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10/15/2020

Fed proposes FOMC FOIA rules

The Federal Reserve Board is requesting public comment on technical, clarifying updates of the Federal Open Market Committee's Rules Regarding Availability of Information, which describe its Freedom of Information Act (FOIA) procedures. The proposal would implement non-substantive updates to the Committee's FOIA procedures to make them consistent with the Committee's current practices and to incorporate recent changes in law and guidance. The proposal also incorporates formatting and language from the Federal Reserve Board's revisions to its own FOIA procedures, which are effective October 15, 2020. Comments on the proposal are due by December 14, 2020.

10/16/2020

New York bank pays $546,000 Flood Act penalty

The Federal Reserve Board has issued a consent order for a $546,000 civil money penalty to Manufacturers and Traders Trust Company, Buffalo, New York, for a pattern or practice of unspecified violations of Regulation H, 12 CFR § 208.25, which implements requirements of the National Flood Insurance Act.

10/14/2020

New head of FinCEN Intelligence Division

FinCEN announced yesterday that Jimmy Kirby was selected as the new Associate Director to head FinCEN’s Intelligence Division. As Associate Director of the Intelligence Division, Kirby will oversee FinCEN’s collection, analysis, and dissemination of financial intelligence, and a Division whose mission is critical to protecting national security, safeguarding the economy, and protecting communities from harm.

Mr. Kirby previously served for nearly four-and-a-half years as FinCEN's Chief Counsel, where he managed all legal matters pertaining to FinCEN and served as principal legal advisor to the Director and senior leadership.

10/14/2020

CFPB settles with Nissan Motor Acceptance Corp

The CFPB has announced it has issued a consent order against Nissan Motor Acceptance Corporation (NMAC), an auto financing subsidiary of Nissan North America, Inc., which services auto loans and leases originated by Nissan and Infiniti dealerships nationwide.

The Bureau found that NMAC and its agents:

  • wrongfully repossessed vehicles;
  • kept personal property in consumers’ repossessed vehicles until consumers paid a storage fee;
  • deprived consumers paying by phone of the ability to select payment options with significantly lower fees; and
  • in its loan extension agreements, made a deceptive statement that appeared to limit consumers’ bankruptcy protections.

These actions violated the Consumer Financial Protection Act’s (CFPA) prohibition against unfair and deceptive acts and practices.

The Bureau’s consent order requires Nissan to refund fees paid by consumers, credit any outstanding charges stemming from the repossession, and pay consumers redress for each day Nissan wrongfully held the car. Nissan must also pay a civil money penalty of $4 million. The consent order also requires Nissan to:

  • prohibit its repossession agents from charging personal property fees to consumers directly and from demanding fees as a condition of returning personal property;
  • correct its repossession practices and conduct a quarterly review to discover and remediate any future wrongful repossessions;
  • clearly disclose to consumers the fee for each method of making a payment by phone before consumers are asked which method they wish to use; and
  • stop using any language that creates the impression that consumers have surrendered their bankruptcy rights.

10/14/2020

Fed discount rate meetings minutes released

The Federal Reserve Board has released the minutes of its interest rate meetings from August 24 through September 16, 2020.

10/13/2020

CIP exemption for premium finance loans

The OCC, Federal Reserve, FDIC, NCUA, and FinCEN have issued an order granting an exemption from the requirements of the customer identification program rules implementing section 326 of the USA PATRIOT Act for certain loans. The affected loans are those extended by banks. credit unions and their subsidiaries under the jurisdiction of the agencies to all customers (entities and individuals) to facilitate purchases of property and casualty insurance policies referred to as insurance premium finance lending or premium finance loans.

This order, which is dated October 5, 2020, supersedes an order issued September 27, 2018.

10/14/2020

Agenda for FDIC public Board meeting

The FDIC has posted the agenda for its 10:00 a.m. EDT October 20, 2020, Board of Directors meeting, which will be open to the public via live webcast.

