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OFAC has designated one individual and three entities responsible for facilitating the flow of Iranian financial assistance to Houthi forces and their destabilizing activities. Among those designated are the head of the Currency Exchangers Association in Sana’a, and three exchange houses in Yemen and Türkiye. These persons have facilitated the transfer of millions of dollars to the Houthis at the direction of U.S.-designated Sa’id al-Jamal, who is affiliated with Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).

For the names and identification information of the designated parties, see the December 28, 2023, BankersOnline OFAC Update.

• Treasury Department press release

The Federal Trade Commission has announced it has filed suit against Grand Canyon Education, Inc. (GCE), Grand Canyon University (GCU), and Brian Mueller—the CEO of GCE and president of GCU—for deceiving prospective doctoral students about the cost and course requirements of its doctoral programs and about being a nonprofit, while also engaging in deceptive and abusive telemarketing practices.

In its complaint, the FTC says that GCU and GCE told prospective students that the total cost of GCU’s “accelerated” doctoral programs was equal to the cost of just 20 courses (or 60 credits). In reality, the school requires that almost all doctoral students take additional “continuation courses” that add thousands of dollars in costs. The U.S. Department of Education reported that fewer than 2% of GCU doctoral program graduates completed their program within the cost that GCU advertises, and almost 78% of these students take five or more continuation courses. The complaint also says that, despite operating the school for the profit of GCE and its investors, the defendants deceptively marketed the school as a nonprofit.

The defendants also used abusive telemarketing calls to try to boost enrollment at GCU, according to the complaint. GCE advertised on websites and social media urging prospective students to submit their contact information on digital forms. GCE telemarketers then used the information to illegally contact people who have specifically requested not to be called, as well as people on the National Do Not Call Registry. GCE has also made illegal calls to numbers it purchased from lead generators.

The FTC says the defendants’ deceptive claims and abusive telemarketing calls violated the FTC Act and the Telemarketing Sales Rule and asks the court to provide redress to consumers and prohibit the institution from further violations of the law.

The OCC, Federal Reserve Board, FDIC, and NCUA have this morning published [88 FR 89820] a final rule in the Federal Register adopting final changes to the Uniform Rules of Practice and Procedures (Uniform Rules) to recognize the use of electronic communications in all aspects of administrative hearings and to otherwise increase the efficiency and fairness of administrative adjudications. The OCC, Board, and FDIC are also modifying their agency-specific rules of administrative practice and procedure (Local Rules). The OCC also is integrating its Uniform Rules and Local Rules so that one set of rules applies to both national banks and Federal savings associations and amending its rules on organization and functions to address service of process.

The changes affect 12 CFR Parts 3, 4, 6, 19, 108, 109, 112, 150, and 165 (OCC); Parts 238 and 263 (Federal Reserve); Part 308 (FDIC); and Part 747 (NCUA). The amendments are to become effective April 1, 2024.

The OCC, Federal Reserve, and FDIC yesterday published [88 FR 89489] a joint notice and request for comment on proposed revisions to the reporting forms and instructions for the Call Reports and the FFIEC 002 relating to the reporting on (1) loans to nondepository financial institutions and other loans, (2) guaranteed structured financial products, and (3) proposed long–term debt requirements. The proposed revisions to the FFIEC 002 report form and instructions relate to the reporting on the loans to nondepository financial institutions and other loans. 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.

In addition, the agencies are requesting comment on a proposal to adopt ongoing standards for electronic signatures to comply with the Call Report signature and attestation requirement.

These proposed changes would be effective as of the June 30, 2024, report date, except for those related to the proposed long–term debt requirements, which would take effect the same quarter as the effective date of any final rule on such requirements.

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.

Comments must be submitted by February 26, 2024.

• FDIC Financial Institution Letter FIL-68-2023.
  

On Tuesday, the FDIC released the public sections of resolution plans of nine large domestic covered insured depository institutions (IDIs) that were due by December 1, 2023.

FDIC regulations require a covered insured depository institution to submit a resolution plan under which the FDIC, as receiver, might resolve the institution under the Federal Deposit Insurance Act in a way that provides depositors timely access to their insured deposits, maximizes returns on the sale or disposition of assets, and minimizes creditor losses.

