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The OCC has issued Bulletin 2024-36 to inform national banks, federal savings associations, and federal branches and agencies of foreign banks of fees and assessments charged by the Office of the Comptroller of the Currency (OCC) for calendar year 2024.

For calendar year 2024, the OCC is maintaining the general assessment, independent trust, and independent credit card fee schedules from 2023. There will be no inflation adjustment to assessment rates.

The OCC is increasing the hourly fee for special examinations and investigations to $170 from $161. The increase is to ensure adequacy in recovering the cost of conducting special examinations and investigations.

The OCC’s assessment schedule continues to include a surcharge for banks that require increased supervisory resources. The surcharge ensures that fees reflect the increased cost of supervision applying to banks rated 3, 4, or 5 under the Uniform Financial Institutions Rating System. The surcharge also ensures that fees reflect the increased cost of supervision for these banks.

The OCC has announced it is soliciting academic research papers on depositor behavior, bank liquidity, and run risk in the banking system for submission by January 15, 2024.

The OCC will invite authors of selected papers to present to OCC staff and invited academic and government researchers at OCC Headquarters in Washington, D.C., on June 5-7, 2024. Authors of selected papers will be notified by March 1, 2024, and will have the option of presenting their papers virtually.

FinCEN has updated its Beneficial Ownership Information (BOI) Frequently Asked Questions, Small Entity Compliance Guide, quick reference materials, and informational video. These guidance materials now reflect the reporting deadline extension for companies created or registered in 2024 to file their initial BOI reports.

The FDIC has issued FIL-62-2023 with guidance to help financiaol institutions and facilitate recovery in areas of Illinois affected by severe storms and flooding from September 17–18, 2023.

On Friday, the Treasury Department announced that OFAC had sanctioned Luis Miguel Martinez Morales (Martinez) for his role in corruption in Guatemala wherein he engaged in widespread bribery schemes, including schemes related to government contracts. Martinez was designated under Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption around the world.

Treasury also reported the imposition of OFAC sanctions on three entities and identification as blocked property three vessels that used Price Cap Coalition services while carrying Russian crude oil above the Coalition-agreed price cap.

For detailed information on the designated parties and vessels, see Friday's BankersOnline OFAC Update.

The OCC has released a list of 42 CRA performance evaluations that became public In November. Of the evaluations listed, 29 are rated satisfactory, and the following 13 are rated outstanding:

• Community West Bank, N.A., Goleta, GA
• San Luis Valley Federal Bank. Alamosa, CO
• Citizens Bank & Trust, Inc., Trenton, GA
• The Citizens National Bank of Quitman,, Quitman, GA
• Central FS & LA, Cicero, IL
• The First National Bank of Ava, Ava, IL
• Home FS&LA of Grand Island, Grand Island, NE
• Valley National Bank, Passaic, NJ
• Pioneer Bank, Roswell, NM
• BNY Mellon, N.A., Pittsburg, PA
• The First National Bank in Sioux Falls, Sioux Falls, SD
• Home Federal Bank of Tennessee, Knoxville, TN
• Skyline National Bank, Independence, VA

The Financial Stability Board (FSB) this morning announced it has published a toolkit for financial authorities and financial institutions for their third-party risk management and oversight.

The toolkit was developed in response to concerns over the extent and nature of financial institutions’ interactions with a broad and diverse ecosystem of third-party service providers, which could have implications for financial stability.

The primary emphasis of the toolkit is on critical third-party services, given the potential impact of their disruption on financial institutions’ critical operations and financial stability. It also looks holistically at financial institutions’ third-party risk management in light of changing industry practices and recent regulatory and supervisory approaches to operational resilience.

The toolkit, which incorporates feedback from a public consultation conducted over the summer, aims to (i) reduce fragmentation in regulatory and supervisory approaches to third-party risk management across jurisdictions and different areas of the financial services sector; (ii) strengthen financial institutions’ ability to manage third-party risks and financial authorities’ ability to monitor and strengthen the resilience of the financial system; and (iii) facilitate coordination among relevant stakeholders (i.e. financial authorities, financial institutions and third-party service providers).

