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Treasury continues to counter ransomware

The Department of the Treasury on Monday announced a set of actions focused on disrupting criminal ransomware actors and virtual currency exchanges that launder the proceeds of ransomware. Treasury’s actions advance the administration’s counter-ransomware efforts to disrupt ransomware infrastructure and actors and address abuse of the virtual currency ecosystem to launder ransom payments.

Monday's actions include the OFAC designation of Chatex, a virtual currency exchange, and its associated support network, for facilitating financial transactions for ransomware actors. OFAC also designated IZIBITS OU, Chatextech SIA, and Hightrade Finance Ltd for providing material support and assistance to Chatex.

Complementing this action, the Department of State announced a Transnational Organized Crime Reward offer of up to $10,000,000 for information leading to the identification or location of any individual(s) who hold a key leadership position in the Sodinokibi/REvil ransomware variant transnational organized crime group. The Department of State also announced a reward offer of up to $5,000,000 for information leading to the arrest and/or conviction in any country of any individual conspiring to participate in or attempting to participate in a Sodinokibi variant ransomware incident.

OFAC also designated Ukrainian Yaroslav Vasinskyi and Russian Yevgeniy Polyanin for their part in perpetuating Sodinokibi/REvil ransomware incidents against the United States. These two individuals are part of a cybercriminal group that has engaged in ransomware activities and received more than $200 million in ransom payments paid in Bitcoin and Monero. OFAC also designated a company owned by Polyanin.

Treasury also reported FinCEN's release of an updated advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments (see our related report).

For identification information on the individuals and entities targeted by OFAC, see the November 8, 2021, BankersOnline OFAC Update.


Hsu discusses climate change risk

On Monday, Acting Comptroller of the Currency Michael J. Hsu discussed climate change risk at OCC Headquarters. His remarks highlighted five questions that large bank boards of directors should ask to promote and accelerate improvements in climate risk management practices at their banks:

  1. What is our overall exposure to climate change?
  2. Which counterparties, sectors, or locales warrant our heightened attention and focus?
  3. How exposed are we to a carbon tax?
  4. How vulnerable are our data centers and other critical services to extreme weather?
  5. What can we do to position ourselves to seize opportunities from climate change?


Fed posts October SLOOS

The Federal Reserve has posted the October 2021 Senior Loan Officer Opinion Survey on Bank Lending Practices, which addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally correspond to the third quarter of 2021.

Regarding loans to businesses, respondents to the October survey, on balance, reported easier standards and stronger demand for commercial and industrial (C&I) loans to large and middle-market firms over the third quarter. Banks also reported easier standards for C&I loans to small firms, while demand from small firms remained basically unchanged. For commercial real estate, banks reported easier standards for all loan categories. Banks also reported stronger demand for multifamily loans and for loans secured by nonfarm nonresidential properties, while demand for construction and land development loans remained basically unchanged.

For loans to households, banks eased standards across most categories of residential real estate (RRE) loans, on net, and reported weaker demand for most types of RRE loans over the third quarter. Banks also eased standards across all three consumer loan categories—credit card loans, auto loans, and other consumer loans—while reports on demand for consumer loans were mixed.

The survey included a set of special questions inquiring about the current level of demand relative to pre-pandemic levels (defined as the end of 2019) for C&I and credit card loans, as well as banks’ outlook for demand for such loans over the next six months. On balance, banks reported weaker levels of demand for all queried C&I and credit card loan categories compared with the end of 2019, and that they expect stronger demand for both C&I and credit card loans over the next six months.


US travel permitted for fully vaccinated foreign nationals

The Department of Homeland Security has announced that, starting November 8, 2021, foreign nationals who have been fully vaccinated against COVID-19 and have appropriate documentation will be permitted to enter the United States via land ports of entry and ferry terminals for non-essential reasons such as tourism. The Department reminds these travelers to be prepared to (1) provide proof of their COVID-19 vaccination, and (2) verbally attest to their reason for travel and COVID-19 vaccination status during a border inspection.


