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The OCC has released a list of recent enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with them. Actions taken against national banks and federal savings associations include:

• A Formal Agreement with First FS & LA of Lorain (Lorain, Ohio) for unsafe or unsound practices, including those related to the failure of the board of directors and bank management to develop and implement an appropriate strategic plan; appropriately manage and control liquidity and interest rate risks; implement effective Bank Secrecy Act (“BSA”) /Anti-Money Laundering internal controls; and appoint a BSA Officer with the requisite skills and expertise to oversee the BSA program, and the bank’s violation of law, rule, or regulation, including a violation relating to conducting ongoing customer due diligence.
• A Cease and Desist Order against Heritage Bank, N.A. (Spicer, Minnesota), for unsafe or unsound practices, including those related to capital adequacy, capital and strategic planning, credit review, ongoing monitoring of the credit portfolio, liquidity and liquidity management practices, and the allowance methodology.
• A Formal Agreement with Minnstar Bank, N.A. (Lake Crystal, Minnesota), for unsafe or unsound practices, including those related to concentrations of credit, credit underwriting and administration, appraisals, allowance for credit losses, strategic planning, incentive compensation, capital planning, and liquidity risk management, and violations of law, rule, or regulation, including those relating to loans to executive officers, lending limits, and appraisals.

Actions against institution-affiliated parties included:

• An Order of Prohibition and for payment of a $40,000 civil money penalty (CMP) against Norman Desembrana, former operations senior manager at the Philadelphia, Pennsylvania, lockbox facility of Wells Fargo Bank, N.A., Sioux Falls, South Dakota, for concealing a significant backlog of unprocessed customer checks.
• An Order of Prohibition and for payment of a $300,000 CMP against Gary Judd, former chairman and CEO, Sterling Bank and Trust, FSB, Southfield, Michigan, for failing to appropriately oversee the bank’s operation of its Advantage Loan Program or supervise bank insiders involved in the implementation of the Advantage Loan Program.
• An Order of Prohibition and for payment of a $400,000 CMP against Scott Seligman, an institution-affiliated party of Sterling Bank and Trust, FSB, Southfield, Michigan, for participating in the operation of the Advantage Loan Program, contributing to a poor compliance culture at the bank, and pressuring bank employees to quickly underwrite Advantage Loan Program loans.
• An Order of Prohibition against Jackie M. Snider, former AVP at a Sulphur, Oklahoma, branch of Vision Bank, N.A., Ada, Oklahoma, for misappropriating at least $95,430 via the diversion of funds from customers’ accounts and taking efforts to conceal such misappropriation.
• An Order of Prohibition against John Edmonds, former VP at JPMorgan Chase Bank N.A., Columbus, Ohio, based on his conviction for commodities fraud and conspiracy to commit wire fraud, commodities fraud, commodities price manipulation, and spoofing.
• An Order of Prohibition against Christian Trunz, former executive director at JPMorgan Chase Bank N.A., Columbus, Ohio, based on his conviction for spoofing and conspiracy to commit spoofing.

FinCEN has announced it has issued a Financial Trend Analysis focusing on patterns and trends identified in Bank Secrecy Act data linked to Elder Financial Exploitation (EFE), or the illegal or improper use of an older adult’s funds, property, or assets. FinCEN examined BSA reports filed between June 15, 2022 and June 15, 2023 that either used the key term referenced in FinCEN’s June 2022 EFE Advisory or checked “Elder Financial Exploitation” as a suspicious activity type. This amounted to 155,415 filings over this period indicating roughly $27 billion in EFE-related suspicious activity.

Financial institutions began filing BSA reports featuring the advisory’s key term on the same day that FinCEN published its 2022 advisory. FinCEN has continued to receive EFE BSA reports, averaging 15,993 per month between June 15, 2023, and January 15, 2024. Banks have submitted the vast majority of EFE-related BSA filings.

EFE typically consists of two subcategories: elder scams and elder theft. Elder scams, identified in approximately 80% of the EFE BSA reports that FinCEN analyzed, involve the transfer of money to a stranger or imposter for a promised benefit that the older adult does not receive. In elder theft, identified in approximately 20% of the reports, an otherwise trusted person steals an older adult’s assets, funds, or income. Among other conclusions, FinCEN’s analysis revealed that most elder scam-related BSA filings referenced “account takeover” by a perpetrator unknown to the victim; that adult children were the most frequent elder theft-related perpetrators; and that illicit actors mostly relied on unsophisticated means to steal funds that minimize direct contact with financial institution employees.

The Federal Trade Commission has posted a consumer alert concerning scammers taking advantage of news coverage of student loan forgiveness programs.

