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10/17/2023

FBAR filing deadline extended for those affected by terrorism in Israel

Yesterday, FinCEN posted FinCEN Notice FIN-2023-NTC4 announcing that certain individuals and businesses affected by the terroristic action in the State of Israel that are required to file Reports of Foreign Bank and
Financial Accounts (FBARs) have until October 7, 2024, to file FBARs for the 2022 calendar year. The FBARs for calendar year 2022 otherwise would be due on or before October 16, 2023.

FinCEN is offering this expanded relief to any individuals or businesses that have been provided tax relief pursuant to the IRS announcement on October 13, 2023. Should the IRS offer tax relief to additional individuals and businesses impacted by the terroristic action in the State of Israel, those FBAR filers will receive the same filing relief automatically.

In addition, FinCEN will work with any FBAR filer who lives outside the areas directly impacted by the terroristic action in the State of Israel, but who must consult records located in the affected areas to meet the deadline.

10/17/2023

Treasury announces cybersecurity cooperation MoU with UAE

The U.S. Department of the Treasury and the Cyber Security Council of the United Arab Emirates (UAE) have announced the finalization of a bilateral Memorandum of Understanding (MoU) on Cybersecurity Cooperation.

Specifically, the MoU enhances cooperation in the following areas:

  • Information sharing relating to the financial sector including cybersecurity information on incidents and threats
  • Staff training and study visits to promote cooperation in the area of cybersecurity
  • Competency-building activities such as the conduct of cross-border cybersecurity exercises

This new partnership is part of Treasury’s continued collaborative approach to improving cybersecurity outcomes for the financial system, including public-private partnerships and close relationships with international partners.

10/16/2023

Consumers get permanent free weekly credit report access

The Federal Trade Commission has posted a Consumer Alert to report that the three national credit reporting agencies — Equifax, Experian, and TransUnion — have permanently extended a program that lets consumers check their credit reports at each of the agencies once a week for free.

Consumers should go to AnnualCreditReport.com to request free copies of their credit reports. Other sites may impose a charge or be fraudulent sites set up to steal personal information, according to the FTC.

10/16/2023

SBA deadline reminder for Wyoming disaster loans

The Small Business Administration has issued a reminder to Wyoming private nonprofit organizations of the November 13 deadline to apply for an SBA federal disaster loan for property damage caused by flooding that occurred June 15. Private nonprofits that provide essential services of a governmental nature are eligible for assistance.

10/16/2023

Court rules for FTC in DNC telemarketing case

The Federal Trade Commission on Friday announced that a federal judge in Illinois has ruled in favor of the Commission in a case the FTC has been litigating since 2019 against a telemarketing company and its owners, finding they made millions of illegal, unsolicited calls to consumers on the Do Not Call (DNC) Registry.

The court found that corporate defendants Day Pacer, LLC and Edutrek, L.L.C. purchased consumers’ contact information primarily from websites claiming to help people find jobs, and instead illegally called those consumers to market unsolicited vocational or post-secondary education services. The court also found that the defendants assisted and facilitated other telemarketing companies by paying them to make approximately 40 million calls to consumers on the DNC Registry. Additionally, the court found that individual defendants Raymond Fitzgerald, Ian Fitzgerald, and David Cumming directly participated in or had authority to control the corporations’ deceptive acts or practices, and were therefore also liable.

The court found that the defendants knowingly violated the Telemarketing Sales Rule, citing evidence that the defendants had ignored repeated complaints from consumers and warnings from business partners. In granting summary judgment, the court found that the FTC was entitled to both injunctive relief and civil penalties. The court has scheduled a hearing to determine the amount of the civil penalty award and the scope of injunctive relief.

10/13/2023

OFAC sanctions entities for transporting Russian oil sold at above-cap price

On Thursday, the Treasury Department reported that OFAC had imposed sanctions on two entities and identified as blocked property two vessels that used Price Cap Coalition service providers while carrying Russian crude oil above the Coalition-agreed price cap.

In addition to yesterday’s sanctions actions, the Price Cap Coalition has also published a Coalition Advisory for the Maritime Oil Industry and Related Sectors. The Advisory, which is directed at both government and private sector actors involved in the maritime trade of crude oil and refined petroleum products, provides recommendations concerning specific best practices and reflects our commitment to promoting responsible practices in the industry, preventing and disrupting sanctioned trade, and enhancing compliance with the price cap.

The United States is part of an international coalition (the Price Cap Coalition), including the G7, the European Union, and Australia, that have agreed to prohibit the import of crude oil and petroleum products of Russian Federation origin. These countries, home to many best-in-class financial and professional services, have also agreed to restrict a broad range of services related to the maritime transport of crude oil and petroleum products of Russian Federation origin—unless that oil is bought and sold at or below the specific price caps established by the Coalition or is authorized by a license. This policy is known as the “price cap.” The price cap is intended to maintain a reliable supply of crude oil and petroleum products to the global market while reducing the profits the Russian Federation earns from oil after its own war of choice against Ukraine inflated global energy prices.

