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12/02/2020

OFAC targets network aiding Colombian DTO

The Treasury Department has announced OFAC has designated Jhon Fredy Zapata Garzon (Zapata Garzon) under authority of the Foreign Narcotics Kingpin Designation Act (Kingpin Act) for materially assisting the international narcotics trafficking activities of the Clan del Golfo drug trafficking organization (DTO). Three of his family members and associates are also being designated along with four businesses they own or control.

Since June 2000, more than 2,100 entities and individuals have been named pursuant to the Kingpin Act for their role in international narcotics trafficking. Penalties for violations of the Kingpin Act range from civil penalties of up to $1,503,470 per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines of up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals could face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

For identification information on all of the individuals and entities affected in OFAC's action, see BankersOnline's OFAC Update.

12/01/2020

OFAC sanctions Chinese tech company for Maduro support

The Treasury Department has announced that OFAC has designated China National Electronic Import-Export Company (CEIEC) for supporting the illegitimate Maduro regime’s efforts to undermine democracy in Venezuela, including its efforts to restrict internet service and conduct digital surveillance and cyber operations against political opponents.

CEIEC has over 200 subsidiaries and offices around the world. Concurrent with this action, OFAC is issuing a general license that, for 45 days, authorizes all transactions and activities prohibited by E.O. 13692, as amended, that are ordinarily incident and necessary to the wind-down of transactions involving CEIEC.

See BankersOnline's OFAC Update for CEIEC identification details and links to the general license and a related FAQ.

12/01/2020

Webinar on use of artificial intelligence

FDIC FIL-109-2020 has announced the FDIC, Fed, OCC, and CFPB will conduct an Ask the Regulators webinar event for their supervised institutions on the use of artificial intelligence (AI), including machine learning (ML) on Wednesday, December 16, 2020, at 1:00 p.m. EST.

During the “Ask the Regulators: Banks’ Use of Artificial Intelligence, including Machine Learning” webinar, the agencies will discuss issues and common questions raised about banks’ use of AI/ML, including risk management and controls, data usage, explainability and transparency, independent review, and consumer protection considerations. The agencies will also highlight several existing laws, regulations, supervisory guidance, and other resources that may be relevant to AI/ML usage.

Pregistration is required.

12/01/2020

LIBOR transition statement issued

The Federal Reserve Board, FDIC, and the OCC have issued a statement encouraging banks to cease entering into new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by December 31, 2021, in order to facilitate an orderly—and safe and sound— LIBOR transition.

12/01/2020

Bureau no-action letter issued

The Consumer Financial Protection Bureau has announced it has granted a no-action letter to Upstart Network, Inc., regarding its automated model for underwriting and pricing applications for unsecured closed-end loans.

12/01/2020

Fed releases senior financial officer survey data

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 (SFOS) is used by the Board to obtain information about deposit pricing and behavior, bank liability management, the provision of financial services, and reserve management strategies and practices. The most recent survey was conducted in collaboration with the Federal Reserve Bank of New York between September 18, 2020, and October 2, 2020, and includes responses from banks that held approximately three quarters of total banking system's reserve balances at the time of the survey.

12/01/2020

Bureau adds to executive team

The CFPB has announced additions to its executive team:

  • Matthew R. Bettenhausen serves as Senior Advisor and Counselor to the Director
  • Chris Chilbert is the Chief Information Officer in the Bureau’s Operations Division
  • Janis K. Pappalardo is the Associate Director for Research, Markets and Regulations
  • Donna Roy is the Bureau’s Chief Operating Officer
  • Deborah Royster is the Assistant Director, Office for Older Americans

12/01/2020

Fed lending programs extended through first quarter

Treasury and the Federal Reserve Board have announced an extension of four of the Fed's credit facilities through March 31, 2021:

  • Commercial Paper Funding Facility
  • Money Market Mutual Fund Liquidity Facility
  • Primary Dealer Credit Facility
  • Paycheck Protection Program Liquidity Facility

12/01/2020

Debt parking scheme halted

The Federal Trade Commission has filed an action in U.S. District Court and received a stipulated Order for Permanent Injunction and Monetary Judgment against a debt collection company that allegedly placed bogus or highly questionable debts on consumers’ credit reports to coerce them to pay the debts. The FTC alleged that the company and its owners, Brandon M. Tumber, Kenny W. Conway, and Joseph H. Smith, had collected more than $24 million from consumers. Under a settlement with the FTC, the company, Midwest Recovery Systems (Midwest Recovery), is prohibited from the practice, known as “debt parking,” and required to delete the debts it previously reported to credit reporting agencies.

