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E.g., Feb 26 2024
E.g., Feb 26 2024


FDIC guidance to financial institutions in areas of Washington

The FDIC has issued Financial Institution Letter FIL-8-2024 with guidance to help financial institutions and facilitate recovery in areas of Washington affected by wildfires that caused significant property damage August 18–25, 2023.


FinCEN renewing info collections without changes

FinCEN has published two notices and requests for comment to extend its authority to require the collection of information.

On Friday, February 23, FinCEN published [89 FR 13802] a notice on the proposed renewal, without change, of an existing information collection requirement for geographic targeting orders (GTOs). This will allow FinCEN to continue renewing its GTOs while its proposal for requiring nationwide Real Estate Reports of non-financed transfers of residential real estate remains under consideration. Comments are due by April 23, 2024.

On Monday, February 26, FinCEN published [89 FR 14148] a notice on the proposed renewal, without change, of its existing information collection requirement in 31 CFR 1010.230 related to beneficial ownership requirements for legal entity customers. The current requirement for banks to obtain certifications of beneficial ownership from entity customers will continue until FinCEN proposes and issues and makes effective a final rule to change the requirements in section 1010.230, which is not expected until at least the end of 2024. Comments on FinCEN's notice are due by April 26, 2024.


FDIC releases January enforcement actions

The FDIC has released a list of 15 orders of administrative enforcement actions taken against banks and individuals in January 2024. The administrative enforcement actions in those 15 orders consisted of six orders to pay civil money penalties, two combined prohibition orders and orders to pay civil money penalties, two prohibition orders, four consent orders, and one order terminating a consent order.

  • Nine orders against individuals who are current or former institution-affiliated parties of Bank of England, England, Arkansas, connected to violations of section 5 of the Federal Trade Commission Act involving misrepresentations of personal and bank affiliations with the Department of Veterans Affairs in the course of taking applications for VA mortgage loans.
    • Assessments of civil money penalties and orders of removal/prohibition were issued to:
      • Ryan Qarana, former branch manager of the Bloomfield, MI, loan production office of the bank, for failing to ensure that loan officers in the Bloomfield, Michigan loan production office complied with Section 5; specifically by misrepresenting or failing to ensure that loan officers did not misrepresent: (1) available loan prices for mortgage loans, (2) that consumers could skip two months of their mortgage payments, and (3) the loan production office’s affiliation with the Department of Veterans Affairs. CMP $100,000.
      • Jasmine Jonna, former sales manager of the Bloomfield loan production office, for misrepresenting available loan prices for mortgage loans, misrepresenting to consumers that they could skip two months of their mortgage payments, and misrepresenting the loan production office’s affiliation with the Department of Veterans Affairs. CMP of $12,000.
    • Civil money penalties were assessed on:
      • Ramy Zoma, for misrepresenting the bank as affiliated with the Department of Veterans Affairs. CMP $2,500.
      • Janel Zaitona, for luring consumers to apply for mortgage loans with low, unavailable loan prices that would not be honored and subsequently increasing the price before closing the loan, and misrepresenting to consumers that they could skip two months of mortgage payments and by misrepresenting to consumers the Bank’s affiliation with the Department of Veteran’s Affairs. CMP $1,000
      • Salam Yaldo, for luring consumers to apply for mortgage loans with low, unavailable loan prices, that would not be honored and subsequently increasing the price before closing the loan; misrepresenting to consumers that they could skip two months of mortgage payments; and misrepresenting to consumers his and the Bank’s affiliation with the Department of Veterans Affairs. CMP $15,000
      • Zach Jabro, for failing, as the branch manager of the office, in certain aspects, to manage, monitor, and oversee the sales operations of the branch. CMP $110,000
      • Maria Abdulnoor, for luring consumers to apply for mortgage loans with low, unavailable loan prices that would not be honored and subsequently increasing the price before closing the loan, and misrepresenting to consumers that they could skip two months of mortgage payments. CMP $35,000.
    • Cease and desist orders were issued to Lamont Kennedy and Oday Sessi.
  • An order to pay a civil money penalty of $2,000 was issued to Collins State Bank, Collins, Wisconsin, for violations of the Flood Disaster Protection Act, National Flood Insurance Act, and Part 339 of the FDIC's Rules and Regulations, by failing to obtain adequate flood insurance at the time of making, increasing, renewing, or extending four (4) loans.
  • Removal/prohibition orders were issued to:
    • Laura Ellen Ellison, formerly a loan operations specialist for CommerceOne Bank, Birmingham, Alabama, for executing nine unauthorized wire transfers from accounts of two bank customers to her personal bank account at another bank, and creating false documentation to make the transfers appear to have been authorized.
    • Bonnie A. Kirkpatrick, formerly employed by First Farmers & Merchants State Bank, Brownsdale, Minnesota, after a finding that she forged withdrawal slips, took various amounts of money from multiple consumer accounts without permission or authority, and removed Bank funds from the cash drawer, all for her own personal gain.
  • Consent orders were issued to First Farmers & Commercial Bank, Pikeville, Tennessee, and Lineage Bank, Franklin, Tennessee
  • A consent order issued in September 2022 to Union Savings Bank, Cincinnati, Ohio, was terminated.


