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Banker's Toolbox, Inc., leaders in compliance solutions for financial institutions, announced the acquisition of Georgia-based MainStreet Technologies (MST). MST is an industry leader in the loan risk management space. This acquisition adds to a strong and growing portfolio of compliance-related solutions and will continue to enhance the value Banker's Toolbox brings to both their customers and the industry. (Read full press release here.)

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Chinese bank pays $42M for mishandling ADRs

The Security and Exchange Commission has announced it has issued a cease and desist order requiring the Industrial and Commercial Bank of China Financial Services LLC (ICBCFS), a wholly-owned subsidiary of Industrial and Commercial Bank of China Limited, to pay more than $42 million to settle charges for improper handling of “pre-released” American Depositary Receipts (ADRs) - U.S. securities that represent foreign shares of a foreign company – require a corresponding number of foreign shares to be held in custody at a depositary bank. The settlement marks the largest recovery against a broker in the SEC’s ongoing investigation of ADR practices, which thus far has resulted in settlements with 10 financial institutions exceeding $414 million.


CFPB settles with student loan firm

The Bureau has announced a settlement with Student CU Connect CUSO, LLC (CUSO), a company set up to hold and manage private loans for students at ITT Technical Institute. The complaint filed by the CFPB alleged that CUSO was actively involved in the creation and the implementation of the CUSO loan program. The complaint alleges that ITT induced its students to take out the loans by a variety of means, and that CUSO knew or was reckless in not knowing that many student borrowers did not understand the terms and conditions of the CUSO loans and could not afford them.

Under the terms of a proposed stipulated judgment, CUSO must stop collecting on all outstanding CUSO loans, discharge all outstanding CUSO loans, and ask all consumer reporting agencies to which CUSO furnished information to delete tradelines relating to CUSO loans. The order also requires CUSO to provide notice to all consumers with outstanding CUSO loans that their debt has been discharged and is no longer owed and that CUSO is seeking to have the relevant tradelines deleted. The total amount of loan forgiveness is currently estimated to be $168 million. Forty-four states plus the District of Columbia have also settled with CUSO on the same terms.


IRS reminder on tax withholding

The IRS has posted a reminder to taxpayers that they have options to control the amount of their take-home pay and the size of their tax refund by adjusting their tax withholding. Paycheck Checkup using the IRS Withholding Calculator can help taxpayers determine the right amount of tax to have their employer withhold from their paychecks


OCC schedules two workshops in Boston

Two compliance and operational risk workshops will be hosted by the OCC at its Boston Field Office, on July 30 and 31, for directors of national community banks and federal savings associations it supervises.

  • The Compliance Risk workshop on July 30 focuses on the critical elements of an effective compliance risk management program and on major compliance risks and critical regulations. 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 July 31 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.


Fed Board requests comment on FOIA and CSI updates

The Federal Reserve Board has requested public comment on technical, clarifying updates regarding its Freedom of Information Act (FOIA) procedures and changes to improve the efficiency of its rules governing the disclosure of confidential supervisory information (CSI). The proposal would update the Board's FOIA regulation to be consistent with the Board's current practices and to incorporate recent changes in law and guidance. The proposed changes to the CSI rules would ease certain outdated and inefficient restrictions. The proposal would, among other things, expand the ability of a supervised financial institution to share CSI with its affiliates, auditors, and outside legal counsel as well as other federal and state banking agencies.


Treasury releases FLEC report

On behalf of the Financial Literacy and Education Commission (FLEC), Treasury has released the Best Practices for Financial Education at Institutions of Higher Education Report, which provides recommendations for higher education institutions to deliver effective financial literacy education and resources to help students make informed decisions and avoid pitfalls associated with financing their education. This report advances FLEC’s mission to prepare students to make sound financial choices in order to succeed in the workforce.


Industrial production on rise again

The Federal Reserve Board has released its G.17 Industrial Production and Capacity Utilization data for the month of May. Industrial production rose 0.4 percent in May after falling 0.4 percent in April. The indexes for manufacturing and mining gained 0.2 percent and 0.1 percent, respectively, in May; the index for utilities climbed 2.1 percent. At 109.6 percent of its 2012 average, total industrial production was 2.0 percent higher in May than it was a year earlier. Capacity utilization for the industrial sector moved up 0.2 percentage point in May to 78.1 percent, a rate that is 1.7 percentage points below its long-run (1972–2018) average.