For the names and identification information of the designated entities and vessels and links to the Coalition Advisory and a related General License, see the October 12, 2023, BankersOnline OFAC Update.

10/13/2023

CFPB and DoJ caution against discrimination on basis of immigration status

The CFPB and the Justice Department have issued a joint statement reminding financial institutions that all credit applicants are protected from discrimination on the basis of their national origin, race, and other characteristics covered by the Equal Credit Opportunity Act, regardless of their immigration status. The CFPB and Justice Department issued the statement because consumers have reported being rejected for credit cards as well as for auto, student, personal, and equipment loans because of their immigration status, even when they have strong credit histories and ties to the U.S. and are otherwise qualified to receive the loans.

The joint statement explains that while the Equal Credit Opportunity Act allows creditors to consider immigration status when necessary to ascertain the creditor’s rights regarding repayment, unnecessary or overbroad reliance on immigration status may violate the Act’s prohibition of discrimination on the basis of national origin, race or another prohibited basis. The joint statement also confirms that neither the Equal Credit Opportunity Act nor its regulations provide companies a safe harbor with respect to other laws barring discrimination on the basis of immigration status.

10/13/2023

FTC and CFPB act against TransUnion for tenant screening report failures

The Federal Trade Commission and the Consumer Financial Protection Bureau have obtained a settlement agreement that will require credit reporting agency Trans Union LLC and a subsidiary to pay a total of $15 million to settle charges they failed to ensure the accuracy of tenant screening reports by including inaccurate and incomplete eviction records about consumers, hampering their ability to obtain housing.

In a federal court complaint, the FTC and CFPB say that Colorado-based TransUnion Rental Screening Solutions, Inc. (TURSS) and its parent company, Trans Union LLC, based in Chicago and commonly known as TransUnion, violated the Fair Credit Reporting Act (FCRA) by failing to ensure the accuracy of the information included in their tenant background screening reports.

TURSS obtains eviction records from third-party provider LexisNexis Risk and Information Analytics Group, Inc. but has failed to take steps to ensure the accuracy of the data it was provided, according to the complaint. The FTC and CFPB say TURSS failed to follow reasonable procedures to: prevent the inclusion of multiple entries for the same eviction case; accurately report the disposition of eviction cases it included in its reports; accurately label the monetary amounts associated with those cases; and prevent the inclusion of sealed eviction records in its background reports.

The FTC and CFPB also say that TURSS violated the FCRA by failing in many instances to provide consumers with the names of third-party vendors from whom it received criminal and eviction records included in its tenant screening reports, which made it harder for consumers to correct errors in their background reports.

Under the proposed order, which must be approved by a federal court before it can go into effect, TURSS and Trans Union LLC will be required to pay $11 million, which will be used to compensate consumers, and a $4 million civil penalty, which will go to the CFPB’s civil penalty fund. This is the largest amount ever recovered in an FTC tenant screening matter. In addition, the companies must also take steps to address the allegations of the complaint and help enable consumers to dispute inaccurate information in the future.

10/13/2023

TransUnion and subs to pay $8M for FCRA and CFPA violations

In its press release announcing the CFPB/FTC joint action against TransUnion, the CFPB also announced it has issued a separate order against TransUnion, parent company of one of the three nationwide consumer reporting agencies, and two of its subsidiaries, Trans Union LLC, and TransUnion Interactive, Inc. (collectively, TransUnion), which are headquartered in Chicago, Illinois.

The CFPB alleges that TransUnion, by mid-2018, had a backlog of thousands of requests for security freezes and locks. The backlog lasted for years, and it was only after the CFPB informed TransUnion that the agency was going to conduct an exam of its security freezes that it cleared the backlog of nearly 40,000 unfulfilled requests. The Bureau found that TransUnion’s failure to place or remove security freezes in a timely manner violated the Fair Credit Reporting Act (FCRA), and TransUnion’s failure to place or remove both security freezes and locks in a timely manner was unfair in violation of the Consumer Financial Protection Act of 2010 (CFPA). Specifically, The CFPB alleges that TransUnion:

  • Failed to timely place or remove security freezes and locks: For tens of thousands of individuals, since at least 2003, the company failed to timely place or remove security freezes and locks on tens of thousands of credit reports. Despite these failures, TransUnion falsely represented to consumers that their requests were processed when they were not, which the CFPB found to be a deceptive act or practice.
  • Failed to protect certain populations from pre-screened solicitation lists: TransUnion unlawfully failed to exclude thousands of individuals, including active-duty members of the military and other potential victims of identity theft, from pre-screened solicitation lists.