FDIC guidance to financial institutions in areas of California

The FDIC has issued Financial Institution Letter FIL-7-2024 with guidance to help financial institutions and facilitate recovery in areas of California affected by severe storm and flooding, which caused significant property damage January 21–23, 2024.


CFPB orders supervision for World Acceptance Corporation

The CFPB has announced it has issued its first supervisory designation order in a contested matter, after determining that installment lender World Acceptance Corporation has met the legal requirements for supervision.

The CFPB’s procedures require the CFPB to issue a notice to an entity not currently subject to a supervisory examination. The entity can either consent to supervision or contest the notice. Typically, the notices have pointed to consumer complaints and other indicators of risk to consumers.

The order is not a finding that World Acceptance Corporation has engaged in wrongdoing.


Treasury reports on FATF plenary

The Treasury Department has reported that the Financial Action Task Force (FATF), the global standard-setting body for anti-money laundering and countering the financing of terrorism (AML/CFT), concluded its fifth Plenary under the Singaporean presidency on February 23. The FATF made several key advances, including kicking off a public consultation on potential changes to the FATF Recommendation on wire transfer information and the adoption of new guidance on trusts. The FATF also noted its concern on Russian Federation’s growing financial connectivity with North Korea and Iran.


FTC issues UDAP complaint against H&R Block

The Federal Trade Commission reports it is taking action against tax preparation company H&R Block for unfairly deleting consumers’ tax data and requiring them to contact customer service when they downgrade to more affordable online products, and deceptively marketing their products as “free” when they were not free for many consumers.

In an administrative complaint, FTC staff alleges that H&R Block’s online tax filing products lead consumers into higher-cost products made for more complicated tax filings, despite many consumers not needing the additional tax forms and schedules offered by those products. In addition, H&R Block fails to clearly explain which of its products cover what forms, schedules, or tax situations, leading many consumers to start completing their tax returns in products that are more expensive than they need. When consumers later realized they did not need or want those more expensive products, though, H&R Block presented them with a series of time-consuming challenges when attempting to downgrade after already spending substantial time entering their tax information.

Specifically, when consumers choose to downgrade, H&R Block requires consumers to contact its customer support via chat or phone. Then, its system deletes all the tax data the consumers have entered, requiring them to start their tax return from scratch, creating a significant disincentive to downgrading. This stands in contrast to the upgrade process, where consumers’ data seamlessly moves to the more expensive product instantly.


President announces more sanctions against Russia

The White House has released a statement in which President Biden announced “more than 500 new sanctions against Russia for its ongoing war of conquest on Ukraine and for the death of Aleksey Navalny, who was a courageous anti-corruption activist and Putin’s fiercest opposition leader. These sanctions will target individuals connected to Navalny’s imprisonment as well as Russia’s financial sector, defense industrial base, procurement networks and sanctions evaders across multiple continents. They will ensure Putin pays an even steeper price for his aggression abroad and repression at home.”

The U.S. is also “imposing new export restrictions on nearly 100 entities for providing backdoor support for Russia’s war machine [and] taking action to further reduce Russia’s energy revenues.”

Specifics of the sanctions will be announced by the Treasury Department's Office of Foreign Assets Control.


Bureau publishes proposal to limit OD fees at very large banks

The CFPB has published [89 FR 13852] its previously announced proposed rule on overdraft lending at very large financial institutions in today's Federal Register. Comments are due by April 1, 2024,


Hsu discusses consolidated supervision of crypto-asset intermediaries

The OCC reports that Acting Comptroller of the Currency Michael J. Hsu yesterday offered remarks to the Financial Stability Board’s Crypto Working Group.

In his remarks, Mr. Hsu shared his perspective on the importance of coordination and collaboration on the supervision of global institutions, particularly with regard to crypto-asset activities. He also discussed the relationship between crypto and tokenization.


Hsu on banking and commerce

Acting Comptroller of the Currency Michael J. Hsu yesterday discussed banking and commerce, regulatory effectiveness, and financial stability in remarks at Vanderbilt University in Nashville, Tennessee.

In his remarks, Mr. Hsu discussed the blurring of the lines between banking and commerce in payments and private credit/equity, and how this might lead to financial instability. He also offered thoughts on the potential for the Financial Stability Oversight Council’s recently adopted analytic framework to identify and address financial stability risks as they emerge.


Fed releases January FOMC minutes

The Federal Reserve Board has released the minutes of the January 30–31, 2024, Federal Open Market Committee meeting.


