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FDIC releases January enforcement actions

The FDIC made public its administrative enforcement actions taken against banks and individuals during the month of January 2017. Included were one consent order, six removal and prohibition orders, three Section 18 orders, and four civil money penalties. The larger CMPs included the previously announced $65 million CMP imposed by the FDIC, OCC and Federal Reserve on ServiceLink Holding LLC, and CMPs for Flood Act violations imposed on banks in Albany, Illinois ($58,232) and Lake Mills, Wisconsin ($16,802).


OFAC sanctions al-Nusrah Front leaders

OFAC has announced it has taken action against two al-Nusrah Front (ANF) leadership officials, Iyad Nazmi Salih Khalil (Khalil) and Bassam Ahmad al-Hasri (al-Hasri). Both individuals, based in Syria, are being designated pursuant to Executive Order (E.O.) 13224, which targets terrorists and those providing support to terrorists or acts of terrorism. OFAC also designated Syrian-based Metallic Manufacturing Factory (MMF) for acting for or on behalf of a designated entity, Mechanical Construction Factory. Finally, OFAC announced the removal of several listings from the SDN List.

For further information, see our OFAC Update.


FinCEN renews GTOs in six metro areas

The Financial Crimes Enforcement Network (FinCEN) announced yesterday the renewal of existing Geographic Targeting Orders (GTO) that temporarily require U.S. title insurance companies to identify the natural persons behind shell companies used to pay “all cash” (no financing) for high-end residential real estate in six major metropolitan areas. FinCEN reported that about 30 percent of the transactions covered by the GTOs involve a beneficial owner or purchaser representative that is also the subject of a previous suspicious activity report. This corroborates FinCEN’s concerns about the use of shell companies to buy luxury real estate in “all-cash” transactions. The renewed GTOs, which will be effective for 180 days from February 24, include these major U.S. geographic areas (shown with their purchase price thresholds):

  • Borough of Manhattan, NY — $3.0 million
  • All other boroughs of New York City — $1.5 million
  • Miami-Dade, Broward and Palm Beach counties, FL — $1.0 million
  • Broward County, FL — $1.0 million
  • Palm Beach County, FL — $1.0 million
  • San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara counties, CA — $2.0 million
  • Bexar County (which includes San Antonio), TX — $0.5 million


Agencies release swap margin guidance

The Federal Reserve Board has issued SR-17-3 and the OCC has issued Bulletin 2017-12 announcing with guidance explaining how supervisors should examine for compliance with the swap margin rule, which established margin requirements for swaps not cleared through a clearinghouse. The guidance explains that the Board and the OCC expect swap entities covered by the rule to prioritize their compliance efforts surrounding the March 1, 2017, variation margin deadline according to the size and risk of their counterparties. The Farm Credit Administration, the FDIC, and the FHFA also administer the final rule for institutions under their jurisdiction, but currently have no swap entities affected by this guidance. However, they support the guidance issued by the Board and the OCC.

The guidance does not apply to community banks with $10 billion or less in total consolidated assets.


NCUA extends interest rate cap

The NCUA Board held an open meeting on February 23, 2017, and unanimously approved a staff recommendation to maintain until September 10, 2018, the current 18-percent maximum loan interest rate for most loans made by federal credit unions. The Federal Credit Union Act caps the interest rate on federal credit union loans at 15 percent; however, the law gives the NCUA Board discretion to raise that limit for 18-month periods if interest-rate levels could threaten the safety and soundness of credit unions. The current 18-percent ceiling has remained in place since May 1987.


Updated Q&A on projected CU resolution costs and assessments

The NCUA has posted updated Questions and Answers about the Corporate Resolution program costs and projected future Temporary Corporate Credit Union Stabilization Fund assessments.


Mortgage relief scammer settles with FTC

The Federal Trade Commission has announced that Gabriel D. Stewart, the final defendant in an alleged mortgage relief scam that preyed upon distressed homeowners, will be banned from selling mortgage or debt relief services under the terms of a settlement. In addition to banning Stewart from those businesses, the stipulated order prohibits him from misrepresenting financial and other products and services. It imposes a judgment of more than $1.7 million that is partially suspended and requires Stewart to pay $105,487, representing the amount of money he received from the scam. The full judgment will become due immediately if Stewart is found to have misrepresented his financial condition.


