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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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10/17/2019

Hundreds charged worldwide in takedown of child porn network

U.S. Immigration and Customs Enforcement has reported that Jong Woo Son, 23, a South Korean national, was indicted by a federal grand jury in the District of Columbia for his operation of Welcome To Video, the largest child sexual exploitation market by volume of content. The nine-count indictment was unsealed Wednesday along with a parallel civil forfeiture action. Son has also been charged and convicted in South Korea and is currently in custody serving his sentence in South Korea. An additional 337 site users residing in 23 states and D.C. as well as the United Kingdom, South Korea, Germany, Saudi Arabia, the United Arab Emirates, the Czech Republic, Canada, Ireland, Spain, Brazil and Australia have been arrested and charged. Two of those charged were Homeland Security employees—a Homeland Security Investigations special agent and a U.S. Border Patrol agent..

This Darknet website is among the first of its kind to monetize child exploitation videos using bitcoin. In fact, the site itself boasted over one million downloads of child exploitation videos by users. Each user received a unique bitcoin address when the user created an account on the website. An analysis of the server revealed that the website had more than one million bitcoin addresses, signifying that the website had capacity for at least one million users. The law enforcement operation is responsible for the rescue of at least 23 minor victims residing in the United States, Spain and the United Kingdom, who were being actively abused by the users of the site.

10/08/2019

OCC Innovation Office Hours in Las Vegas

The OCC has announced it will hold Innovation Office Hours on October 28 in Las Vegas to promote responsible innovation in the federal banking system.

Office Hours are one-on-one meetings with Office of Innovation staff to discuss financial technology (fintech), new products or services, partnering with a bank or fintech company, or other matters related to responsible innovation in the federal banking system. OCC staff will provide feedback and respond to questions. Each meeting will last no longer than one hour. Requests for Office Hours sessions must be submitted by October 18.

10/02/2019

2020 OCC bank supervision operating plan

The OCC has released its bank supervision operating plan for fiscal year 2020. Supervisory strategies will focus on—

  • cybersecurity and operational resiliency
  • BSA/AML compliance management
  • commercial and retail credit underwriting practices and oversight and control functions
  • impact of changing interest rate outlooks on bank activities and risk exposures
  • preparedness for the current expected credit losses (CECL) account standard, and preparation for the potential phase-out of LIBOR
  • technological innovation and implementation

09/20/2019

Changes to FDIC post-exam survey process

In FIL-50-2019 the FDIC is notifying FDIC-supervised financial institutions that the Office of the Ombudsman, which is independent of the supervisory process, reports directly to the FDIC Chairman's office, and is a confidential resource for banks, is now administering the Post-Examination Survey process.

The Office of the Ombudsman will:

  • Assume responsibility for soliciting Survey responses effective October 1, 2019;
  • Send notice that the Survey will accompany the Report of Examination;
  • Provide a reminder to encourage participation in the Survey; and
  • Serve as the contact point for banks regarding the Survey and follow-up requests.

The FIL includes links to the current post-exam survey questions for the Safety and Soundness and the Compliance and CRA exams.

09/18/2019

CFPB seeking Tech Sprint opportunities

The CFPB has published in today's Federal Register a notice and request for information to identify opportunities to utilize Tech Sprints as a means to encourage regulatory innovation and collaborate with stakeholders in developing viable solutions to regulatory compliance challenges. Tech Sprints have been used successfully by the Financial Conduct Authority in the United Kingdom to gather regulators, technologists, financial institutions, and subject matter experts from key stakeholders for several days to work together to develop innovative solutions to clearly-identified challenges.

Tech Sprints have also been used by the U.S. Census Bureau, where tech companies, universities, government and communities together worked to translate U.S. government open data into useful digital products over the course of a 12-week sprint. At the end of the sprint, products launched and often moved on to full development as tools for the public.

Comments are due by November 8, 2019.

09/11/2019

CFPB issues innovation policies

The CFPB has issued three new policies to promote innovation and facilitate compliance: the No-Action Letter (NAL) Policy, Trial Disclosure Program (TDP) Policy, and Compliance Assistance Sandbox (CAS) Policy.