FHA offers new option to help struggling mortgage borrowers

The Federal Housing Administration yesterday announced a new loss mitigation home retention option for borrowers with FHA-insured single family forward mortgages who are behind on their mortgage payments. The new offering, called the Payment Supplement, provides mortgage servicers with an additional tool to temporarily reduce a borrower’s monthly mortgage payment by up to 25 percent without modifying the mortgage’s current interest rate. The Payment Supplement is meant to help those borrowers who cannot sufficiently be assisted by existing FHA home retention solutions because the interest rate on their mortgage is lower than current interest rates.

When implemented, the Payment Supplement will allow mortgage servicers to temporarily reduce a borrower’s mortgage payment by using funds from a Partial Claim which enables the borrower to access up to 30 percent of the outstanding balance of their FHA-insured mortgage. The Partial Claim amount is placed in a junior lien and paid back when the homeowner sells or refinances the home or the mortgage otherwise terminates. Under the Payment Supplement, the Partial Claim funds are used in the following way:

  • First, the Partial Claim is used to pay any arrearages and to bring the borrower’s mortgage payment current.
  • Next, the remaining funds are deposited in an FHA custodial account managed by the mortgage servicer and used to temporarily supplement the principal and interest portion of a borrower’s mortgage payment each month, with a target of up to a 25 percent reduction in monthly principal and interest payments.

The Payment Supplement option is available to all borrowers who have not already exhausted their Partial Claim allowance through previous loss mitigation actions.

Mortgage servicers may begin implementing Payment Supplement on May 1, 2024, but must implement the solution for all eligible borrowers by January 1, 2025.

In addition to the publication of the Payment Supplement policy, FHA also announced yesterday that it is extending its full suite of temporary loss mitigation options through April 30, 2025.


CFPB revises supervisory appeals process

The CFPB has announced it has issued a procedural rule updating the process by which financial institutions can appeal supervisory findings. The updated rule broadens the CFPB officials eligible to evaluate appeals, the options for resolving an appeal, the matters subject to appeal, and makes additional clarifying changes.

The changes in the updated appeals process include:

  • The Supervision Director will select an appeals committee of three CFPB managers with relevant expertise who did not work on the matter being appealed, and who will advise the Supervision Director in conjunction with attorneys assigned by the CFPB’s General Counsel.
  • The appeals committee will now be able to remand a matter to Supervision staff for consideration of a modified finding, in addition to the existing options of upholding or rescinding the finding.
  • Institutions may now file an appeal of any compliance rating or finding, not only an adverse rating.

Publication Update: Published on 2/22/2024 at 89 FR 13263. It became applicable on publication.


FTC final rule on impersonation of government and businesses

The Federal Trade Commission has finalized its Trade Regulation Rule on Impersonation of Government and Businesses (16 C.F.R. Part 461), which prohibits the impersonation of government, businesses, and their officials or agents in interstate commerce as deceptive or unfair acts or practices.

The new rule will become effective 30 days after it is published in the Federal Register.

The FTC has also issued a supplemental notice of proposed rulemaking that would, if finalized as proposed, amend the amend the new rule to revise its title, add a prohibition on the impersonation of individuals, and extend liability for violations of the rule to parties who provide goods and services with knowledge or reason to know that those goods or services will be used in impersonations of the kind that are themselves unlawful under the Rule.

In its press release announcing the rule on impersonation of government and businesses and the supplemental notice of proposed rulemaking that would amend the rule, the FTC said it is proposing the amendments in light of surging complaints around impersonation fraud, as well as public outcry about the harms caused to consumers and to impersonated individuals. The Commission said that “emerging technology – including AI-generated deepfakes – threatens to turbocharge this scourge, and the FTC is committed to using all of its tools to detect, deter, and halt impersonation fraud.”

Comments on the supplemental notice of proposed rulemaking will be accepted for 60 days after Federal Register publication.


FinCEN issues Small Entity Compliance Guide for BOI access

FinCEN has issued a Small Entity Compliance Guide for Beneficial Ownership Information Access and Safeguards Requirements to provide an overview of the Beneficial Ownership Information Access and Safeguards Rule (Access Rule) requirements for small entities (including financial institutions) that obtain beneficial ownership information (BOI) from FinCEN.

The preface of the Guide indicates it is explanatory only, does not supplement or modify any obligations imposed by statute or regulation, and does not supersede more recent guidance documents issued by FinCEN.

The Guide and other resource materials about the Beneficial Ownership Information Reporting rules can be found on FinCEN's BOI Reference Materials webpage.


U.S. sanctions two affiliates of Russian ransomware group

The Treasury Department on Tuesday reported that OFAC has designated two individuals who are affiliates of the Russia-based ransomware group LockBit. This action is the first in an ongoing collaborative effort with the U.S. Department of Justice, Federal Bureau of Investigation, and international partners targeting LockBit.