The nine IDIs include (with links to the public portion of their plans):

• Bank of America NA
• Bank of New York Mellon
• Citibank, NA
• Goldman Sachs Bank USA
• JPMorgan Chase Bank NA
• Morgan Stanley Bank NA
• Morgan Stanley Private Bank, NA
• State Street Bank and Trust Company
• Wells Fargo Bank NA

On Tuesday, the OCC issued Bulletin 2023-40 announcing revisions to the asset-size threshold amounts used to define “small bank or savings association” and “intermediate small bank or savings association” under the Community Reinvestment Act (CRA) regulations. The thresholds—which apply to any national bank, federal savings association, or state savings association (collectively, bank)—become effective January 1, 2024. This bulletin adjusts the threshold amounts based on the annual percentage change in a measure of the Consumer Price Index.

The threshold amounts are the same as those announced last week by the FDIC and Federal Reserve System—Beginning January 1, 2024, a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.564 billion is a “small bank or savings association.” A “small bank or savings association” with assets of at least $391 million as of December 31 of both of the prior two calendar years and less than $1.564 billion as of December 31 of either of the prior two calendar years is an “intermediate small bank or savings association.”

The Federal Trade Commission has announced it will extend by 30 days the comment period on its proposed rule prohibiting junk fees. Comments will now be accepted through February 7, 2024.

The Treasury Department has published a Request for Information to inform its development of a national strategy for financial inclusion. Treasury was directed to develop a strategy to improve financial inclusion in the Joint Explanatory Statement accompanying the Financial Services and General Government Appropriations Act of 2023.

The Treasury Department initiated work on the strategy in 2023 and is seeking input from a wide variety of stakeholders to ensure that the strategy identifies clear and actionable opportunities for the public, private, and nonprofit sectors to advance financial inclusion and broaden access to financial products and services among underserved communities.

Written comments and information are requested on or before February 20, 2024.

The U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau jointly announced the following new residential sales statistics for November 2023:

• New Home Sales: Sales of new single‐family houses in November 2023 were at a seasonally adjusted annual rate of 590,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 12.2 percent (±15.6 percent)* below the revised October rate of 672,000, but is 1.4 percent (±19.8 percent)* above the November 2022 estimate of 582,000.
• Sales Price: The median sales price of new houses sold in November 2023 was $434,700. The average sales price was $488,900.
• For Sale Inventory: The seasonally‐adjusted estimate of new houses for sale at the end of November was 451,000. This represents a supply of 9.2 months at the current sales rate.

The CFPB has announced it has joined the Department of Justice in suing Colony Ridge, a Texas-based developer and lender, for operating an illegal land sales scheme and targeting tens of thousands of Hispanic borrowers with false statements and predatory loans. The lawsuit filed in federal district court alleges Colony Ridge sells unsuspecting families flood-prone land without water, sewer, or electrical infrastructure, and that the company sets borrowers up to fail with loans they cannot afford. Roughly 1-in-4 Colony Ridge loans ends in foreclosure, after which the company repurchases the properties and sells them to new borrowers. The CFPB and Justice Department are seeking redress for borrowers harmed by Colony Ridge and an immediate end to its illegal practices. This is the CFPB’s first federal court lawsuit charging a defendant with violations of the Interstate Land Sales Full Disclosure Act.

The lawsuit names as defendants three Texas-based Colony Ridge affiliate companies, as well as Loan Originator Services, a nonbank mortgage company licensed to originate loans in Texas. Colony Ridge has developed more than 40,000 lots spread across an unincorporated area of Liberty County, Texas, approximately 30 miles northeast of Houston. Colony Ridge markets these subdivisions using the names “Terrenos Houston” and “Terrenos Santa Fe.”

Colony Ridge targets Spanish-speaking borrowers: it advertises almost exclusively in Spanish, often in TikTok or other social media posts featuring, for example, national flags and regional music from Latin America. In these advertisements, Colony Ridge promises consumers the dream of home ownership with its own seller financing: an easy-to-obtain loan product that requires no credit check and only a small deposit.

The complaint alleges that Colony Ridge has lured tens of thousands of Hispanic consumers into their predatory loan products. Foreclosure and property deed records from September 2019 through September 2022 show that Colony Ridge initiated foreclosures on at least 30% of seller-financed lots within just three years of the purchase date, with most loan failures occurring even sooner. Records also confirm that Colony Ridge accounted for more than 92% of all foreclosures recorded in Liberty County between 2017 and 2022.

The complaint seeks to stop Colony Ridge’s alleged unlawful conduct, provide redress for affected consumers, and impose a civil penalty payable to the CFPB victims relief fund. If the defendants are found liable, the amount of any restitution will be determined in the litigation in federal court.