The FSB promotes international financial stability by coordinating national financial authorities and international standard-setting bodies as they work toward developing strong regulatory, supervisory and other financial sector policies. It fosters a level playing field by encouraging coherent implementation of these policies across sectors and jurisdictions. Working through its members, it seeks to strengthen financial systems and increase the stability of international financial markets. The policies developed in the pursuit of this agenda are implemented by jurisdictions and national authorities.

The FDIC has issued the lists of institutions scheduled for a Community Reinvestment Act (CRA) examination during the first quarter 2024 and second quarter 2024.

The OCC also released its schedule of CRA evaluations to be conducted in the first and second quarters of 2024.

The Federal Reserve System posts CRA examination schedules on its website.

In Financial Institution Letter FIL-59-2023, issued yesterday, the FDIC notified banks that the Office of the Ombudsman, which is responsible for administering the Post-Examination Surveys (Survey), is updating the Survey and the transmission process for Risk Management and Compliance and/or CRA examinations. The updated Survey solicits additional feedback on the virtual aspects of examinations.

The Office of the Ombudsman will—

• Update the Survey and the transmission process for Risk Management and Compliance and/or CRA examinations effective January 1, 2024
• Send updates Surveys to the Executive Officers
• Send notices and provide reminders about the Survey from FDICSurveys-noreply@fdic.gov
• Continue to serve as the point of contact for banks regarding the Survey and follow-up requests
  A copy of the Post-Examination Survey (Risk Management Examination) and the Post-Examination Survey (Compliance and/or CRA Examination) were provided with the Financial Institution Letter.

The FDIC has issued its November 2023 update of its Consumer Compliance Examination Manual. The Manual provides supervisory information regarding consumer compliance examinations, Community Reinvestment Act performance evaluations, and other supervisory activities. It includes supervisory policies and examination procedures for evaluating financial institutions’ compliance with federal consumer protection laws and regulations. The Manual is designed to promote consistency and efficiency in the examination process and compliance with applicable laws and regulations. Financial institutions can use the Manual to obtain more information about the FDIC’s examination process.

The November Update updated several sections of the Manual related to the FDIC's shift from SOURCE to FOCUS. In addition, the Table of Contents was updated to reflect corrections to chapter names; the chapter on Enforcement Actions was updated to explain how the FDIC will publish inflation adjustments to the maximum civil money penalty; and the chapter on the Flood Disaster Protection Act was updated to include interagency flood Q&As.

The Treasury Department yesterday announced that OFAC had sanctioned three Mexican individuals and 13 Mexican companies that are linked, directly or indirectly, to timeshare fraud led by the Cartel de Jalisco Nueva Generacion (CJNG). CJNG, a violent Mexico-based organization, traffics a significant proportion of the illicit fentanyl and other deadly drugs that enter the United States. OFAC coordinated this action with the Government of Mexico, including its Financial Intelligence Unit, as well as U.S. Government partners, including the Federal Bureau of Investigation (FBI), and the Drug Enforcement Administration.

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

Yesterday, Treasury reported that OFAC sanctioned eight foreign-based Democratic People’s Republic of Korea’s (DPRK) agents that facilitate sanctions evasion, including revenue generation and missile-related technology procurement that support the DPRK’s weapons of mass destruction (WMD) programs. Additionally, OFAC sanctioned cyber espionage group Kimsuky for gathering intelligence to support the DPRK’s strategic objectives. OFAC acted in coordination with Australia, Japan, and the Republic of Korea.

For the names and identification information of the designated individuals and entity, see this BankersOnline OFAC Update.

The FDIC has issued FIL-60-2023 to announce it is extending the comment period on its proposal to issue Guidelines as Appendix C to FDIC’s standards for safety and soundness regulations in Part 364 and make conforming amendments to parts 308 and 364 of its regulations.

These Guidelines would apply to all insured state nonmember banks, state-licensed insured branches of foreign banks, and insured state savings associations that are subject to Section 39 of the Federal Deposit Insurance Act (FDI Act), with total consolidated assets of $10 billion or more on or after the effective date of the final Guidelines. The notice of proposed rulemaking stated that the comment period would close on December 11, 2023. The FDIC has determined that an extension of the comment period until February 9, 2024, is appropriate.

The Department of the Treasury announced yesterday that OFAC had sanctioned over 20 individuals and entities for their involvement in financial facilitation networks for the benefit of Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and Iranian Armed Forces General Staff (AFGS), and the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).