The settlement includes a monetary judgment of $24.3 million, which is partially suspended based on an inability to pay. Tumber and the company will be required to pay $56,748, and Tumber will also be required to sell his stake in another debt collection company and provide the proceeds from that sale to the FTC. In addition, Midwest Recovery will be required to surrender all of its remaining assets. If the defendants are found to have misrepresented their ability to pay, the full amount of the judgment would become immediately payable.

12/01/2020

HUD awards $54.7M in new rental grants for low-income persons

HUD has announced the awarding of over $54.7 million in capital advance and project rental assistance grants to 15 organizations, to expand the supply of affordable rental housing for extremely low-income persons with disabilities. The capital advance awards will support integrated affordable housing by providing funding for the development of permanent supportive rental housing through it’s Section 811 Supportive Housing for Persons with Disabilities program.

12/01/2020

NCUA prohibition notices issued

The NCUA issued two prohibition notices in November 2020, to individuals who are now prohibited from participating in the affairs of any federally insured financial institution.

  • A former employee of Groton Municipal Employees Federal Credit Union in Groton, Connecticut, who had entered into a pretrial diversion or similar program resulting from a charge of third degree larceny in connection with her employment.
  • A former employee of Beacon Credit Union in Lynchburg, Virginia, who had been sentenced on a charge of embezzlement in connection with her employment.

12/01/2020

Powell discusses CARES Act with Senate Committee

Yesterday, Federal Reserve Board Chair Jerome H. Powell updated the Senate Committee on Banking, Housing, and Urban Affairs on the actions of the Federal Reserve to use its policies to help alleviate the economic burden resulting from the pandemic.

He noted economic activity has continued to recover from its depressed second-quarter level. The reopening of the economy led to a rapid rebound in activity, and real gross domestic product, or GDP, rose at an annual rate of 33 percent in the third quarter. In recent months, however, the pace of improvement has moderated. Household spending on goods, especially durable goods, has been strong and has moved above its pre-pandemic level. In contrast, spending on services remains low largely because of ongoing weakness in sectors that typically require people to gather closely, including travel and hospitality.

Powell said the Federal Reserve's response has been guided by its mandate to promote maximum employment and stable prices for the American people, along with its responsibilities to promote the stability of the financial system. The CARES Act assigns sole authority over its funds to the Treasury Secretary, subject to the statute's specified limits. The Secretary has indicated that these limits do not permit the CARES Act-funded facilities to make new loans or purchase new assets after December 31 of this year. Accordingly, the Federal Reserve will return the unused portion of funds allocated to the lending programs that are backstopped by the CARES Act in connection with their termination at the end of this year. As the Secretary noted in his letter, non-CARES Act funds in the Exchange Stabilization Fund are available to support emergency lending facilities if they are needed.

12/01/2020

FDIC and OCC list CRA exam schedules

The FDIC and the OCC have issued their respective schedules for CRA examinations during the first and second quarters of 2021.

12/01/2020

Fed CRA ratings for October and November

Our review of the Federal Reserve Board's archive of CRA evaluation ratings indicates that in the months of October and November, 2020, the Federal Reserve Banks made public 21 ratings. Of the Federal Reserve member banks listed, one received a "Needs to Improve" rating, 17 were rated "Satisfactory," and these three banks received ratings of "Outstanding" (links are to the banks' evaluations):

12/01/2020

Bureau issues Advisory Opinions Policy and two opinions

On Monday, November 30, 2020, the Consumer Financial Protection Bureau issued its final Advisory Opinions Policy. The policy is meant to provide a way to clarify ambiguities in the Bureau's regulations or in statutory requirements. The Bureau has said that the program "provides a mechanism through which the Bureau can more effectively carry out its statutory purposes and objectives by better enabling compliance in the face of regulatory and statutory uncertainty." Information about the Advisory Opinions program is available on the Bureau's website.