TransUnion has, without admitting or denying any wrongdoing, executed a Stipulation and Consent to the issuance of a Consent Order in which TransUnion is required to pay $3 million to consumers in redress and $5 million in civil penalties. TransUnion must also take steps to address and prevent unlawful conduct, including convening a committee to identify and solve technical and systems problems that can affect consumers.

10/13/2023

FTC settles with crypto company over false claim of FDIC insurance

The Federal Trade Commission has announced a settlement with bankrupt crypto company Voyager that will permanently ban it from handling consumers’ assets and is filing suit against its former CEO, Stephen Ehrlich, for falsely claiming that customers’ accounts were insured by the Federal Deposit Insurance Corporation (FDIC) and were “safe,” even as the company was approaching an eventual bankruptcy. The complaint also names Stephen Ehrlich’s wife as a relief defendant.

The FTC's complaint alleges that from at least 2018 until it declared bankruptcy in July 2022, Voyager used promises that consumers’ deposits would be “safe” to entice them to hand over their funds. When the company failed, consumers lost access to significant assets they had saved, including ongoing salary deposits, college tuition funds, and down payments for homes, according to the complaint, which notes that consumers were locked out of their cash accounts for more than a month and lost more than $1 billion in crypto assets.

The company offered incentives to consumers who converted the cash they deposited into a cryptocurrency called USD Coin, a so-called “stablecoin” that claims to track the value of the U.S. dollar.

The company’s marketing included direct promises about the safety of consumers’ deposits. One example cited in the complaint included the line “YOUR USD IS FDIC INSURED.” Voyager, however, is not a bank or financial institution, and the deposits consumers made with Voyager were not eligible to be insured by the FDIC. The complaint notes that the FDIC does not insure crypto assets at all, and consumers’ cash deposits were actually placed in an account held by Voyager at a traditional bank that also issued debit cards on behalf of Voyager. Consumers’ cash was only protected if that bank itself failed, and their cryptocurrency wasn’t protected at all. The company only removed the FDIC claims from its advertising after receiving a cease-and-desist letter from the FDIC.

The proposed settlement with Voyager and its affiliates will permanently ban the companies from offering, marketing, or promoting any product or service that could be used to deposit, exchange, invest, or withdraw any assets. The companies also agreed to a judgment of $1.65 billion, which will be suspended to permit Voyager to return its remaining assets to consumers in the bankruptcy proceedings. Former executive Stephen Ehrlich has not agreed to a settlement and the FTC’s case against him will proceed in federal court.

10/12/2023

FDIC deposit insurance awareness campaign

To increase the public’s awareness of deposit insurance and how it can protect people’s money in the event of a bank’s failure, the Federal Deposit Insurance Corporation (FDIC) has launched a national campaign, “Know Your Risk. Protect Your Money.” The consumer-focused campaign aims to reach those who may have lower confidence in the U.S. banking system or who are unbanked, as well as those who use mobile payment systems, alternative banking services and financial products that may appear to be FDIC-insured but are not.

10/12/2023

CFPB guidance to large banks on junk fees for basic services

On Wednesday, the CFPB announced it had issued Advisory Opinion 2023-10, "Consumer Information Requests to Large Banks and Credit Unions," regarding a provision enacted by Congress which generally prohibits large banks and credit unions from imposing unreasonable obstacles on customers, such as charging excessive fees, for basic information about their own accounts. Under section 1034(c) of the Consumer Financial Protection Act [Title X of the Dodd-Frank Act], large banks and credit unions — those with more than $10 billion in assets — must provide complete and accurate account information when requested by accountholders. The Advisory Opinion clarifies that people are entitled to get the basic information they need without having to pay junk fees.

The Advisory Opinion explains how the CFPB will administer the legal requirement for large banks when it comes to customer service, including how the CFPB will evaluate fees imposed on customers for making reasonable requests, such as seeking original account agreements or information about recurring withdrawals from an account. However, the CFPB does not intend to seek monetary relief for potential violations of Section 1034(c) that occur prior to February 1, 2024.

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10/12/2023

Marketer agrees to lifetime ban and surrender of assets

The Federal Trade Commission has reported that the owner of a series of companies that charged consumers millions of dollars in undisclosed and recurring subscription fees for skin creams has agreed to a lifetime ban on negative option marketing and deception of customers, and will turn over his funds and assets to the FTC.

The FTC sued Gopalkrishna Pai and eight companies he owned in 2019, charging that he marketed a number of skin creams online, selling them for a nominal “shipping and handling” fee, usually $4.99. Consumers who bought the products were not aware that they would later be charged the full price for the products and a recurring monthly charge.