House prices up in 4th quarter

The Federal Housing Finance Agency reported yesterday that U.S. house prices rose 1.5 percent in the fourth quarter of 2016 according to the agency's House Price Index (HPI). House prices rose 6.2 percent from the fourth quarter of 2015 to the fourth quarter of 2016. FHFA’s seasonally adjusted monthly index for December was up 0.4 percent from November. The top five states in annual cost increases were Oregon (11.0 percent), Colorado (10.6 percent), Florida (10.4 percent), Washington (10.2 percent) and Nevada (8.9 percent).


Annual adjustment to Reg I asset-size threshold

The Federal Reserve Board has announced its first annual adjustment to the asset-size threshold in Regulation I that determines the dividend rate that certain member banks earn on their Federal Reserve Bank stock. The updated total consolidated asset threshold is $10,122,000,000.

Update: Published at 82 FR 11501 in the Federal Register on February 24, 2017. It will be effective on March 27, 2016.


Bureau proposal to gather student loan servicing data

The CFPB has published in this morning's Federal Register a notice and request for comment on a proposed new information collection, "Student Loan Servicing Market Monitoring." Comments on the proposal will be accepted for 60 days, through April 24, 2017. The notice indicates the Bureau expects the collection will affect only 10 respondents, presumably only the largest student loan servicers.


OFAC offers compressed SDN file

OFAC has posted a compressed version of its SDN.XML file in order to provide bandwidth savings for users that frequently download the information. This new file compresses the SDN.XML file by approximately 92%.


January FOMC minutes released

The Federal Reserve Board and the Federal Open Market Committee (FOMC) have released the minutes of the Committee meeting held on January 31–February 1, 2017.


FATF roundtable on FinTech and RegTech

The Financial Action Task Force (FATF) held a roundtable on FinTech and RegTech in Paris on February 18, 2017. The session was chaired by the FATF President, Juan Manuel Vega-Serrano. The meedting was a first step to take this initiative forward in order to engage with various stakeholders. The event brought together anti-money laundering/counter-terrorist financing (AML/CFT) professionals, national supervisors, international organizations and other relevant experts, including experts from banks that have partnered with FinTech and RegTech1 firms to discuss issues of common interest.

1RegTech: A blend word created to address regulatory challenges in the financial services sector through innovative technology. RegTech comprises a group of companies that use technology to help businesses comply with regulations efficiently and inexpensively.


NCUA Consumer Compliance webinar on ECOA

The NCUA has announced that it has replaced the previously announced discussion on prepaid account rules with a discussion regarding the Equal Credit Opportunity Act (ECOA) and Reg B during the regulator’s February 28, 2017, consumer compliance webinar. Prepaid account rules will be discussed in depth during a future webinar.


Fourth Quarter 2016 charge-off and delinquency rates

The Federal Reserve has released data on the charge-off and delinquency rates on loans and leases at commercial banks for the fourth quarter 2016.


MLA website problem revealed

The Department of Defense has posted a notice on its official Military Lending Act (MLA) website that between February 9 and February 15, 2017, there was a problem with MLA Multiple Record Requests that prevented 149 request files from processing. It was suggested that those who submitted a multiple record request file in between those dates, submit the file again for processing.


Full bench to consider Bureau's appeal of PHH case

In October 2016, a three-judge panel of the U.S. Court of Appeals in Washington found that the Bureau's structure is unconstitutional, and ordered that the Director of the CFPB be considered as appointed for five year but serving "at the pleasure of the president" rather than subject to removal only "for cause," as provided in § 1011(c)(3) of the Dodd-Frank Act (See "Court limits CFPB Director's independence," October 12, 2016). The CFPB appealed that ruling, suspending its effect pending the appeal. CNBC has reported that, on Thursday, February 16, the Bureau's request for a hearing by the full panel was granted. Oral arguments on the appeal are scheduled for May 24.


FAC minutes released

The Federal Reserve Board has released the minutes of February 10, 2017, meeting of its Federal Advisory Council (FAC). The FAC is composed of twelve representatives of the banking industry who consult with and advise the Board on all matters within the Board's jurisdiction.


Large commercial banks ranking released

The Federal Reserve Statistical Service has updated the list of insured U.S.-chartered commercial banks that have consolidated assets 
of $300 million or more, ranked by consolidated assets 
as of September 30, 2016.


Minority-owned depository institutions data

The FRB has updated the compiled quarterly data on depository institutions that participate in the Treasury’s Minority Bank Deposit Program and the FDIC’s Minority Depository Institutions Program as of September 30, 2016. The data come from the Board’s National Information Center database and are generally updated about twelve weeks after the end of each quarter.