For identification information on the two individuals, see BankersOnline's February 20, 2024, OFAC Update.


Agencies issue Shared National Credit Program report

The Federal Reserve Board, OCC, and FDIC on February 16 reported in the 2023 Shared National Credit (SNC) Report that credit quality associated with large, syndicated bank loans remains moderate. However, the agencies noted declining credit quality trends due to the pressure of higher interest rates on leveraged borrowers and compressed operating margins in some industry sectors.

Risks in leveraged loans remain high, and risks in certain industries, including technology, telecom and media; health care and pharmaceuticals; and transportation services are also elevated. Risk in the real estate and construction sector is segmented, with deteriorating trends in some sub-sectors being offset by stability and/or improvement in other sub-sectors. Industries affected by the pandemic, including transportation services and entertainment/recreation, continue to show notable improvement.

The 2023 review reflects the examination of SNC loans originated on or before June 30, 2023. The review focused on leveraged loans and stressed borrowers from various industry sectors.


Court bans and fines mortgage relief scam operators

The Federal Trade Commission on Friday announced that a federal court has issued an order banning the operators of the Home Matters USA mortgage relief scam from the telemarketing and debt relief businesses and requiring them to turn over $19 million as a result of a lawsuit by the Commission and the California Department of Financial Protection and Innovation (DFPI).

The FTC and DFPI sued companies doing business as Home Matters USA, Academy Home Services, Atlantic Pacific Service Group, and Golden Home Services America and the owners of the companies, Michael R. Nabati, Armando Solis Barron, Dominic Ahiga (also known as Michael D. Grinnell), and Roger S. Dyer in September 2022, charging them with taking millions of dollars from thousands of struggling homeowners seeking mortgage relief.

The court found that the defendants falsely promised to reduce homeowners’ mortgage payments and prevent foreclosures, defrauding distressed homeowners out of millions of dollars. The scheme harmed more than 3,000 people nationwide, particularly elders and veterans.


FCC order clarifies TCPA opt-out rules

The Federal Communications Commission has announced its adoption of new rules to further protect consumers from unwanted robocalls and robotexts. The new rule will make it simpler for consumers to revoke consent, and requires that callers and texters implement requests in a timely manner.

The new rules require that robocallers and robotexters honor do-not-call and consent revocation requests within a reasonable time, not to exceed 10 business days from receipt. Last week’s action also codifies the Commission’s 2015 ruling that consumers can revoke consent under the TCPA through any reasonable means.
Under the ruling, consumers will be able to opt out of test messages using “stop,” “quit,” “end,” “revoke,” “opt out,” “cancel,” or “unsubscribe" via reply text message as a per se reasonable means to revoke consent.

The ruling also adds to the FCC rules the Commission’s 2012 ruling that clarified that a one-time text message confirming a consumer’s request that no further text messages be sent does not violate the TCPA as long as the confirmation text merely confirms the called party’s opt-out request and does not include any marketing information.

The Commission also seeks comment on whether the TCPA applies to robocalls and robotexts from wireless providers to their own subscribers and whether consumers should have the ability to revoke consent and stop such communications.

The order becomes effective 30 days after Federal Register publication (with some exceptions).


FDIC special committee update on third-party review

The Special Committee of the FDIC Board of Directors established to oversee an independent third-party review of the agency’s workplace culture issued a statement yesterday with an update on the progress of the review.

More than 350 people have contacted Cleary Gottlieb Steen & Hamilton LLP, the law firm conducting the review. For individuals who leave contact information, the Special Committee has set goals to respond within 48 hours. Cleary Gottlieb has also been reaching out to and conducting interviews with FDIC staff from various Divisions and Regional Offices. The Special Committee recognizes it can be difficult for some to share their stories and appreciates and supports those who have chosen to do so.

The FDIC has agreed to waive any confidentiality restriction currently in place with employees that would otherwise preclude them from discussing specifics of their case or management’s responses to Cleary Gottlieb, the FDIC’s OIG, or any Congressional committee or subcommittee. Accordingly, an individual is free to share documentation or other information related to harassment, interpersonal misconduct, or the FDIC’s workplace culture with investigators, even if prohibited by terms of a settlement agreement or a nondisclosure agreement (NDA) with the FDIC.

The Committee intends to complete its independent review in the second quarter of 2024.


CFPB: Large banks charge higher credit card rates than small institutions

The CFPB has announced its release of a report based on the first set of results from the newly updated Terms of Credit Card Plans survey. The survey data reveal that large banks are offering worse credit card terms and interest rates than small banks and credit unions, regardless of credit risk. In fact, reports the Bureau, the 25 largest credit card issuers charged customers interest rates of 8 to 10 points higher than small- and medium-sized banks and credit unions. This difference can translate to $400 to $500 in additional annual interest for the average cardholder.