Payment processor banned by FTC

The Federal Trade Commission has issued an order permanently banning a payment processor that facilitated a fraudulent student loan debt relief scheme from processing debt relief payments. The order also requires the company and its owner to surrender $500,000 to the FTC for consumer redress.

A complaint filed by FTC alleged Automatic Funds Transfer Services, Inc. (AFTS) and its owner, Eric Johnson, processed at least $31 million in consumer payments for a fraudulent student loan debt relief scheme sued by the FTC in 2019. The debt relief scheme used numerous names, including The Student Loan Group (SLG).

AFTS and Johnson processed payments from tens of thousands of consumers deceived by SLG into paying illegal upfront fees with false promises to lower the consumers’ monthly student loan payments. The complaint cites correspondence showing that AFTS and Johnson were aware of numerous issues with the scheme. The FTC alleges that the company and Johnson received complaints from, among others, consumers and banks; were aware that SLG had high return rates and was collecting illegal upfront fees from consumers; and knew that SLG kept changing company and brand names to, among other reasons, mitigate negative publicity. Despite numerous warning signs, AFTS and Johnson continued processing consumer payments for SLG right until the scheme was ultimately shut down following an enforcement action by the FTC.

The settlement permanently prohibits AFTS and Johnson from processing payments for debt relief or student loan companies. They will also be prohibited from processing payments indirectly for any merchant that does not have a signed contract with AFTS, and will be required to apply enhanced screening and monitoring of certain high risk clients to ensure such clients are not operating illegally. The monetary judgment of $27,584,969 is largely suspended due to an inability to pay. AFTS and Johnson will be required to surrender $500,000 to the FTC, and if they are found to have misrepresented their financial status, the full amount of the judgment would be immediately due.

Press release


Federal court stays OSHA vaccine mandate

The Washington Post [subscription may be required for access] has reported that a panel of three judges in the U.S. Court of Appeals for the Fifth Circuit has suspended the Biden-Harris Administration's new vaccine requirement for private companies.

The suspension is administrative, staying the OSHA mandate while the court assesses it in more depth. The ruling came in response to a lawsuit filed Friday by a group of plaintiffs including Louisiana Attorney General Jeff Landry. The court gave the Justice Department until 5 p.m. Monday, November 8, to respond to the plaintiffs' request for a more permanent halt to the mandate. Suits against the vaccination mandate have been filed in multiple federal courts. The courts will have to decide which appeals court will hear the consolidated cases.


SBA adds new regional innovation clusters

The SBA has announced the addition of five new Regional Innovation Clusters (RICs) to the portfolio of communities the agency supports through the program. RICs are geographically-concentrated networking hubs of small businesses, suppliers, service providers, and related institutions that work together to maximize resources, compete on larger scales, and drive innovation and job creation.

The new SBA Regional Innovation Clusters include:


Sinaloa Cartel members charged

Two high-ranking members of of the Sinaloa Cartel have been charged with international drug trafficking following investigations lead by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI). On November 13, 2019, and February 19, 2020, a federal grand jury in Tucson returned superseding indictments against cartel members Aureliano Guzman-Loera of Sinaloa, Mexico, and brothers Ruperto, Jose, and Heriberto Salgueiro-Nevarez, of Guadalupe Y Calvo, Mexico. The indictments allege various violations of United States law occurring over several years related to the international distribution of controlled substances, including fentanyl, heroin, cocaine, methamphetamine, and marijuana. The Salgueiro-Nevarez brothers allegedly operate a faction of the Sinaloa Cartel known as the SNO, which stands for the Salgueiro-Nevarez Organization. Aureliano Guzman-Loera is the brother of former Sinaloa Cartel leader, Joaquin Guzman-Loera, “El Chapo”.


California credit union placed in conservatorship

The National Credit Union Administration has placed Pomona Postal Federal Credit Union in Pomona, California, into conservatorship. The credit union has 717 members and $4.2 million in assets, according to its most recent Call Report. It provides financial services to people working for the Pomona Post Office, located in Pomona, California. No reason for the conservatorship was announced in the NCUA's press release.