According to the December 2023 FHFA House Price Index for December, U.S. house prices rose in October, up 0.3 percent from September, according to the Federal Housing Finance Agency (FHFA) seasonally adjusted monthly House Price Index (HPI). House prices rose 6.3 percent from October 2022 to October 2023. The previously reported 0.6 percent price increase in September was revised to a 0.7 percent increase.

• FHFA 12/26/2023 press release

The Federal Housing Finance Agency has released its third quarter 2023 Foreclosure Prevention and Refinance Report. The report shows that Fannie Mae and Freddie Mac (the Enterprises) completed 43,356 foreclosure prevention actions during the quarter, raising the total number of homeowners who have been helped to 6,861,827 since the start of conservatorships in September 2008.

The report also shows that 33 percent of loan modifications completed in the third quarter reduced borrowers’ monthly payments by more than 20 percent. The number of refinances decreased from 93,952 in the second quarter of 2023 to 83,522 in the third quarter of 2023.

The Enterprises’ serious delinquency rate declined slightly from 0.55 percent to 0.54 percent at the end of the third quarter. This compares with 3.34 percent for Federal Housing Administration (FHA) loans, 1.99 percent for Veterans Affairs (VA) loans, and 1.52 percent for all loans (industry average).

Yesterday, we reported that FijnCEN had issued a final rule regarding access to Beneficial Ownership Information that certain entities will be required to file with FinCEN beginning January 1, 2024.

In connection with its press release announcing the final rule, FinCEN issued two interagency statements to give banks and non-bank financial institutions guidance on the interplay between the final rule and FinCEN’s existing Customer Due Diligence Rule.

• Interagency Statement for Banks
• Statement for Non-Bank Financial Institutions

FinCEN also issued a Fact Sheet about the final rule.

The Financial Crimes Enforcement Network (FinCEN) has announced in Notice FIN-2023-NTC5 a further extension of time for certain Report of Foreign Bank and Financial Accounts (FBAR) filings in light of the notice of proposed rulemaking (NPRM) that FinCEN issued on March 10, 2016, which proposes to revise the regulations implementing the Bank Secrecy Act (BSA) requirements regarding FBARs. Specifically, one of the proposed amendments would expand and clarify the exemptions for certain U.S. persons with signature or other authority over foreign financial accounts. This proposed amendment seeks to address questions previously raised by members of the public regarding the filing requirement and its application to U.S. persons with signature authority over, but no financial interest in, certain types of foreign financial accounts.

On December 9, 2022, FinCEN issued Notice 2022-1 to extend the filing date to April 15, 2024, for the FBAR for certain U.S. individuals with signature authority over, but no financial interest in, one or more foreign financial accounts. FinCEN has previously issued identical extensions that applied to similarly situated individuals. As stated in previous Notices, FinCEN received questions following prior amendments to the FBAR regulations, which required additional consideration with respect to certain exemptions. The proposed amendments in the NPRM seek to address these exemptions but, because the proposed rulemaking is not yet finalized, FinCEN is further extending the filing due date to April 15, 2025, for individuals whose filing due date for reporting signature authority was previously extended by Notice 2022-1.

Perhaps in 2024 we can stop waiting for the "other shoe to drop" with a final rule.

The FDIC has announced that its Board of Directors yesterday adopted a final rule to amend part 328 of its regulations to modernize the rules governing use of the official FDIC signs and advertising statements, and to clarify the FDIC’s regulations regarding false advertising, misrepresentations of deposit insurance coverage, and misuse of the FDIC’s name or logo.

Among the changes are rules on placement of the FDIC's official sign on digital channels, such as a bank's website and mobile banking app, through which depositors are increasingly handling their banking needs. Beginning in 2025, banks will be required to display a new black and navy blue official digital sign near the name of the bank on all bank websites and mobile apps, and on certain ATMs. The rule also—

• Modernizes requirements for display of the FDIC official sign in bank branches and other physical premises to account for evolving designs of bank branches and other physical bank locations where customers make deposits
• Requires the use of signs to differentiate insured deposits from non–deposit products across banking channels and to indicate that certain financial products “are not insured by the FDIC, are not deposits, and may lose value”
• Clarifies the FDIC’s regulations regarding misrepresentations of deposit insurance coverage by addressing specific scenarios where a person, including a non–bank entity, provides information to consumers that may be misleading, confuse consumers as to whether they are doing business with a bank, and whether their funds are protected by deposit insurance
• Requires insured depository institutions to maintain policies and procedures addressing compliance with Part 328
• Amends definitions of "non-deposit product" to include crypto-assets and specifically address safe deposit boxes

The amendments made by the final rule will take effect on April 1, 2024, with an extended compliance date of January 1, 2025.

