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09/21/2020

FEMA suspends communities in AK, AZ, IA and WA

OFAC published [85 FR 58294] in Friday's Federal Register a notice that is was suspending, as of September 18, communities in Alaska, Arizona, Iowa and Washington from the National Flood Insurance Program for noncompliance with the floodplain management requirements of the program.

  • Alaska: Fairbanks Northstar Borough and the City and Borough of Juneau
  • Arizona: Goodyear
  • Iowa: Harpers Ferry, Lansing, Postville, Waterville, and unincorporated areas of Allamakee County
  • Washington: Chehalis Reservation, Elma, Montesano, Oakville, and unincorporated areas of Grays Harbor County

09/18/2020

SEC charges former tech company CEO

The Securities and Exchange Commission has announced it has filed an emergency action against Adam Rogas, the former CEO of Las-Vegas-based NS8 Inc., which purports to provide fraud detection and prevention software to e-commerce merchants, seeking an asset freeze and charging Rogas with defrauding investors by falsely claiming millions of dollars in revenue. The SEC complaint alleges Rogas, from at least 2018 through June 2020, altered NS8's bank statements to show millions of dollars in payments from customers. Rogas allegedly sent the falsified bank statements and revenue figures on a monthly basis to NS8's finance department, which used them to prepare NS8's financial statements. In at least two securities offerings, NS8 and Rogas allegedly provided investors and prospective investors the false financial statements, showing millions of dollars in revenue and assets and other information incorporating the falsified revenue figures. The SEC alleges that as a result of Rogas's fraud, NS8 raised approximately $123 million in 2019 and 2020, and that Rogas ultimately pocketed at least $17.5 million of investor funds.

09/18/2020

Tech company settles liability for apparent OFAC violations

OFAC has announced an $894,111 settlement with Comtech Telecommunications Corp., based in Melville, New York, and its wholly-owned subsidiary, Comtech EF Data Corp., headquartered in Tempe, Arizona for four apparent violations of the Sudanese Sanctions Regulations.

Between June 2014 and October 2015, Comtech, through its subsidiary EF Data, indirectly exported warrantied satellite equipment and facilitated services and training to a government-owned entity in Sudan in apparent violation of the SSR. OFAC determined that Comtech voluntarily disclosed the apparent violations and that the apparent violations constituted an egregious case.

09/18/2020

OCC enforcement actions

The OCC has released a list of enforcement orders issued in the month of August.

  • Two former senior vice presidents; the former chairman, CEO and president; and four former directors of City National Bank of New Jersey, Newark, New Jersey, were issued consent civil money penalty orders in amounts ranging from $3,000 to $70,000 (totaling $124,000) for their failures to ensure that the bank had an adequate BSA/AML compliance program, adequate risk controls, and adequate staffing of its BSA/AML function while the bank was taking on high-risk new accounts, including brokered deposits.
  • a former banker with People's United Bank, N.A., Bridgeport, Connecticut, was issued a consent prohibition order after the Comptroller found that she had stolen cash from her assigned cash drawer and made fraudulent entries so that the drawer appeared to be in balance

09/18/2020

OFAC targets Hizballah and Iranian cyber actors

The Treasury Department announced Thursday that OFAC has sanctioned two Lebanon-based companies, Arch Consulting and Meamar Construction, for being owned, controlled, or directed by Hizballah. Additionally, OFAC designated Sultan Khalifah As’ad, a Hizballah Executive Council official, who is closely associated with both companies.

Treasury also announced that OFAC has imposed sanctions on Iranian cyber threat group Advanced Persistent Threat 39, 45 associated individuals, and one front company, Rana Intelligence Computing Company, through which the Government of Iran (GOI) employed a years-long malware campaign that targeted Iranian dissidents, journalists, and international companies in the travel sector. Concurrent with OFAC’s action, the U.S. Federal Bureau of Investigation (FBI) released detailed information about APT39 in a public intelligence alert.

For identification information on the entities and individuals sanctioned by OFAC's actions, see BankersOnline's OFAC Update.

09/18/2020

Fed releases hypothetical stress test scenarios

The Federal Reserve Board has released its hypothetical scenarios for a second round of bank stress tests. Earlier this year, the Board's first round of stress tests found that large banks were well capitalized under a range of hypothetical events. An additional round of stress tests is being performed due to the continued uncertainty caused by the COVID event. Large banks will be tested against two scenarios featuring severe recessions to assess their resiliency under a range of outcomes. The Board will release firm-specific results from banks' performance under both scenarios by the end of this year.