For the names and identification information of the designated individuals and entities, see yesterday’s BankersOnline OFAC Update.

FinCEN has published [88 FR 83499] a final rule extending the filing deadline for initial reports of beneficial ownership information by entities created or registered on or after January 1, 2024, and before January 1, 2025, from 30 calendar days to 90 calendar days after their creation or registration, to give those entities additional time to understand the new reporting obligation and collect the necessary information to complete their filings.

Entities created or registered on or after January 1, 2025, will continue to have 30 calendar days to file their BOI reports with FinCEN.

The FDIC has announced that FDIC-insured institutions reported net income of $68.4 billion for the third quarter of 2023, a decrease from the prior quarter driven by lower noninterest income and higher realized losses on securities. Other highlights of the report include:

• The net interest margin increased from the prior quarter to 3.30 percent
• Community banks reported lower net income from the prior quarter
• Loan balances increased from last quarter and one year ago
• Total deposits declined for a sixth consecutive quarter
• Asset quality metrics remained favorable despite modest deterioration
• The Deposit Insurance Fund Reserve Ratio rose to 1.13 percent

FDIC Chairman Martin J. Gruenberg said “The banking industry continued to show resilience in the third quarter. Net income remained high, overall asset quality metrics remained favorable, and the industry remained well capitalized. The banking industry still faces significant downside risks from the continued effects of inflation, rising market interest rates, and geopolitical uncertainty. In addition, deterioration in the industry’s commercial real estate portfolio is beginning to materialize in office properties. These issues, together with funding and earnings pressures, will remain matters of ongoing supervisory attention by the FDIC.”

The Federal Reserve Bank of Atlanta has released the November 29, 2023, Beige Book, which summarizes comments and information on economic activity collected on or before November 17, 2023, from contacts outside the Federal Reserve System.

The Report's summary of overall economic activity indicates —

• On balance, economic activity slowed since the previous report, with four Districts reporting modest growth, two indicating conditions were flat to slightly down, and six noting slight declines in activity.
• Retail sales, including autos, remained mixed; sales of discretionary items and durable goods, like furniture and appliances, declined, on average, as consumers showed more price sensitivity.
• Travel and tourism activity was generally healthy. Demand for transportation services was sluggish.
• Manufacturing activity was mixed, and manufacturers' outlooks weakened.
• Demand for business loans decreased slightly, particularly real estate loans.
• Consumer credit remained fairly healthy, but some banks noted a slight uptick in consumer delinquencies.
• Agriculture conditions were steady to slightly up as farmers reported higher selling prices; yields were mixed.
• Commercial real estate activity continued to slow; the office segment remained weak and multifamily activity softened.
• Several Districts noted a slight decrease in residential sales and higher inventories of available homes.
• The economic outlook for the next six to twelve months diminished over the reporting period.

The Federal Housing Administration has announced proposed changes to its 203(k) Rehabilitation Mortgage Insurance Program.

The changes would:

• Increase the Limited 203(k) total rehabilitation costs limits
• Extend the rehabilitation period for both the Standard 203(k) and the Limited 203(k) types
• Revise the 203(k) consultant fee schedule

Comments on the FHA's proposal will be accepted through January 5, 2024.

The NCUA has announced it will reinstate assessing civil money penalties for credit unions failing to submit their Call Reports on time, effective January 1, 2024.

“The program was suspended after the December 2019 cycle due to the COVID-19 pandemic,” NCUA Chairman Todd M. Harper said. “It is now time to reinstate the program to ensure we provide credit union members, the financial services stakeholders, other regulators, and the public with the most accurate and up-to-date quarterly Call Report data on a timely basis.”

The December 2023 Call Report will be the first reporting cycle under the reinstated program and will be due by 11:59:59 p.m. Eastern time, January 30, 2024. To assist credit unions in avoiding a penalty, the NCUA will send a reminder to credit unions with outstanding Call Reports one week before the due date.