• Board Memorandum with summary of the rule
• UPDATE: Published on 1/18/2024 at 89 FR 3504 in the Federal Register

The Financial Crimes Enforcement Network (FinCEN) has scheduled for December 22, 2023, Federal Register publication a final rule with regulations regarding access by authorized recipients to beneficial ownership information (BOI) that will be reported to FinCEN pursuant to section 6403 of the Corporate Transparency Act (CTA).

The summary of the rule indicates the regulations implement the strict protocols required by the CTA to protect sensitive personally identifiable information (PII) reported to FinCEN and establish the circumstances in which specified recipients have access to BOI, along with data protection protocols and oversight mechanisms applicable to each recipient category. The disclosure of BOI to authorized recipients in accordance with appropriate protocols and oversight will help law enforcement and national security agencies prevent and combat money laundering, terrorist financing, tax fraud, and other illicit activity, as well as protect national security.

The Introduction in the Supplementary Information to be published with the rule states, "Financial institutions with customer due diligence requirements under applicable law will have access to BOI to facilitate compliance with those requirements, as will the Federal functional regulators or other appropriate regulatory agencies that supervise or assess those financial institutions’ compliance with such requirements." It also states "FinCEN will implement the CTA requirement to revise the 2016 CDD Rule [31 CFR 1010.230] through a future rulemaking process. That process will provide the public with an opportunity to comment on the effect of the final provisions of the BOI reporting and access rules on financial institutions’ customer due diligence obligations."

The rule will be effective 60 days after publication (February 20, 2024).

The Federal Financial Institutions Examination Council (FFIEC) has announced that the Federal Reserve Board, FDIC, and OCC, as members of the FFIEC, have released data on small business, small farm, and community development lending during 2022. The Community Reinvestment Act regulations require the agencies to annually disclose these data.

The FFIEC also prepared aggregate disclosure statements of small business and small farm lending for all of the metropolitan statistical areas and non-metropolitan counties in the United States and its territories. The statements are available here.

• Fact Sheet
• Tables

On Wednesday, the Department of the Treasury reported that OFAC continued to tighten enforcement of the price cap on Russian oil by building on previous actions targeting shipowners and vessels implicated in transporting Russian crude oil above the cap. In line with actions previously taken by partners in the Price Cap Coalition, OFAC designated a Government of Russia-owned ship manager as well as several obscure oil traders who have emerged as frequent participants in the seaborne transportation of Russian-origin oil following the imposition of the price cap.

OFAC also, in coordination with the Price Cap Coalition, updated the Guidance on Implementation of the Price Cap Policy for Crude Oil and Petroleum Products of Russian Federation Origin. Yesterday’s actions are in line with commitments made by Leaders of the Group of Seven (G7) on December 6, 2023 to tighten compliance and enforcement of the price cap policy on Russian oil, including by imposing sanctions on those engaged in deceptive practices and by updating compliance rules and regulations as necessary.

For the names and identification information of the designated parties, and links to two new Russia-related General Licenses, see the December 20, 2023, BankersOnline OFAC Update.

On Tuesday, President Biden sent a veto message to the Senate concerning Senate Joint Resolution 32, which would disapprove of the CFPB’s final rule titled “Small Business Lending Under the Equal Credit Opportunity Act (Regulation B).” The Joint Resolution was passed by the House of Representatives and the Senate under the Congressional Review Act, and, if approved by the president, would have nullified the CFPB's rule and prevented the Bureau from issuing any substantially similar rule.

The Bureau's rule remains subject to an injunction against enforcement issued by the U.S. District Court for the Southern District of Texas.

The Treasury Department yesterday reported that OFAC has imposed sanctions on 10 entities and four individuals based in Iran, Malaysia, Hong Kong, and Indonesia supporting Iran’s unmanned aerial vehicle (UAV) production. This network, led by Iran-based Hossein Hatefi Ardakani, has facilitated the procurement of U.S.- and foreign-origin components worth hundreds of thousands of dollars for the Islamic Revolutionary Guard Corps Aerospace Force Self Sufficiency Jihad Organization (IRGC ASF SSJO) and its UAV program.