Key summary agenda items include:

  • Final Rule on Branch Application Procedures
  • Notice of Proposed Rulemaking on Removal of Transferred OTS Regulations Regarding Subordinate Organizations (Part 390, Subpart O)
  • Notice of Proposed Rulemaking on Role of Supervisory Guidance

Key discussion agenda items include:

  • Final Rule on Regulatory Capital Treatment for Investments in Certain Unsecured Debt Instruments of Global Systemically Important U.S. Bank Holding Companies, Certain Intermediate Holding Companies, and Global Systemically Important Foreign Banking Organizations; Total-Loss Absorbing Capacity Requirements
  • Final Rule on Net Stable Funding Ratio: Liquidity Risk Measurement Standards and Disclosure Requirements
  • Interim Final Rule on Applicability of Annual Independent Audits and Reporting Requirements for Fiscal Years Ending in 2021

10/13/2020

FDIC issues FIL on Hurricane Sally relief

The FDIC has issued FIL-96-2020 announcing steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Florida affected by Hurricane Sally.

10/14/2020

FinCEN Advisory on unemployment insurance fraud

FinCEN has issued FIN-2020-A007, an "Advisory on Unemployment Insurance Fraud During the Coronavirus Disease 2019 (COVID-19) Pandemic." The advisory contains descriptions of COVID-19-related unemployment insurance (UI) fraud, associated red flag indicators, and information on how to report suspicious activity that may involve UI fraud. Representative types of such fraud include:

  • Fictitious employer-employee fraud: filers falsely claim they work for a legitimate company, or create a fictitious company and supply fictitious employee and wage records to apply for UI payments;
  • Employer-employee collusion fraud: the employee receives UI payments while the employer continues to pay the employee reduced, unreported wages;
  • Misrepresentation of income fraud: an individual returns to work and fails to report the income in order to continue receiving UI payments, or in an effort to receive higher UI payments, an applicant claims higher wages than he/she previously earned;
  • Insider fraud: state employees use credentials to inappropriately access or change UI claims, resulting in the approval of unqualified applications, improper payment amounts, or movement of UI funds to accounts that are not on the application; or
  • Identity-related fraud: filers submit applications for UI payments using stolen or fake identification information to perpetrate an account takeover.

FinCEN asks that SARs for possible UI fraud include the key term "“COVID19 UNEMPLOYMENT INSURANCE FRAUD FIN-2020-A007” in SAR field 2 (Filing Institution Note to FinCEN) and the narrative to indicate a connection between the suspicious activity being reported and the activities highlighted in the advisory. Filers should also select SAR field 34(z) (Fraud-other) as the suspicious activity type, and include certain other information detailed in the Advisory, if available, to assist law enforcement.

10/13/2020

OFAC sanctions Nicaraguan bank and officials

On Friday, Treasury announced that OFAC had designated Nicaraguan financial institution Cooperativa De Ahorro Y Credito Caja Rural Nacional RL, as well as Attorney General Ana Julia Guido De Romero and Secretary of the Presidency Paul Herbert Oquist Kelley, in an effort to target key financial operations and government officials that continue to undermine Nicaragua’s democracy. The action, taken pursuant to Executive Order 13851, “Blocking Property of Certain Persons Contributing to the Situation in Nicaragua,” targets corrupt financial operations and Ortega regime supporters.

Identifying information can be found in this BankersOnline OFAC Update.

10/13/2020

$1.3B authorized for Florida disaster recovery

Secretary Carson announced Monday that HUD is making more than $1.3 billion in funding available to the state of Florida, which will immediately help Floridians recover from Hurricane Michael and assist the investment in large scale disaster mitigation projects through the Community Development Block Grant Mitigation and Disaster Relief programs.

10/09/2020

School-affiliated credit card decline continues

The CFPB yesterday issued its annual College Credit Card Agreements report to Congress, which covers agreements between credit card issuers and institutions of higher education, as well as certain organizations affiliated with such institutions. The report indicates that in 2019 the number of total agreements in effect, as well as the number of accounts open under the agreements, continues a general downward trend. Overall, between 2009 and 2019, the number of agreements in effect, year-end open accounts, and payments by issuers all declined by more than two-thirds. Agreements with alumni associations continue to represent the large majority of agreements, accounts, and payments by issuers.