The Federal Reserve Board has published [88 FR 83317] a final rule that applies an inflation adjustment to the threshold for total consolidated assets in Regulation I. Federal Reserve Bank (Reserve Bank) stockholders that have total consolidated assets above the threshold receive a different dividend rate on their Reserve Bank stock than stockholders with total consolidated assets at or below the threshold. The Federal Reserve Act requires that the Board annually adjust the total consolidated asset threshold to reflect the change in the Gross Domestic Product Price Index, published by the Bureau of Economic Analysis (BEA). Based on the change in the Gross Domestic Product Price Index as of September 28, 2023, the total consolidated asset threshold will be $12,517,000,000 through December 31, 2024, up from the current threshold of $12,124,000,000.

The rule is effective today, December 29, 2023, but applicable beginning January 1, 2024.

The Federal Housing Finance Agency has announced that U.S. house prices rose 5.5 percent between the third quarter of 2022 and the third quarter of 2023, according to the FHFA House Price Index. House prices were up 2.1 percent compared to the second quarter of 2023. FHFA’s seasonally adjusted monthly index for September was up 0.6 percent from August.

“U.S. house price growth continued to accelerate in the third quarter, appreciating more than in each of the previous four quarters,” said Dr. Anju Vajja, Principal Associate Director in FHFA’s Division of Research and Statistics. “House prices rose in the third quarter in all census divisions and are higher than one year ago, driven primarily by a low supply of homes for sale.”

The Federal Housing Administration has announced new loan limits for calendar year 2024 for its Single Family Title II forward and Home Equity Conversion Mortgage (HECM) insurance programs. Loan limits for most of the country will increase in the coming year due to continued strong home price appreciation over the past year.

For a complete list of FHA loan limits, areas at the FHA ceiling, and areas between the floor and the ceiling, visit the FHA's Loan Limits Page. FHA lenders can refer to Mortgagee Letters 2023-21 and 2023-22 for more details.

The Federal Reserve Board has released the minutes of its discount rate meetings from October 23 through November 1, 2023.

The CFPB has announced it has ordered Bank of America, N.A. to pay a $12 million civil money penalty for submitting false mortgage lending information to the federal government under the Home Mortgage Disclosure Act. For at least four years, hundreds of Bank of America loan officers failed to ask mortgage applicants certain demographic questions as required under federal law, and then falsely reported that the applicants had chosen not to respond.

The CFPB’s review of Bank of America’s HMDA data collection practices found that the bank was submitting false data, including falsely reporting that mortgage applicants were declining to answer demographic questions. This conduct violated HMDA and its implementing regulation, Regulation C, as well as the Consumer Financial Protection Act, when the bank:

• Falsely reported that applicants declined to provide information: Hundreds of Bank of America loan officers reported that 100% of mortgage applicants chose not to provide their demographic data over at least a three month period. In fact, these loan officers were not asking applicants for demographic data, but instead were falsely recording that the applicants chose not to provide the information.
• Failed to adequately oversee accurate data collection: Bank of America did not ensure that its mortgage loan officers accurately collected and reported the demographic data required under HMDA. For example, the bank identified that many loan officers receiving applications by phone were failing to collect the required data as early as 2013, but the bank turned a blind eye for years despite knowledge of the problem.

For additional information on the Bureau's action against Bank of America and a link to the Consent Order, see “Bank of America pays $12 million for filing false HMDA data” in the BankersOnline Penalty pages.

The Federal Housing Finance Agency on Tuesday announced the conforming loan limit values (CLLs) for mortgages Fannie Mae and Freddie Mac (the Enterprises) will acquire in 2024. In most of the United States, the 2024 CLL value for one-unit properties will be $766,550, an increase of $40,350 from 2023.

For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit value, the applicable loan limit will be higher than the baseline loan limit. The Housing and Economic Recovery Act (HERA) establishes the high-cost area limit in those areas as a multiple of the area median home value, while setting the ceiling at 150 percent of the baseline limit. Median home values generally increased in high-cost areas in 2023, which increased their CLL values. The new ceiling loan limit for one-unit properties will be $1,149,825, which is 150 percent of $766,550.

Special statutory provisions establish different loan limits for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limits will be $1,149,825 for one-unit properties.

Due to rising home values, the CLL values will be higher in all but five U.S. counties or county equivalents.