The two hypothetical recessions in the scenarios feature severe global downturns with substantial stress in financial markets. The first scenario—the "severely adverse"—features the unemployment rate peaking at 12.5 percent at the end of 2021 and then declining to about 7.5 percent by the end of the scenario. Gross domestic product declines about 3 percent from the third quarter of 2020 through the fourth quarter of 2021. The scenario also features a sharp slowdown abroad.

The second scenario—the "alternative severe"—features an unemployment rate that peaks at 11 percent by the end of 2020 but stays elevated and only declines to 9 percent by the end of the scenario. Gross domestic product declines about 2.5 percent from the third to the fourth quarter of 2020.

The two scenarios also include a global market shock component that will be applied to banks with large trading operations. Those banks, as well as certain banks with substantial processing operations, will also be required to incorporate the default of their largest counterparty.

09/18/2020

Assistance for Oregon wildfire victims announced

HUD has announced federal disaster assistance for the State of Oregon to provide support to homeowners and low-income renters displaced from their homes in areas affected by wildfires and straight-line winds. A Presidential declaration allows HUD to offer foreclosure relief and other assistance to impacted families living in these counties.

09/17/2020

FOMC maintains course

The Federal Reserve Board has released the Federal Open Market Committee Statement following the September 15–16 meeting of the Committee. The FOMC agreed to continue to "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" and "expects to maintain an accommodative stance of monetary policy until these outcomes are achieved." It also intends to keep the target range for the federal funds at 0 to 1/4 percent "until labor market conditions have reached levels 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."

09/17/2020

FinCEN proposes amending AML program requirements

FinCEN has published [85 FR 58023] an advance notice of proposed rulemaking in today's Federal Register seeking public comment on potential regulatory amendments to establish that all covered financial institutions subject to an anti-money laundering program requirement must maintain an “effective and reasonably designed” anti-money laundering program.

The ANPRM says any such amendments would be expected to further clarify that such a program assesses and manages risk as informed by a financial institution’s risk assessment, including consideration of anti-money laundering priorities to be issued by FinCEN consistent with the proposed amendments; provides for compliance with Bank Secrecy Act requirements; and provides for the reporting of information with a high degree of usefulness to government authorities.

The regulatory amendments under consideration are intended to modernize the regulatory regime to address the evolving threats of illicit finance, and provide financial institutions with greater flexibility in the allocation of resources, resulting in the enhanced effectiveness and efficiency of anti-money laundering programs.

The ANPRM also seeks comment on proposals to impose an explicit requirement for a risk assessment process and for the Director of FinCEN to issue a list of national AML priorities, to be called FinCEN’s Strategic Anti-Money Laundering Priorities, every two years.

Comments on the ANPRM will be accepted for 60 days following publication, through Monday, November 16, 2020.

09/17/2020

Members of CFPB advisory groups announced

CFPB Director Kathleen Kraninger has announced the appointment of members to the Bureau's Consumer Advisory Board, Community Bank Advisory Council, Credit Union Advisory Council, and Academic Research Council. The experts on these advisory groups advise Bureau leadership on a broad range of consumer financial issues and emerging market trends.

09/17/2020

OFAC sanctions two Russians for virtual currency theft

Yesterday, in a coordinated action with the Departments of Justice and Homeland Security, OFAC sanctioned two Russian nationals for their involvement in a sophisticated phishing campaign in 2017 and 2018 that targeted customers of two U.S.-based and one foreign-based virtual asset service providers. American citizens and businesses were among the victims of this malicious cyber-enabled activity, which resulted in combined losses of at least $16.8 million.

Danil Potekhin and Dmitrii Karasavidi were designated pursuant to Executive Order 13694, as amended by E.O. 13757, which targets malicious cyber-enabled activities, including those related to the significant misappropriation of funds or personal identifiers for private financial gain. Potekhin and Karasavidi are also the subjects of an indictment unsealed today by the Department of Justice.

As a result of yesterday’s action, all property and interests in property of the designated persons that are in the possession or control of U.S. persons or within or transiting the United States are blocked, and U.S. persons generally are prohibited from dealing with them. for further identification information on Potekhin and Karasavidi, see BankersOnline's OFAC Update.

09/17/2020

Bank trading revenue increases

The OCC has released its Second Quarter 2020 Bank Trading Revenue Report, which reports trading revenue of U.S. commercial banks and federal savings associations of $14.7 billion in the second quarter 2020, which was $8.0 billion, or 119.3 percent, more than the previous quarter. Trading revenue in the second quarter 2020 increased by 81.5 percent compared with the $8.1 billion reported in the second quarter 2019. The report also indicated:

  • While four large banks held 86.7 percent of the total banking industry notional amount of derivatives, a total of 1,733 insured U.S. commercial banks and savings associations held derivatives at the end of the second quarter 2020.
  • Derivative contracts remained concentrated in interest rate products, which represented 73.5 percent of total derivative notional amounts.
  • The percentage of centrally cleared derivatives transactions decreased quarter-over-quarter to 40.3 percent in the second quarter 2020.