10/09/2020

FCC proposes amendments to TCPA regulations

The Federal Communications Commission has published [85 FR 64091] in today's Federal Register a proposed rule to implement section 8 of the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act) and seeks comment on how to best implement it. As directed by the TRACED Act, the Commission seeks to ensure that any exemption the Commission has granted under the Telephone Consumer Protection Act (TCPA) for calls to residential lines or for calls to wireless numbers includes requirements with respect to the classes of parties that may make such calls; the classes of parties that may be called; and the number of such calls that may be made to a particular called party.

The Commission, to comply with the TRACED Act, seeks comment on the need to amend exemptions the Commission has previously carved out. Those exemptions are: (1) Non-commercial calls to a residence; (2) commercial calls to a residence that do not constitute telemarketing; (3) tax-exempt nonprofit organization calls to a residence; (4) Health Insurance Portability and Accountability Act of 1996 (HIPAA)-related calls to a residence; (5) package delivery-related calls to a wireless number; (6) financial institution calls to a wireless number; (7) healthcare-related calls to a wireless number; (8) inmate calling service calls to a wireless number; and (9) cellular carrier calls to their own subscribers.

Comments are due on or before October 26, 2020, and reply comments are due on or before November 3, 2020.

10/09/2020

U.S. sanctions 18 major Iranian banks

Yesterday, the Secretary of the Treasury, in consultation with the Secretary of State, identified the financial sector of the Iranian economy pursuant to section 1(a)(I) of Executive Order 13902, which authorizes Treasury to sanction any Iranian financial institution. Subsequently, OFAC sanctioned eighteen major Iranian banks. Sixteen Iranian banks were sanctioned for operating in Iran’s financial sector and one bank for being owned or controlled by a sanctioned Iranian bank. Additionally, this action includes the designation of an Iranian military-affiliated bank under Treasury’s counter-proliferation authority.

See BankersOnline's OFAC Update for identification of the banks sanctioned by these actions, information on a new Iran-related General License, and links to new Iran-related FAQs.

10/09/2020

Simpler forgiveness application for small PPP loans

Treasury has announced that the SBA has released a simpler loan forgiveness application and application instructions for Paycheck Protection Program loans of $50,000 or less, and issued an interim final rule on its simpler forgiveness process.

The SBA began approving PPP forgiveness applications and remitting forgiveness payments to PPP lenders for PPP borrowers on October 2, 2020.

10/09/2020

OCC authorizes Hurricane Delta closings

The OCC has issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices affected by Hurricane Delta at their discretion.

10/09/2020

Morgan Stanley fined $60M

The OCC has announced it assessed a $60 million civil money penalty against Morgan Stanley Bank, N.A., and Morgan Stanley Private Bank, N.A. ("the banks").

The OCC took these actions based on the banks’ failure to exercise proper oversight of the 2016 decommissioning of two Wealth Management business data centers located in the U.S.
Among other things, the OCC found that the banks—

  • failed to effectively assess or address risks associated with decommissioning its hardware;
  • failed to adequately assess the risk of subcontracting the decommissioning work, including exercising adequate due diligence in selecting a vendor and monitoring its performance; and
  • failed to maintain appropriate inventory of customer data stored on the decommissioned hardware devices.

In 2019, the banks experienced similar vendor management control deficiencies in connection with decommissioning other network devices that also stored customer data.

The OCC found the noted deficiencies constitute unsafe or unsound practices and resulted in noncompliance with 12 CFR Part 30, Appendix B, “Interagency Guidelines Establishing Information Security Standards."

10/08/2020

Bureau issues RESPA Section 8 FAQs

The Consumer Financial Protection Bureau has published guidance in the form of FAQs on Real Estate Settlement Procedures Act (RESPA) Section 8 topics. The FAQs, which the CFPB has issued as a Compliance Aid, provide an overview of the provisions of RESPA Section 8 and respective Regulation X sections, and address the application of certain provisions to common scenarios described in Bureau inquiries involving gifts and promotional activities, and marketing services agreements (MSAs).