The Bureau also released its first two Advisory Opinion Letters on these topics:

The two Advisory Opinion Letters will be effective upon publication in the Federal Register.

12/01/2020

Revisions to small business size standards proposed

The SBA is requesting public comments on a proposed rule that would revise the small business size standards for businesses in five North American Industrial Classification System (NAICS) sectors to increase small business eligibility for SBA’s loan and contracting programs. The NAICS sectors reviewed in the proposed rule are: Education Services; Health Care and Social Assistance; Arts, Entertainment and Recreation; Accommodation and Food Services; and Other Services. SBA proposes to increase size standards for 70 industries in those sectors.

Comments on the proposal will be accepted through January 26, 2021.

11/30/2020

FOMC minutes released

The Federal Reserve Board has released the minutes of the Federal Open Market Committee's November 4–5, 2020, meeting.

11/30/2020

Revised Reg F published

The Consumer Financial Protection Bureau has published its previously-announced final rule revising Regulation F, which implements the Fair Debt Collection Practices Act, at 85 FR 76734 of today's Federal Register. The rule will become effective one year from today.

11/30/2020

Bureau makes another change

This time it's not a regulation that's been changed. The CFPB has announced some changes to its website at consumerfinance.gov. Thus far, it appears slightly different in its main pages, but many parts of the site still look very familiar.

The Bureau says that the updated website will feature additional user functionality, an improved layout, more content, and easier access to information. Notably, the refresh will also include a new interactive enforcement database to help the public track the Bureau’s enforcement actions. Through these updates, the Bureau "aims to increase transparency and make it easier for consumers and stakeholders to locate and access essential resources."

The significant changes announced in the Bureau's press release include:

  • An interactive enforcement database. This new database allows users to quickly find information about the Bureau’s public enforcement actions. Users can view interactive graphs tracking cumulative consumer relief, cumulative enforcement actions, and total enforcement actions per year.
  • A page for petitions. Petitions for rulemaking will be publicly available on the Bureau’s website. Users can now easily search for and find petitions in a centralized location.
  • Archiving of older content. Blogs, newsroom pages, and reports older than two years old will now be labeled to provide clarity and identify items that may not be the most up to date resources offered by the Bureau. The materials will still be accessible via the search function on the website. Users will be able to clearly see if they are being directed to or are using an archived page.

The CFPB plans further improvements to the site in the coming months.

11/25/2020

OCC issues proposed CRA General Performance Standards

The OCC is inviting comment on a notice of proposed rulemaking regarding the Community Reinvestment Act’s (CRA) general performance standards. The OCC published a final rule in June 2020 to strengthen and modernize the agency’s regulations under the CRA to encourage banks to engage in more activities to serve the needs of their communities, particularly low- and moderate-income and other historically underserved communities.

The proposal released yesterday provides the OCC’s proposed approach to determine the CRA evaluation measure benchmarks, retail lending distribution test thresholds, and community development minimums under the general performance standards set forth in the 2020 final rule. The proposal also explains how the OCC would assess significant declines in CRA activities levels in connection with performance context following the initial establishment of the benchmarks, minimums, and thresholds. Finally, the proposed rule would make clarifying and technical amendments to the 2020 final rule.

Comments on the proposal will be accepted for 60 days following publication in the Federal Register.

11/25/2020

JPMorgan Chase Bank pays $250M for lax controls

The OCC has announced it has issued a Consent Order to JPMorgan Chase Bank, National Association (Columbus, Ohio) to pay a $250 million civil money penalty, based on the bank's failure to maintain internal controls and internal audit over its fiduciary business.

For additional information and a link to the Consent Order, see "OCC hits JPMorgan Chase with $250M CMP" in the BankersOnline Penalty pages.

11/25/2020

Navy FCU settles OD fees class action suit for $16M

The CreditUnionTimes reports the Navy Federal Credit Union will settle a class action suit for $16 million that will reimburse an estimated 700,000 current and former members who were charged fees for overdrafts.

An Alexandria, Virginia, U.S. District Court judge has issued a preliminary approval for the settlement in Lambert v. Navy Federal Credit Union, with final approval expected in March.