The survey data include information on all general-purpose credit cards of the largest 25 credit card issuers in the United States. The data also include a representative sample of products from small- and medium-sized banks and credit unions across the country.


Social Security proposes to use electronic payroll data

The Social Security Administration has published [89 FR 11773] a proposed rule, "Use of Electronic Payroll Data to Improve Program Administration," describing the agency’s plans for accessing and using information from payroll data providers to reduce improper payments, including overpayments, which improves service to customers.

Unreported, late reported, and incorrectly reported earnings are often a cause of overpayments for people who receive Social Security Disability Insurance (SSDI) benefits and Supplemental Security Income (SSI) payments. When a person has been overpaid, the law requires the agency to ask for repayment, which can create financial difficulties for beneficiaries.

Social Security is working to reduce wage-related improper payments by using its legal authority to establish information exchanges with payroll data providers. These exchanges will help ensure the agency receives timely and accurate wage data. These exchanges and the agency’s planned business process is called the Payroll Information Exchange (PIE).

PIE will help reduce manual reporting errors as well as the reporting burden for individuals who authorize Social Security to obtain their wage and employment information through these information exchanges and work for employers whose payroll data is available through the exchange. PIE will also help to more quickly identify wages that often go unreported or undetected and which can lead to improper payments.

Comments on the proposal will be accepted through April 15, 2024.


OFAC amends North Korea Sanctions Regulations

The Treasury Department's Office of Foreign Assets Control has published [89 FR 12233] in today's Federal Register a final rule amending its North Korea Sanctions Regulations [31 C.F.R. 510] to modify a general license that authorizes certain transactions in support of specified humanitarian activities of nongovernmental organizations. Additionally, OFAC is adding general licenses to authorize the following: transactions related to the exportation and reexportation of items authorized by the U.S. Department of Commerce; the provision of certain agricultural commodities, medicine, and medical devices; and certain journalistic activities in North Korea.

The rule is effective today. OFAC also issued several new North Korea-related FAQs and amended three FAQs.


OCC enforcement actions for February 2024

The OCC has released its February 2024 list of enforcement actions taken against national banks and federal savings associations and related individuals.

  • The previously announced cease and desist order, order for civil money penalty, and Gramm-Leach-Bliley agreement issued to City National Bank, Los Angeles, California.
  • A cease and desist order against Blue Ridge Bank, N.A., Martinsville, Virginia, for unsafe or unsound practices, including those related to BSA/AML, capital ratios, capital and strategic planning, liquidity risk management, and information technology controls. The deficiencies in the BSA/AML compliance program resulted in violations of law, rule, or regulation, and the bank also failed to correct previously reported BSA problems.
  • A formal agreement with The First National Bank of St. Ignace, St. Ignace, Michigan, for unsafe or unsound practices, including those related to capital planning, capital stress testing, and strategic planning, and a violation of law, rule, or regulation related to payment of dividends.
  • An order of prohibition and for payment of a $50,000 civil money penalty against Stephen Adams, former senior vice president and managing director of residential lending, Sterling Bank and Trust, FSB, Southfield Michigan, for his role in failing to appropriately supervise, investigate, and discipline employees originating residential mortgage loans.
  • Orders of prohibition issued to—
    • Cole R. Mann, former branch manager, PNC Bank, National Association, Wilmington, Delaware, for stealing, embezzling, or otherwise misappropriating funds from the bank and a bank customer
    • Chimere Shanta Mitchell, former fraud and claims operations specialist at Wells Fargo Bank, N.A., Sioux Falls, South Dakota, for misappropriating confidential information of bank customers, including more than 20 elderly customers, and selling the information to a third party, resulting in fraudulent transactions
    • Aaron Parsons, relationship banker and Webster Bank N.A., Stamford, Connecticut, for unauthorized withdrawals from accounts of bank customers, four of whom are elderly, and depositing the funds in his own bank account
    • Nyema'sha Taylor, former teller at Wells Fargo Bank, N.A., Sioux Falls, South Dakota, for knowingly processing unauthorized cash withdrawals from a customer’s account
    • Francis Andujar Velazquez, former senior customer service representative, Santander Bank, Wilmington, Delaware, for misappropriating funds from customers’ accounts by making purchases using confidential bank customer information and selling confidential information of bank customers to a third party and facilitating fraudulent transactions
    • Mirsha Yamili Wilson, former associate Banker, JPMorgan Chase Bank, N.A., Columbus, Ohio, for taking cash used to supply a bank branch’s ATMs and concealing the shortage
  • Personal cease and desist orders against—
    • Colleen Kimmel, former general counsel, Sterling Bank and Trust, FSB, Southfield, Michigan, for her role in not ensuring the bank conducted or suggesting to the Board that the bank conduct an investigation into concerns related to a residential mortgage loan product, not ensuring the bank’s BSA program had an adequate system of internal controls, and not timely reporting suspicious activity related to certain residential mortgage loans
    • Jonathan Kolk, former residential underwriting manager, Sterling Bank and Trust, FSB, Southfield, Michigan, for capitulating to pressure to quickly underwrite certain residential mortgage loans and his role in underwriting, and supervising the underwriting of, loans that had false or fraudulent loan applications


Agencies release Dodd-Frank Act stress test scenarios for 2024

The OCC, FDIC, and Federal Reserve Board have released the hypothetical scenarios for their annual Dodd-Frank stress tests, which help ensure that large banks can lend to households and businesses even in a severe recession.