The Bureau also said it has determined that Compliance Bulletin 2015-05, "RESPA Compliance and Marketing Services Agreements," does not provide the regulatory clarity needed on how to comply with RESPA and Regulation X and therefore is rescinding it. The Bureau’s rescission of the Bulletin does not mean that MSAs are per se or presumptively legal. Whether a particular MSA violates RESPA Section 8 will depend on specific facts and circumstances, including the details of how the MSA is structured and implemented. MSAs remain subject to scrutiny.

10/08/2020

Citibank fined $400M for risk management deficiencies

The OCC announced yesterday it has issued Citibank, N.A., Sioux Falls, South Dakota, a $400 million civil money penalty order related to deficiencies in enterprise-wide risk management, compliance risk management, data governance, and internal controls. The OCC took that action based on the bank’s unsafe or unsound banking practices for its long-standing failure to establish effective risk management and data governance programs and internal controls. This failure also resulted in a violation of 12 CFR Part 30, Appendix D, “OCC Guidelines Establishing Heightened Standards for Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches.”

The agency also issued a cease and desist order requiring the bank to take broad and comprehensive corrective actions to improve risk management, data governance, and internal controls. The order requires the bank to seek the OCC’s non-objection before making significant new acquisitions and reserves the OCC’s authority to implement additional business restrictions or require changes in senior management and the bank’s board should the bank not make timely, sufficient progress in complying with the order.

Further information on the OCC's actions, with links to the consent orders, can be found HERE, in BankersOnline's Penalty pages.

The Federal Reserve Board announced a separate but related action against Citigroup, the bank’s holding company. In a cease and desist order, the Board requires Citigroup to enhance its firm-wide risk management and internal controls. Among other things, the firm has not taken prompt and effective actions to correct practices previously identified by the Board in the areas of compliance risk management, data quality management, and internal controls.

10/08/2020

Regulators finalize TLAC and capital rule revision

The OCC, Federal Reserve Board, and FDIC have published a final rule [85 FR 63423] adopting as final the revisions to the definition of eligible retained income made under the interim final rule published [85 FR 15909] in the Federal Register on March 20, 2020, for all depository institutions, bank holding companies, and savings and loan holding companies subject to the agencies' capital rule. The final rule revises the definition of eligible retained income to make more gradual any automatic limitations on capital distributions that could apply under the agencies' capital rule.

Separately, in this final rule, the Board also is adopting as final the definition of eligible retained income made under the interim final rule published [85 FR 17003] in the Federal Register on March 26, 2020, for purposes of the Board's total loss-absorbing capacity (TLAC) rule. The final rule, which will become effective January 1, 2021, adopts these interim final rules with no changes.

10/08/2020

Consumer credit decreases

The Federal Reserve has released its G.19 Consumer Credit Report for August 2020, which reports consumer credit decreased at a seasonally adjusted annual rate of 2 percent. Revolving credit decreased at an annual rate of 11-1/4 percent, while nonrevolving credit increased at an annual rate of 3/4 percent.

10/07/2020

Fed September CRA ratings

This month's check of the Federal Reserve's CRA evaluation ratings archives revealed that the Fed released four evaluations in September, all with Satisfactory ratings.

10/08/2020

FBAR filing relief for disaster victims

FinCEN has posted a notice that victims of the California wildfires, the Iowa derecho, Hurricane Laura, the Oregon wildfires, and Hurricane Sally have until December&nbsp31, 2020, to file Reports of Foreign Bank and Financial Accounts (FBARs) for the 2019 calendar year.

The FBAR for calendar year 2019 otherwise would be due on or before October 15, 2020.

FinCEN is offering this expanded relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance as a result of the disasters listed above (the “affected areas”). Should FEMA designate FBAR filers in other localities affected by these natural disasters as eligible for individual assistance at a later date, they will receive the same filing relief automatically.