In its complaint, the FTC alleged that Pai and his companies charged consumers tens of millions of dollars in fees they didn’t consent to, noting that the supposed disclosure of these fees was hidden behind a small link on the sales websites, and that consumers’ attempts to cancel were often unsuccessful, even when they returned the products unopened. The FTC also alleged that Pai created hundreds of shell companies to facilitate payment processing for the scam.

10/12/2023

CFPB: Exams have returned $140M to consumers

As part of a White House event focused on the Administration's campaign against "junk" feesm the CFPB has released a special edition of its Supervisory Highlights focused on the agency’s efforts to protect consumers from such fees. As a result of the CFPB’s supervisory work, the companies mentioned in the report are refunding $140 million to consumers, $120 million of which is for surprise overdraft fees and double-dipping on non-sufficient funds fees. A separate report finds that most financial institutions have eliminated non-sufficient funds fees, saving consumers an estimated $2 billion every year.

The Supervisory Highlights special edition covers fees in the areas of bank account deposits, auto loan servicing, and remittances found during examinations between February and August 2023. CFPB oversight has identified instances of companies charging a variety of "junk" fees, including for:

  • Fake paper statements: Some institutions charge customers monthly fees for sending paper bank statements. CFPB examiners found instances where banks charged fees for statements they never actually printed or mailed.
  • Worthless add-on products for paid-off auto loans: When people purchase cars, they sometimes have purchase loan add-on products, like guaranteed asset protection (GAP) insurance. In situations when borrowers paid off their loan early or had their vehicle repossessed, CFPB examiners found that loan servicers continued to charge fees for the add-on products, which no longer offered any value.
  • Sloppy international money transfers: CFPB examiners found remittance providers charged hidden fees by taking money out of the funds consumers sent without properly disclosing them. In other instances, CFPB examiners found remittance providers failed to refund fees when the money consumers sent failed to arrive on time.

10/12/2023

FTC proposes ban on junk fees

The Federal Trade Commission on Wednesday announced a new proposed rule to prohibit hidden and bogus fees that can harm consumers and undercut honest businesses. The proposal follows a 2022 request for public input on whether a rule would help to eliminate unfair and deceptive charges. After receiving more than 12,000 comments on how fees affect their personal spending or business, the FTC is seeking a new round of comments on yesterday's proposed rule.

The commission said the proposed rule, which would be added to 16 CFR Chapter I as Part 464, would ban businesses from running up their bills with hidden and bogus fees, ensure consumers know exactly how much they are paying and what they are getting, and help spur companies to compete on offering the lowest price. Businesses would have to include all mandatory fees when telling consumers a price, making it easier for consumers to comparison shop for the lowest price. The proposed rule would also have enforcement teeth, allowing the FTC to secure refunds for harmed consumers and seek monetary penalties against companies that do not comply with its provisions.

The proposal would bank hidden and bogus fees that inflate artificially low advertised prices or deceive consumers about the nature and purpose of fees. All businesses would be required to quote total prices at the start of the purchasing process.

A 60-day comment period will open when the proposed rule is published in the Federal Register.

Publication and comment period update: Published 11/9/2023, with a comment period ending 1/8/2024.
UPDATE: On 12/20/2023, the FTC announced it is extending the comment period to end on 2/7/2024.

10/11/2023

OCC names Freas Deputy Comptroller for Large Bank Supervision

The Office of the Comptroller of the Currency has announced the selection of Monica Fuentes Freas as a Deputy Comptroller for Large Bank Supervision (LBS).

In this role, Ms. Freas will manage the supervision of a portion of the OCC's large bank portfolio. She joins three other Deputies for Large Bank Supervision providing oversight of the large, complex financial institutions under OCC supervision. Ms. Freas will assume responsibilities for a portfolio of banks from Tanya Smith, who has been appointed Examiner-in Charge for Citibank following the retirement of Roberta Caruso.

Prior to this role, Ms. Freas served as acting Deputy Comptroller for Large Bank Supervision, where she established strategic direction and set priorities for the LBS program at-large, including resource management and planning for more than 750 staff to ensure support of OCC objectives and strategic goals. She also served as Acting Examiner-in-Charge of Bank of China Ltd.’s U.S. federal branches.

10/11/2023

FSB review of 2023 bank failures

The Financial Stability Board (FSB) has published a review of the 2023 bank failures and assessment of potential implications for the operation of the international resolution framework as set out in the FSB’s Key Attributes of Effective Resolution Regimes for Financial Institutions. The report identifies preliminary lessons learned for the Key Attributes’ framework for resolving global systemically important banks (G-SIBs) and other systemically important banks, drawing on an analysis of the Credit Suisse case and the recent bank failures in the United States.