09/17/2020

FATF AML and Terrorist Financing report

The Financial Action Task Force (FATF) has released a report, Virtual Assets – Red Flag Indicators of Money Laundering and Terrorist Financing, to help national authorities detect whether virtual assets are being used for criminal activity. Based on more than 100 case studies collected by members of the FATF Global Network, it highlights the most important red flag indicators that could suggest criminal behavior. Key indicators in this report focus on:

  • Technological features that increase anonymity, such as the use of peer-to-peer exchanges websites, mixing or tumbling services or anonymity-enhanced cryptocurrencies
  • Geographical risks – criminals can exploit countries with weak, or absent, national measures for virtual assets
  • Transaction patterns that are irregular, unusual or uncommon, which can suggest criminal activity
  • Transaction size – if the amount and frequency has no logical business explanation
  • Sender or recipient profiles – unusual behavior can suggest criminal activity
  • Source of funds or wealth, which can relate to criminal activity

09/17/2020

States and FTC halt charity scam

The Federal Trade Commission reports a sprawling fundraising operation that allegedly scammed consumers out of millions of dollars will be permanently banned from charitable fundraising along with its owner and others involved in its operation as a result of a lawsuit brought by the Federal Trade Commission and Attorneys General of New York, Virginia, Minnesota, and New Jersey. A complaint filed by the Commission and the states alleges that the defendants served as the primary fundraisers for a number of sham charities that were the subject of numerous law enforcement actions. It also alleges that the sham charities claimed to use consumers’ donations to help homeless veterans, retired and disabled law enforcement officers, breast cancer survivors, and others in need. In fact, these organizations spent almost none of the donations on the promised activities.

Under the proposed settlements, all of the defendants will be permanently prohibited from participating in any charity fundraising, and from deceiving consumers in any other fundraising effort, including for political action committees (PACs). The defendants will be required to clearly inform consumers at the time they ask for money that any donations are not charitable and not eligible for tax deductions. In addition, the defendants will be subject to significant monetary judgments and required to surrender assets. The funds being surrendered by the defendants will be paid to the State of New York, which will contribute the funds on behalf of New York, Virginia, and New Jersey to legitimate charities that perform services that mirror those promised by the sham charities.

09/16/2020

FDIC Deposit Insurance Fund restoration plan

FDIC FIL-90-2020, released yesterday, reports the FDIC Board has voted to adopt a Restoration Plan to restore the Deposit Insurance Fund reserve ratio to at least 1.35 percent within 8 years, as required by the Federal Deposit Insurance Act. Under the Restoration Plan, the FDIC will:

  • monitor deposit balance trends, potential losses, and other factors that affect the reserve ratio;
  • maintain the current schedule of assessment rates for all insured depository institutions; and
  • provide updates to its loss and income projections at least semiannually.

09/16/2020

CFPB outlines proposals for small business lending data

The Consumer Financial Protection Bureau has released its Outline of Proposals Under Consideration and Alternatives Considered for Section 1071 of the Dodd-Frank Act governing small business lending data collection and reporting. The Bureau plans to convene a Small Business Advocacy Review panel in October 2020, to prepare a report that examines the impact of the potential rule on small businesses. The report, along with feedback received from small businesses, will be considered by the Bureau in its rulemaking to implement Section 1071.

Section 1071 requires financial institutions to collect certain data regarding applications for credit for women-owned, minority-owned, and small businesses, and to report that data to the Bureau on an annual basis. The Outline describes proposals that the Bureau is considering to implement Section 1071 along with the relevant law, the regulatory process, and an economic analysis of the potential impacts of the proposals on directly affected small entities.

Comments on the proposals under consideration should be received by the Bureau by December 14, 2020.

09/16/2020

OFAC targets individual and two entities

The Treasury Department announced Tuesday that OFAC had designated Zineb Souma Yahya Jammeh and Nabah LTD for their roles in providing support to persons previously designated for their own corrupt behavior.

Treasury also announced OFAC's designation of a Chinese state-owned entity located in Cambodia, Union Development Group Co., Ltd., for seizure and demolition of local Cambodians’ land for the construction of the Dara Sakor development project.

Both actions were taken under authority of 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.

For identification details, see BankersOnline's OFAC Update.

09/16/2020

CFPB and states settle with owner of ITT Private Loans

The Consumer Financial Protection Bureau has filed on Tuesday a proposed stipulated judgment against PEAKS Trust 2009-1, along with Deutsche Bank National Trust Company, Deutsche Bank Trust Company Delaware, and Deutsche Bank Trust Company Americas, in their capacity as trustees to PEAKS Trust 2009-1.