The suit was brought by Ruby Lambert in January 2019 after she was charged a second $29 NSF fee when a $96 check on her account was presented a second time after it was bounced to her insurance company. Although Lambert acknowledged that Navy Federal was allowed to charge her a single NSF fee, she argued in court documents that the credit union breached terms of member account agreements when it charged her a second NSF fee for the same insurance check payment.

Lambert's suit was dismissed in August 2019 because Navy Federal's account agreement gave the CU a contractual right to charge an NSF fee each time an NSF check is presented. Lambert appealed to the U.S. District Court for the Eastern District of Virginia. Navy Federal and Lambert's lawyers agreed to settle the suit.

The $16 million cash fund will pay for $5.2 million in attorney fees, a $5,000 “service award” for Lambert, and millions in NSF fee reimbursements for an estimated 700,000 current and former Navy Federal members who were assessed a second or third NSF fee for a single payment transaction that was rejected because of insufficient funds in their accounts from January 28, 2014, to October 27, 2020. Navy Federal will separately pay all settlement administration costs.

11/25/2020

HUD launches Recovery House Program

HUD Secretary Carson has announced the publication of the Notice for HUD’s pilot Recovery Housing Program (RHP). The program was authorized by the SUPPORT Act to provide stable, temporary housing to individuals in recovery from a substance use disorder.

RHP is funding 25 grantees, 24 states and the District of Columbia, whose age-adjusted rate of drug overdose deaths was above the national overdose mortality rate. The RHP Notice provides state grantees the flexibility to carry out activities directly or pass funds through to local governments in rural and urban areas throughout the state. Therefore, grantees can streamline the use of RHP funds, particularly by nonprofits and other subrecipients that currently administer residential programs for persons in recovery from a substance use disorder.

11/25/2020

FHFA announces conforming loan limits

The Federal Housing Finance Agency has announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2021. In most of the U.S., the 2021 maximum conforming loan limit (CLL) for one-unit properties will be $548,250, an increase from $510,400 in 2020.

For areas in which 115 percent of the local median home value exceeds the baseline CLL, the maximum loan limit will be higher than the baseline loan limit. The Housing and Economic Recovery Act establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a “ceiling" on that limit of 150 percent of the baseline loan limit. Median home values generally increased in high-cost areas in 2020, driving up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $822,375 — or 150 percent of $548,250.

Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $822,375 for one-unit properties.

As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum CLL will be higher in 2021 in all but 18 counties or county equivalents in the U.S.

11/25/2020

House prices climbing

The Federal Housing Finance Agency (FHFA) has announced U.S. house prices rose 3.1 percent in the third quarter of 2020, up 7.8 percent from the third quarter of 2019—the fastest year-over-year rate of appreciation since 2006. FHFA's seasonally adjusted monthly index for September was up 1.7 percent from August.

11/24/2020

HUD proposes to allow private flood insurance on FHA-insured loans

HUD has published [85 FR 74630] a proposed rule that would amend Federal Housing Administration (FHA) regulations to allow mortgagors the option to purchase private flood insurance on FHA-insured mortgages for properties located in Special Flood Hazard Areas (SFHAs), in satisfaction of the mandatory purchase requirement of the Flood Disaster Protection Act of 1973 (the FDPA), and in harmony with private flood insurance requirements under the Biggert-Waters Act.. Comments on the proposal are due by January 22, 2021.

11/24/2020

CFPB updates 2021 HMDA FIG

The Bureau has made an update to the HMDA Filing Instructions Guide (FIG) for data collected in 2021 (for submission in 2022). Edits Q656 and Q657 in Table 8 (Macro Quality Edits for Loan/Application Register) have been reclassified and moved to Table 7 (Quality Edits for Loan/Application Register).

11/24/2020

Reserve Banks' quarterly financials

The Federal Reserve Board has posted the third quarter 2020 combined financial reports summarizing the financial position and results of operations of the Reserve Banks. The combined information includes the accounts and results of operations of each of the 12 Reserve Banks and some consolidated variable interest entities. All financial information included in the quarterly financial reports is unaudited.

11/24/2020

Final IRS regs on like-kind exchanges of real property

Treasury and the IRS yesterday issued final regulations relating to section 1031 like-kind exchanges. These final regulations address the definition of real property (RP) under section 1031 and also provide a rule addressing the receipt of personal property that is incidental to real property received in a like-kind exchange.