Concurrent with OFAC’s action and following a multi-year investigation by Homeland Security Investigations (HSI), the Department of Justice announced the unsealing of an indictment charging Hossein Hatefi Ardakani and Gary Lam with crimes related to an illicit procurement network and scheme to unlawfully export U.S.-origin, dual-use, and sensitive technology to Iran. HSI’s global investigation identified a network of Iranian intermediary companies, front companies, and logistics businesses used to procure and facilitate the transfer of sensitive U.S.- and foreign-origin technology to Iran for its weapons programs. On October 18, 2023, OFAC designated Gary Lam, whose primary name is Lin Jinghe, for his support to an Iran-based procurement agent working on behalf of the IRGC-owned Saberin Kish Company.

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

The FDIC and Federal Reserve have published [88 FR 87895] a final rule in this morning's Federal Register establishing for 2024 the asset-size thresholds used to define “small bank” and “intermediate small bank” in their Community Reinvestment Act regulations. As required, the adjustment to the threshold amounts are based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI–W).

Effective January 1, 2024, “small bank” will mean a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.564 billion, and “intermediate small bank” will mean a small bank with assets of at least $391 million as of December 31 of both of the prior two calendar years and less than $1.564 billion as of December 31 of either of the prior two calendar years.

The Federal Trade Commission reported yesterday that, at the Commission's request, a federal court has temporarily halted the operation of a sprawling business opportunity scheme that has taken in millions of dollars from consumers with bogus promises of huge returns. The scheme has operated since at least 2018 under a number of names, including “Blueprint to Wealth,” according to the FTC’s complaint. Three individuals -- Samuel James Smith, Robert William Shafer and Charles Joseph Garis, Jr. -- and a company owned by one of them -- Business Revolution Group -- are charged in the complaint with operating the scheme.

The complaint alleges that consumers were charged at least $3,000 and as much as $21,000, plus additional hundreds in “administrative fees,” for membership in the scheme, which nominally promises its members turnkey online businesses that would be operated on the members’ behalf. Advertising and marketing for the businesses is controlled by the scheme’s operators and the businesses exist entirely to sell Blueprint to Wealth memberships, the complaint charges.

The court’s order temporarily bars the defendants from misrepresenting or assisting others in misrepresenting material facts about any business or money-making opportunity. It also freezes the defendants’ assets until further action by the court. The FTC’s complaint asks the court to shut down the defendants’ scheme permanently and allow the FTC to provide refunds to the consumers harmed by the scheme.

The CFPB yesterday announced it has ordered U.S. Bank National Association to pay nearly $21 million for keeping out-of-work consumers from accessing unemployment benefits at the height of the COVID-19 pandemic. U.S. Bank froze tens of thousands of accounts due to unprecedented numbers of fraudulent unemployment claims. However, it failed to provide people a reliable and quick way to regain access. The bank also failed to provide provisional account credits, while investigating potentially unauthorized transfers. The CFPB’s order requires U.S. Bank to pay $5.7 million to consumers harmed by its actions and to pay a $15 million penalty.

The Office of the Comptroller of the Currency reported it has separately fined U.S. Bank $15 million for the same conduct.

For additional information and links to the consent orders issued by the CFPB and OCC, see "U.S. Bank fined $30M for illegal conduct during pandemic" in BankersOnline’s Penalty pages.

The CFPB has announced the asset-size exemption thresholds for depository institutions under Regulation C. The Bureau also announced the asset-size exemption thresholds for certain creditors under the escrow requirements and small creditor portfolio and balloon-payment qualified mortgage requirements, and the small creditor exemption from the prohibition against balloon-payment high-cost mortgages under Regulation Z.

These adjustments are effective on January 1, 2024, consistent with relevant statutory or regulatory provisions.

• The HMDA (Regulation C) asset-size exemption in comment 2(g)-2 will increase to $56 million from $54 million.
• The Regulation Z exemption threshold in § 1026.35(b)(2)(iii) for the escrow requirement for HPMLs will increase to $2,640,000,000 from $2,537,000,000. The adjustment to the escrows asset-size exemption threshold also will increase the threshold for small-creditor portfolio and balloon-payment qualified mortgages under Regulation Z.
• The EGRRCPA asset-size exemption from escrow requirements for smaller federally-insured depository institutions and credit unions will be increased to $11.835 billion from $11.374 billion.

The BankersOnline Regulations pages have been updated to reflect these increases.