The review upholds the appropriateness and feasibility of the international resolution framework, concluding that the framework provided the Swiss authorities with an executable alternative to the solution that they deemed preferable in the case of Credit Suisse. Nevertheless, the report identifies several areas for further analysis and improvements in the operationalization and implementation of the international resolution framework. Among these are the need for an effective temporary public sector liquidity backstop and operational readiness of banks to access that as a last resort. Firms and authorities also need to (i) address the legal issues identified in the execution of bail-in across borders during resolution planning; (ii) better operationalize a range of resolution options such as transfer and sale of business tools alone or in combination with bail-in; and (iii) understand the impact of bail-in on financial markets. In addition, authorities should continue to prioritize testing and simulating effective decision making and execution at domestic and international levels. They should also extend their communication and coordination efforts outside of the core crisis management group.

[The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.]

10/11/2023

SEC amends rules governing beneficial ownership reporting

The Securities and Exchange Commission yesterday announced it has adopted rule amendments governing beneficial ownership reporting under Sections 13(d) and 13(g) of the Securities Exchange Act of 1934. The amendments update Regulation 13D-G [17 CFR Parts 232 and 240] to require market participants to provide more timely information on their positions to meet the needs of investors in today’s financial markets.

“Today’s adoption updates rules that first went into effect more than 50 years ago. Frankly, these deadlines from half a century ago feel antiquated,” said SEC Chair Gary Gensler. “In our fast-paced markets, it shouldn’t take 10 days for the public to learn about an attempt to change or influence control of a public company. I am pleased to support this adoption because it updates Schedules 13D and 13G reporting requirements for modern markets, ensures investors receive material information in a timely way, and reduces information asymmetries.”

The amendments will be effective 90 days after they are published in the Federal Register.

10/11/2023

SBA disaster-related press releases

10/11/2023

CFPB sues recidivist Freedom Mortgage for HMDA reporting errors

The CFPB has reported it has filed a lawsuit in federal court alleging that Freedom Mortgage Corporation submitted legally-required mortgage loan data that was riddled with errors. The CFPB alleges that Freedom’s practices violate both the Home Mortgage Disclosure Act (HMDA) and a 2019 consent order. In a recent separate matter, in August 2023 the CFPB fined Freedom $1.75 million for paying illegal kickbacks for mortgage loan referrals.

The lawsuit filed yesterday alleges that the HMDA data Freedom submitted for 2020 contained widespread errors across multiple data fields, and that the errors constitute violations of HMDA, the Consumer Financial Protection Act, and the 2019 order. After the CFPB found 51 errors in an initial review of 159 files in Freedom’s 2020 submission, the company had to resubmit its data. In that resubmission, Freedom corrected errors in 35 different required HMDA data fields—this reflects errors in over 174,000 data entries affecting nearly 20 percent of Freedom’s mortgage loan applications.

10/11/2023

FHFA report on sales of non-performing loans

The Federal Housing Finance Agency has released the latest report on the sale of non-performing loans (NPLs) by Fannie Mae and Freddie Mac (the Enterprises). The Enterprise Non-Performing Loan Sales Report includes sales information about NPLs sold through December 31, 2022. Borrower outcomes reflect NPLs sold through June 30, 2022.

This report reflects activity reported prior to FHFA's decision in February 2023 to pause Enterprise NPL and RPL (re-performing loan) Sales during a review of the sales programs. The pause was lifted in June 2023. FHFA also published an updated NPL/RPL Fact Sheet in June 2023 reflecting enhancements to the NPL and RPL sales programs, including:

  • Loans that are under a forbearance plan, or that were under a forbearance plan within the past 90 days, are not eligible to be included in NPL or RPL sales.
  • RPL buyers and servicers, including subsequent servicers, are required to provide loan level reporting to the Enterprises for four years after the RPL sale.
  • RPL buyers' servicers are first required to evaluate borrowers who are able to resolve a financial hardship for loss mitigation that keeps the same monthly mortgage payment by moving past-due principal and interest to the end of the loan as a non-interest-bearing balance (“payment deferral"), due and payable at maturity, sale, refinance, or payoff.

The December 2022 NPL Sales Report shows that the Enterprises sold 163,297 NPLs with a total unpaid principal balance (UPB) of $30.0 billion from program inception in 2014 through December 31, 2022. The loans included in the NPL sales had an average delinquency of 2.8 years and an average current mark-to-market loan-to-value (LTV) ratio of 84 percent (not including capitalized arrearages).

10/10/2023

FTC: Consumers lost $2.7B to social media scams since 2021

The Federal Trade Commission has reported that new Commission data shows that scams originating on social media have accounted for $2.7 billion in reported losses since 2021, more than any other contact method.