OCC releases enforcement actions and terminations

The OCC has released new enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. Four civil money penalties, one formal agreement, five personal cease and desist orders, and one removal/prohibition order were issued. Among those announced was the January 24, 2017, $65 million CMP issued to ServiceLink Holdings, LLC, of Jacksonvolle, Florida. There were also orders to cease and desist and to pay a total of $55,500 issued to three former directors of a Greenville, South Carolina bank.


FTC sends funds to money-scheme victims

The Federal Trade Commission has announced it is mailing 2,031 checks totaling more than $436,000 to people who lost money to Money Now Funding, a work-at-home scheme that conned people, including many seniors with limited income and savings, into thinking they could make money by referring merchants in their area to a non-existent money-lending service.


FEMA suspending communities from Flood Program

The Federal Emergency Management Agency has published a final rule at 82 FR 10962 in today's Federal Register identifying communities in Colorado, Illinois and Virginia where the sale of flood insurance has been authorized under the National Flood Insurance Program (NFIP) that are scheduled for suspension today, February 17, 2017, for noncompliance with the floodplain management requirements of the program.

  • Colorado—portions of Arapahoe County
  • Illinois—portions of Peoria, Tazewell and Whiteside counties
  • Virginia—the City of Norfolk and portions of Loudoun County


Two removed from OFAC list

OFAC has posted a notice that the names of two individuals linked to transnational criminal organizations have been deleted from the OFAC SDN List. See BankersOnline's OFAC update for the details.


Fed to continue testing of Term Deposit Facility

The Federal Reserve has confirmed plans to continue the previously announced periodic testing of its Term Deposit Facility (TDF). These operations are aimed at ensuring the operational readiness of the TDF and providing eligible institutions with an opportunity to maintain familiarity with term deposit procedures. The TDF test operations are a matter of prudent planning and have no implications for the near-term conduct of monetary policy. The Federal Reserve plans to conduct a routine TDF test operation each quarter in 2017, starting with one to be conducted on February 23, 2017, with a floating-rate offering of term deposits with an early withdrawal feature. The schedule and terms for future test operations will be announced later.


OCC revises Licensing Manual booklet

The OCC has issued Bulletin 2017-11 to announce the revision of the “Changes in Directors and Senior Executive Officers” booklet of the Comptroller’s Licensing Manual. The revised booklet updates procedures and requirements following the integration of the Office of Thrift Supervision into the OCC in 2011, and it incorporates revised regulations (12 CFR 5) that became effective July 1, 2015, addressing changes in directors and senior executive officers of national banks, federal savings associations, and federal branches.


NCUA funds receive clean audit opinions

The NCUA has announced that its four permanent funds have again received unmodified, or “clean,” audit opinions for 2016, according to audited financial statements released yesterday by the Office of the Inspector General.


Increasing transparency in student loan servicing

A CFPB Blog article requests comments on a new initiative that would take a closer look at the way consumers repay student debt and track the student loan industry activities that they depend on if they experience financial distress.


New residential construction activity

HUD and the Census Bureau have jointly announced new residential construction statistics for January 2017.


FDIC train-the-trainer webinar next week

The FDIC will present a three-hour Train-the-Trainer webinar on financial education, focusing on the FDIC's Money Smart Program, on Wednesday, February 22, 2017, at 1 p.m. ET.


Miller named Chief of Staff at Treasury

Treasury Secretary Mnuchin has announced the appointment of Eli Miller to serve as the Chief of Staff of the Treasury Department. The Chief of Staff is responsible for managing the day-to-day operations of the Department generally and the office of the Secretary specifically. In this capacity, Miller will operate in direct support of the Secretary and play a key role in advising, coordinating and reviewing policy development within the Department, other agencies, and the White House as well as assisting and planning the overall strategic direction of the Department.


Bureau exploring alternative data use for credit invisible

In a press release coordinated to coincide with the CFPB's Charleston, West Virginia, February 16 field hearing on Alternative Data, the Bureau announced this morning it has launched an inquiry into ways to expand access to credit for consumers who are credit invisible or who lack enough credit history to obtain a credit score. The Bureau is seeking public feedback on the benefits and risks of tapping alternative data sources such as bills for mobile phones and rent payments to make lending decisions about consumers whose lack of credit history might otherwise block opportunities. Specifically, the Bureau will explore these, and other, topics:

  • Access to credit
  • Complexity of the process
  • Impact on costs and service
  • Implications for privacy and security
  • Impact on specific groups


December TIC data released

Treasury has released Treasury International Capital (TIC) data for December 2016. The sum total in December of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a monthly net TIC outflow of $42.8 billion. Of this, net foreign private outflows were $57.1 billion, and net foreign official inflows were $14.3 billion. Foreign residents decreased their holdings of long-term U.S. securities in December; net sales were $13.9 billion. Net sales by private foreign investors were $32.0 billion, while net purchases by foreign official institutions were $18.1 billion. U.S. residents decreased their holdings of long-term foreign securities, with net sales of $1.1 billion.


