Find Top Stories by Day or Week

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 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

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 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 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 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 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 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 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.

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.

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 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.

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 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.

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.

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.

HUD has announced that has entered into a Voluntary Compliance Agreement-Conciliation Agreement (VCA-CA) with Cushing Housing Inc. requiring Cushing House to pay $300,000 to individuals, including former tenants, who were subjected to housing discrimination at Cushing’s property.

The agreement stems from a complaint filed by tenants alleging Cushing Housing violated civil rights laws when it failed to address serious, racially motivated harassment that denied them the ability to peacefully enjoy their housing. The harassment was so severe that it left them fearful of leaving their apartment and took a substantial toll on their mental health. The VCA-CA resolves HUD’s October 26, 2022 Letter of Findings, which found Cushing House discriminated against the tenants in violation of Title VI of the Civil Rights Act of 1964.

In addition to the $300,000 payment to complainants and an aggrieved individual, the agreement requires Cushing Housing to establish an anti-harassment policy as well as a fair housing and civil rights compliance policy. Both policies must be made available to all tenants and include formal grievance procedures. Respondents are also required to obtain fair housing and civil rights training for all officers, agents, and employees.

OFAC has announced it has entered into a settlement with Nasdaq, Inc. for $4,040,923 related to apparent violations of the Iranian Transactions and Sanctions Regulations by its former Armenian subsidiary, Nasdaq OMX Armenia OJSC, the former owner and operator of the Armenian Stock Exchange (ASE).

Nasdaq OMX Armenia processed trades and settled payments through the ASE platform involving the OFAC-designated Armenian subsidiary of Iran's state-owned Bank Mellat. In doing so, Nasdaq OMX Armenia knowingly engaged in the exportation of services to Iran and the Iranian government, thereby committing 151 apparent violations of the OFAC sanctions on Iran. The settlement amount reflects OFAC’s determination that the apparent violations were non-egregious and voluntarily self-disclosed.

For additional information on OFAC's settlement with Nasdaq, Inc., see this BankersOnline Penalty page.

Yesterday, the Department of the Treasury reported that OFAC has sanctioned two former Afghan government officials — Mir Rahman Rahmani (M. Rahmani) and his son, Ajmal Rahmani (A. Rahmani), collectively known as “the Rahmanis” — for their extensive roles in transnational corruption, as well as 44 associated entities. These individuals and entities were 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. Through their Afghan companies, the Rahmanis perpetrated a complex procurement corruption scheme resulting in the misappropriation of millions of dollars from U.S. Government-funded contracts that supported Afghan security forces.

Concurrently, the Department of State designated Mir Rahman Rahmani, Ajmal Rahmani, and their immediate family members, under Section 7031(c) of the annual Department of State, Foreign Operations, and Related Programs Appropriations Act for involvement in significant corruption as a public official.

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

The FDIC on Monday reported that the Special Committee of its Board of Directors established to oversee an independent third-party review of the agency's workplace culture has issued a statement:

“The Special Committee has appointed the law firm of Cleary Gottlieb Steen & Hamilton LLP to conduct an independent review into allegations of sexual harassment and interpersonal misconduct, as well as issues relating to the workplace culture at the FDIC. The team at Cleary Gottlieb will be led by Joon H. Kim, the former Acting U.S. Attorney for the Southern District of New York, Jennifer Kennedy Park, and Abena Mainoo.

“This team at Cleary Gottlieb has conducted numerous investigations into workplace misconduct and hostile work culture, including being appointed by the New York State Attorney General’s Office to conduct an independent investigation into allegations of sexual harassment and other related misconduct involving the former New York Governor Andrew Cuomo and the New York State Executive Chamber.”

“The Special Committee is committed to an independent and thorough review,” said committee co–chair Michael J. Hsu. “There is no question that the Cleary Gottlieb team has both the experience and the expertise to lead this review.”

The Special Committee encourages both past and current FDIC employees who witnessed or experienced any sexual harassment or hostile, abusive, unprofessional, inappropriate or other interpersonal misconduct at the FDIC to share their experiences with the Cleary Gottlieb team.

The independent counsel team has established a telephone hotline and email address to gather information related to the review. If you have information relevant to the review, please call 202-974-1643 or contact the independent counsel team via email at fdicinvestigation@cgsh.com.

Reports can be left anonymously. The independent counsel team will handle all reports confidentially and, as appropriate, can discuss with those reporting into the hotline any restrictions the individual wishes to impose on how the information is used.