FinCEN has announced it has joined twelve financial intelligence units (FIUs) in issuing a Public Statement on November 27, 2023, recognizing the formation of a task force of like-minded FIUs who aim to strengthen efforts to disrupt international financial flows to Hamas and other terrorist organizations. The task force was established immediately following the terror attacks by Hamas against Israel on October 7, 2023.

With regard to financial institutions and technology companies, the Public Statement states that the Task Force Members “recognize the importance of the private sector in achieving these goals, particularly in identifying and mitigating terrorists’ use of the global financial system. Close coordination with financial institutions and technology companies, to the furthest extent our respective authorities allow, is critical to identify and stop terrorist funding channels.”

On Monday, the Federal Reserve Board announced technical details related to reserve requirements for depository institutions, which will remain zero. The annual adjustment and publication of the reserve requirement exemption amount and low reserve tranche is required by law and does not indicate a change in depository institutions' reserve requirements.

If reserve requirement ratios were not zero, the reserve requirement exemption amount and the low reserve tranche would be used to determine the reserve requirement ratios that could apply to a depository institution. Specifically, the reserve requirement exemption amount is the amount of a depository institution's reservable liabilities that will always be exempt from reserve requirements. The low reserve tranche amount is the amount of a depository institution's net transaction accounts that may be subject to a reserve requirement ratio not greater than three percent. A depository institution's net transaction accounts greater than the low reserve tranche may be subject to a reserve requirement ratio of not greater than 14 percent.

For 2024, the reserve requirement exemption amount will be set at $36.1 million, unchanged from 2023, and the low reserve tranche will be set at $644.0 million, down from $691.7 million in 2023.

The new amounts are derived using formulas specified in the Federal Reserve Act and will apply beginning January 1, 2024. But, of course, because reserve requirement ratios are all set at 0 percent, this is one notice from the Fed that banks can safely ignore.

The IRS has announced a delay of the new $600 Form 1099-K reporting threshold for third party settlement organizations for calendar year 2023.

As the IRS continues to work to implement the new law, the agency will treat 2023 as an additional transition year. This will reduce the potential confusion caused by the distribution of an estimated 44 million Forms 1099-K sent to many taxpayers who wouldn't expect one and may not have a tax obligation. As a result, reporting will not be required unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023.

Given the complexity of the new provision, the large number of individual taxpayers affected and the need for stakeholders to have certainty with enough lead time, the IRS is planning for a threshold of $5,000 for tax year 2024 as part of a phase-in to implement the $600 reporting threshold enacted under the American Rescue Plan (ARP).

Following feedback from the tax community, the IRS is also looking to make updates to the Form 1040 and related schedules for 2024 that would make the reporting process easier for taxpayers. Changes to the Form 1040 series – the core tax form for more than 150 million taxpayers – are complex and take time; delaying changes to tax year 2024 allows for additional feedback.

• IRS Notice 2023-74

The FDIC has released a list of enforcement actions taken in October 2023. Included were three consent orders to pay civil money penalties, three consent orders to cease and desist, and two removal/prohibition orders :

• Transportation Alliance Bank (DBA TAB Bank), Ogden, Utah, was ordered to pay a civil money penalty of $315,000 for deceptive practices involving a "rebate processing fee" for early payment of certain loans.
• Paramount Bank, Hazelwood, Missouri, was assessed an $85,000 penalty for reporting inaccurate HMDA data for 2020 and 2021.
• Range Bank, Marquette, Michigan, was assessed a $4,000 civil money penalty for failing to require escrow of flood insurance premium payments on four loans on which the bank collected escrow payments for taxes and homeowner's insurance premiums.
• Herring Bank, Amarillo, Texas, was issued a cease and desist order (jointly issued with the Texas Department of Banking) due in part to weaknesses in access controls for IT and in its corporate bond accounting software.
• Royal Business Bank, Los Angeles, California, was issued a cease and desist order (issued jointly with the California Department of Financial Protection and Innovation) related to the bank's Bank Secrecy Act/Anti Money Laundering Compliance Program.
• TrustTexas Bank, SSB, Cuero, Texas, received a cease and desist order, issued jointly with the Texas Department of Savings and Mortgage Lending, for allegedly unsafe or unsound banking practices relating to interest rate risk exposure, deterioration in capital protection and earnings, and deficiencies in management and oversight by the Board.
• Brian Ferris, a former loan officer of Berkshire Bank, Pittsfield, Massachusetts, received a corrected order of prohibition relating to his alleged participation in a conspiracy to defraud the bank by submitting fraudulent loan applications to the bank that were referred to him by two co-conspirators who operated a loan brokerage business.
• Patricia Westmoreland, a former bank manager for Branch Banking and Trust Company, now known as Truist Bank, Charlotte, North Carolina, received an order of prohibition for allegedly embezzling approximately $201,000 and falsifying bank records.