11/24/2020

New OCC Licensing Manual booklet issued

OCC Bulletin 2020-102, issued yesterday, announced the new “Mutual to Stock Conversions” booklet of the Comptroller’s Licensing Manual. The new booklet incorporates provisions of the revised regulation (12 CFR 192) that became effective August 13, 2020. The new booklet:

  • provides an overview of policy considerations and decision criteria that the OCC considers when reviewing applications by federal savings associations to convert from a mutual to stock form of ownership under 12 CFR 192.
  • describes various types of mutual to stock conversions including standard conversions, merger conversions, conversion mergers, and voluntary supervisory conversions.
  • describes the applications process, including the prefiling process, filing and review of the application, the decision, and the post-consummation phase of the mutual to stock conversion.
  • outlines requirements and procedures federal savings associations should follow when filing an application to convert from mutual to stock form of ownership.
  • lists references and links to informational resources and sample forms and documents that prospective filers may find helpful during the filing and conversion process.

11/24/2020

OCC updates Activities and Operations rules

The Office of the Comptroller of the Currency has announced a final rule that updates the agency's rules for national bank and federal savings association activities and operations, with amendments affecting 12 CFR parts 4, 5, 7, 145, and 160. The rule, which takes effect April 1, 2021, is part of the OCC’s continuous effort to modernize its rules and remove unnecessary requirements to relieve banks of unnecessary burdens, encourage economic opportunity, and promote the safe, sound, and fair operation of the federal banking system. The final rule changes 12 CFR part 7 to update or eliminate outdated regulatory requirements that no longer reflect the modern financial system and to clarify and codify recent OCC interpretations. The Rule includes changes:

  • incorporating and streamlining interpretations addressing permissible derivatives activities for national banks;
  • codifying interpretations to permit national banks and federal savings associations to engage in certain tax equity finance transactions;
  • codifying interpretations regarding national bank membership in payment systems and clarifying that federal savings associations are subject to the same requirements as national banks;
  • expanding the ability of national banks and federal savings associations to choose corporate governance provisions under state law;
  • clarifying the extent to which national banks may adopt anti-takeover provisions permissible under state corporate governance law;
  • clarifying when national bank participation in a financial literacy program on the premises of, or a facility used by, a school or other organization would not be a branch;
  • codifying interpretations of the National Bank Act relating to capital stock issuances and repurchases; and
  • applying rules relating to finder activities, indemnification, equity kickers, postal services, independent undertakings, and hours and closings to federal savings associations.

11/23/2020

FDIC sets reserve ratio for 2021

The FDIC has published a notice [85 FR 74719] that the "Board of Directors of the Federal Deposit Insurance Corporation designates that the Designated Reserve Ratio for the Deposit Insurance Fund shall remain at 2 percent for 2021."

11/23/2020

Temporary reporting relief for community banks

The Federal Reserve Board, FDIC, and OCC have announced an interim final rule that provides temporary relief for certain community banking organizations related to certain regulations and reporting requirements as a result, in large part, of their growth in size from the coronavirus response.

Community banking organizations are subject to different rules and requirements based on their risk profile and asset size. Due to participating in federal coronavirus response programs—such as the Paycheck Protection Program—and other lending that supports the U.S. economy, many community banking organizations have experienced rapid and unexpected increases in their sizes, which are generally expected to be temporary. The temporary increase in size could subject community banking organizations to new regulations or reporting requirements. Community banking organizations with under $10 billion in assets may have fewer resources available to prepare and comply with previously unanticipated regulatory requirements, especially during a time of economic disruption.

With regard to the requirements covered by the interim final rule, community banking organizations that have crossed a relevant threshold generally will have until 2022 to either reduce their size, or prepare for new regulatory and reporting standards. The rule applies to community banking organizations and financial institutions with less than $10 billion in total assets as of December 31, 2019. The rule will be effective immediately upon publication in the Federal Register. Comments on the interim final rule will be accepted for 60 days following publication.