10/07/2020

Powell comments on pandemic and challenges

In a presentation at the National Association for Business Economics Virtual Annual Meeting, Federal Reserve Board Chair Jerome Powell reviewed recent economic developments and the challenges ahead.

Powell noted the recovery has progressed more quickly than generally expected. He also recommended we should continue do what we can to manage downside risks to the outlook. One such risk is that COVID-19 cases might again rise to levels that more significantly limit economic activity, not to mention the tragic effects on lives and well-being. Managing this risk as the expansion continues will require following medical experts' guidance, including using masks and social-distancing measures.

Powell stated “Today, I will just note that the underlying structure of the economy changes over time, and that the FOMC's framework for conducting monetary policy must keep pace. The forward rate guidance adopted at our September meeting reflects our new consensus statement. The new guidance says that, with inflation running persistently below our longer-run 2 percent goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of policy until these outcomes are achieved. The Committee also left the target range for the federal funds rate unchanged at 0 to 1/4 percent, and it expects it will be appropriate to maintain this target range until labor market conditions have reached levels that are consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.”

10/07/2020

New funding for disabled veterans housing

HUD has announced $3.9 million in funding through the Veterans Housing Rehabilitation and Modification Pilot Program (VHRMP) to help make homes more accessible for disabled veterans. Through the VHRMP program, grantees will make necessary physical modifications to address the needs of eligible veterans, including wheelchair ramps, widening doors, reconfiguring bathrooms, and modifying homes to accommodate a veteran’s caregiver. The purpose of this program is to assist our nation’s low-income veterans living with disabilities who need adaptive housing to help them regain or maintain their independence.

10/07/2020

2020 census of finance companies

The Federal Reserve System has announced that it will begin the 2020 Census of Finance Companies and Other Lenders. The census is a key part of the Federal Reserve's effort to paint a complete picture of this important sector of the U.S. economy. A letter from Fed Chair Powell was sent to approximately 26,000 companies urging their participation in the census.

10/06/2020

EIP registration deadline extended

The IRS has announced that the deadline to register for an Economic Impact Payment (EIP or stimulus payment) is now November 21, 2020, five weeks beyond the original deadline. This additional time is only for those who have not received their EIP and don’t normally file a tax return. For taxpayers who requested an extension of time to file their 2019 tax return, the deadline date remains October 15.

10/06/2020

Applications for early termination of CFPB orders

The CFPB has issued a policy statement on applications for early termination of administrative consent orders. The statement outlines the early termination application process for entities subject to an order and the standards that the Bureau intends to use when evaluating applications. For an order to be terminated early, an entity should demonstrate that it meets certain threshold eligibility criteria, has fully complied with the terms of the order, and has a satisfactory compliance management system in applicable areas. These conditions are designed to minimize the risk of new violations of law by the entity and to protect consumers.

The policy statement becomes effective October 8, 2020.

PUBLICATION UPDATE: Published on October 3, 2020.

10/07/2020

Nacha ACH Contact Registry deadline

October 30 is the deadline for financial institutions to enter required information in the ACH Contact Directory to be in compliance with the Nacha Operating Rules. In a September 30 Nacha Blog Post, blogger Michael Kahn says, "Do it because it’s a Rule, but also do it for that counterpart at another financial institution who may need your help one day. After all, you may need their help some day—and that’s when you’ll be glad they entered their information."

10/06/2020

Report on U.S. credit markets and effects of COVID-19

The Securities and Exchange Commission has published a staff report titled "U.S. Credit Markets: Interconnectedness and the Effects of the COVID-19 Economic Shock," which focuses on the origination, distribution and secondary market flow of credit across U.S. credit markets. The staff report also addresses how the related interconnections in U.S. credit markets operated as the effects of the COVID-19 pandemic took hold.

SEC staff will host a Roundtable on Interconnectedness and Risk in U.S. Credit Markets to discuss the issues raised in the report at 1:00 p.m. EDT on October 14.

