group plc (“En+”), UC Rusal plc (“Rusal”), and JSC EuroSibEnergo (“ESE”), following an earlier notification submitted to Congress on December 19, 2018.

Under the terms of their removal from OFAC’s SDN List, En+, Rusal, and ESE have reduced Oleg Deripaska’s direct and indirect shareholding stake in the companies and severed his control. This action ensures that the majority of directors on the En+ and Rusal boards will be independent directors – including U.S. and European persons – who have no business, professional, or family ties to Deripaska or any other SDN, and that independent U.S. persons vote a significant bloc of the shares of En+.

For identity information on the three companies, see our OFAC Update.

01/25/2019

OFAC designates airline and Iran militias in Syria

Treasury has announced that OFAC has taken action against two Syria-based, Iran-backed militias composed of foreign nationals, an Iranian airline linked to designated Iranian airline Mahan Air and Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), and an Armenian general sales agent providing services to Mahan Air.

As a result of yesterday’s action, all property and interests in property of these entities that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.

In addition, persons that engage in certain transactions with the entities designated yesterday may themselves be exposed to designation. Furthermore, any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the designated entities could be subject to U.S. correspondent account or payable-through sanctions.

For identification information on the designations, see our OFAC Update.

01/25/2019

Fed seeking payment improvement working group members

The Federal Reserve's FedPayments Improvement team is reaching out to the payments industry for industry participants for two work groups to become involved with Federal Reserve executives in focusing on payment fraud.

  • The Fraud Definitions Work Group will work to identify where existing fraud definitions may be leveraged as well as where new or changed definitions would be helpful, develop a recommended fraud classification model to better understand key data points in payment fraud, and propose a roadmap to encourage broad industry adoption of this recommended model. It will involve 20–30 industry participants selected by the Fed who have in-depth expertise that includes, but is not limited to, fraud prevention, payments risk mitigation, and ACH, wire and check operations including customer servicing aspects.
  • The Fraud Definitions Community Interest Group is open to industry stakeholders interested in following and consulting on Fraud Definitions Work Group deliverables. This group will receive regular updates on the Fraud Definitions Work Group’s progress and be notified of opportunities to provide feedback on work group deliverables.

Additional information can be found on the FedPayments Improvement webpage on the new work groups.

01/23/2019

Former Maryland banker gets prohibition order

The Federal Reserve Board has issued a Consent Order of Prohibition to a former institution-affiliated party of CFG Community Bank, Baltimore, Maryland, who, on September 18, 2018, pleaded guilty to one count of bank fraud and one count of tax evasion, and stipulated in his plea agreement facts demonstrating that he diverted from the bank for his own benefit and that of another individual:

  • funds from the re-finance of mortgage loans owned by the bank; and
  • refunds of insurance premiums on loans owned by the bank;
  • loan payoff proceeds owed to the bank;

and engaged in tax evasion by failing to report the income attributable to his conduct.

Under the terms of the plea agreement, the former banker agreed to a forfeiture judgment of over $500,000, and must pay restitution of over $892,000 to the bank and over $365,000 to the IRS.

CFG Community Bank is a state-chartered Federal Reserve member bank with three offices and total assets of $786 million as of September 30, 2018.

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