In its complaint, the Bureau alleged that PEAKS provided substantial assistance to ITT Educational Services, Inc. in engaging in unfair acts and practices in violation of the Consumer Financial Protection Act of 2010 (CFPA). PEAKS owned and managed private loans for students at ITT Technical Institute. PEAKS allegedly knew or was reckless in not knowing that many student borrowers did not understand the terms and conditions of those loans, could not afford them, or in some cases did not even know they had them. If entered by the court, the proposed judgment will require PEAKS to forgive all of its outstanding loans—approximately $330 million in debt– for about 35,000 borrowers who currently have outstanding principal balances. Forty-seven states plus the District of Columbia have also settled with PEAKS Tuesday.

The complaint alleges that ITT arranged for the PEAKS loans to be serviced and collected on after ITT had induced its students to take out the loans by a variety of unfair practices, including rushing students through financial aid appointments, using aggressive tactics, and in some cases, gaining unauthorized access to student accounts to sign students up for loans without permission. The Bureau alleged that PEAKS was actively involved in servicing and managing the PEAKS loan program, including the collection of the loans, and that PEAKS’s conduct constituted substantial assistance of ITT’s unfair acts and practices in violation of the CFPA.

If entered by the court, the proposed stipulated judgment would require PEAKS to stop collecting on all outstanding PEAKS loans, discharge all outstanding PEAKS loans, and ask all consumer reporting agencies to which PEAKS furnished information to delete information relating to PEAKS loans. The order would also require PEAKS to provide notice to all consumers with outstanding PEAKS loans that their debt has been discharged and is no longer owed and that PEAKS is seeking to have the relevant consumer reporting information deleted. The total amount of loan forgiveness is currently estimated to be $330 million, for about 35,000 consumers with outstanding balances owed on their PEAKS loans.

09/16/2020

Investment training firm to pay duped consumers

The Federal Trade Commission has announced a settlement that requires Online Trading Academy (OTA) to offer debt forgiveness to thousands of consumers who purchased its “training programs,” while the company’s founder and other individuals will together pay between $5 and $9.1 million and turn over assets. The settlement is expected to result in more than $10 million to benefit injured consumers.

The FTC alleged that OTA had no evidence that purchasers were likely to realize advertised profits, and that the company’s own surveys and third party trading data showed that most purchasers made little to no money. OTA also claimed that its instructors and salespeople were active, successful traders, pointing consumers to their supposed success as evidence the strategy worked. But the Commission alleged those claims were false or unsubstantiated, and that several high-profile OTA pitchmen admitted they did not make significant money trading. Finally, the FTC charged that when consumers realized the truth and asked for their money back, OTA illegally used form contracts to prevent them from telling the government or other consumers about OTA’s deception.

09/16/2020

$3.7M COVID-19 grants awarded to credit unions

The NCUA has awarded $3.7 million in grants and no-interest loans to 162 low-income credit unions, helping them provide affordable financial services to their members and communities during the COVID-19 pandemic. The grants and loans fell into four categories:

  • Rental, mortgage, and utility payment assistance to members such as entrepreneurs, small business owners, and hospitality and service industry employees;
  • Loan payment relief to affected members;
  • New products or services for affected members; and
  • Covering costs associated with moving credit union operations to remote locations, such as laptops, software, and short-term rentals.

09/16/2020

CU Data Report for Q2 released

The NCUA Quarterly U.S Map Review has been released and indicates federally credit unions saw strong asset and share-and-deposit growth over the year ending in the second quarter of 2020. Nationally, median asset growth over the year ending in the second quarter of 2020 was 10.0 percent, compared to 1.7 percent during the year ending in the second quarter of 2019. The median growth rate of loans outstanding was 0.2 percent over the year ending in the second quarter of 2020, compared to 4.6 percent over the year ending in the second quarter of 2019. During the first half of 2020, 81 percent of federally insured credit unions had positive net income, compared to 88 percent during the first half of 2019. Nationally, the median annualized return on average assets was 39 basis points during the first half of 2020, compared to 63 basis points during the first half of 2019.

09/16/2020

Industrial production increase continues in August

The Federal Reserve Board has posted G.17 data for August which show industrial production rose 0.4 percent in August for its fourth consecutive monthly increase. However, even after the recent gains, the index in August was 7.3 percent below its pre-pandemic February level.