FinCEN has announced it will host a webinar on beneficial ownership information reporting requirements on Wednesday, December 13, at 2 p.m. Eastern Time.

Note: Registration for the webinar has closed, due to high demand.

The Treasury Department on Friday released a Joint Statement on the recent EU – U.S. Financial Regulatory Forum, which took place on December 4–5, 2023, hosted by the U.S. Department of the Treasury and the European Commission.

The Forum emphasized close ongoing EU and U.S. cooperation in a range of areas and focused on six themes: (1) market developments and financial stability; (2) regulatory developments in banking and insurance; (3) anti-money laundering and countering the financing of terrorism (AML/CFT); (4) sustainable finance; (5) regulatory and supervisory cooperation in capital markets; and (6) operational resilience and digital finance. Agency participation varied across themes, with representatives expressing views on issues in their respective areas of responsibility.

The Treasury Department has announced that OFAC has sanctioned 20 individuals for their connection to human rights abuse in nine countries. An additional two individuals were sanctioned under the Department of State’s counterterrorism authority. Furthermore, the Department of State likewise designated individuals in Russia, Indonesia, and the People’s Republic of China (PRC) for visa restrictions pursuant to Section 7031(c) of the Annual Appropriations Act. These actions were taken in concert with measures imposed by partners in the United Kingdom and Canada, which have similarly utilized economic measures to deter human rights abuse globally.

For the names and identification information of the designated parties, a related Global Magnitsky FAQ, and a reminder on OFAC's plan to shut down an FTP server, see this BankersOnline OFAC Update.

A proposed rule to change the Regulation Z exemption of overdraft fees from the definition of finance charges could be on the horizon, based on the CFPB's Fall 2023 Regulatory Agenda. The agenda lists a potential December 2023 Notice of Proposed Rulemaking (NPRM) on the topic, and indicates that the CFPB is considering developing proposed amendments to Regulation Z with respect to the special rules on OD fees that were included by the Federal Reserve Board in 1969.

The Bureau also includes a potential December 2023 NRPM on Fees for Insufficient Funds on the agenda with a December 2023 target date.

Also listed on the agenda in proposed rule stage are the CFPB's proposed rulemaking on Personal Financial Data Rights, a proposal on Mortgage Servicing, a proposal on Supervision of Larger Participants in Consumer Payment Markets, and a proposal on Financial Data Transparency.

Included on the Agenda in the Final Rule stage are amendments to FIRREA Concerning Automated Valuation Models (target date June 2024), a rule on Property Assessed Clean Energy (PACE) Financing (October 2024), a rule to establish a Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders (March 2024), a rule establishing a Registry of Supervised Nonbanks that use Form Contracts with Terms Seeking to Waive or Limit Consumer Legal Protections (March 2024), and the CFPB's proposed rule on Credit Card Penalty Fees (December 2023).

The target dates on federal agency rulemaking agendas are tentative, and are often inaccurate, and the status of the actions listed can change.

The Office of the Comptroller of the Currency yesterday reported the key issues facing the federal banking system in its Semiannual Risk Perspective for Fall 2023.

The OCC highlighted credit, market, operational, and compliance risks as the key risk themes in the report. The report also highlights artificial intelligence (AI) in banking as an emerging risk.

Yesterday, the Treasury Department reported that OFAC, in coordination with the United Kingdom, designated two individuals associated with an advanced persistent threat (APT) group that is sponsored by the Russian Federal Security Service (FSB) and has targeted individuals and entities in the United States, United Kingdom, and other allied and partner countries.

Treasury also announced that OFAC has sanctioned 13 individuals and entities responsible for providing tens of millions of dollars’ worth of foreign currency generated from the sale and shipment of Iranian commodities, backed by the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), to the Houthis in Yemen.

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

Yesterday, the FDIC’s Board of Directors released its second semiannual update of 2023 on the Restoration Plan for the agency’s Deposit Insurance Fund (DIF). The Federal Deposit Insurance Act requires that the FDIC Board adopt a restoration plan when the DIF’s reserve ratio—the ratio of the fund balance relative to insured deposits—falls below 1.35 percent.