The Federal Reserve Board, FDIC, and OCC have jointly announced that they will extend until January 16, 2024, the comment period on their long-term debt proposed rule to improve the resolvability of large banks and enhance financial stability. The agencies extended the comment period to allow interested parties more time to analyze the issues and prepare their comments.

Comments on the proposal were originally due by November 30.

FinCEN has reported its issuance, in coordination with IRS Criminal Investigation (IRS-CI), of alert FIN-2-23-Alert007 to financial institutions on fraud schemes related to the COVID-19 Employee Retention Credit (ERC). The alert provides an overview of typologies associated with ERC fraud and scams, highlights select red flags to assist financial institutions in identifying and reporting suspicious activity and reminds financial institutions of their reporting requirements under the Bank Secrecy Act (BSA).

“It is unfortunate that while the COVID-19 pandemic is behind us, fraud related to COVID-19 relief programs, like the ERC, continues to occur at a concerning scale,” said FinCEN Director Andrea Gacki. “We are issuing this alert in partnership with CI to remind financial institutions that it is critical that they remain vigilant in identifying and reporting related suspicious activity and to protect businesses from being taken advantage of by fraudsters.”

The ERC was authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act as a tax credit to encourage businesses to keep employees on payroll during the COVID-19 pandemic. CI has identified ongoing fraud and scams related to the ERC that, to date, have resulted in 323 investigations involving more than $2.8 billion of potentially fraudulent ERC claims throughout tax years 2020, 2021, 2022, and 2023. In response to the scope of the ERC fraud, in September 2023, the IRS announced an immediate moratorium through at least December 31, 2023, on processing new ERC claims in an effort to protect honest small business owners from scams.

The Federal Reserve Board has announced it has executed a consent order of prohibition against Chandlar Groce, formerly a sales and service representative at a branch of Arvest Bank (Fayetteville, Arkansas), after a finding that she made unauthorized transfers from an elderly bank customer's account to her own accounts, for her personal benefit.

The FDIC's Board of Directors yesterday announced the establishment of a special committee of the Board to oversee an independent third–party review of the agency’s workplace culture. The Board appointed Directors Jonathan McKernan and Michael J. Hsu to co–chair this special committee and issued the following statement:

“All employees at the FDIC need to feel safe and able to speak out if they are subject to, witness or encounter inappropriate behavior in the workplace. Sexual harassment, discrimination, and other misconduct are totally unacceptable and have no place at the FDIC.

“The FDIC Board is committed to fostering an environment and culture that promotes a safe, fair, and inclusive workplace for all FDIC employees. The Board supports taking all actions necessary to identify and address the root cause of the problem and to promote accountability. Today, the FDIC Board unanimously approved the creation of an independent special committee of the Board, co–chaired by FDIC Directors Michael J. Hsu and Jonathan McKernan to oversee a third–party, agency–wide review. The co–chairs may appoint up to three additional non–voting members, likely from outside the FDIC, to join the special committee to advise and promote a diversity of views. The review will be fully independent and those conducting it will report directly and exclusively to the special committee.

“This is a top priority for the FDIC Board Members. While this important work is underway, we recognize and appreciate the nearly 6,000 professionals who work at the FDIC, advancing its important mission of maintaining the stability and public confidence in the nation’s financial system.”

Related statements by:

• Chairman Martin J. Gruenberg
• Vice Chairman Travis Hill

The Federal Housing Finance Agency has announced the publishing of a final rule that amends several provisions of the Enterprise Regulatory Capital Framework (ERCF) for Fannie Mae and Freddie Mac (the Enterprises).