HRA coverage expanded

The Departments of Health and Human Services, Labor, and the Treasury have announced regulatory amendments to be published June 20 that will expand the use of health reimbursement arrangements (HRAs). When employers have fully adjusted to the revised rules, it is estimated these changes will benefit approximately 800,000 employers, including small businesses, and more than 11 million employees and family members, including an estimated 800,000 Americans who were previously uninsured. FAQs regarding the changes were also released.


Three OFAC CACR settlement agreements

OFAC has announced three settlement agreements with travel-related businesses, each to settle potential civil liability for apparent violations of the Cuban Assets Control Regulations (CACR) for providing unauthorized Cuba-related travel services:

  • Expedia Group, Inc., headquartered in Bellevue, Washington, on behalf of itself and its subsidiaries and affiliates worldwide, has agreed to pay $325,406
  • Hotelbeds USA, Inc. (incorporated in Florida, a U.S. subsidiary of Hotelbeds Group, headquartered in Mallorca, Spain), has agreed to pay $222,705
  • An Individual, as well as Cubasphere, on whose behalf the Individual also acted, have agreed to pay $40,320


OFAC adjusts penalties for inflation

OFAC has published an amendment [84 FR 27714] to its regulations to implement the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended . This regulatory amendment, which is effective on publication, adjusts for inflation the maximum amount of the civil monetary penalties that may be assessed under relevant OFAC regulations.


FDIC Supervisory Highlights

The June 2019 issue of the FDIC's Consumer Compliance Supervisory Highlights includes a section with "Resources & Information for Financial Institutions" and an appendix of "Most Frequently Cited Violations and Enforcement Actions" to support supervised institutions' efforts to manage consumer compliance responsibilities effectively. In a section devoted to issues identified in examinations during 2018, the report lists:

  • Overdraft Programs: Debit Card Holds and Transaction Processing
  • Real Estate Settlement Procedures Act (RESPA) Section 8 Violations
  • Regulation E – Mistakes Made in the Consumer Liability/Error Resolution Process
  • Skip-A-Payment Loan Programs
  • Lines of Credit – Finance Charge Calculation and Disclosure


FDIC website warning

A warning has been issued by the FDIC advising bank customers on the potential for confusion between and the FDIC-run secure portal,, which advertises itself as a consumer-focused provider of FDIC pass-through insurance for bank deposits, is not affiliated with the FDIC. A similar warning was recently issued by the California Department of Business Oversight.


CRA feedback from 29 Fed roundtables

The Federal Reserve Board has published "Perspectives from Main Street: Stakeholder Feedback on Modernizing the Community Reinvestment Act," a summary of feedback received from bankers and community groups during a series of 29 roundtable discussions on the current state of, and potential revisions to, Community Reinvestment Act regulations.


OFAC targets Iraqi financial conduit

The Treasury Department announced on Wednesday that OFAC has imposed sanctions on an Iraq-based Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) financial conduit, South Wealth Resources Company (SWRC), which has trafficked hundreds of millions of dollars’ worth of weapons to IRGC-QF-backed Iraqi militias. SWRC and its two Iraqi associates, who were also designated Wednesday, have covertly facilitated the IRGC-QF’s access to the Iraqi financial system to evade sanctions. Identity information on the SWRC and the two designated associates can be found in BankersOnline's OFAC Update.


Muzinich at German-American Conference

Treasury Deputy Secretary Justin Muzinich presented the keynote address Tuesday at the German-American Conference in Berlin. He discussed numerous topics including international taxation, investment security, countering illicit finance, financial regulatory approaches, economic growth, trade, and Iran.


Minority-owned banks

The Federal Reserve Board has posted data as of March 31, 2019, on minority-owned depository institutions.


Large commercial banks listed

The Federal Reserve Board has released its list of insured U.S.-chartered commercial banks with consolidated assets of $300 million or more as of March 31, 2019. There are 1,835 banks on the list, with total consolidated assets of $16.33 trillion.