OFAC sanctions network smuggling U.S. tech to Central Bank of Iran

The U.S. Department of the Treasury yesterday announced that OFAC has a procurement network responsible for facilitating the illegal export of goods and technology from over two dozen U.S. companies to end-users in Iran, including the Central Bank of Iran (CBI), which is designated for its role in providing financial support to the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and Hizballah. These designations target three individuals and four entities tied to the procurement of sophisticated U.S. technology for use by CBI in violation of U.S. export restrictions and sanctions.

Among the goods and technology acquired by CBI were items classified as information security items subject to national security and anti-terrorism controls by the U.S. Department of Commerce’s Bureau of Industry and Security.

For the names and identification information of the designated entities and individuals, see BankersOnline's February 14, 2024, OFAC Update.


Treasury fact sheet on recent actions

Yesterday, the Treasury Department issued a Fact Sheet on recent actions taken to enhance financial transparency and combat illicit finance. These initiatives include major steps towards implementing the Anti-Money Laundering Act, including the Corporate Transparency Act, and supporting the Administration’s Strategy to Counter Corruption. Major initiatives include:

  • Increasing corporate transparency through beneficial ownership reporting as FinCEN implements the Corporate Transparency Act
  • Strengthening transparency in the residential real estate market with its February 2024 Notice of Proposed Rulemaking to require certain professionals involved in real estate closings and settlements to report information to FinCEN about non-financed transfers of residential real estate to legal entities or trusts.
  • Protecting the investment adviser sector from abuse with its recent Notice of Proposed Rulemaking to require certain investment advisers to apply AML/CFT requirements pursuant to the Bank Secrecy Act, including implementing risk-based AML/CFT programs, reporting suspicious activity to FinCEN, and fulfilling relevant recordkeeping requirements. Related to this effort, Treasury also published a detailed risk assessment of the investment adviser sector that identified several illicit finance and national security risks.
  • Publication of the 2024 National Risk Assessments on Money Laundering, Terrorist Financing, and Proliferation Financing.


Merchant cash advance operator to pay $20.3M

The Federal Trade Commission has announced a federal court has entered a judgment requiring merchant cash advance operator Jonathan Braun to pay $20.3 million in monetary relief and civil penalties. This is the first trial by jury that the FTC has ever conducted.

The judgment follows a January trial in which a jury found that Braun, in his role with small-business funding company RCG Advances, which formerly did business as Richmond Capital Group, knowingly violated the Gramm-Leach-Bliley Act by deceiving small businesses about the amount of funding that Defendants would provide to and collect from them. The court entered a judgment of $3,421,067 to redress the harm that Braun’s misconduct caused to small businesses. In addition, noting the utter disregard and contempt that Braun showed to consumers, including spewing vile threats and profanities to small business owners, the court imposed $16,956,000 in civil penalties for Braun’s violations of law.

The FTC sued Braun in June 2020, along with four other defendants, charging that he deceived small businesses and other organizations by misrepresenting the terms of merchant cash advances his business provided, and then used unfair collection practices, including sometimes threatening physical violence, to compel consumers to pay.


OCC workshops for directors and senior managers

The OCC reports it has opened registration for its 2024 schedule of in-person workshops for board directors and senior management of national community banks and federal savings associations.

The OCC examiner-led workshops provide practical training and guidance to directors and senior management of national community banks and federal savings associations to support the safe and sound operation of community-based financial institutions.

The OCC offers five daylong workshops:

  • Building Blocks: Developing Strong Management
  • Risk Governance: Improving Effectiveness
  • Compliance Risk: Understanding the Rules
  • Credit Risk: Recognizing and Responding to Risk
  • Operational Risk: Navigating Rapid Changes

The OCC is also offering a half-day workshop, Capital Markets: Keeping Current. This workshop covers balance sheet management risks, as well as hot topics and risk themes for bankers and regulators in the capital markets area.

Workshops are limited to 35 participants. Attendees will receive course materials, supervisory publications, and lunch.

Schedules, locations, cost and fee waiver information, and online registration are available on the OCC's website.