SEC names chief of whistleblower office

The Securities and Exchange Commission on Friday announced the appointment of Nicole Creola ("Cree") Kelly as chief of the SEC’s Office of the Whistleblower. Ms. Kelly is currently Senior Special Counsel in the Office of the General Counsel and has more than 20 years of experience with the agency. Among her other roles were counsel to former SEC Chair Mary Jo White, counsel to former SEC Commissioner Kara M. Stein, and stints in the Enforcement Division’s Complex Financial Instruments Unit as well as the Whistleblower Office.


Hedge fund advisor liable for securities fraud

The Securities and Exchange Commission has announced that jurors in Boston Federal Count have returned a verdict against a hedge fund adviser and his investment advisory firm. Gregory Lemelson and Massachusetts-based Lemelson Capital Management LLC were charged with reaping more than $1.3 million in illegal profits by making false statements to drive down the price of San Diego-based Ligand Pharmaceuticals Inc.

The SEC’s complaint and evidence at trial showed that, after establishing a short position in Ligand through his hedge fund, Lemelson made a series of false statements to shake investor confidence in Ligand and lower its stock price, increasing the value of his fund’s position. The false statements included assertions that Ligand’s investor relations firm had agreed that Ligand’s most profitable drug was on the brink of obsolescence and that Ligand had entered into a sham transaction with an unaudited shell company in order to pad its balance sheet. The evidence also showed that Lemelson had boasted about bringing down Ligand’s stock price through his “multi-month battle” against the company.


Passport scam alert

U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) officials are warning the public that imposters posing as HSI special agents are contacting people and claiming there is a problem with their passport. The scammers claim the passport is involved in some type of crime and threaten the caller by indicating police will be dispatched to their home to arrest them.

The scammers are spoofing the HSI San Antonio main phone number, 210-979-4500. ICE recommends that anyone receiving a threatening call or message from this number should:

  • Not give the person any personal or financial information
  • Try to collect any contact information from the caller
  • End the conversation immediately if threats and intimidation persist
  • Report the incident to the ICE tip line at 1 (866) 347-2423; callers to the tip line may remain anonymous


401(k) contribution limit increased

The IRS has announced that the amount individuals can contribute to their 401(k) plans in 2022 has increased to $20,500, up from $19,500 for 2021 and 2020. The IRS also issued technical guidance on all of the cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2022.


Claims aggregator charged by SEC

The Securities and Exchange Commission has announced it has charged a New Jersey "claims aggregator" — a firm that submits claims on behalf of its clients to administrators tasked with returning settlement funds to harmed investors – and its three principals with defrauding distribution funds established to return money to securities fraud victims in a multi-year scheme that yielded millions of dollars.

The SEC's complaint alleges that Joseph Cammarata, Erik Cohen, and David Punturieri, and two entities that they control, AlphaPlus Portfolio Recovery Corp. and Alpha Plus Recovery LLC (collectively AlphaPlus), stole at least $40 million from approximately 400 distribution funds, including more than $3 million from settlement funds arising from SEC enforcement actions. The complaint alleges that, starting in 2014, AlphaPlus engaged in a serial scheme to fraudulently obtain money by submitting false claims to settlement fund administrators – purporting to represent clients who had traded the securities that were the subjects of the underlying settlements. The complaint further alleges that defendants used false trading data and broker-dealer letterhead they misappropriated from other companies to "document" the purported trades and provide an air of legitimacy to their fake claims. According to the complaint, Cammarata, Cohen, and Punturieri funneled the fraudulently obtained distributions through a web of accounts they controlled and used the stolen money to pay for numerous personal expenses, such as jewelry, home renovations, luxury automobiles, watercraft, and real estate.


CFPB action to stop false ID name-matching

The CFPB on Thursday announced it has issued an advisory opinion affirming that consumer reporting companies, including tenant and employment screening companies, are violating the law if they engage in shoddy name-matching procedures. Regulators are concerned about the significant harms caused by false identity matching, where an applicant is disqualified from rental housing or a job based on having the same name as another individual with negative information in their credit history.