Manufacturing output continued to improve in August, rising 1.0 percent, but the gains for most manufacturing industries have gradually slowed since June. Mining production fell 2.5 percent in August, as Tropical Storm Marco and Hurricane Laura caused sharp but temporary drops in oil and gas extraction and well drilling. The output of utilities moved down 0.4 percent. At 101.4 percent of its 2012 average, the level of total industrial production was 7.7 percent lower in August than it was a year earlier. Capacity utilization for the industrial sector increased 0.3 percentage point in August to 71.4 percent, a rate that is 8.4 percentage points below its long-run (1972–2019) average but 7.3 percentage points above its low in April.

09/15/2020

Eighth company settles with CFPB over VA loan advertising

On Monday, the CFPB issued a consent order against ClearPath Lending, Inc., an Irvine, California, corporation that is licensed as a mortgage broker or lender in about 22 states. ClearPath offers and provides mortgage loans guaranteed by the U.S. Department of Veterans Affairs. The Bureau announcement said ClearPath’s principal means of advertising VA-guaranteed loans is through direct-mail advertisements sent primarily to U.S. military servicemembers and veterans.

The Bureau found that ClearPath sent consumers mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or that lacked required disclosures, in violation of the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts and practices, the Mortgage Acts and Practices – Advertising Rule (MAP Rule), and Regulation Z. The consent order requires ClearPath to pay a civil money penalty of $625,000 and imposes requirements to prevent future violations.

Yesterday’s action is the eighth case stemming from a Bureau sweep of investigations of multiple mortgage companies that use deceptive mailers to advertise VA-guaranteed mortgages. The Bureau commenced this sweep in response to concerns about potentially unlawful advertising in the market that the VA identified.

For additional information and a link to the Bureau's consent order, see "ClearPath Lending, Inc., is eighth company to settle with CFPB over deceptive VA loan ads," in BankersOnline's Penalty pages.

09/15/2020

FDIC guidance on Tropical Storm Isaias regulatory relief

The FDIC has issued guidance with FIL-89-2020 that includes steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Puerto Rico affected by Tropical Storm Isaias.

09/15/2020

Hurricane Sally closings authorized

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 Sally at their discretion.

09/15/2020

NCUA CDFI certification applications - second round

The National Credit Union Administration (NCUA) has opened its second application round for eligible credit unions that want to qualify to use the agency’s streamlined process for Community Development Financial Institution certification. The Office of Credit Union Resources and Expansion will analyze each applicant credit union’s products, services, and other indicators to determine whether it qualifies for the streamlined application process. The NCUA will provide qualified credit unions with the necessary information to complete and submit the streamlined certification application to the CDFI Fund, which will make the final determination on certification. This application round will close October 17.

09/15/2020

FTC publishes proposal and comments request on address discrepancies

The Federal Trade Commission has published in today's Federal Register [85 FR 57172] its previously announced notice of proposed rulemaking and request for public comment regarding its "Duties of Users of Consumer Reports Regarding Address Discrepancies Rule." The comment period will end on November 30, 2020.

09/15/2020

FinCEN ending AML exemption for banks without federal regulator

FinCEN has published [85 FR 57129] a Final Rule in today's Federal Register that will remove the anti-money laundering program exemption for banks that lack a Federal functional regulator, including, but not limited to, private banks, non-federally insured credit unions, and certain trust companies.

The final rule requires minimum standards for anti-money laundering programs for banks without a Federal functional regulator to ensure that all banks, regardless of whether they are subject to Federal regulation and oversight, are required to establish and implement anti-money laundering programs, and extends customer identification program requirements and beneficial ownership requirements to those banks not already subject to these requirements.

The rule will be effective November 16, 2020, but carries a compliance date of March 15, 2021.

09/14/2020

HUD announces $1.988 Billion in CARES Act funding

HUD Secretary Carson on Friday announced the allocation of the remaining $1.988 billion in CARES Act funding for the Community Development Block Grant (CDBG) program. The allocation focuses funds towards places with households facing higher risk of eviction. To date, HUD has provided nearly $5 billion in CDBG funding nationwide to help communities combat the coronavirus and alleviate economic hardship. These funds can be used to provide temporary financial assistance to meet rental obligations for up to 6 months.

09/14/2020

SEC modernizes disclosures by banking registrants

The Securities and Exchange Commission has announced it has adopted final rules to update and expand the statistical disclosures that bank and savings and loan registrants provide to investors, in light of changes in this sector over the past 30 years. The rules also eliminate certain disclosure items that are duplicative of other Commission rules and requirements of U.S. Generally Accepted Accounting Standards or International Financial Reporting Standards. The rules replace Industry Guide 3, Statistical Disclosure by Bank Holding Companies, with updated disclosure requirements in a new subpart 1400 of Regulation S-K. The rules are intended to help ensure that investors have access to more meaningful, relevant information about these registrants to facilitate their investment and voting decisions.