Annual review of NMLS fees underway

The Conference of State Banking Supervisors yesterday announced that an annual review of NMLS fees has begun. The fees are reviewed annually to determine if the fee structure is properly aligned with the costs of efficiently operating NMLS for the 600,000 industry users who rely on the system to maintain their licensing or registration. The fee review process will continue throughout 2024. Any changes to NMLS fees will take effect in 2025.


FinCEN sees increase in reports of use of CVC for child exploitation and human trafficking

Yesterday, FinCEN issued a Financial Trend Analysis (FTA) reflecting an increase in Bank Secrecy Act (BSA) reporting associated with the use of convertible virtual currency (CVC) and online child sexual exploitation (OCSE) and human trafficking. This FTA is based on BSA reporting filed between January 2020 and December 2021.

The analysis detailed in this FTA furthers Treasury efforts to combat human trafficking as well as the illicit uses of CVC. For example, Brian Nelson, Treasury’s Under Secretary for Terrorism and Financial Intelligence, announced at the President’s Interagency Task Force to Monitor and Combat Trafficking that FinCEN has joined the Canadian financial intelligence unit’s Project Protect—a flagship public-private partnership on human trafficking. In addition, in June 2021, FinCEN identified human trafficking and cybercrime as among the “Anti-Money Laundering and Countering the Financing of Terrorism National Priorities” issued pursuant to the Anti-Money Laundering Act of 2020.

More recently, in October 2023, FinCEN issued a finding pursuant to Section 311 of the USA PATRIOT Act that CVC mixing is a class of transactions of primary money laundering concern and proposed reporting requirements to increase transparency in connection with CVC mixing.

FinCEN’s analysis highlights the value of BSA reporting filed by regulated financial institutions.


FinCEN proposes AML/CFT requirements for some investment advisors

FinCEN has issued a Notice of Proposed Rulemaking to be published in the February 15, 2024, Federal Register that would require certain investment advisers to apply Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) requirements pursuant to the Bank Secrecy Act (BSA), including implementing risk-based AML/CFT programs, reporting suspicious activity to FinCEN, and fulfilling recordkeeping requirements.

The proposed rule would add investment advisers to the list of businesses classified as “financial institutions” under the BSA. Investment advisers registered with the Securities and Exchange Commission (SEC), as well as those that report to the SEC as exempt reporting advisers, would be required to implement AML/CFT programs. They would also be required to file suspicious activity reports, fulfill certain recordkeeping requirements, and fulfill other obligations applicable to financial institutions subject to the BSA and FinCEN’s implementing regulations.

The proposed rule would also apply information-sharing provisions between and among FinCEN, law enforcement government agencies, and certain financial institutions, along with special measures that have been applied under Section 311 of the USA PATRIOT Act. Finally, FinCEN is proposing to delegate examination authority for this rule to the SEC given the SEC’s expertise in the regulation of investment advisers and experience in examining other financial institutions with respect to AML/CFT responsibilities.

Treasury today also published its risk assessment of this sector, which identifies illicit finance threats and vulnerabilities in the sector, including how the uneven application of AML/CFT requirements across the sector allows both legitimate and illicit investors to “shop around” for an adviser who does not need to inquire into their source of wealth.

Comments on the proposal are due by April 15, 2025.


Virginia bank pays $9,600 flood insurance penalty

The Federal Reserve Board has reported it has issued a consent order for the payment of a civil money penalty of $9,600 to Select Bank, Forest, Virginia, for a pattern or practice of unspecified flood insurance violations.


FDIC guidance to help financial institutions in Michigan

The FDIC has issued FIL-6-2024 with guidance to help financial institutions and facilitate recovery in areas of Michigan affected by severe storms, tornadoes, and flooding August 24–26, 2023.


FHFA to host multifamily property insurance symposium

The Federal Housing Finance Agency has announced it will host the next session in its series of property insurance symposiums on March 13, 2014. The session will afford multifamily industry leaders and stakeholders the opportunity to exchange and openly discuss creative ideas to address escalating insurance market stress and how we can help those impacted.

The event will feature panels with various stakeholders, including:

  • ​​​Fannie Mae and Freddie Mac
  • The U.S Department of Housing and Urban Development Multifamily Office
  • Insurance industry experts
  • Multifamily lenders and borrowers

The session will be an in-person event in Washington on a first-come, first-served basis. Virtual attendance will also be available. For questions and additional information, including registration, email the FHFA at


FFIEC statement on exam principles related to valuation bias

The Federal Financial Institutions Examination Council has issued, on behalf of its members—the Federal Reserve Board, FDIC, OCC, CFPB, NCUA, and the State Liaison Committee—a Statement on Examination Principles Related to Valuation Discrimination and Bias in Residential Lending. The statement's purpose is to (i) mitigate risks that may arise due to potential discrimination or bias in those practices, and (ii) promote credible valuations.