FDIC Financial Institution Letter FIL-64-2023, Managing Commercial Real Estate Concentrations in a Challenging Economic Environment, issued yesterday, is an advisory to reemphasize the importance of strong capital, appropriate credit loss allowance levels, and robust credit risk-management practices for institutions with commercial real estate (CRE) concentrations. It also conveys several key risk management practices for institutions to consider in managing CRE loan concentrations in the current economic environment. Additionally, the advisory reemphasizes the importance of effectively managing liquidity and funding risks, which can compound lending risks, particularly for CRE-concentrated institutions. This advisory replaces the 2008 advisory: Managing Commercial Real Estate Concentrations in a Challenging Environment (issued March 17, 2008).

Institutions with significant CRE concentrations are advised to consider the risk management principles discussed in the joint Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices (issued December 6, 2006), and the Interagency Policy Statement on Allowances for Credit Losses (Revised April 27, 2023).

The FDIC has posted a "Sunshine Act" notice of the next meeting of its Board of Directors, scheduled for tomorrow, December 20, at 2 p.m. EST. The meeting will be open to the public for observation only by webcast.

An item of interest to Operations and Compliance managers is on the agenda: Board members will discuss and act on a resolution concerning a "Final Rule on FDIC Official Signs and Advertising Requirements, False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC’s Name or Logo."

BankersOnline published a Top Story announcing the December 2022 FDIC proposed rule on December 14, 2022.

The CFPB on Friday announced it had taken action against a medical debt collector, Commonwealth Financial Systems, for illegally trying to collect unverified medical debts after consumers disputed the validity of the debts. Under the stipulated order issued Friday, the company will cease operations and pay a $95,000 penalty to the CFPB’s victims relief fund. Commonwealth is also required by the order to request all consumer reporting companies to whom it previously furnished information about any consumer to delete all collection accounts for such consumers.

Commonwealth Financial Systems is a nonbank corporation with its principal place of business in Dickson City, Pennsylvania. Commonwealth is a third-party debt collector that specializes in the collection of past-due medical debts and furnishes information about consumer collection accounts to consumer reporting companies.

Commonwealth’s actions violated the Fair Credit Reporting Act because the company failed to conduct reasonable investigations of disputed debts and failed to inform consumer reporting companies that certain information was being disputed. Commonwealth also violated the Fair Debt Collection Practices Act because it continued to attempt to collect disputed debts without substantiating documentation.

In a related development, New York State Governor Kathy Hochul on Thursday signed into state law legislation prohibiting hospitals, health care professionals and ambulances from reporting an individual's medical debt to credit agencies.

The OCC, the Federal Reserve Board, and the FDIC on Friday day issued a revised interagency statement to extend the “Extension of the Revised Statement Regarding Status of Certain Investment Funds and their Portfolio Investments for Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC Regulations.” The prior interagency statement was issued on December 22, 2022, and was set to expire on January 1, 2024.

The revised interagency statement explains that the agencies will continue to exercise discretion not to take action against banks or against certain companies that sponsor, manage, or advise investment funds and institutional accounts (fund complexes) that become principal shareholders of banks (principal shareholder fund complexes). The discretion relates to certain extensions of credit by banks to portfolio companies of the principal shareholder fund complex (fund complex-controlled portfolio companies) that otherwise would violate Regulation O, 12 CFR 215, provided certain eligibility criteria are satisfied.

• FDIC FIL-63-2023

The Federal Reserve Board has released results of a survey of senior financial officers at banks about their strategies and practices for managing reserve balances. The Senior Financial Officer Survey is used by the Board to obtain information about banks' reserve balance management strategies and practices, their deposit pricing strategies, their expectations for potential changes in both the size and composition of their balance sheets, and their views regarding Federal Reserve facilities. The most recent survey was conducted in collaboration with the Federal Reserve Bank of New York between September 22, 2023, and October 6, 2023, and includes responses from banks that held a bit more than three quarters of total banking system reserve balances at the time of the survey.

Yesterday, Treasury announced that OFAC has joined the United Kingdom in taking action against Iran’s Islamic Revolutionary Guard Corps – Qods Force (IRGC-QF), Hamas, and Palestinian Islamic Jihad (PIJ). OFAC designated IRGC-QF official Majid Zaree (Zaree), who is involved in the IRGC-QF’s support to groups such as Hizballah and Hamas.

Treasury also reported that OFAC had sanctioned the Malas Mañas transnational criminal organization (TCO), a human smuggling and narcotics trafficking organization based in Sonora, Mexico, along with two individuals in its support network.

For the names and identification information of the designated parties, see yesterday's BankersOnline OFAC Update.