McWilliams addresses CATO Summit attendees

In remarks at the CATO Summit on Financial Regulation: “If You Build It, They Will Come” in Washington, D.C., FDIC Chairman McWilliams discussed:

  • The regulatory framework and innovation
  • Benefits of innovation
  • Benefits of banking
  • The FDIC and innovation
  • Small-dollar lending
  • Reducing regulatory burden
  • De novo banks


FHFA report to Congress

The Federal Housing Finance Agency has released its 2018 Report to Congress, which provides information about FHFA's 2018 examinations of Fannie Mae and Freddie Mac, 11 Federal Home Loan Banks and the Federal Home Loan Banks' Office of Finance. The report also describes FHFA's actions as conservator of the Enterprises and presents two legislative recommendations:

  • Acting on housing finance reform
  • Strengthening the FHFA's regulatory powers


CFPB symposium on abusive acts or practices

The CFPB has announced it will hold a symposium on the Dodd-Frank Act’s prohibition on abusive acts or practices on June 25 at its headquarters in Washington. The symposium will feature two panels of UDAAP experts. The first panel will include a discussion with leading academic experts in the area of Consumer Protection. The discussion will touch on various policy issues relating to the abusive standard under Dodd-Frank. The second panel will examine how the abusive standard has been used in practice and will include leading legal experts in the field. Members of the public who plan to attend in person or to view the event via livestream must register in advance.


Final rule on charitable contributions and state taxes

Treasury has announced the IRS has issued final rules and additional guidance on the federal income tax treatment of payments made under state and local tax credit programs. The regulations prevent charitable contributions made in exchange for state tax credits from circumventing the new limitation on state and local tax deductions. The amendments to the Internal Revenue Code are scheduled for Federal Register publication on June 13, and to be effective 60 days later, on August 12. They will be retroactively applicable to amounts paid or property transferred by a taxpayer after August 27, 2018.


OFAC targets Assad regime supporters

On Tuesday, the U.S. Department of the Treasury’s Office of Foreign Assets Control designated 16 individuals and entities associated with an international network benefiting the Assad regime. The designations were designed to cut off critical supplies and financiers for the regime’s luxury reconstruction and investment efforts. This action reinforces the United States’ commitment to imposing a financial toll on those supporting Assad’s authoritarian rule, including Syrian oligarch Samer Foz.

According to Treasury Undersecretary for Terrorism and Financial Intelligence Sigal Mandelker, "Samer Foz, his relatives, and his business empire have leveraged the atrocities of the Syrian conflict into a profit-generating enterprise. This Syrian oligarch is directly supporting the murderous Assad regime and building luxury developments on land stolen from those fleeing his brutality."

As a result of OFAC’s action, all property and interests in property of the designated individuals and entities that are in the United States or in the possession or control of U.S. persons must be blocked and 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.

For a list and identifying information for the individuals and entities designated, see BankersOnline's OFAC Update.


Oklahoma severe weather guidance

The FDIC has issued FIL-30-2019 with steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Oklahoma affected by severe winter storms, straight-line winds, and tornadoes.


NCUA bars two from industry

The NCUA has announced it issued one prohibition notice and one prohibition order in May to individuals who are prohibited from participating in the affairs of any federally insured financial institution. One of the barred individuals was an employee of a credit union in Johnson City, Tennessee, who had pleaded guilty to charges of theft and tax evasion, and been sentenced to 51 months in prison and ordered to pay more than $1.2 million in restitution. The other individual was a branch manager of a credit union in Rochester, New York.


Western Union pays $402K for OFAC violations

OFAC has announced a $401,697 settlement with Western Union Financial Services, Inc., of Denver, Colorado. Western Union has agreed to settle its potential civil liability for 4,977 apparent violations of the Global Terrorism Sanctions Regulations. Between December 9, 2010, and March 13, 2015, Western Union processed 4,977 transactions totaling approximately $1.275 million, which were paid out to third-party, non-designated beneficiaries who chose to collect their remittances at a Western Union Sub-Agent in The Gambia that was previously designated. OFAC determined that Western Union voluntarily self-disclosed the apparent violations and that they constitute a non-egregious case.