10/06/2020

NCUA webinar on minority depository institutions

The NCUA will host a one-hour webinar, “Pathways to Consumer Financial Well-Being: The Importance of Financial Inclusion and Minority Depository Institutions,” on October 21, 2020, at 2 p.m. EDT. Participants will be able to log into the webinar and view it on their computers or mobile devices using the registration link. The webinar is open to consumers, credit unions, and parties interested in working with credit unions to expand access to safe and affordable financial services in underserved communities. Registration is now open.

10/06/2020

Tribes awarded $9M for safer housing

HUD has awarded more than $9 million in Healthy Homes Production grants to twelve tribes and tribal agencies to protect children and families from home health and safety hazards. HUD's Office of Lead Hazard Control and Healthy Homes promotes local efforts to eliminate dangerous lead paint and other housing-related health hazards from lower income homes, stimulates private sector investment in lead hazard control, supports cutting-edge research on methods for assessing and controlling housing-related health and safety hazards, and educates the public about the dangers of hazards in the home.

10/06/2020

FDIC releases CRA evaluation ratings

The FDIC has released a list of 74 state nonmember banks recently evaluated for compliance with the Community Reinvestment Act and to whom the FDIC assigned evaluation ratings in July 2020. Of the evaluations listed, 68 were rated "Satisfactory." The remaining six evaluations were rated "Outstanding," and we congratulate these banks on that achievement (links are to their evaluation reports):

10/05/2020

SBA issues procedural notice on PPP ownership changes

The SBA has issued a Procedural Notice on "Paycheck Protection Program Loans and Changes of Ownership," effective October 2, 2020. A change of ownership for this purpose occurs when—

  1. at least 20 percent of the common stock or other ownership interest of a PPP borrower (including a publicly traded entity) is sold or otherwise transferred, whether in one or more transactions, including to an affiliate or an existing owner of the entity,
  2. the PPP borrower sells or otherwise transfers at least 50 percent of its assets (measured by fair market value), whether in one or more transactions, or
  3. a PPP borrower is merged with or into another entity.

Prior to the closing of any change of ownership transaction, the PPP borrower must notify the PPP Lender in writing of the contemplated transaction and provide the PPP Lender with a copy of the proposed agreements or other documents that would effectuate the proposed transaction.

10/05/2020

Larger small business size standards proposed

The SBA is requesting public comments on two proposed rules that would revise the small business size standards for businesses in eight North American Industrial Classification System (NAICS) sectors to increase small business eligibility for SBA’s loan and contracting programs. The sectors reviewed in the first proposed rule [85 FR 62239] are: Agriculture, Forestry, Fishing, and Hunting; Mining, Quarrying, and Oil and Gas Extraction; Utilities; and Construction. The NAICS sectors reviewed in the second proposed rule [85 FR 62372"] are: Transportation and Warehousing; Information; Finance and Insurance; and Real Estate and Rental and Leasing. The SBA proposes to increase size standards for 113 industries in those sectors. Comments can be submitted on these proposed rules on or before December 1, 2020.

10/05/2020

FTC updates DNC Registry user fees

The Federal Trade Commission has published a final rule [85 FR 62596] in this morning's Federal Register to amend its Telemarketing Sales Rule by updating the fees charged to entities accessing the National Do Not Call Registry as required by the Do-Not-Call Registry Fee Extension Act of 2007. The revised fees became effective October 1, 2020.

The revised rule increases the annual fee for access to the Registry for each area code of data from $65 to $66 per area code; and increases the maximum amount that will be charged to any single entity for accessing area codes of data from $17,765 to $18,044.

10/05/2020

September jobs report released

The Bureau of Labor Statistics has released its monthly employment situation report for September. The U.S. added 661,000 jobs, and the unemployment rate fell to 7.9 percent. In the last five months, 52 percent of the job losses from the pandemic have been recovered, and the country has gained more than 11.4 million jobs, including a combined upward revision in July and August of 145,000 jobs.