In a new data spotlight, the FTC also takes a deep dive into social media scam trends in the first half of 2023. Reports show that the most frequently reported scams on social media are related to online shopping, with 44 percent of reports pointing to fraud related to buying or selling products online. Most of these reports come from people who never received the items they ordered after responding to an ad on Facebook or Instagram.

While online shopping scams are the most commonly reported scam on social media, the spotlight notes that scams using social media to promote bogus investment schemes account for larger overall losses, accounting for 53 percent of all the money reported lost to scams on social media in the first half of the year. Cryptocurrency played a significant role in the investment scams consumers reported; more than half of the reports showed that consumers paid the scammers using cryptocurrency. After investment scams, the spotlight noted that romance scams accounted for the second-most reported scam losses on social media.

10/10/2023

Bureau invitation to Appraisal Subcommittee hearing

The CFPB has sent out an invitation to join the FFIEC's Appraisal Subcommittee (ASC) for its third public hearing focused on appraisal bias, the residential appraisal process, and associated regulations.

ASC provides federal oversight of state appraiser and appraisal management company regulatory programs and monitors and reviews the Appraisal Foundation. The ASC is a subcommittee of the Federal Financial Institutions Examination Council (FFIEC).

This hearing will explore how a residential appraisal is developed and reviewed, reconsiderations of value, the challenges that exist, and the development of rural appraisals. It is intended to gather additional context to inform the ASC's ongoing work toward fair appraisals for all.

The ASC meeting is scheduled as a hybrid session for Wednesday, November 1, 2023, from 10 a.m. to 1:00 p.m. EDT at HUD's headquarters at 451 7th Street SW, Washington, DC. Zoom Livestream details will be send to registered attendees before the event. Registration for in-person and livestream attendance is required.

10/10/2023

CFTC fines 3 FIs $53M for swap reporting failures and other violations

The Commodity Futures Trading Commission on September 29 issued orders simultaneously filing and settling charges with affiliates of three financial institutions for a variety of swap dealer activities including failures related to swap data reporting and, in one case, failures related to the disclosure of Pre-Trade Mid-Market Marks (PTMMMs).

The settling financial institutions, charges, and civil monetary penalties are:

  • Goldman Sachs & Co. LLC for failing to diligently supervise a wide range of its swap dealer activities, and for unprecedented failures regarding swap data reporting and the disclosure of PTMMMs in violation of multiple sections of the Commodity Exchange Act (CEA) and CFTC regulations. The order imposes a $30,000,000 civil monetary penalty and includes Goldman taking steps to develop a written remediation plan and retain a consultant to advise on and assess its remediation plan.
  • JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC, and J.P. Morgan Securities plc for violations related to swaps reporting. The order imposes a $15,000,000 civil monetary penalty and other undertakings.
  • Bank of America, N.A. and Merrill Lynch International for failing to diligently supervise swaps reporting and failing to comply with swaps reporting obligations. The order imposes an $8 million civil monetary penalty and other undertakings.

10/10/2023

Student loan debt relief scammers banned

The FTC has reported that two groups of student loan debt relief scammers will be permanently banned from the debt relief industry and are required to turn over their assets as part of a settlement with the Federal Trade Commission.

In the FTC’s May 2023 complaints against SL Finance LLC and its owners Michael Castillo and Christian Castillo, and BCO Consulting Services Inc. and SLA Consulting Services Inc. and their owners Gianni Olilang, Brandon Clores, Kishan Bhakta, and Allan Radam, the agency said that the defendants pretended to be affiliated with the U.S. Department of Education, charged illegal junk fees, and lured students with repayment programs and loan forgiveness that did not exist.

The SL Finance defendants also falsely claimed that their program was part of the CARES Act or a similar COVID-19 relief program, according to the complaint. The agency charged that these operations bilked students out of millions of dollars.

Under the proposed orders with SL Finance and its owners, and BCO Consulting and its owners, the defendants will be permanently banned from debt relief of any kind. They will also be banned from making any misrepresentations about financial products or services and from using false statements to collect consumers’ financial information. The SL Finance order also imposes a partially suspended monetary judgment of $5.8 million which is largely suspended based on defendants’ inability to pay. The Castillo brothers will be required to surrender assets worth approximately $312,685. The BCO Consulting orders imposes a partially suspended monetary judgment of $5.8 million, which is also largely suspended based on the defendants’ inability to pay. Individual defendants Olilang, Clores, Bhakta, and Radam will be required to relinquish assets worth approximately $565,594.

10/10/2023

Fed issues final capital requirement rule for insurers

On Friday, the Federal Reserve Board announced it has finalized a rule establishing capital requirements for insurers supervised by the Board. The final rule is substantially similar to the proposal issued in September 2019. The rule includes a framework, known as the Building Block Approach, that builds on existing state-based insurance requirements, accounts for risks that are specific to the business of insurance, and is different from the calculations used for bank capital requirements. Under the Building Block Approach, a Board-supervised insurer is required to aggregate its top-tier company's capital requirements with its subsidiaries' requirements to determine its enterprise-wide requirement.