Consumer credit increases

The Federal Reserve has posted April 2019 G.19 Consumer Credit data. Consumer credit increased at a seasonally adjusted annual rate of 5-1/4 percent. Revolving credit increased at an annual rate of 8 percent, while nonrevolving credit increased at an annual rate of 4-1/4 percent.


Largest Iranian petrochemical holding group designated

OFAC has designated Iran’s largest and most profitable petrochemical holding group, Persian Gulf Petrochemical Industries Company (PGPIC), for providing financial support to Khatam al-Anbiya Construction Headquarters, the engineering conglomerate of the Islamic Revolutionary Guard Corps. PGPIC’s network of 39 subsidiary petrochemical companies and foreign-based sales agents was also designated. PGPIC and its subsidiaries hold 40 percent of Iran’s total petrochemical production capacity and are responsible for 50 percent of Iran’s total petrochemical exports. For identification information on these designations, see BankersOnline's OFAC Update.


Former Goldman Sachs employee issued C&D

The Federal Reserve Board has executed a Consent Cease and Desist Order against Youlei Tang, a former employee of Goldman Sachs & Co., New York, New York, for mishandling confidential supervisory and proprietary information.


Underwriting provisions of Payday Lender Rule delayed

The CFPB has posted a notice on its Payday Lending Rule implementation page that the Bureau yesterday issued a final rule delaying for 15 months the August 19, 2019, compliance date of the mandatory underwriting provisions of the 2017 Payday Lending Rule. The new compliance date of those provisions will be November 19, 2020. The rest of the Payday Lending Rule's substantive provisions will become effective on August 19, 2019.

The 15-month delay of the underwriting provisions is designed to give the Bureau the time to evaluate a separate proposal that those provisions be eliminated from the Payday Lending Rule.


Venezuela-related General Licenses amended

OFAC has posted a notice of the amendment of General License 7A, "Authorizing Certain Activities Involving PDV Holding, Inc. and CITGO Holding, Inc.;” General License 8A, “Authorizing Transactions Involving Petroleós de Venezuela, S.A. (PdVSA) Prohibited by Executive Order 13850 for Certain Entities Operating in Venezuela;” and General License 13A, “Authorizing Certain Activities Involving Nynas AB,” to clarify these general licenses do not authorize transactions or dealings related to the exportation or re-exportation of diluents [thinning or diluting agents], directly or indirectly, to Venezuela. Additionally, OFAC issued corresponding FAQ 672 to provide further guidance with respect to restrictions regarding diluents.


SSA proposes SSN verification service

The Social Security Administration has published a notice [84 FR 26712] announcing the initial enrollment period for a new electronic Consent Based Social Security Number (SSN) Verification (eCBSV) service. SSA will roll out the service to a limited number of users in June 2020, and plans on expanding the number of users within six months of the initial rollout. All interested permitted entities must apply during this initial enrollment period to be eligible to use the new eCBSV service during either the initial rollout or subsequent planned expansion. Permitted entities that do not apply during the initial enrollment period must wait until the next designated period after the planned expansion to apply for enrollment. The initial enrollment period for permitted entities will begin on July 17, 2019, and remain open until the period closes on July 31, 2019. In accord with statutory requirements, permitted entities will be required to provide payment to build the new eCBSV system.

The eCBSV is created under a mandate in Section 215 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).


CU performance data available

The NCUA has released data on the financial performance of federally insured credit unions for the First Quarter 2019. The report also includes an overview of the quarterly Call Report data and tables showing the recent history of major credit union performance indicators.


FCC adopts robocall blocking by default

The Federal Communications Commission has approved a Declaratory Ruling to affirm that voice service providers may, as the default, block unwanted calls based on reasonable call analytics, as long as their customers are informed and have the opportunity to opt out of the blocking. This action empowers providers to protect their customers from unwanted robocalls before those calls even reach the customers’ phones. The ruling also clarifies that providers may offer their customers the choice to opt-in to tools that block calls from any number that does not appear on a customer’s contact list or other “white lists.”