Specifically, the CFPB affirmed that the practice of matching consumer records solely through the matching of names is illegal under the Fair Credit Reporting Act. The advisory opinion affirms the obligations and requirements of consumer reporting companies, including background screeners, to use reasonable procedures to assure maximum possible accuracy. The agency said it will be working closely with the Federal Trade Commission to root out illegal conduct in the background screening industry. Background screening companies that violate the Fair Credit Reporting Act can be liable for significant civil penalties, restitution for victims, damages, and other relief.

PUBLICATION AND EFFECTIVE DATE UPDATE: Published at 86 FR 62468 on 11/10/2021, and effective upon publication.


Administration COVID vax policies announced

The White House has issued a Fact Sheet with the details of two policies to fight COVID-19, both involving vaccination mandates.

The Department of Labor’s Occupational Safety and Health Administration (OSHA) is announcing the details of a requirement for employers with 100 or more employees to ensure each of their workers is fully vaccinated by January 4, 2022, or tests for COVID-19 on at least a weekly basis. The OSHA rule will also require that these employers provide paid-time for employees to get vaccinated, and ensure all unvaccinated workers wear a face mask in the workplace.

The Centers for Medicare & Medicaid Services (CMS) at the Department of Health and Human Services is announcing the details of its requirement that health care workers at facilities participating in Medicare and Medicaid are fully vaccinated, also by January 4. The rule applies to more than 17 million workers at approximately 76,000 health care facilities, including hospitals and long-term care facilities.


Hsu discusses 'regulatory perimeter'

Yesterday, Acting Comptroller of the Currency Michael J. Hsu discussed clarifying and modernizing the bank regulatory perimeter at the American Fintech Council’s Fintech Policy Summit 2021. He described recent trends toward digitalization of banking and financial innovation, which have been accelerated by the COVID-19 pandemic. Several years of projected growth in digitalization took place in a matter of quarters. For instance, digital payments transactions increased by 27 percent, from $4.1 trillion to $5.2 trillion, from 2019 to 2020. Similarly, the total market value of cryptocurrencies has grown to approximately $2.5 trillion from $200 billion in 2019. Consumers and businesses experienced greater convenience, expanded capabilities, and an increase in opportunities, all as a result of financial innovation.

However, said Hsu, "these trends are being driven by firms that are not subject to bank rules and do not have the same controls as banks. In regulatory-speak, they sit outside of the so-called bank regulatory perimeter. The full implications of this will likely only become apparent over time. While the convenience and benefits of rapid innovation can be enjoyed immediately, the risks and harms to consumers and businesses of engaging in financial activities with fewer controls tend to emerge only later. He pointed to the apparent success of fintech companies in facilitating expanded access to PPP loans, and recent evidence of higher rates of customer dissatisfaction and of fraud with fintech-facilitated PPP loans versus those run through traditional banks. He also described the rapid growth in users and total market value in the cryptocurrency space, matched by growth in cryptocurrency scams and consumer complaints. He said "'Move fast and break things' is a common mantra in tech. In the financial services context, it is important to remember that those 'things' are people and their money."

Hsu added, "Increasingly, the three cornerstones of banking—taking deposits, making loans, and facilitating payments—are being reassembled functionally and digitally outside of the bank regulatory perimeter by certain firms... [and] these 'synthetic banking providers' (SBPs) operate out of the reach of bank regulators and free of bank rules, such as capital requirements, bank consumer protection laws, and the Community Reinvestment Act. History and research warn us that unregulated banking ends badly. Indeed, the origins of the OCC, Federal Reserve, and FDIC, as well as of many state banking agencies, can be traced back to financial panics and destabilizing runs resulting from unregulated or poorly regulated banking."

Hsu then suggested "we need to remove the disparity between the rights and responsibilities of banks and those of synthetic banking providers by holding SBPs to banking standards."


FTC publishes policy on negative option marketing

The Federal Trade Commission has published [86 FR 60822] in this morning's Federal Register a policy statement to provide guidance regarding its enforcement of various statutes and FTC regulations addressing negative option marketing and operating. The Statement is intended to assist the business community and practitioners by providing specific guidance on the Commission's interpretation of existing law as it applies to negative option practices. It may also assist the courts in developing an appropriate framework for interpreting and applying the various statutes and regulations addressing negative option marketing.