11/23/2020

CFPB settles deceptive sales practice case

The Bureau has announced it has issued a consent order against U.S. Equity Advantage, Inc. (“USEA”), a nonbank located in Orlando, Florida, and its owner, Robert M. Steenbergh. The Bureau found that the company’s disclosures and advertisements of its auto loan payment program contained misleading statements in violation of the Consumer Financial Protection Act of 2010’s prohibition against deceptive acts or practices.

The consent order imposes a judgment against them requiring them to pay $9,300,000 in consumer redress and contains requirements to prevent future violations. The ordered redress amount was suspended upon payment of $900,000 and a $1 civil money penalty to the Bureau. The suspension of the full payment for redress, as well as the $1 civil penalty, is based on USEA’s and Steenbergh’s demonstrated inability to pay more based on sworn financial statements.

11/23/2020

FDIC proposes temporary rule to temper CECL transition effect

FDIC FIL-107-2020, issued November 20, 2020, announces an FDIC proposed rulemaking that would address the temporary deposit insurance assessment effects resulting from certain optional regulatory capital transition provisions relating to the implementation of the current expected credit losses (CECL) methodology. The proposal would remove the double counting of a specified portion of the CECL transitional amount or the modified CECL transitional amount, as applicable, in the calculation of certain financial measures that are used to determine assessment rates for large and highly complex insured depository institutions (IDIs).

The proposal would affect only those institutions with $10 billion or more in total assets. In order to implement these adjustments, the proposal would require large and highly complex IDIs that elect a CECL transition provision to report one additional, temporary item on the Consolidated Reports of Condition and Income (Call Report).

Comments on the proposed rule will be accepted for 30 days after publication in the Federal Register.

11/23/2020

CFPB sues debt settlement company and owners

The CFPB has filed a lawsuit against FDATR, Inc., and its owners, Dean Tucci and Kenneth Wayne Halverson. The Bureau alleges that FDATR, Tucci, and Halverson violated the Telemarketing Sales Rule (TSR) by engaging in deceptive and abusive telemarketing acts or practices and the Consumer Financial Protection Act of 2010 (CFPA) through deceptive acts or practices.

FDATR was a corporation headquartered in Wood Dale, Illinois, that promised to provide student-loan debt-relief and credit-repair services to consumers nationwide. Tucci and Halverson both owned and managed FDATR, which was involuntarily dissolved in September 2020. The Bureau’s complaint, filed in the United States District Court for the Northern District of Illinois, seeks injunctions against FDATR, Tucci, and Halverson, as well as damages, redress to consumers, disgorgement of ill-gotten gains, and the imposition of civil money penalties.

  • CFPB press release
  • 11/23/2020

    OCC proposes Fair Access to Financial Services Rule

    The OCC has issued a proposed rule that would ensure fair access to banking services provided by national banks, federal savings associations, and federal branches and agencies of foreign bank organizations.The proposal would codify more than a decade of OCC guidance stating that banks should provide access to services, capital, and credit based on the risk assessment of individual customers, rather than broad-based decisions affecting whole categories or classes of customers.

    The proposal would apply to the largest banks in the country that may exert significant pricing power or influence over sectors of the national economy and would require a covered bank to ensure it makes its products and services available to all customers in the community it serves, based on consideration of quantitative, impartial, risk-based standards established by the bank. Under the proposal, a covered bank’s decision to deny services based on an objective assessment of the person’s creditworthiness, ability to pay, or other quantitative, impartial, risk-based reasons would not violate the bank’s obligation to provide fair access. However, under the proposal, the bank may not deny a customer service to disadvantage, limit, or prevent the customer from entering or competing in a market or business segment, or to benefit another person or business activity.

    A bank would be presumed not to meet the definition of a bank covered by the proposed rule if it has less than $100 billion in total assets.

    Comments on the proposal will be accepted through January 4, 2021.

    11/20/2020

    OCC enforcement orders

    The OCC has released a list of enforcement actions against national banks, federal savings associations and individuals now or formerly affiliated with such institutions.