The Commission also adopted a Notice of Proposed Rulemaking that proposes requiring voice service providers to implement the SHAKEN/STIR caller ID authentication framework, if major voice service providers fail to do so by the end of this year.


SEC issues Best Interest rule

The Securities and Exchange Commission has adopted a package of rulemakings and interpretations designed to enhance the quality and transparency of retail investors’ relationships with investment advisers and broker-dealers, bringing the legal requirements and mandated disclosures in line with reasonable investor expectations, while preserving access (in terms of choice and cost) to a variety of investment services and products. The rules include new Regulation Best Interest, the new Form CRS, "Relationship Summary," and two separate interpretations under the Investment Advisers Act of 1940.


FTC sends enforcement report to CFPB

The Federal Trade Commission has provided its 2018 Annual Financial Acts Enforcement Report to the CFPB. The report describes the Commission's enforcement and activities regarding Regulation Z (Truth in Lending Act), Regulation M (Consumer Leasing Act), and Regulation E (Electronic Fund Transfer Act). A copy was also provided to the Federal Reserve Board.


Bureau levies $1.75M HMDA penalty

The Consumer Financial Protection Bureau has settled with Freedom Mortgage Corporation for a civil money penalty of $1.75 million, to settle Freedom's potential liability for violations of the Home Mortgage Disclosure Act and its implementing regulation, Regulation C (12 CFR part 1003) as alleged by the Bureau. Freedom, headquartered in Mount Laurel, New Jersey, is one of the ten largest HMDA reporters in the country. From 2013 through 2016 it originated more than 50,000 mortgage loans a year.

The Bureau found that Freedom violated HMDA and Regulation C by submitting mortgage-loan data for 2014 to 2017 that contained errors; Freedom reported inaccurate race, ethnicity, and sex information and much of Freedom’s loan officers’ recording of this incorrect information was intentional. For example, certain loan officers were told by managers or other loan officers that, when applicants did not provide their race or ethnicity, they should select "non-Hispanic white" regardless of whether that was accurate.

Under the terms of the consent order, Freedom must pay a civil money penalty of $1.75 million and take steps to improve its compliance management to prevent future violations. For more information on the Bureau's finding and the steps Freedom must take, see "Freedom Mortgage hit with HMDA penalty."


OCC CRA evaluations released

The OCC has released a list of thirty-three CRA performance evaluations that became public in May. Twenty-seven evaluations were rated "Satisfactory" and these six were rated "Outstanding:"


FDIC lists 7 CRA ratings of outstanding

The FDIC has released a list of 88 banks that the agency assigned CRA evaluations to in March 2019. As is normally the case, most of the banks received "Satisfactory" ratings. Three "Needs to Improve" ratings were listed (two banks in Pennsylvania and one in Califormia). These seven banks were listed with "Outstanding" evaluations:


Federal Reserve CRA evaluations

The Federal Reserve Board's historical listing of CRA evaluation ratings lists 25 evaluations made public in May, with 23 of those evaluations rated Satisfactory. Two institutions earned Outstanding ratings in their evaluations:

[Right click a bank name to save a PDF of its Public Evaluation before opening it.]


June Beige Book posted

The June 5, 2019, edition of the Federal Reserve Board's Beige Book has been posted. It was prepared at the Federal Reserve Bank of Minneapolis from information collected by the Reserve Banks through May 24 from contacts outside the Federal Reserve System.


Tarbert confirmed as CFTC Chairman

Dr. Heath Tarbert has been confirmed by the Senate as Chairman of the Commodity Futures Trading Commission (CFTC). Tarbert currently serves as the Treasury Department’s Acting Under Secretary for International Affairs and, prior to that designation, served as the Treasury’s Assistant Secretary for International Markets. He will begin his Chairmanship at the CFTC on July 15, 2019. Statements supporting the confirmation were also issued by current CFTC Chairman Giancarlo and Treasury Secretary Mnuchin.


Stress test requirement delayed for $100B-$250B institutions

The OCC has announced that, because national banks and federal savings associations with consolidated assets between $100 billion and $250 billion will not be subject to the Dodd-Frank Act Stress Test requirements as of November 24, 2019, the OCC has extended the deadline for compliance with the DFAST requirements under current law for those banks to November 25, 2019, effectively eliminating the requirement for those banks for 2019 and beyond. The OCC sent a notification letter to the affected banks in December 2018.