The final rule includes modifications of certain provisions of the ERCF related to guarantees on commingled securities, multifamily mortgage exposures secured by properties with government subsidies, and derivatives and cleared transactions, among other modifications. These amendments clarify certain aspects of the ERCF and help to further align the ERCF with the risks faced by the Enterprises. It becomes effective April 1, 2024, with selected provisions effective January 1, 2026.

The CFPB has posted a blog article announcing the agency has approved an application from the Independent Community Bankers of America (ICBA) that marks the first step for piloting disclosures for construction loans. Under this program, the CFPB authorizes parameters for in-market testing of alternatives to required disclosures.

The ICBA applied under the program for a template covering the CFPB’s Know Before You Owe Disclosures. In particular, the ICBA asked to test certain adjustments to the existing mortgage disclosures in the unique context of construction loans, for which the CFPB’s disclosures were not primarily designed. The application noted that, in particular, many first-time homebuyers in rural areas build their homes instead of buying existing homes, and consequently, the challenges of using the current disclosures in the construction loan context may impact rural areas more acutely. The CFPB solicited comments on the ICBA’s application in February and made a decision to approve the template after reviewing the public feedback.

The CFPB waiver template issued to the ICBA indicates that the ICBA application aims to increase the availability of affordable single-close construction-to-permanent loans, i.e., a loan transaction that combines a construction phase loan with a permanent mortgage loan once the home is built, and employs a single closing and single set of closing costs. ICBA believes that consumer understanding of construction loans would be improved by disclosures that ICBA views as more specifically tailored to such loans, and that more community banks would offer such loans if they could use such disclosures. ICBA further believes its proposed alternative LE and the CD will more fully disclose all the various components of a single-close construction-to-permanent loan. In an attachment to the Application, ICBA described in detail its proposed changes to the LE and CD for construction loans.

Individual lenders can apply for approval to test the alternative disclosures for construction loans. In deciding whether to approve individual lender applications, the CFPB will carefully evaluate a lender’s plan to test the effectiveness of these disclosures. The CFPB looks forward to reviewing any lender applications.

The Department of the Treasury has announced that it has, through FinCEN, OFAC, and IRS-CI, taken unprecedented action to hold Binance Holdings Ltd. and its affiliates accountable for violations of the U.S. anti-money laundering and sanctions laws that protect American national security and the integrity of the international financial system. Binance is the world’s largest virtual currency exchange, responsible for an estimated 60% of centralized virtual currency spot trading.

Binance settled with FinCEN and OFAC for violations of the Bank Secrecy Act and apparent violations of multiple sanctions programs. The violations include failure to implement programs to prevent and report suspicious transactions with terrorists — including Hamas’ Al-Qassam Brigades, Palestinian Islamic Jihad (PIJ), Al Qaeda, and the Islamic State of Iraq and Syria (ISIS) — ransomware attackers, money launderers, and other criminals, as well as matching trades between U.S. users and those in sanctioned jurisdictions like Iran, North Korea, Syria, and the Crimea region of Ukraine. By failing to comply with AML and sanctions obligations, Binance enabled a range of illicit actors to transact freely on the platform. These settlements are part of a global agreement simultaneous with Binance’s resolution of related matters with the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC).

FinCEN's settlement agreement assesses a civil money penalty of $3.4 billion, imposes a five-year monitorship, and requires significant compliance undertakings, including to ensure Binance’s complete exit from the United States. This settlement is the largest penalty in U.S. Treasury and FinCEN history.

OFAC’s settlement agreement assesses a penalty of $968,618,825 and requires Binance to abide by a series of robust sanctions compliance obligations, including full cooperation with the monitorship overseen by FinCEN, in settlement of Binance's potential liability for 1,667,153 apparent violations of multiple OFAC-administered sanctions programs. The settlement amount reflects OFAC’s determination that the Apparent Violations were not voluntarily self-disclosed and that Binance’s conduct was egregious. The settlement amount also reflects Binance’s settlements with the Department of Justice (DOJ), the Financial Crimes Enforcement Network (FinCEN), and the Commodity Futures Trading Commission (CFTC).