Scammers have called consumers to say they are affiliated with Federal Student Aid (FSA) or the Department of Education, and that they are following up on the consumer's eligibility for a new loan forgiveness program. They may even have information about the consumer's loan, including the balance or account number. But they are looking for two things -- upfront fees, which are illegal, and information like the consumer's FSA ID login information, which can be used by the scammer to cut the consumer off from their loan servicer or steal the consumer's identity.

In a related press release, the FTC announced that Marco Manzi, the ringleader of a student loan debt relief scam, will be permanently banned from the debt relief industry and is required to turn over assets as part of a settlement with the Commission.

OFAC has published a final rule in today’s Federal Register to remove its Zimbabwe Sanctions Regulations (part 541) from 31 C.F.R. chapter V, as a result of the termination of the national emergency on which the regulations were based. The removal of part 541 is effective today.

The FDIC has reported that the heads of resolution, regulatory and supervisory authorities, central banks, and finance ministries of the United States, the United Kingdom, and the European Banking Union are among leaders participating in a Trilateral Principal Level Exercise (TPLE) on Saturday, April 20, 2024.

The meeting is part of a series of regular exercises and exchanges among the principals of these key financial sector authorities. The intent is to enhance understanding of each jurisdiction’s resolution regime for global systemically important banks (G-SIBs), strengthen coordination on cross-border resolution, and promote confidence in and commitment to the orderly resolution of G-SIBs.

The 2024 TPLE, to be hosted by the FDIC, builds on a series of such exercises going back to 2014, with the European Banking Union authorities joining in 2016. The exercise coincides with the spring meetings in Washington, D.C. sponsored by the World Bank and International Monetary Fund. The 2024 TPLE will draw on cross-border cooperation processes developed to operationalize international standards applicable to G-SIBs and lessons learned from the 2023 failures of large banks in multiple jurisdictions.

Yesterday, the Treasury Department reported that OFAC had designated 12 entities and ten individuals under Executive Order 14038. This action built on U.S. sanctions imposed in response to Belarus’s fraudulent August 2020 election, as well as President Alyaksandr Lukashenka’s support for Russia’s illegal full-scale invasion of Ukraine. The action sustains U.S. financial pressure on the Lukashenka regime for its continuing support for Russia’s war against Ukraine and the financial benefit it derives from this activity.

For the names and identification information of the designated individuals and entities, see BankersOnline's April 15, 2024, OFAC Update.

FinCEN has issued a Notice [FIN-2024-NTC1] on the use of counterfeit U.S. passport cards to perpetrate identity theft and fraud schemes at financial institutions. The Notice, which was coordinated with the Department of State's Diplomatic Security Service, provides an overview of typologies associated with U.S. passport card fraud, highlights 17 select red flags to assist financial institutions in identifying and reporting suspicious activity, and reminds financial institutions of their reporting requirements under the Bank Secrecy Act (BSA).

FinCEN reports that, from 2018 to 2023, U.S. passport card fraud has resulted in $10 million in actual losses and $8 million in additional attempted losses with over 4,000 victims in the United States. However, DSS and other law enforcement agencies assess losses associated with U.S. passport card fraud and associated identity theft are likely significantly greater and seek increased reporting by financial institutions to identify additional illicit activity. Fraud, including financial crimes related to the use of counterfeit U.S. passport cards, is the largest source of illicit proceeds in the United States and represents one of the most significant money laundering threats to the United States, as highlighted in the U.S. Department of the Treasury’s National Money Laundering Risk Assessment, the National Strategy for Combatting Terrorist and Other Illicit Financing, and FinCEN’s Anti-Money Laundering and Countering the Financing of Terrorism National Priorities.

On Friday, the Treasury Department reported that OFAC had taken action against Hamas, targeting Gaza- and Lebanon-based leaders of the terrorist group’s offensive cyber and unmanned aerial vehicle (UAV) operations. Concurrent with this action, the European Union imposed sanctions targeting Hamas.

For the names and identification information of the designated parties, see the April 12, 2024, BankersOnline OFAC Update.

Consumer Compliance Outlook's first issue for 2024 casts a Compliance Spotlight on resources to combat increased check fraud. The article describes resources from the Federal Reserve System, FinCEN, the U.S. Postal Inspection Service, the ABA, and check service providers.

The Federal Reserve Board has announced the execution of:

• a cease and desist order issued with the consent of Mode Eleven Bancorp, the holding company of Summit National Bank, both located in Hulett, Wyoming, related to Bancorp's previous strategy focused on providing banking-related services to financial technology companies through certain nonbank subsidiaries
• a written agreement with Steele Bancshares, Inc., Tyler, Texas, and American State Bank, Arp, Texas, related to identified safety and soundness deficiencies at the bank.