Negative option offers come in a variety of forms, but all share a central feature: Each contains a term or condition under which the seller may interpret a consumer's silence or failure to take affirmative action to reject a good or service or to cancel the agreement as acceptance or continuing acceptance of the offer. Such offers are often involved in consumer claims of unauthorized credit card or debit card charges.


IRS reminder on special tax deduction for charitable donations

The IRS has posted a reminder that a special tax provision will allow more Americans to easily deduct up to $600 in donations to qualifying charities on their 2021 federal income tax return. Ordinarily, people who choose to take the standard deduction cannot claim a deduction for their charitable contributions. But a temporary law change now permits them to claim a limited deduction on their 2021 federal income tax returns for cash contributions made to qualifying charitable organizations.

Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify. Under this provision, individual tax filers, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2021. The maximum deduction is increased to $600 for married individuals filing joint returns. NOTE: Cash contributions include those made by check, credit card or debit card as well as amounts incurred by an individual for unreimbursed out-of-pocket expenses in connection with their volunteer services to a qualifying charitable organization. Cash contributions don't include the value of volunteer services, securities, household items or other property.


$13M+ to assist victims of COVID related discrimination

HUD has announced it is providing $13.6 million in American Rescue Plan (ARP) funding to enable 51 HUD Fair Housing Initiatives Program (FHIP) agencies to conduct a range of fair housing enforcement and education and outreach activities related to the COVID-19 pandemic. Among the activities that will be conducted by the organizations is addressing discriminatory practices in underserved communities. Another $5,757,663 in ARP funding will be made available to eligible applicants that did not receive funding in this first round.


G5 October Foreign Exchange Rates

The Federal Reserve has posted the G.5 average foreign exchange rates for the month of October.


FDIC releases 65 CRA evaluations

The FDIC has released a list of 65 institutions examined for compliance with the Community Reinvestment Act whose evaluations have recently been made public. Of those listed, one was determined to be in Substantial Noncompliance, two received ratings of Outstanding, and 62 received Satisfactory ratings.

We congratulate the two banks that received the Outstanding evaluation ratings:


Statements supporting NGFS Glasgow Declaration

The Board of Governors of the Federal Reserve System and Acting Comptroller of the Currency Michael J. Hsu on Wednesday issued statements in support of the Glasgow Declaration by the Network of Central Banks and Supervisors for Greening the Financial System (NGFS).


About the NGFS

The NGFS, launched at the Paris One Planet Summit on December 12, 2017, is a group of central banks and supervisors, which on a voluntary basis are willing to share best practices and contribute to the development of environment and climate risk management in the financial sector, and to mobilize mainstream finance to support the transition toward a sustainable economy. The NGFS brings together 100 central banks and supervisors and 16 observers. Together, they represent five continents and around 85% of global greenhouse gas emissions, and are responsible for the supervision of all of the global systemically important banks and two thirds of global systemically important insurers.


FOMC Statement from November 3 meeting

The Federal Reserve Board has issued the Federal Open Market Committee statement following the committee's meeting of November 3, 2021.


The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation having run persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved.

The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.

In light of the substantial further progress the economy has made toward the Committee's goals since last December, the Committee decided to begin reducing the monthly pace of its net asset purchases by $10 billion for Treasury securities and $5 billion for agency mortgage-backed securities. Beginning later this month, the Committee will increase its holdings of Treasury securities by at least $70 billion per month and of agency mortgage‑backed securities by at least $35 billion per month. Beginning in December, the Committee will increase its holdings of Treasury securities by at least $60 billion per month and of agency mortgage-backed securities by at least $30 billion per month. The Committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook.