The Commission’s rules require disclosure about:

  • Distribution of assets, liabilities and stockholders’ equity, the related interest income and expense, and interest rates and interest differential;
  • Weighted average yield of investments in debt securities by maturity;
  • Maturity analysis of the loan portfolio including the amounts that have predetermined interest rates and floating or adjustable interest rates;
  • Certain credit ratios and the factors that explain material changes in the ratios, or the related components during the periods presented;
  • The allowance for credit losses by loan category; and
  • Bank deposits including average amounts and rate paid and amounts that are uninsured.

The rules will be effective 30 days after publication in the Federal Register and will apply to fiscal years ending on or after December 15, 2021. However, voluntary compliance with the new rules will be accepted in advance of the mandatory compliance date. Guide 3 will be rescinded effective January 1, 2023.

09/14/2020

Victims of WG Trading investment fraud to receive $1B+

The Securities and Exchange Commission has announced that the court-appointed receiver has begun the final distribution to investors in connection with the SEC's action against defendants Paul Greenwood, Steven Walsh, and their affiliated WG Trading entities. Upon completion of this final distribution, over $1 billion will have been returned to affected investors, representing 100% of their net principal investments. In February 2019, the SEC charged Walsh, Greenwood, and their affiliated entities with orchestrating a brazen investment fraud involving the misappropriation of investor assets.

09/14/2020

DHS Public Action Plan announced

In September 2019, the Department of Homeland Security (DHS) issued its Strategic Framework for Countering Terrorism and Targeted Violence (CTTV Framework). On Friday, the DHS announced a corresponding Public Action Plan demonstrating the Department’s efforts to combat emerging threats and improve information sharing. The Public Action Plan provides a high-level outline of the goals set by DHS, including efforts to secure cyberspace, deter lone wolf attacks, and secure soft targets such as churches and schools, along with the ability to dynamically modify DHS resources as new threats emerge.

09/14/2020

OCC okays wildfire closures

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 wildfires in Oregon and Washington at their discretion.

In issuing the proclamation, the OCC expects that only those bank offices directly affected by potentially unsafe conditions will close. Those offices should make every effort to reopen as quickly as possible to address the banking needs of their customers.

09/11/2020

OFAC sanctions Russia-linked election interference actors

The Treasury Department has reported that OFAC has designated a Russia-linked individual for attempting to influence the U.S. electoral process. Andrii Derkack, a member of the Ukrainian parliament, was designated as an active Russian agent who has been directly or indirectly engaged in, sponsored, concealed, or otherwise been complicit in foreign interference in an attempt to undermine the upcoming 2020 U.S. presidential election.

Also designated were three Russian nationals -- Artem Lifshits, Anton Andreyev, and Darya Aslanova -- for acting on behalf of the Russian troll factory known as the Internet Research Agency (IRA), known to engage in activities designed to influence the outcome of the 2020 U.S. elections..

For identification details on the four designated individuals, see BankersOnline's OFAC Update.

09/11/2020

States all compliant with REAL ID

The Department of Homeland Security reports that, after more than 15 years since Congress passed the REAL ID Act, all 50 states are now in full compliance issuing REAL ID driver's licenses and state identification cards, with most states becoming compliant in the last four years. To date, the 50 states have issued more than 105 million REAL ID-compliant cards, representing 38 percent of all individuals with driver's licenses or ID cards.

On October 1, 2021 – less than 13 months away – full enforcement of REAL ID will take effect at all federally regulated airports, federal facilities, and nuclear power plants.

The Department continues to urge Americans to obtain a REAL ID-compliant card or acceptable alternative, such as a U.S. passport or passport card prior to the October 1, 2021, enforcement deadline.

09/11/2020

OCC - Credit risk of loan purchase activities

The OCC has issued Bulletin 2020-81 to remind banks it supervises of sound risk management principles regarding loan purchase activities. Commercial and retail loan purchase activities include purchasing whole loans, loan pools, loan portfolios, loan participations, or participations in syndicated loans from other banks or nonbank lenders.Lending activities, including loan purchase activities, are subject to certain regulatory standards and long-standing risk management guidelines. The OCC expects banks to engage in loan purchase activities in a safe and sound manner and in compliance with applicable accounting standards, laws, and regulations. Loan purchase activities should align with banks' strategic plans and be supported by sound risk management systems.

09/10/2020

FTC settles with student loan debt scheme operators

The Federal Trade Commission has announced that the operators of a student loan debt relief scheme will pay at least $835,000 to settle Commission allegations that they charged illegal upfront fees and made false promises to consumers struggling with student loan debt. The settlement resolves FTC litigation against Carey G. Howe, Anna C. Howe, Shunmin Hsu, Ruddy Palacios, and Oliver Pomazi, five individuals who were named as defendants in the agency’s complaint against Arete Financial Group and several related companies. In the complaint filed in 2019, the FTC alleged that Arete and the other defendants pretended to be affiliated with the Department of Education and deceptively promised loan forgiveness, consolidation, and repayment programs to reduce or eliminate monthly payments and principal balances.