As of June 30, 2023, the DIF balance stood at $117.0 billion. Increased loss provisions, including for the bank failures that occurred in March and May, coupled with strong insured deposit growth, resulted in a decline in the reserve ratio from 1.25 percent as of December 31, 2022, to 1.10 percent as of June 30, 2023. Despite this decline, the FDIC projects that the reserve ratio is likely to reach the statutory minimum of 1.35 percent by the statutory deadline of September 30, 2028.

Yesterday, Secretary of the Treasury Janet L. Yellen announced during her travel to Mexico that OFAC has sanctioned 15 Mexican individuals — several of whom are U.S. fugitives — and two Mexico-based companies linked, directly or indirectly, to the Beltrán Leyva Organization (BLO), which continues to be one of the most powerful drug trafficking organizations in the world and is heavily involved in the transportation and distribution of deadly drugs, including fentanyl, to the United States. It has been one of the largest suppliers of cocaine to the U.S. market for over two decades.

This action was coordinated closely with the Government of Mexico, including La Unidad de Inteligencia Financiera (Mexico’s Financial Intelligence Unit), consistent with the Bicentennial Framework, which was adopted at the inaugural meeting of the High-Level Security Dialogue in October 2021 and continues to guide bilateral security cooperation between the United States and Mexico.

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

The CFPB announced this morning it has taken action against Atlantic Union Bank for illegally enrolling thousands of customers in checking account overdraft programs. The CFPB found that Atlantic Union misled consumers who enrolled in this overdraft service by phone and failed to provide proper disclosures. The CFPB is ordering Atlantic Union to refund at least $5 million in illegal overdraft fees and pay a $1.2 million penalty to the CFPB’s victims relief fund.

The Electronic Fund Transfer Act and its implementing regulation require banks to describe their overdraft service in writing before getting a consumer to opt-in to overdraft coverage for ATM withdrawals and one-time debit card transactions. The CFPB’s consent order describes the bank’s illegal conduct and how it improperly communicated with and enrolled consumers in its overdraft program. Specifically, the bank violated federal law by:

• Charging fees without proper consent: At Atlantic Union Bank branches, employees gave oral descriptions of the bank’s overdraft coverage to new customers who opened checking accounts. Employees sought oral confirmation from customers to enroll in overdraft coverage before providing them with the required written disclosures describing the terms of service.
• Misleading customers about the terms and costs of overdraft coverage: For customers who enrolled in overdraft coverage by phone, Atlantic Union Bank employees did not clearly explain which transactions were covered by the service, and made other misleading statements about the terms and conditions of the service. In some calls, bank employees also omitted key information about the cost of the service and the fact that consumers could incur a hefty overdraft fee for each transaction covered by the service.

For additional information, see "Atlantic Union Bank to pay $6.2M for illegal overdraft fees" in the BankersOnline Penalty Pages.

The Office of the Comptroller of the Currency has issued guidance to OCC-supervised institutions to address the risks associated with "buy now, pay later" (BNPL) lending.

The guidance, included in OCC Bulletin 2023-37 (12/6/2023), focuses on the risk management of BNPL loans, which are payable in four or fewer installments and carry no finance charges. The guidance notes that banks should maintain underwriting, repayment terms, pricing, and safeguards that minimize adverse customer outcomes and should ensure that marketing materials and disclosures are clear and conspicuous.

The OCC expects banks that offer BNPL loans to do so in a manner that is safe and sound, provides fair access to financial services, supports fair treatment of consumers, and complies with applicable laws and regulations.

The Special Committee of the Federal Deposit Insurance Corporation (FDIC) Board of Directors established to oversee an independent third–party review of the agency’s workplace culture issued a statement yesterday.

The statement says that, following its establishment, "under the authorities granted by the Board of Directors, the Special Committee began an expedited solicitation of law firms to engage one or more to conduct the independent review.

“The Special Committee is committed to finalizing the selection of the third–party reviewer as soon as practicable and completing the onboarding process soon thereafter.”

The OCC has reported that Deputy Comptroller for Compliance Policy and Acting Deputy Comptroller for the Office of Financial Technology Donna Murphy yesterday testified on the activities and initiatives of the OCC's Office of Financial Technology before the Subcommittee on Digital Assets, Financial Technology and Inclusion, Committee on Financial Services of the U.S. House of Representatives.

In her testimony, Ms. Murphy discussed the OCC’s supervision and regulation related to banks’ use of new and emerging financial technologies. She also highlighted the OCC’s work to engage with banks as they navigate rapid financial technology developments to balance safety, soundness and fairness with innovation and growth.

• Oral statement
• Written testimony