    • First Abu Dhabi Banks USA N.V. was assessed a $5 million civil money penalty for BSA/AML compliance program deficiencies and violations. An earlier consent order against the bank was terminated.
    • A former director and the former senior compliance and BSA officer of a New Jersey bank were assessed penalties totaling $39,000 (and the compliance/BSA officer was issued a prohibition order) for their involvement in the bank's seriously deficient BSA/AML compliance program while the bank's management was soliciting high-risk businesses as customers.
    • A former senior vice president of a Sallisaw, Oklahoma, bank was issued a default order with an order of prohibition, a cease and desist order requiring restitution of $2.3 million, and civil money penalty of $250,000. The order indicates it has been appealed to a federal court.
    • The former VP of commercial lending and chief lending officer of a Charleroi, Pennsylvania, bank has been issued a consent order to cease and desist and to pay a $12,000 civil money penalty, for inappropriately approving large overdrafts and waiving overdraft fees; and failing to ensure that the bank's credit underwriting process properly assessed the borrower's ability to repay.

    11/20/2020

    Entities exporting forced North Korean labor sanctioned

    Treasury has announced that OFAC has imposed sanctions on two entities involved in the exportation of forced labor from North Korea. Mokran LLC, a Russian construction company, and Korea Cholsan General Trading Corporation, a North Korean company operating in Russia, were targeted for having engaged in, facilitated, or been responsible for the exportation of forced labor from North Korea, including exportation to generate revenue for the Government of North Korea or Workers’ Party of Korea. In addition, current SDN listings for Korea Rungrado General Trading Corporation, Korea General Corporation for External Construction, and Yanbian Silverstar Network Technology Co., Ltd were updated.

    For further identification information on these entities and on updated listing on an individual previously sanctioned under Syria-related regulations, see BankersOnline's OFAC Update.

    11/20/2020

    FDIC updates RMS Manual

    The FDIC has issued a November 2020 update to its Risk Management Manual of Examination Policies (RMS Manual). The November updates were made to section 3.2 (Loans) of the Manual, and include revised instructions for assessing environmental risk programs; updated residential appraisal thresholds; including effective dates for lease accounting; instructions on assessing bank-to-bank credit; assessing payday lending programs; Current Expected Credit Loss (CECL) updates; and other minor technical edits.

    With the issuance of the November updates, the FDIC has moved to inactive status FIL-14-2005 (Payday Lending Programs Revised Examination Guidance), and FIL-52-2015 (FDIC Clarifying its Approach to Banks Offering Products and Services, such as Deposit Accounts and Extensions of Credit, to Non-Bank Payday Lenders). Also, the Guidelines for an Environmental Risk Program are being removed from the FDIC Statements of Policy section of the FDIC Law, Regulations, and Related Acts webpage. The two FILs and the Guidelines document are addressed in the RMS Manual.

    The RMS Manual can be downloaded as ZIP files.

    11/20/2020

    BSA due diligence for charities and non-profits clarified

    The Federal Banking Agencies and FinCEN have issued a joint fact sheet to provide clarity to banks and credit unions on how to apply a risk-based approach to charities and other non-profit organizations. The fact sheet highlights the importance of ensuring that legitimate charities have access to financial services and can transmit funds through legitimate and transparent channels, especially during the current COVID-19 pandemic. It also reminds banks to apply a risk-based approach to customer due diligence requirements when developing the risk profiles of charities and other non-profit customers, and reaffirms that the application of a risk-based approach is consistent with existing customer due diligence and other Bank Secrecy Act/Anti-Money Laundering compliance requirements.

    11/20/2020

    Fed assessment fees modified

    The Federal Reserve Board has announced it has issued a final rule modifying the annual assessment fees for its supervision and regulation of large financial companies, as required by the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). The final rule is nearly identical to the proposal issued in November 2019. The final rule raises the threshold at which fees are assessed for bank holding companies and savings and loan holding companies from $50 billion to $100 billion in total consolidated assets. Additionally, it adjusts the amount charged to certain bank holding companies and savings and loan holding companies following changes from the Board related to the EGRRCPA.

    The rule will be effective 30 days after publication in the Federal Register.

    11/20/2020

    Fed and Oklahoma holding company in written agreement

    The Board of Governors of the Federal Reserve System has announced the execution of a written agreement between the Federal Reserve Bank of Kansas City and a Vinita, Oklahoma, bank holding company.

    11/19/2020

    FDIC: Banking with Apps

    The FDIC's November 2020 issue of FDIC Consumer News features "Banking With Apps: Where your mobile device meets banking," an article on the increasingly blurred lines between banks and non-banks, with an overview of the differences between deposit accounts offered by banks and financial products offered by non-bank companies, as well as tips for consumers considering using “fintech” for their banking needs.