FRBservices has announced that FedNow Service participation continues to show strong growth and diversity heading into 2024, with 331 institutions, headquartered in 45 states and ranging in size from under $500 million to over $3 trillion in assets, now sending or receiving on the network.

The FedNow Service launched in July with 35 participating institutions. The Federal Reserve Banks expect strong network growth to continue in 2024, bringing accessibility to the FedNow Service through the long-standing connections that the Federal Reserve has with thousands of financial institutions across the country.

The Federal Reserve Banks developed the FedNow Service to facilitate nationwide reach of instant payment services by financial institutions — regardless of size or geographic location — around the clock, every day of the year. Through financial institutions participating in the FedNow Service, businesses and individuals can send and receive instant payments at any time of day, and recipients have full access to funds immediately, giving them greater flexibility to manage their money and make time-sensitive payments. Access is provided through the Federal Reserve’s FedLine network, which serves more than 9,000 financial institutions directly or through their agents.

The OCC has announced enforcement actions taken in November.

• A Formal Agreement with B2 Bank National Association, Mountain Iron, Minnesota, for unsafe or unsound practices, including those relating to internal controls and management oversight.
• A Cease and Desist Order against Upstate National Bank, Ogdensburg, New York, for engaging in unsafe or unsound practices, including those relating to board oversight and corporate governance; strategic and capital planning; interest rate risk management; liquidity risk management; and for engaging in violations of law, rule, or regulation relating to reports of condition.
• Orders of Prohibition against:
  • Marco Antonio Rodriguez Arango, a teller at an Oceanside, California, branch of Wells Fargo Bank, N.A., Sioux Falls, South Dakota, for taking funds from the branch bank vault for personal use which resulted in personal financial gain and a loss to the bank.
  • Helen Caldwell, former financial advisor, Citibank, N.A., Sioux Falls, South Dakota, resolving a Notice of Charges in which the OCC alleged, among other things, that she solicited an elderly customer to invest, and the customer did invest, more than $200,000 in a company she co-owned; received at least $99,000 in direct payments from the company; and falsely represented that she was following, and would follow, policies prohibiting this conduct. She consented to the Order without admitting or denying the allegations in the Notice.
  • Marily Sandybell Espinosa, formerly a personal banker at Wells Fargo Bank, National Association, Sioux Falls, for making multiple unauthorized withdrawals from a customer’s account for personal use.
  • Cheung Kin Lam, formerly a personal banker at JPMorgan Chase Bank, National Association, Columbus, Ohio, for embezzling funds from the Bank and falsifying bank records to conceal his theft.
  • Yecenia D. Perez, former bank assistant manager, Winter Hill Bank, FSB, Somerville, Massachusetts, for misappropriating funds at a loss or risk of loss to the bank.
  • Terry Alan Walker, former customer experience representative at a BMO Harris Bank, N.A., location in Indianapolis, Indiana, for misappropriating funds at a loss or risk of loss to the bank.

OFAC has posted a Notice of Actions announcing a $1,207,830 settlement with CoinList Markets LLC. CoinList agreed to settle its potential civil liability arising from processing 989 transactions on behalf of users ordinarily resident in Crimea between April 2020 and May 2022, in apparent violation of OFAC's Russia/Ukraine sanctions. The settlement amount reflects OFAC's determination that CoinList's conduct was non-egregious and not voluntarily self-disclosed.

For additional details, see "CoinList Markets LLC settles with OFAC for $1.2M+," in the BankersOnline Penalty pages.

FinCEN has announced it has named Jimmy Kirby as its Deputy Director. Mr. Kirby previously served as FinCEN’s Acting Deputy Director. Prior to that, he served as Associate Director of FinCEN’s Research and Analysis Division (formerly FinCEN’s Intelligence Division) as well as FinCEN’s Chief Counsel.

The Treasury Department has reported that OFAC has imposed a fourth round of sanctions on Hamas since the October 7 terrorist attack on Israel. Today’s action targets key officials who perpetuate Hamas’s violent agenda by representing the group’s interests abroad and managing its finances. OFAC closely coordinated with the United Kingdom to concurrently designate several key Hamas officials.

For the names and identification information of the designated individuals, see the December 13, 2023, BankersOnline OFAC Update.

The Federal Reserve Board has issued the Federal Open Market Committee Statement following the Committee's Meeting on December 12–13, 2023. An excerpt follows:

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of any additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.”

The Board and the Committee also released the economic projections made by participants at the Committee meeting.