Related link:

Implementation Note issued November 3, 2021


Working Group report on stablecoins

The Treasury Department has released a Fact Sheet issued by the President's Working Group for Financial Markets (PWG), the FDIC, and the OCC on the growing use of stablecoins, which are digital assets designed to maintain a stable value relative to a national currency or other reference assets. Stablecoins are today primarily used in the United States to facilitate trading, lending, or borrowing of other digital assets, predominantly on or through digital asset trading platforms, but proponents believe stablecoins could become widely used by households and businesses as a means of payment. If well-designed and appropriately regulated, stablecoins could support faster, more efficient, and more inclusive payments options.

The purpose of the President's Working Group is to identify regulatory gaps related to stablecoins with the potential to be used as a means of payment, and to present recommendations for addressing those gaps. The PWG has identified risks that will increase as stablecoins become more widely used. The PWG, FDIC, and OCC have noted key gaps in prudential authority over stablecoins used for payments purposes. To address those risks, the agencies are recommending prompt action by Congress to enact legislation to ensure that payment stablecoins are subject to a federal prudential framework on a consistent and comprehensive basis to address risks to stablecoin users and guard against stablecoin runs, to address concerns about payment system risk, and to address additional concerns about systemic risk and economic concentration of power.

Until Congress acts, the agencies recommend that the Financial Stability Oversight Council consider steps available to address the risks outlined in the report.


$2B+ from HUD for disaster recovery

HUD has announced the allocation of $2,040,617,000 in CDBG-Disaster Recovery (CDBG-DR) and CDBG-Mitigation (CDBG-MIT) funds appropriated in the continuing resolution, the Extending Government Funding and Delivering Emergency Assistance Act to 10 states and territories covering 15 separate major disasters that occurred calendar year 2020.

These funds will go to recover from and build resilience to natural disasters, including climate disasters, with a specific focus on low- and moderate-income populations. The funds are specified to be used for: “disaster relief, long-term recovery, restoration of infrastructure and housing, economic revitalization, and mitigation, in the most impacted and distressed areas.”

The states and territories to receive this funding are Alabama, California, Florida, Iowa, Louisiana, Michigan, Mississippi, Oregon, Puerto Rico, and Tennessee.


IRS issues additional $510 million in refunds

The Internal Revenue Service has announced it recently sent approximately 430,000 refunds totaling more than $510 million to taxpayers who paid taxes on unemployment compensation excluded from income for tax year 2020.

The IRS efforts to correct unemployment compensation overpayments will help most of the affected taxpayers avoid filing an amended tax return. So far, the IRS has identified over 16 million taxpayers who may be eligible for the adjustment. Some will receive refunds, while others will have the overpayment applied to taxes due or other debts.

The American Rescue Plan Act (ARPA) of 2021, enacted in March, excluded the first $10,200 in unemployment compensation per taxpayer paid in 2020. The $10,200 is the amount excluded when calculating one's adjusted gross income (AGI); it is not the amount of refund. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.

Earlier this year, the IRS began its review of tax returns filed prior to the enactment of ARPA to identify the excludable unemployment compensation. To date, the IRS has issued over 11.7 million refunds totaling $14.4 billion. This latest batch of corrections affected over 519,000 returns, with 430,000 taxpayers receiving refunds averaging about $1,189.


Marketable borrowing estimates announced

The U.S. Department of the Treasury has announced its current estimates of privately-held net marketable borrowing for the October – December 2021 and January – March 2022 quarters.

During the October – December 2021 quarter, Treasury expects to borrow $1.015 trillion in privately-held net marketable debt, assuming an end-of-December cash balance of $650 billion. The borrowing estimate is $312 billion higher than announced in August 2021, primarily due to the lower beginning of quarter balance, somewhat offset by a lower end-of-quarter balance and higher receipts.

During the January – March 2022 quarter, Treasury expects to borrow $476 billion in privately-held net marketable debt, assuming an end-of-March cash balance of $650 billion.

During the July – September 2021 quarter, Treasury borrowed $103 billion in privately-held net marketable debt and ended the quarter with a cash balance of $215 billion. In August 2021, Treasury estimated privately-held net marketable borrowing of $673 billion and assumed an end-of-September cash balance of $750 billion. The $570 billion decrease in borrowing resulted primarily from the decrease in the end-of-September cash balance and, to a lesser extent, from an increase in receipts and a decrease in expenditures.