    11/19/2020

    OFAC targets broad Iran patronage network

    On Wednesday, the Treasury Department announced that OFAC had acted against a key patronage network for the Supreme Leader of Iran, the Islamic Revolution Mostazafan Foundation (Bonyad Mostazafan, or the Foundation), an immense conglomerate of some 160 holdings in key sectors of Iran’s economy, including finance, energy, construction, and mining.

    OFAC also designated Iran’s Minister of Intelligence and Security, Mahmoud Alavi, pursuant to human rights authorities.

    See BankersOnline's OFAC Update for identity information on the nine individuals, 49 entities, and one vessel added to OFAC's SDN List, along with four previous designations updated, in yesterday's OFAC action.

    11/19/2020

    Treasury clarifies expense deductibility related to PPP loans

    Treasury and the IRS have released guidance clarifying the tax treatment of expenses where a Paycheck Protection Program (PPP) loan has not been forgiven by the end of the year the loan was received. Since businesses are not taxed on the proceeds of a forgiven PPP loan, the expenses are not deductible. This results in neither a tax benefit nor tax harm since the taxpayer has not paid anything out of pocket.

    If a business reasonably believes that a PPP loan will be forgiven in the future, expenses related to the loan are not deductible, whether the business has filed for forgiveness or not. Therefore, businesses are encouraged to file for forgiveness as soon as possible. In the case where a PPP loan was expected to be forgiven, and it is not, businesses will be able to deduct those expenses.

    11/19/2020

    Final Capital Rule for Fannie and Freddie

    The Federal Housing Finance Agency (FHFA) has announced it has approved a final rule that establishes a new regulatory capital framework for Fannie Mae and Freddie Mac (the Enterprises).

    The final rule fulfills Congress's Housing and Economic Recovery Act of 2008 mandate that FHFA establish risk-based capital requirements for the Enterprises. The rule is intended to ensure the safety and soundness of the Enterprises by increasing the quantity and quality of the Enterprises' regulatory capital and reducing the pro-cyclicality of the aggregate capital requirements. A Fact Sheet on the rule was also released.

    The rule will become effective 60 days after publication in the Federal Register.

    11/19/2020

    Unchanged thresholds for Regs M and Z

    The Consumer Financial Protection Bureau and the Board of Governors of the Federal Reserve System have announced that the dollar thresholds for exemptions from coverage in section 1013.2(e) of Regulation M (Consumer Leasing), section 226.3(b) of the Board's Regulation Z (Truth in Lending), and section 1026.3(b) of the Bureau's Regulation Z (Truth in Lending) will remain unchanged at $58,300 for calendar year 2021.

    The BankersOnline pages for sections 1013.2 and 1026.3 of Bureau regulations M and Z have been updated.

    11/19/2020

    Mobile banking app operators sued by FTC

    The Federal Trade Commission has filed a complaint alleging that Beam Financial Inc. and its founder and CEO Yinan Du, also known as Aaron Du, the operators of a mobile banking app, promised users of their free mobile banking app that they could make transfers out of their accounts and would receive their requested funds within three to five business days. Instead, some users waited weeks or even months to receive their money despite repeated complaints to Beam, while others said they never received their money, according to the complaint. In addition to making it difficult for consumers to access their funds, Beam also failed to give users the high interest rates the company promised, the Commission alleges. Beam repeatedly claimed that users would receive “the industry’s best possible rate” of at least 0.2 percent or 1.0 percent, according to the complaint. In fact, many new users received a much lower interest rate of 0.04 percent and stopped earning any interest after requesting that Beam return their funds.

    11/19/2020

    No change for small loan HPML appraisal exemption

    The Consumer Financial Protection Bureau, Federal Reserve Board, and Office of the Comptroller of the Currency today announced that the threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans in section 34.203(b)(2) (OCC), section 226.43(b)(2) (Board) and section 1026.35(c)(2)(ii) (Bureau) during 2021 will remain unchanged at $27,200.

    The BankersOnline page for Bureau Regulation Z section 1026.35 has been updated.

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