No-action letters provide increased regulatory certainty through a statement that the Bureau will not bring a supervisory or enforcement action against a company for providing a product or service under certain facts and circumstances. The Bureau has issued its first NAL under the new NAL Policy in response to a request by HUD on behalf of more than 1,600 housing counseling agencies (HCAs) that participate in HUD’s housing counseling program. The no-action letter essentially states that the Bureau will not take supervisory or enforcement action under RESPA against HUD-certified HCAs that have entered into certain fee-for-service arrangements with lenders for pre-purchasing of housing counseling services. The Bureau also released a No-Action Letter Template for mortgage lenders to apply for a NAL for any HUD-required MOU between the mortgage lender and a participating counseling agency under a Housing Counseling Funding Agreement.

Under the new TDP Policy, entities seeking to improve consumer disclosures may conduct in-market testing of alternative disclosures for a limited time upon permission by the Bureau.

The CAS Policy enables testing of a financial product or service where there is regulatory uncertainty. After the Bureau evaluates the product or service for compliance with relevant law, an approved applicant that complies in good faith with the terms of the approval will have a “safe harbor” from liability for specified conduct during the testing period. Approvals under the CAS Policy will provide protection from liability under the Truth in Lending Act, the Electronic Fund Transfer Act, or the Equal Credit Opportunity Act.

UPDATE: The policies were published in the Federal Register 9/13/2019:
NAL policy: 84 FR 48229
TDP policy: 84 FR 48260
CAS policy: 84 FR 48246

09/11/2019

Bureau and states launch innovation network

The CFPB announced Tuesday the launch of the American Consumer Financial Innovation Network (ACFIN) to enhance coordination among federal and state regulators to facilitate financial innovation.

Initial state members of ACFIN are the attorneys general of Alabama, Arizona, Georgia, Indiana, South Carolina, Tennessee, and Utah. All state regulators have been invited to join.

09/10/2019

OCC schedules 2 LA workshops

The OCC has announced it will host two workshops at the Federal Reserve Bank of Los Angeles, October 22 and 23, for directors of institutions supervised by the OCC:

  • The Compliance Risk workshop on October 22 focuses on the critical elements of an effective compliance risk management program. Topics of discussion include the Bank Secrecy Act, Flood Disaster Protection Act, Fair Lending, Home Mortgage Disclosure Act, Community Reinvestment Act, and other compliance hot topics.
  • The Operational Risk workshop on October 23 focuses on the key components of operational risk—people, processes, and systems. The workshop also covers governance, third-party risk, vendor management, internal fraud, and cybersecurity.

09/05/2019

Google and YouTube pay $170M COPPA penalty

The Federal Trade Commission has announced that Google LLC and its subsidiary YouTube LLC have agreed to pay a federal civil money penalty of $136 million and a New York State penalty of $34 million to settle allegations that YouTube violated the Children's Online Privacy Protection Act (COPPA) Rule by collecting personal information—in the form of persistent identifiers that are used to track users across the Internet—from viewers of child-directed channels, without first notifying parents and getting their consent. YouTube earned millions of dollars by using the identifiers, commonly known as cookies, to deliver targeted ads to viewers of these channels, according to the complaint.

Google and YouTube also agreed to develop, implement, and maintain a system that permits channel owners to identify their child-directed content on the YouTube platform so that YouTube can ensure it is complying with COPPA. In addition, the companies must notify channel owners that their child-directed content may be subject to the COPPA Rule’s obligations and provide annual training about complying with COPPA for employees who deal with YouTube channel owners.

For additional information, see "YouTube pays $170M for COPPA violations," in BankersOnline's Penalty pages.

08/30/2019

FCC amends Truth in Caller ID rules

The Federal Communications Commission has published [84 FR 45669] in today's Federal Register a final rule amending its Truth in Caller ID rules in subpart P of 47 CFR part 64 to implement the amendments to section 227(e) of the Communications Act adopted by Congress last year as part of the RAY BAUM'S Act. The rule published today amends the FCC's rules to encompass malicious spoofing activities directed at consumers in the United States from actors outside of the U.S. and to reach caller ID spoofing using alternative voice and text messaging services. The amendments carry a February 5, 2020, effective date.

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