New CFPB guide for family members of elders

The CFPB has issued a new guide, Preventing elder financial abuse: Guide for family and friends of people living in nursing homes and assisted living communities.

The guide walks through four steps to fighting elder financial abuse: Prevent, Recognize, Record, and Report. It lists red flags to watch for, shares some common scenarios, and includes resources that can be used to help loved ones.

The Bureau also released a quick reference handout on reporting elder financial abuse.


FTC returns nearly $60 million to Amazon drivers

On Tuesday, the Federal Trade Commission announced it had sent almost $60 million in checks and PayPal payments to drivers who had their tips illegally taken by Amazon.

From late 2016 through August 2019, Amazon had asked customers placing orders with Amazon Prime Now or AmazonFresh services how much they wanted to tip the courier, and told customers that "100 percent of the tips are passed on to your courier." But, according to the FTC's February 2, 2021 press release, Amazon pocketed much of those tips.

The FTC has sent over 139,000 checks and 1,620 PayPal payments totaling $59,600,593 to Amazon Flex drivers who had $5 or more taken from them. The largest payment is $28,255, and the average is $422.


FDIC Office of Minority and Community Development Banking

The Federal Deposit Insurance Corporation on Tuesday announced the creation of a new Office of Minority and Community Banking to support the agency’s ongoing strategic and direct engagement with Minority Depository Institutions, Community Development Financial Institution banks, and other mission-driven banks. The new office will further promote private sector investments in low- and moderate-income communities.


CFPB: More credit report disputes in Black and Hispanic neighborhoods

The Consumer Financial Protection Bureau on Tuesday announced its release of research finding that consumers in majority Black and Hispanic neighborhoods, as well as younger consumers and those with low credit scores, are far more likely to have disputes appear on their credit reports. The new research is a part of a series of reports focusing on trends in the consumer financial marketplace, and uses data on auto loan, student loan, and credit card accounts opened between 2012 and 2019.

The report shows that majority Black and Hispanic neighborhoods continue to face significant challenges with credit records. In nearly every credit category reviewed, consumers residing in majority Black areas were more than twice as likely to have disputes appear on their credit reports compared to consumers residing in majority white areas. For auto loans, consumers in majority Black areas were more than three times as likely to have disputes appear on their credit reports (0.8% of accounts with disputes in majority white census tracts compared to 2.8% of accounts in majority Black census tracts).

The CFPB is committed to further researching the root causes of credit information disputes, as well as investigating the reasons for the demographic disparities found in the report.

Related link


OCC CRA evaluations released

The OCC has released a list of national banks and savings associations recently evaluated for compliance with the Community Reinvestment Act whose evaluation reports were made public in October 2021.

Of the 15 evaluations made public last month, 9 are rated satisfactory, 5 are rated outstanding, and one is rated Substantial Noncompliance. We congratulate these five banks who received the outstanding ratings:


FDIC September enforcement actions announced

The FDIC has released a list of enforcement actions taken in September 2021.

  • Farmers and Merchants Bank, Milford, Nebraska, was ordered to pay a civil money penalty of $24,000 for violations of flood insurance regulations.
  • Liberty Bank, Inc., Salt Lake City, Utah, was issued a consent cease and desist order after the FDIC found the bank in violation of the Truth in Lending Act, the Real Estate Settlement Procedures Act, the Electronic Signatures Act, the Equal Credit Opportunity Act, the Community Reinvestment Act, and the Truth in Savings Act, and their respective implementing regulations.


FinCEN renews geographic targeting orders

FinCEN has announced the renewal of its Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate. The purchase amount threshold remains $300,000 for each covered metropolitan area. The terms of the order are effective beginning November 1, 2021, and ending on April 29, 2022. FinCEN said that GTOs continue to provide valuable data on the purchase of residential real estate by persons possibly involved in various illicit enterprises. Renewing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity, as well as inform FinCEN’s future regulatory efforts in this sector.