10/05/2020

Flood program extended one year

The president signed H.R. 8337 on Thursday. Section 146 of the "Continuing Appropriations Act, 2021 and Other Extensions Act" postponed the expiration of the National Flood Insurance Program for one year, to September 30, 2021. Language was included to bridge the gap between the September 30, 2020, expiration date and the signing date.

10/02/2020

OCC Bulletins posted

The OCC yesterday posted two Bulletins:

  • Bulletin 2020-85 - "Current Expected Credit Losses: Final Rule" - announced the rule finalizing the interim final rule to delay the estimated impact on regulatory capital stemming from the implementation of Accounting Standards Update No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (CECL) by banks.
  • Bulletin 2020-86 - "Community Reinvestment Act: Small Bank Compliance Guide" includes a compliance guide for small banks, an initial illustrative list of qualifying activities, and a form to request consideration of items to be added to the list of qualifying activities

10/02/2020

OFAC settles with travel assistance company

OFAC has announced a settlement with Generali Global Assistance, Inc. (GGA), a New York-incorporated travel assistance services company. GGA agreed to remit $5,864,860 to settle its potential civil liability for 2,593 apparent violations of the Cuban Assets Control Regulations. GGA intentionally referred Cuba-related payments to its Canadian affiliate, thereby avoiding processing reimbursement payments directly to Cuban parties and to travelers while they were located in Cuba. GGA subsequently reimbursed its Canadian affiliate for those payments.

The statutory maximum civil monetary penalty applicable in this matter is $168,545,000. OFAC determined, however, that GGA voluntarily self-disclosed the Apparent Violations and that the Apparent Violations constitute an egregious case. Accordingly, under OFAC’s Economic Sanctions Enforcement Guidelines (“Enforcement Guidelines”), the base civil monetary penalty amount applicable in this matter is $84,272,500. The settlement amount of $5,864,860 reflects OFAC’s consideration of the General Factors under the Enforcement Guidelines.

In its notice of the settlement, OFAC said this enforcement action highlights the importance of ensuring that sanctions compliance policies and procedures address both direct and indirect sanctions compliance risks, and in particular, highlights the risks of implementing a procedure to process, indirectly, transactions whose direct processing would be prohibited by U.S. sanctions.

10/02/2020

NMLS reminder on renewals

The NMLS has posted a reminder that the NMLS 2021 annual renewal period for federal registrations begins November 1. According to federal regulations, all mortgage loan originators registered prior to July 1, 2020, must renew their registrations for 2021. The renewal period ends December 31.

10/02/2020

CFPB assessment of TRID disclosure rule

The CFPB has released a report to Congress on its formal five-year assessment of its Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z) Rule (the "TRID Rule"), which took effect October 3, 2015. In its assessment, the Bureau used both its own research and external sources to evaluate the effectiveness of the Rule in meeting (1) the purposes and objectives of the Bureau and (2) the specific goals of the Rule as stated by the Bureau prior to the Rule’s effective date.

Some highlights from Director Kraninger's message covering the report:

  • In laboratory testing, borrower understanding of mortgage transactions has improved due to their receipt of the required disclosures.
  • The TRID Rule appears to have created sizeable implementation costs for lenders and closing companies. Based on the industry surveys, a typical cost for a lender to implement the TRID Rule was $146 per mortgage originated in 2015, or roughly 2.0 percent of the average cost of originating a mortgage. Similarly, a typical cost for a closing company to implement the TRID Rule was $39 per closing in 2015, or about ten percent of the average cost of closing.
  • The TRID Rule’s effects on ongoing costs is less clear. Industry data indicate that mortgage lending costs have steadily increased over the past decade. However, the Bureau does not have any data that demonstrates how much, if any, of these increased costs are attributable to the TRID Rule.
  • The TRID Rule appears to have decreased mortgage originations and increased closing times, but these measures returned to pre-TRID Rule levels in a relatively short period of time.

10/02/2020

Ransomware advisories

The Treasury Department announced yesterday that its Office of Terrorism and Financial Intelligence today issued a pair of advisories to assist U.S. individuals and businesses in efforts to combat ransomware scams and attacks, which continue to increase in size and scope.