Industrial production decreases

The FRB has released its January 2017 G.17 industrial production and capacity utilization report. Industrial production decreased 0.3 percent in January following a 0.6 percent increase in December. In January, manufacturing output moved up 0.2 percent, and mining output jumped 2.8 percent. The index for utilities fell 5.7 percent, largely because unseasonably warm weather reduced the demand for heating. At 104.6 percent of its 2012 average, total industrial production in January was at about the same level as it was a year earlier. Capacity utilization for the industrial sector fell 0.3 percentage point in January to 75.3 percent, a rate that is 4.6 percentage points below its long-run (1972–2016) average.


February FedFlash posted

Federal Reserve Financial Services has posted the February 2017 issue of FedFlash, featuring articles on:

  • Changes to check adjustment case requirements and edits
  • Effective date (9/15/17) of Phase 2 of the NACHA Same Day ACH program
  • Reminder that revisions to contaminated current guidance are effective immediately
  • Enhancement of Fedwire Securities Service Automated Claim Adjustment process to occur in 2018


Refinance volume slowdown continues

The Federal Housing Finance Agency (FHFA) has reported that 13,220 borrowers refinanced their mortgages through the Home Affordable Refinance Program (HARP) from October through December. FHFA's fourth quarter Refinance Report also shows that total refinance volume fell in December, as mortgage interest rates increased. Total HARP refinances now stand at 3,447,671 since the inception of the program in 2009.


FTC reins in money mule

The Federal Trade Commission has announced that a Florida man charged with helping telemarketers in India defraud cash-strapped American consumers will be banned from aiding any telemarketers in a settlement with the Commission. The proposed settlement resolves an FTC complaint against Joel S. Treuhaft and his company, PHLG Enterprises, LLC, who collected more than $1.5 million from about 3,000 consumers in a scheme that helped Indian call centers collect money from victims of IRS tax scams, government grant scams and advance-fee loan scams, among others.


FinCEN proposing SAR data fields revisions

FinCEN has published at 82 FR 9109 in the Federal Register a notice and request for comments on a proposed update and revisions to the collection of information filings by financial institutions required to file such reports under the Bank Secrecy Act (“BSA”). This notice does not propose any new regulatory requirements or changes to the requirements related to suspicious activity reporting. The data fields reflect the filing requirement for all filers of SARs under the BSA. Most of the proposed changes would alter the "checklist" of violations in Part II of the filings, including the addition of several fields related to cyber events. Comments are due by April 3, 2017.


Monetary Policy Report to Congress

Federal Reserve Board Chair Yellen has presented the Board’s semiannual Monetary Policy Report to the Congress. In remarks before the Senate Committee on Banking, Housing, and Urban Affairs, Dr. Yellen discussed the report along with the current economic situation and outlook. Yellen stated, “My colleagues on the FOMC and I expect the economy to continue to expand at a moderate pace, with the job market strengthening somewhat further and inflation gradually rising to 2 percent.” In regard to the monetary policy, the Chair noted, “the economic outlook is uncertain, and monetary policy is not on a preset course. FOMC participants will adjust their assessments of the appropriate path for the federal funds rate in response to changes to the economic outlook and associated risks as informed by incoming data. Also, changes in fiscal policy or other economic policies could potentially affect the economic outlook.”


FDIC regulatory relief for Louisiana

The FDIC has issued FIL-9-2017 announcing steps intended to provide regulatory relief to financial institutions and to facilitate recovery in areas of Louisiana affected by severe weather.