Because real estate valuations are a critical underwriting component in residential real estate lending, both from a consumer compliance and safety and soundness perspective, examiners assess institutions’ compliance management systems and risk management practices for identifying and mitigating potential discrimination or bias in residential property valuation practices.

Institutions rely on real estate valuations when assessing the level of collateral support in residential credit decisions. Deficiencies in real estate valuations, including those due to valuation discrimination or bias, can lead to increased safety and soundness risks, as well as consumer harm and have an adverse impact on borrowers and their communities. Examples of such harm are consumers being denied access to credit for which they may be otherwise qualified, offered credit at less favorable terms, or steered to a narrower class of loan products.

For an institution, the failure of internal controls to identify, monitor, and control valuation discrimination or bias could negatively affect credit decisions, potentially exposing an institution to legal and compliance risks or affecting an institution’s financial condition and operations. Furthermore, material findings and concerns related to noncompliance with laws and regulations generally negatively affect the supervisory assessment of an institution’s management in a safety and soundness examination.

To promote compliance with statutory and regulatory requirements, institutions may establish a formal valuation review program. Effective review programs can enable institutions to identify noncompliance with appraisal regulations or USPAP, inaccuracies, or poorly supported valuations. These review programs can also provide the opportunity for institutions to address deficiencies due to potential valuation discrimination or bias before making a credit decision. The Interagency Appraisal and Evaluation Guidelines [see 75 FR 77450, December 10, 2010] provide additional information on the valuation review process and identify elements of an effective real estate valuation program.

The statement of principles should not be interpreted as new guidance to supervised institutions nor an increased focus on supervised institutions’ appraisal practices. Instead, the statement of principles offers transparency into the examination process and supports risk-focused examination work.


FTC gets $195M judgment and permanent telemarketing ban

On Friday, the Federal Trade Commission announced it had obtained a $195 million judgment against Simple Health Plans LLC and its CEO Steven J. Dorfman over charges they duped consumers into signing up for sham health care plans that did not deliver the coverage or benefits they promised and effectively left consumers uninsured and exposed to limitless medical expenses.

In granting the FTC’s motion for summary judgment, the Federal District Court in the Southern District of Florida also banned Simple Health, five related entities and Dorfman from telemarketing and from marketing, promoting, selling or offering any healthcare products.

In a complaint filed in 2018, the FTC said that Florida-based Simple Health misled people into thinking they were buying comprehensive health insurance that would cover preexisting medical conditions, prescription drugs, primary and specialty care treatment, inpatient and emergency hospital care, surgical procedures, and medical and laboratory testing. In reality, most consumers who enrolled reported paying as much as $500 per month for what was actually a medical discount program or extremely limited benefit program that did not deliver the promised benefits and often left consumers with thousands of dollars in uncovered medical bills, or worse yet, unable to get necessary healthcare.


CFPB gets $12M from leaders of foreclosure relief scam

The Consumer Financial Protection Bureau has announced it has resolved an appeal in a long-running enforcement suit against a foreclosure relief scam operation for $12 million in consumer redress and penalties. Consumer First Legal Group, LLC and four attorneys, Thomas G. Macey, Jeffrey J. Aleman, Jason Searns, and Harold E. Stafford, charged millions of dollars in illegal advance fees to financially-distressed homeowners for legal representation the defendants promised but did not provide.

This case was part of a coordinated effort against various foreclosure relief scam operations by the CFPB, Federal Trade Commission (FTC), and 15 states in 2014. The CFPB filed three lawsuits, the FTC filed six lawsuits, and the states took 32 actions.

The CFPB won a judgment against the defendants in 2019. The case has been ongoing given multiple appeals. Yesterday’s settlement brings the case to an end.

Under the resolution, the defendants will pay $10.9 million in consumer redress and a $1.1 million penalty into the CFPB’s victims relief fund. The individual defendants are covered by 8- or 5-year bans from the mortgage assistance industry, under the district court’s original order.


U.S. targets price cap violators and implements Russian diamond ban

Yesterday, the Treasury Department announced that OFAC has taken its second Russian oil price cap enforcement action of 2024, imposing sanctions on four entities and identifying one vessel as blocked property. The network of these entities and the vessel were involved in a price cap violation scheme in late 2023.

OFAC also issued two new determinations that implement G7 commitments to ban the importation of Russian diamonds. First, OFAC issued a determination prohibiting the importation of on non-industrial diamonds mined or extracted in Russia, notwithstanding whether they have been substantially transformed in a third country, effective beginning on March 1, 2024 for certain categories of diamonds, and expanding on September 1, 2024 to include additional categories. Second, OFAC issued a determination prohibiting the importation of diamond jewelry and unsorted diamonds of Russian Federation origin or exported from the Russian Federation, effective March 1, 2024.

For identification information on the designated entities and vessel and links to the Determinations and a related General License, see BankersOnline's February 8, 2024, OFAC Update.


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