The GTOs cover certain counties within these major U.S. metropolitan areas: Boston; Chicago; Dallas-Fort Worth; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle. The orders do not apply to banks or credit unions.

Related links:

Generic sample of GTOs


NCUA bans two former CU employees

The National Credit Union Administration has announced it issued one prohibition order and one prohibition notice in October. The two individuals receiving the enforcement actions are prohibited from participating in the affairs of any federally insured financial institution:

  • Sheena Nicole Morgan, a former employee of Point Breeze Credit Union, Hunt Valley, Maryland
  • Suzanne Nowicki, a former employee of Westport Federal Credit Union, Westport, Massachusetts


Fixed Income Clearing Corporation charged by SEC

The Securities and Exchange Commission has announced that Fixed Income Clearing Corporation (FICC), a clearing agency, has agreed to pay an $8 million penalty to settle SEC charges that it failed to have adequate risk management policies within its Government Securities Division.

According to the SEC’s order, FICC acts as the sole registered clearing agency for transactions in U.S. government securities. FICC substitutes itself for both sides of every transaction that it clears, guaranteeing those transactions and making itself the buyer for every seller and the seller for every buyer. A failure by FICC to manage risk could result in significant costs not only to FICC and its participants, but also to other market participants or the broader U.S. financial system.

The SEC’s order finds that FICC, a wholly-owned subsidiary of The Depository Trust & Clearing Corporation, violated the Covered Clearing Agency Standards promulgated by the SEC under the Securities Exchange Act of 1934. Without admitting or denying the SEC’s findings, FICC agreed to a censure and the $8 million penalty, as well as to cease and desist from future violations of the charged provisions. FICC also agreed to retain an independent compliance consultant to assess its compliance efforts.


CFPB leadership changes announced

The Consumer Financial Protection Bureau has announced two leadership changes within the Bureau:

  • Lorelei Salas will be joining the CFPB as Assistant Director for Supervision Policy and will also serve as the Acting Assistant Director for Supervision Examinations.
  • Eric Halperin has joined the CFPB as Assistant Director for the Office of Enforcement.


U.S. sanctions network and individuals aiding Iranian program

On Friday, OFAC designated members of a network of companies and individuals that have provided critical support to the Unmanned Aerial Vehicle (UAV) programs of Iran’s Islamic Revolutionary Guard Corps (IRGC) and its expeditionary unit, the IRGC Qods Force (IRGC-QF). OFAC also designated Saeed Aghajani, the commander of the IRGC Aerospace Force (IRGC ASF) UAV Command.

Friday's actions were taken pursuant to the counterterrorism authority Executive Order 13224, as amended, as well as E.O. 13382, which targets weapons of mass destruction proliferators and their supporters.

For identity information on the individuals and entities that OFAC designated on Friday, see BankersOnline's October 29, 2021 OFAC Update


California based Ponzi scheme managers charged

The Securities and Exchange Commission has announced that it has charged BNZ, a Newport Beach, California-based company, and its co-founders and co-managers Brett Barber and Louis Zimmerle, for fraudulently raising $13.5 million from more than 100 retail investors.

According to the SEC's complaint, filed on October 28, 2021, since June 2019, BNZ, Barber, and Zimmerle have raised $13.5 million from retail investors by telling them BNZ was in the business of making investments in real estate and alternative investments and promising to pay investors significant returns, generally 10% per year. The complaint alleges that the defendants used only $6.4 million of the $13.5 million raised from investors to invest in real estate and alternative investments, and those investments generated just $300,000 in profits.

Despite generating minimal profits, the defendants allegedly paid investors returns of at least $1.7 million using funds raised from other investors in Ponzi-like fashion, and transferred over $1.6 million to Barber through his company, Guaranteed Income Solutions Inc., and over $700,000 to Zimmerle. The defendants are alleged to have made false and misleading statements to investors regarding, among other things, the source of the payment of the investor returns. In addition, Barber allegedly misled investors by touting his education in finance and his investment experience without also disclosing that he had been barred by the Financial Industry Regulatory Authority from affiliating with any member firm.


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