In the Implementation Note that accompanied the Statement, it is noted that the Board of Governors voted unanimously to maintain the interest rate paid on reserve balances at 5.4 percent, effective December 14, 2023, and voted unanimously to approve the establishment of the primary credit rate at the existing level of 5.5 percent.

The Federal Trade Commission has announced it has finalized a new rule, the Combating Auto Retail Scams Trade Regulation Rule (CARS Rule) to fight two common types of illegal tactics consumers face when buying a car: bait-and-switch tactics and hidden junk fees. The FTC expects the new rule to save consumers nationwide more than $3.4 billion and an estimated 72 million hours each year shopping for vehicles.

The CARS Rule also includes clear protections for members of the military and their families, who are targeted not only with bait-and-switch tactics and junk fees, but also deceptive information about whether dealers are affiliated with the military and other specific issues that affect servicemembers.

The CARS Rule:

• Prohibits misrepresentations about key information, like price and cost.
• Requires dealers to provide the offering price—the actual price any consumer can pay for the vehicle; tell consumers that optional add-ons (like extended warranties) are not required; and give information about the total payment when discussing monthly payments.
• Prohibits dealers from charging for any add-on that does not provide a benefit to consumers. Examples of such add-ons include: warranty programs that duplicate a manufacturer’s warranty, service contracts for oil changes on an electric vehicle, GAP agreements that do not actually cover the car or neighborhood in which it is housed, or other parts of the deal, and software or audio subscription services on a vehicle that cannot support the software or subscription.
• Requires dealers to get consumers’ express, informed consent for any charges that they pay as part of a vehicle purchase.
• Prohibits dealers from lying to servicemembers and other consumers about important cost and financing information, and about whether the dealers are affiliated with the military or any other governmental organization. They also are prohibited from lying about whether a vehicle can be moved out of state (which affects servicemembers and their families, who must frequently move to new duty stations) and whether a vehicle can be repossessed (there are laws that protect many servicemembers from having their vehicle repossessed).

The rule, which will add part 463 to subchapter D of Title 16 of the C.F.R., will become effective July 30, 2024.

UPDATE: Published at 89 FR 590 on 1/4/2024.

FinCEN has updated its Beneficial Ownership Information (BOI) Reporting Rule FAQs to include 19 new or updated questions on general inquiries, the reporting process, reporting companies, reporting requirements, initial reports, updated reports, compliance and enforcement, FinCEN identifiers, and third-party service providers.

Following last week's G7 Leaders' reaffirmation of support for an independent, democratic Ukraine within is internationally recognized borders, the Department of the Treasury yesterday announced that OFAC is implementing the commitments made by G7 Leaders by taking action against third-country actors who materially support Russia’s war; targeting Russian military procurement networks and those who help Russia acquire machine tools, equipment, and key inputs; and further curtailing Russia’s use of the international financial system to further its war in Ukraine.

Concurrently, the Department of State imposed sanctions on over 100 entities and individuals, including those engaged in sanctions evasion in numerous third countries, complicit in furthering Russia’s ability to wage its war against Ukraine, and responsible for bolstering Russia’s future energy production and export capacity.

For a link to OFAC's notice with the names and identification information of the designated parties, see this BankersOnline OFAC Update.

The OCC has reported on the performance of first-lien mortgages in the federal banking system during the third quarter of 2023.

The OCC Mortgage Metrics Report, Third Quarter 2023 showed that 97.3 percent of mortgages included in the report were current and performing at the end of the quarter, the same as the previous quarter. Performance improved compared to third quarter 2022 when 97.2 percent of mortgages were current and performing.

The percentage of seriously delinquent mortgages—mortgages that are 60 or more days past due and all mortgages held by bankrupt borrowers whose payments are 30 or more days past due—was 1.1 percent in the third quarter of 2023, the same as the previous quarter, and a decrease from 1.3 percent a year ago. The percent of seriously delinquent loans has trended down since the third quarter of 2021.

Servicers initiated 8,965 new foreclosures in the third quarter of 2023, an increase from the prior quarter but a decrease from a year earlier. The new foreclosure volume in the third quarter of 2023 is lower than pre-COVID-19 pandemic foreclosure volumes.

Servicers completed 7,436 modifications during the third quarter of 2023, a 13.8 percent decrease from the previous quarter’s 8,623 modifications. Of these 7,436 modifications, 6,367 or 85.6 percent, were “combination modifications”—modifications that included multiple actions affecting the affordability and sustainability of the loan, such as an interest rate reduction and a term extension.