FinCEN issued an advisory [FIN-2020-A006], entitled "Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments," to provide information on the role of financial intermediaries in payments, ransomware trends and typologies, and related financial red flags. It also provides information on effectively reporting and sharing information related to ransomware attacks.

OFAC also issued an advisory, entitled "Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments," to highlight the sanctions risks associated with facilitating ransomware payments on behalf of victims targeted by malicious cyber-enabled activities.

10/02/2020

OCC releases CRA ratings

The OCC has released a list of CRA performance evaluations that became public during September. Of the 12 evaluations made public this month, one is rated needs to improve, 10 are rated satisfactory, and one - Inwood National Bank, Dallas, Texas, was rated outstanding.

10/02/2020

Fed extends expansion of intraday credit

The Federal Reserve Board yesterday extended to March 31, 2021, temporary actions aimed at increasing the availability of intraday credit extended by Federal Reserve Banks on both a collateralized and uncollateralized basis. These temporary actions: (1) suspend uncollateralized intraday credit limits (net debit caps) and waive overdraft fees for institutions that are eligible for the primary credit program; (2) permit a streamlined procedure for secondary credit institutions to request collateralized intraday credit (max caps); and (3) suspend two collections of information that are used to calculate net debit caps.

The Fed's temporary actions were due to expire on September 30, 2020.

10/02/2020

OCC 2021 bank supervision operating plan

The OCC yesterday released its bank supervision operating plan for fiscal year 2021. The plan provides the foundation for policy initiatives and for supervisory strategies as applied to individual national banks, federal savings associations, federal branches, federal agencies, and technology service providers. OCC staff members use this plan to guide their supervisory priorities, planning, and resource allocations.

Supervisory strategies for FY 2021 will focus on:

  • credit risk management, commercial and residential real estate concentration risk management, allowances for loan and lease losses, and allowances for credit losses
  • cybersecurity and operational resilience
  • BSA/AML compliance management
  • compliance risk management associated with 2020 pandemic-related bank activities
  • Community Reinvestment Act performance
  • fair lending examinations and risk assessments
  • the impact of a low-rate environment and preparation for the phaseout of LIBOR
  • proper oversight of significant third-party relationships
  • change management over significant operational changes
  • payment systems products and services

    10/02/2020

    Fed Written Agreement with Pennsylvania bank

    The Federal Reserve Board has announced the execution of a Written Agreement with Atlantic Community Bankers Bank, Camp Hill, Pennsylvania, regarding deficiencies in the bank's program for compliance with BSA/AML requirements.

    10/01/2020

    NCUA Issues one prohibition notice

    The NCUA issued one prohibition notice in September to a former employee of Members 1st Federal Credit Union in Mechanicsburg, Pennsylvania, who had been sentenced on the charge of theft in connection with her employment. She is prohibited from participating in the affairs of any federally insured financial institution.

    10/01/2020

    FinCEN seeks comments on CDD and EDD requirements

    FinCEN published [85 FR 61104] in the September 29 Federal Register a 60-day notice to renew the Office of Management and Budget (OMB) control number assigned to the regulatory requirements to conduct due diligence and enhanced due diligence over foreign correspondent accounts and private banking accounts.

    In the notice, FinCEN proposes for review and comment a methodology to expand the scope of future estimates of cost and time for purposes of the Paperwork Reduction Act to be more granular in the estimates of resources expended to comply with these regulatory requirements. The notice requests feedback from the industry on or before November 30, 2020.

    10/01/2020

    Fed extending capital resilience measures

    The Federal Reserve Board announced yesterday it will extend for an additional quarter several measures to ensure that large banks maintain a high level of capital resilience in this period of continued economic uncertainty during the pandemic. For the fourth quarter of this year, large banks—those with more than $100 billion in total assets—will be prohibited from making share repurchases. Additionally, dividend payments will be capped and tied to a formula based on recent income.

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