The proposed stipulated order bans the settling defendants from providing student loan debt relief services, prohibits them from violating the Telemarketing Sales Rule, and includes a monetary judgment of $43.3 million, which is partially suspended due to an inability to pay. The defendants will be required to surrender at least $835,000 and additional assets, which will be used for consumer redress. The order also requires the defendants’ full cooperation in the ongoing case and any related investigation.

09/10/2020

HUD: CARES funds requirements and flexibilities

HUD Secretary Carson yesterday announced alternative requirements and flexibilities for the $3.96 billion provided to states and units of local government for the Emergency Solutions Grants Program under the CARES Act (ESG-CV):

  • New eligible activities for ESG-CV funds and annual ESG allocations used to prevent, prepare for, and respond to coronavirus, including new types of temporary emergency shelters and landlord incentives.
  • Discretion beyond what is permitted in the ESG regulations for ESG-CV funds and annual ESG allocations used to prevent, prepare for, and respond to coronavirus, including paying for hotel costs for individuals currently being assisted by ESG or CoC programs as necessary to quarantine or isolate.
  • Extending the obligation deadline for recipients, and establishing revised expenditure deadlines for ESG-CV funds.

09/10/2020

Comptroller’s Licensing Manual booklet updated

OCC Bulletin 2020-80, issued yesterday, announced an update of the "Federal Branches and Agencies" booklet of the Comptroller’s Licensing Manual, which revises and replaces the booklet of the same title issued in October 2019. The revised booklet makes clarifications and updates to the OCC's policies and processes regarding the establishment, operations, and other corporate activities of federally licensed offices of foreign banks, which include federal branches, limited federal branches, and federal agencies. The revised booklet:

  • clarifies various notice and application filing requirements and processes.
  • updates decision factors and criteria.
  • removes all internal licensing procedures.
  • makes other minor modifications throughout.

This booklet does not apply to licensing activities of national banks or federal savings associations.

09/10/2020

Bureau podcast series on paying for higher education

The CFPB yesterday released the first episodes of a two-part podcast series for students, parents, and practitioners on managing finances before, during, and after college. The podcast series, Financial inTuition, will include interviews with experts in financial aid, student loans, financial coaching, and planning. The podcasts also will highlight the Bureau’s bevy of resources and tools to help young adult consumers make sound financial decisions. The first part of the series, "Managing Your Money," consists of three episodes:

  1. "Financing Your Future: How to Pay for Higher Education" – This segment will offer tips on preparing for life after high school, and focus on key financial questions one should explore before making a college/higher education decision.
  2. "Managing Money as a Young Adult" ­– This episode will discuss budget and money management tips, including resources offered by the CFPB, and other advice on how to manage finances as a young adult.·
  3. "Understanding and Protecting Your Credit" – This episode will provide insight about understanding the importance of your credit and how to protect it. This episode will cover the function of nationwide credit bureaus and credit reports, how credit scores are calculated, how to build credit and more.

09/10/2020

Deutsche Bank settles OFAC violations

OFAC has announced two settlements totaling $583,100 with Deutsche Bank Trust Company Americas regarding apparent violations of the Ukraine-Related Sanctions Regulations. OFAC determined that neither case was voluntarily self-disclosed to OFAC, but the apparent violations constitute non-egregious cases, and the bank cooperated during the investigation and made immediate corrections to its procedures to prevent future violations of the types cited. .The maximum civil penalty amount for the apparent violations was over $75.7 million. For additional information, see "Deutsche Bank Trust Company settles with OFAC" in BankersOnline's Penalty pages.

09/10/2020

CFPB Summer 2020 Supervisory Highlights

The Consumer Financial Protection Bureau has published [85 FR 55828] in the Federal Register Issue 22 (Summer 2020) of its Supervisory Highlights report. This edition of the report discusses exam findings in the areas of consumer reporting, debt collection, deposits, fair lending, mortgage servicing and payday lending.

09/09/2020

Consumer credit increased in July

The Federal Reserve System has posted its July 2020 G.19 Consumer Credit data. Consumer credit increased at a seasonally adjusted annual rate of 3-1/2 percent. Revolving credit decreased at an annual rate of 1/2 percent, while nonrevolving credit increased at an annual rate of 4-3/4 percent.