The Federal Reserve Board was assigned the responsibility, under section 171 of the Dodd-Frank Act, to establish minimum risk-based capital requirements for depository institution holding companies significantly engaged in insurance activities.

All Board-supervised insurers currently hold enough capital to comply with this rule, which takes effect as of January 1, 2024.

10/06/2023

SBA disaster press releases

10/06/2023

FDIC to propose corporate governance and risk management guidelines for banks over $10 billion

In FIL-55-2023, issued yesterday, the FDIC announced that its board, by a notational vote, has approved a notice of proposed rulemaking that would add an Appendix C to the FDIC’s regulation for safety and soundness standards, at 12 C.F.R. § 364. Appendix C is intended to promote strong corporate governance and risk management at FDIC-supervised institutions that have total consolidated assets of $10 billion or more (covered institutions) by proposing corporate governance and risk management guidelines (Guidelines). The NPR also proposes conforming amendments to parts 308 and 364 to implement the proposed Guidelines.

The proposed guidelines:

  • Describe the general obligations of the board of directors (“board”) to ensure good corporate governance by:
    • being active and involved, protecting the interests of the covered institution, setting goals, approving a strategic plan and policies, and selecting and supervising senior management;
    • adopting a code of ethics requiring high ethical standards in the covered institutions’ operations; and
    • creating a committee structure, including a Risk Committee, designed to permit the board to actively oversee the affairs of the covered institution.
  • Describe the general obligations of individual directors.
  • State that the board should establish an effective risk management program that identifies, measures, monitors, and controls risk appropriate for the size, complexity, and risk profile of the covered institution and in compliance with applicable laws and regulatory requirements.
  • Include as the risk management program a three-line-of-defense model of risk management for monitoring and reporting risks, including front line business units (responsible for limiting their risk-taking activities to those approved by management), an independent risk management function, and the covered institution’s internal audit unit.
  • State that the covered institution should effectively communicate its risk appetite and policies to encourage compliance by all employees and identify and report breaches of risk limits, even if the covered institution does not realize a loss from the breach.

The FDIC is seeking comments on the proposal from all interested parties. Comments will be accepted for 60 days after publication in the Federal Register.

Publication and comment period update:

  • Published at 88 FR 70391 on 10/11/2023, with a comment period ending 12/11/2023.
  • On 11/29/2023, the FDIC announced it will extend the comment period to end on 2/9/2024.

10/06/2023

MLA site scheduled for October 12 maintenance

The Department of Defense's Military Lending Act website news page includes an October 5 notice of scheduled system maintenance on Thursday, October 12, 2023. The website will not be available from 6:00 p.m. until 9:00 p.m. PDT (9:00 p.m. until midnight, EDT).

10/05/2023

HUD charges owner and manager with discrimination

The U.S. Department of Housing and Urban Development announced yesterday it is charging N. Clark, LLC and Kathleen Cresson, owner and manager of a multi-family rental home in New Orleans, Louisiana, with discriminating against potential tenants based on race and familial status.

HUD’s charge alleges that Ms. Cresson screened potential tenants by allowing their calls to go to voicemail. She then failed to negotiate the rental with black testers while negotiating the rental with white testers. The charge also alleges that Ms. Cresson steered testers with children away from the property by repeatedly highlighting aspects of the property that purportedly made it unsuitable for families while making discriminatory statements indicating a preference for renters without children.

A United States Administrative Law Judge will hear HUD’s charge unless any party to the charge elects to have the case heard in federal district court.

10/05/2023

SBA EIDL availability announcements

Yesterday, the U.S. Small Business Administration announced the availability of Economic Injury Disaster Loans (EIDL) for certain small businesses in New Mexico, Montana, Oregon, and Texas.

10/05/2023

CRA evaluations released

The FDIC has released its October 2023 list of 56 banks whose evaluations for compliance with the Community Reinvestment Act (CRA) were recently made public. Fifty-two of those banks received Satisfactory ratings. One bank, in Spring Hill, Kansas, received a Needs to Improve rating.

We congratulate these three banks, which received ratings of Outstanding:

The OCC has released a list of 28 of its CRA evaluations that were made public in September. Twenty-one of the evaluations were rated Satisfactory, and the following seven were rated Outstanding:

Finally, our research shows that the Federal Reserve Banks made public 12 CRA evaluations of Federal Reserve supervised banks in September. Eleven were rated Satisfactory, and one — First Pacific Bank, Whittier, CA — received an Outstanding rating.