OFAC updates Cuban Assets Control regs

OFAC has updated the Cuban Assets Control Regulations, 31 C.F.R. part 515 (CACR), to further implement portions of the President’s foreign policy toward Cuba. In accordance with newly announced changes to non-family travel to Cuba, OFAC has amended the CACR to remove the authorization for group people-to-people educational travel. The CACR amendment will be published in the Federal Register on Wednesday, June 5, 2019, at which time the changes will take effect. OFAC has also published a number of updated FAQs and a Fact Sheet about the amendments.


Flood insurance program extension to September 30

The House has accepted the Senate amendment to H.R.2157 with additional appropriations for disaster relief, which includes another extension for funding of the National Flood Insurance Program, this time through September 30, 2019. The bill is expected to be signed by the president. In the meantime, momentum seems to be building for consideration of a longer term extension with reforms.


IRS adds safeguard for taxpayer data

The IRS has announced that, as part of its ongoing efforts to protect taxpayers from identity thieves, it will stop its tax transcript faxing service in June and will amend the Form 4506 series to end third-party mailing of tax returns and transcripts in July. Starting June 28, 2019, the IRS will stop faxing tax transcripts to both taxpayers and third parties, including tax professionals and lenders. Third-party mailings will stop July 1. This action affects individual and business transcripts.

The IRS notice includes suggested alternatives for income verification, including copies of transcripts mailed to a taxpayer's address of record, and use of the IRS's Income Verification Express Service (IVES).


McWilliams on CRA reform

In a speech delivered yesterday at the Community Development Bankers Association Peer Forum and Membership Meeting, FDIC Chairman Jelena McWilliams said that the agency is working with the OCC and Federal Reserve on a revised regulatory framework for the Community Reinvestment Act that will—

  • focus on clarifying what activities qualify for CRA credit
  • review how lending—including digital lending—is assessed by banks outside of their branch network footprints
  • work to ensure that CRA investments target those most in need in a bank's community


    New MDIAC members

    The OCC has appointed three new members to its Minority Depository Institutions Advisory Committee:

    • Natalie Abatemarco, Managing Director, Citi Community Development, Citibank, NA, New York, New York
    • Jerome Brown, Senior Vice President and Director of Community Development, The First, A National Bank, Hattiesburg, Mississippi
    • Robert Klamp, Chief Executive Officer, GN Bank, USA, Chicago, Illinois


    Hedge fund adviser pays $5M for compliance failures

    A private fund manager in the mortgage-backed securities space has agreed with the Securities and Exchange Commission to pay a $5 million penalty to settle charges stemming from compliance deficiencies that contributed to the firm’s failure to ensure that certain securities in its flagship fund were valued properly. In addition, the fund manager’s chief investment officer agreed to pay a $250,000 penalty.

    An SEC investigation found that Colorado-based investment adviser Deer Park Road Management Company LP, in connection with its flagship STS Partners’ fund (which has been ranked as one of the most consistent performing hedge funds in the country), failed to have policies and procedures to address the risk that its traders were undervaluing securities and selling for a profit when needed. The firm also failed to guard against its traders’ providing inaccurate information to a pricing vendor and then using the prices it got back to value bonds. Additional information can be found in the SEC Order


    FDIC requests input on tech assistance

    In its Financial Institution Letter FIL-29-2019, the FDIC announced it has issued a Request for Information seeking feedback on the FDIC's methods and efforts to provide technical assistance. The request asks for information on additional steps the agency could take to support effective management and operation of FDIC-supervised institutions through technical assistance and collaboration on safety and soundness and consumer compliance matters. Comments on the Request for Information will be accepted for 60 days after publication in the Federal Register.


    FHFA announces new UMBS

    In a statement issued yesterday, FHFA Deputy Director Robert Fishman announced the launch of the new Uniform Mortgage-Backed Security (UMBS), which combines the separate Fannie Mae and Freddie Mac To-Be-Announced markets into one.


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