FTC reports on combatting illegal debt collection practices

The Federal Trade Commission has sent to the CFPB a summary and the full text of its report of 2016 work on debt collection practices for inclusion in the CFPB’s annual report to Congress on the Fair Debt Collection Practices Act (FDCPA), as required by the Dodd-Frank Act. The FTC and the CFPB share FDCPA enforcement responsibilities. In 2016, the Commission:

  • filed or resolved 12 cases against 61 defendants, and obtained nearly $70 million in judgments
  • banned 44 companies and individuals that engaged in serious and repeated violations of law from ever working in debt collection again
  • secured successful summary judgment decisions in three litigated matters, resulting in orders banning defendants from the debt collection industry


Debt collector settles with FTC for $700K

The Federal Trade Commission has reported that GC Services Limited Partnership, a large debt collector based in Houston, Texas, that has been charged with using unlawful tactics to collect on federal student loans and other debts, will pay a $700,000 civil penalty under a settlement with the Commission. The complaint filed by the Justice Department on behalf of the Commission alleged that the company’s collectors left phone messages that illegally disclosed purported debts to others without their permission. GC Services employees also called consumers multiple times after being told that the person who answered did not owe the debt, that they had called the wrong person, or that the person they wanted could not be reached there. According to the Commission, GC Services also falsely claimed that it would take steps to prevent its employees from making unlawful calls to third parties to find a debtor. See our Penalty page for further information.


Morgan Stanley pays $8M to settle SEC charges

The Securities and Exchange Commission has announced that Morgan Stanley Smith Barney has agreed to pay an $8 million penalty and admit wrongdoing to settle charges related to single inverse ETF [exchange-traded funds] investments it recommended to advisory clients. The SEC’s order found that Morgan Stanley did not adequately implement its policies and procedures to ensure that clients understood the risks involved with purchasing inverse ETFs. Among the order’s findings, Morgan Stanley failed to obtain from several hundred clients a signed client disclosure notice, which stated that single inverse ETFs were typically unsuitable for investors planning to hold them longer than one trading session unless used as part of a trading or hedging strategy. Morgan Stanley solicited clients to purchase single inverse ETFs in retirement and other accounts, the securities were held long-term, and many of the clients experienced losses.


Bureau adds HMDA resources

The CFPB has updated the compliance resources available on HMDA filing requirements. Added resources include a webinar discussing identifiers and other data points, and a chart that illustrates banks' options for collecting and reporting ethnicity and race information required under Regulation C.


FRB branches updating cash processing

The Federal Reserve Bank of Cleveland has announced that the Cincinnati Branch will upgrade its cash processing systems over the weekend starting at the close of business on Friday, February 17. The Federal Reserve Bank of Richmond has announced that the Baltimore Branch will make the same upgrade over the weekend starting at the close of business on Friday, February 24. Financial institutions served by the Cincinnati and Baltimore branches will experience a new look and feel to the Federal Reserve's cash order paperwork beginning the Monday following those upgrades.


Venezuelan drug traffickers targeted

OFAC has designated Venezuelan national Tareck Zaidan El Aissami Maddah (El Aissami) as a Specially Designated Narcotics Trafficker (SDNT) pursuant to the Kingpin Act for playing a significant role in international narcotics trafficking. El Aissami is the Executive Vice President of Venezuela. El Aissami's primary frontman, Venezuelan national Samark Jose Lopez Bello (Lopez Bello), was also designated. OFAC further designated or identified as blocked property 13 companies owned or controlled by Lopez Bello or other designated parties that comprise an international network spanning the British Virgin Islands, Panama, the United Kingdom, the United States, and Venezuela. Five of those entities are LLCs registered in Florida. See our OFAC Update for additional information.


CDFI certification open

The NCUA has announced that federally insured low-income credit unions can now apply for certification as community development financial institutions through the streamlined application process developed by the regulator and the Community Development Financial Institutions Fund. The NCUA will host three streamlined CDFI-certification application rounds in 2017, the first beginning today and running through March 17. The second round runs from May 1 through May 26, and the third round runs from August 7 through September 1.


OCC EGRPRA final rule

The OCC has issued Bulletin 2017-10 on its publication on January 23, 2017, of a final rule that removes outdated or otherwise unnecessary provisions in certain rules, reducing the regulatory burden on national banks and federal savings associations. The rule, which becomes effective April 1, 2017, also integrates the OCC’s national bank and FSA rules relating to fidelity bonds, Securities Exchange Act of 1934 disclosures, securities offering disclosures, and insider and affiliate lending. The rule is part of the results of the OCC's review under the Economic Growth and Regulatory Paperwork Reduction Act of 1996.


Early bond redemptions for parts of Louisiana

Federal Reserve Bank Services has reported that Treasury has authorized early savings bond redemptions in areas of Louisiana recently affected by severe weather.


HUD disaster assistance for Louisiana tornado victims

HUD has announced it will speed federal disaster assistance to the State of Louisiana and provide support to homeowners and low-income renters forced from their homes due to severe storms, tornadoes, and straight-line winds.


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