To ensure that Binance fulfills the terms of its settlement — including that it does not offer services to U.S. persons — and to ensure that illicit activity is addressed, Treasury will retain access to books, records, and systems of Binance for a period of five years through a monitor. Failure to live up to these obligations could expose Binance to substantial additional penalties, including a $150 million suspended penalty, which would be collected by FinCEN if Binance fails to comply with the terms of the required compliance undertakings and monitorship. The Settlement Agreement also explicitly states that in the event OFAC determines that a material breach of, or misrepresentation in, the agreement has occurred, including due to a failure to perform the Compliance Commitments of the Settlement Agreement, OFAC may, following notice to Binance, seek to impose on Binance an additional penalty up to the statutory maximum of over $592 Billion.

As noted, OFAC took this action concurrently with DOJ, FinCEN, and the CFTC. Binance’s obligation to pay $898,618,825 of the settlement amount for its Apparent Violations will be deemed satisfied by payment to DOJ for the ITSR violations arising out of the same pattern of conduct during the same period of time.

The Justice Department announced that, as part of its plea agreement to settle criminal charges, Binance has agreed to forfeit $2,510,650,588 and to pay a criminal fine of $1,805,475,575 for a total financial penalty of $4,316,126,163. Binance separately has also reached agreements with the CFTC, FinCEN, and OFAC, and the Department will credit approximately $1.8 billion toward those resolutions.

This morning, FDIC published [88 FR 81417] a Federal Register notice that its Board of Directors has set the Designated Reserve Ratio (DRR) for the Deposit Insurance Fund at 2 percent for 2024, unchanged from 2023.

FinCEN yesterday reported on its November 16 virtual FinCEN Exchange — co-hosted by OFAC and the Department of Commerce's Bureau of Industry and Security (BIS) — to discuss attempts by Russia to evade export controls. The Exchange included representatives from small- to mid-size financial institutions, law enforcement, and government agencies.

FinCEN Exchanges enhance law enforcement feedback and help financial institutions more effectively implement their anti-money laundering programs. This FinCEN Exchange exemplified the ongoing U.S. Government effort to further constrain and prevent Russia from accessing the international financial system and conduct economic activity to fund its invasion of Ukraine.

FinCEN listed information it has issued on this topic to provide red flags to assist financial institutions in identifying suspected illicit activity:

• FinCEN Alert on Increased Vigilance for Potential Russian Sanctions Evasion Attempts (March 7, 2022)
• FinCEN Alert on Real Estate, Luxury Goods, and Other High Value Assets Involving Russian Elites, Oligarchs, and their Family Members (March 16, 2022)
• First FinCEN-BIS Joint Alert Urging Increased Vigilance for Potential Russian and Belarusian Export Control Evasion Attempts (June 28, 2022)
• Financial Trend Analysis on Financial Activity by Russian Oligarchs (December 22, 2022)
• FinCEN Alert on Potential U.S. Commercial Real Estate Investments by Sanctioned Russian Elites, Oligarchs, and Their Proxies (January 25, 2023)
• FinCEN-BIS Supplemental Joint Alert Urging Continued Vigilance for Potential Russian Export Control Evasion Attempts (May 19, 2023)
• Financial Trend Analysis on Suspected Evasion of Russian Export Controls (September 8, 2023)
• FinCEN and the U.S. Department of Commerce’s Bureau of Industry and Security Notice Announcing New Reporting Key Term and Highlight Red Flags Relating to Global Evasion of U.S. Export Controls (November 6, 2023)

FinCEN continues to encourage all financial institutions to register under USA PATRIOT Act Section 314(b) and to form associations to engage in voluntary information sharing [see 31 C.F.R. 1010.540]. Section 314(b) information sharing can reveal networks of illicit activity that no single financial institution can detect alone, compounding the benefits for both the financial institution and law enforcement. In fiscal year 2023, there were more than 7,600 314(b) registered financial institutions, making extensive network analysis possible.

There is a notice on the Department of Defense’s Military Lending Act website that some multiple record request files that were uploaded to the MLA website between 4 p.m. EST on November 14 and 2 p.m. EST on November 15 did not get processed. Senders will need to re-upload their files if they were not processed.

Today, the Treasury Department announced the approval of 20 additional state awards under the State Small Business Credit Initiative (SSBCI) Technical Assistance Grant Program, totaling more than $50.8 million. These awards will be used to provide legal, accounting, and financial advisory services to eligible small businesses applying for the SSBCI capital program and other government small business programs.