09/09/2020

FDIC releases CRA evaluation ratings

The FDIC has issued a list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act. The list covers evaluation ratings that the FDIC assigned to institutions in June 2020. Of the 76 banks listed, 70 receive a "satisfactory" rating, and three were rated "needs to improve." Our congratulations to three banks who received "outstanding" ratings:

09/09/2020

FTC sending checks and PayPal refunds to scam targets

The Federal Trade Commission has announced it is sending 70,142 checks and PayPal payments totaling $3,864,824 to consumers across the country who bought Quell, a wearable device that supposedly would treat chronic pain throughout the body when placed below the knee. Massachusetts-based NeuroMetrix, Inc. and its CEO, Shai Gozani, sold Quell—a transcutaneous electrical nerve stimulation device—to consumers, touting it as “clinically proven” and “FDA cleared” for widespread chronic pain relief. The Commission says that the defendants lack scientific evidence to support widespread chronic pain-relief claims, and their claims about clinical proof and the scope of FDA clearance for this use are false. The FTC is sending 2,144 refund checks and 67,998 refunds via PayPal to consumers. The average refund amount is $55.10 per consumer.

09/09/2020

NY AG and CFPB file suit against debt collection network

The New York Attorney General and the CFPB have filed suit against a network of five different companies based outside of Buffalo, New York, two of their owners, and two of their managers, for their participation in a debt-collection operation using illegal methods to collect debts.

The company defendants are: JPL Recovery Solutions, LLC; Regency One Capital LLC; ROC Asset Solutions LLC, which does business as API Recovery Solutions; Check Security Associates LLC, which does business as Warner Location Services and Orchard Payment Processing Systems; and Keystone Recovery Group. The individual defendants are Christopher Di Re and Scott Croce, who have held ownership interests in some or all of the defendant companies; and Brian Koziel and Marc Gracie, who are members of Keystone Recovery Group, and have acted as managers of some or all of the defendant companies.

The complaint alleges that from at least 2015 through the present, the defendants have participated in a debt-collection operation that has used deceptive, harassing, and improper methods to induce consumers to make payments to them in violation of the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act (CFPA). The New York Attorney General alleges violations of New York law based on the same conduct.

The complaint seeks consumer redress, disgorgement of ill-gotten gains, civil money penalties, and injunctive relief against the defendants.

09/09/2020

CFPB sues debt collectors and buyers

The Consumer Financial Protection Bureau has announced the filing of a lawsuit against Encore Capital Group, Inc. and its subsidiaries, Midland Funding, LLC; Midland Credit Management, Inc.; and Asset Acceptance Capital Corp. The companies, which are headquartered in San Diego, California, together comprise the largest debt collector and debt buyer in the United States, with annual revenue exceeding $1 billion and annual net income exceeding $75 million. Encore and its subsidiaries are currently subject to a 2015 consent order with the Bureau based on the Bureau’s previous findings that they violated the Consumer Financial Protection Act (CFPA), Fair Debt Collection Practices Act (FDCPA), and Fair Credit Reporting Act.

The Bureau's complaint alleges that since September 2015, Encore and its subsidiaries violated the consent order by suing consumers without possessing required documentation, using law firms and an internal legal department to engage in collection efforts without providing required disclosures, and failing to provide consumers with required loan documentation after consumers requested it. The complaint also alleges that the companies violated the consent order, the CFPA, and the FDCPA by suing consumers to collect debts even though the statutes of limitations had run on those debts and violated the consent order by attempting to collect on debts for which the statutes of limitations had run without providing required disclosures. The CFPB further alleges that the companies violated the CFPA by failing to disclose possible international-transaction fees to consumers, thereby effectively denying consumers an opportunity to make informed choices of their preferred payment methods. The Bureau also alleges that each violation of the consent order constitutes a violation of the CFPA.

09/09/2020

Hizballah supporters in Lebanon targeted

Treasury has reported that OFAC has sanctioned former Lebanese government ministers Yusuf Finyanus and Ali Hassan Khalil, who provided material support to Hizballah and engaged in corruption. The designations were made under the authority of Executive Order 13224, as amended.

OFAC also updated an SDN listing. For identity information on the two new designees and the updated listing, see BankersOnline's OFAC Update.

09/09/2020

IRS sending Economic Impact Payments letters

The Internal Revenue Service reports it will send special letters in September to about nine million Americans who typically don't file federal income tax returns and who may be eligible for, but have not registered to claim, an Economic Impact Payment. The letters will urge recipients to register at IRS.gov by October 15 in order to receive their payment by the end of the year. The letters are being sent to people who haven't filed a return for either 2018 or 2019.

09/09/2020

Fed CRA evaluation ratings

The Federal Reserve Board made five CRA evaluation ratings public during August. Four of the evaluations were rated "satisfactory." One evaluation received an "outstanding" rating, earned by VCC Bank, Richmond, Virginia.

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