10/04/2023

FedNow Service instant payment network grows

Federal Reserve Financial Services announced yesterday that the FedNow Service has grown to include 108 institutions now sending and receiving via the network. In addition, 21 financial institutions are providing liquidity and settlement services, and 20 service providers are supporting payment processing in the instant payments infrastructure.

As participation grows, the Federal Reserve continues to prioritize enhancements to the service and plans to introduce new features and functionality in the coming months. Updates will include select risk management and operational enhancements of the service geared toward providing additional fraud prevention tools and straightforward access to important account and transaction information.

The Federal Reserve also plans to introduce a tech-centric developer resource in the coming months allowing financial institution participants to access documentation such as the recently updated operating procedures, technical specifications, as well as code and message samples to assist with service implementation.

10/04/2023

Chinese network of illicit drug producers targeted

Yesterday, the Treasury Department announced that OFAC had designated 28 individuals and entities involved with the international proliferation of illicit drugs, including a China-based network responsible for the manufacturing and distribution of ton quantities of fentanyl, methamphetamine, and MDMA precursors. Those designated by OFAC yesterday — 12 entities and 13 individuals based in China and two entities and one individual based in Canada — are also involved in the global trafficking of xylazine and “nitazenes,” which are highly potent and are often mixed with illicit fentanyl or other drugs.

OFAC’s sanctions complement indictments issued yesterday by the U.S. Attorneys Offices for the Southern District of Florida and the Middle District of Florida.

For the names and identification information of the designated individuals and entities, see the October 3, 2023, BankersOnline OFAC Update.

10/03/2023

Federal Reserve launches Instagram and Threads accounts

The Federal Reserve Board yesterday announced the launch of its Instagram and Threads accounts, with the intent to increase the accessibility and availability of Board news and educational content. Instagram posts generally will include photos, videos, frequently asked questions and answers, economic education content and more. Posts on Threads will include press releases, speeches, testimony, reports and all other content that is regularly posted on the Board's X account, formerly known as Twitter.

10/03/2023

FDIC names Atlanta Regional Director

The FDIC has announced it has appointed Timothy (Tim) Rich Regional Director, Atlanta Region. In this position, he directs both Risk Management and Consumer Protection supervision programs for financial institutions headquartered in the Region.

Mr. Rich has been with the FDIC for more than 36 years and has held a number of leadership positions within the Division of Risk Management Supervision, including Deputy Regional Director in the Atlanta Region since 2021, and Assistant Regional Director in the Atlanta Region for 10 years prior.

10/03/2023

SBA disaster press releases

Yesterday, the Small Business Administration issued disaster assistance press releases relating to:

10/03/2023

Proposed Call Report and FFIEC 002 report changes

The FDIC has issued FIL-53-2023, "Proposed Revisions to the Consolidated Reports of Condition and Income (Call Reports) and the FFIEC 002 Report." The notice applies to all FDIC-insured financial institutions.

On September 28, 2023, the FDIC, the Federal Reserve Board, and the OCC, under the auspices of the Federal Financial Institutions Examination Council (FFIEC), published [88 FR 66933] proposed regulatory reporting changes in the Federal Register for public comment. These proposed changes apply to all three versions of the Call Report (FFIEC 031, FFIEC 041, and FFIEC 051) and to the Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002), as applicable, and are proposed to take effect as of the March 31, 2024, report date.

Comments must be submitted on or before November 27, 2023.

The proposed revisions to the reporting forms and instructions for the Call Reports and the FFIEC 002 relate to the Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU) 2022-02, “Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.”

The agencies are requesting comment on certain technical clarifications to the reporting of Internet website addresses of depository institution trade names and on a proposal to increase the frequency of reporting website addresses from semiannually to quarterly in the FFIEC 051. The agencies are also requesting comment on certain technical clarifications to the reporting of past due loans.

Redlined copies of the FFIEC 031, FFIEC 041, and FFIEC 051 Call Report forms showing the proposed changes and the related draft reporting instructions will be available on the FFIEC’s webpages for these reports, which can be accessed from the FFIEC’s Reporting Forms webpage.

10/03/2023

FinCEN issues BOI reporting brochure, updates FAQs

FinCEN has published a new informational brochure, "An Introduction to Beneficial Ownership Information Reporting," and updated its Beneficial Ownership Information Reporting FAQs.

It should be noted that the new brochure includes information on the reporting requirements for reporting companies formed in 2024 that will be changed if FinCEN finalizes its recently proposed amendment that would provide such companies 90 days, instead of 30, in which to file their reports of beneficial ownership information.

10/03/2023

FFIEC updates 2023 Census flat file

The FFIEC has released an updated Census flat file for 2023. Included are a Documentation document, File definitions and dictionary, and the flat file itself.

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