June 2018 Compliance Journal: Compliance Notes

The below article is the Compliance Notes section of the June 2018 Compliance Journal. The full issue may be viewed by clicking here.

The Wisconsin Supreme Court has accepted WBA’s amicus brief in the Koss Corp. v. Park Bank case. Oral argument has now been scheduled for September 7, 2018. The case takes up the issue of what constitutes “bad faith” under Wisconsin’s Uniform Fiduciary Act (UFA). The trial court and the Wisconsin Court of Appeals both found in favor of Park Bank. There has been very little case law in Wisconsin interpreting “bad faith” under the UFA. The decision which will be made by the Wisconsin Supreme Court will be critical to banks by establishing a lasting definition of “bad faith” with which all banks must comply to avoid liability under the UFA. The American Bankers Association signed on to WBA’s brief.


WBA recently submitted comments on CFPB’s rulemaking process. In particular, WBA expressed its support of CFPB continuing to convene the Small Business Regulatory Enforcement Fairness Act (SBREFA) panels to obtain insights from experienced bankers concerning the impact of particular proposed regulations. However, WBA cautioned that CFPB needs to ensure it carefully considers the recommendations made by banker panelists. The banking industry was fortunate to have two experienced Wisconsin bankers, nominated by WBA, who were selected to serve on the Mortgage Servicing and HMDA SBREFA panels. In addition, WBA urged CFPB to provide increase comment periods to give the commenting public as much time as possible to analyze proposed rules and craft thorough and thoughtful comments. In recent years, some of the comment periods have been as little as 30 days. Unless an underlying statute prescribes such a short period of time, WBA supports a lengthier period particularly for complex proposed rules. Finally, WBA also recommended increasing implementation periods, once a rule has been finalized. The comment letter may be viewed at: https://www.wisbank.com/media/562530/06072018_cfpb-rulemaking-processes.pdf


On May 24, 2018, President Donald Trump signed S. 2155 The Economic Growth, Regulatory Relief, and Consumer Protection Act. The Act is the first set of provisions to ease banks’ burden since the Dodd-Frank Act. The Act may be viewed at: https://www.congress.gov/bill/115th-congress/senate-bill/2155/actions. On June 27, WBA will conduct a free all-member call on the Act. A recording of the call will be available on a future date. 


June 15th was World Elder Abuse Awareness Day. The Wisconsin DOJ’s Elder Abuse taskforce has set up the website http://reportelderabusewi.org to educate people on identifying and reporting elder abuse. WBA commemorated the day by releasing a social media video and resources. WBA’s video may be viewed on the association’s Facebook, Twitter, and LinkedIn profiles.


FinCEN issued and revised a ruling to provide a 90-day limited exceptive relief to covered financial institutions from the obligations of the Beneficial Ownership Requirements for Legal Entity Customers with respect to certain financial products and services that automatically rollover or renew (i.e., certificate of deposit or loan accounts) and were established before the Beneficial Ownership Rule’s Applicability Date, May 11, 2018. This exception begins, retroactively, on May 11, 2018, and will expire on August 9, 2018. The ruling may be viewed at: https://www.fincen.gov/sites/default/files/2018-05/FinCEN%20Ruling%20CD%20and%20Loan%20Rollover%20Relief_FINAL%20508-revised.pdf 


DOJ announced a coordinated law enforcement effort to disrupt Business Email Compromise (BEC) schemes that are designed to intercept and hijack wire transfers from businesses and individuals called Operation Wire Wire. The operation resulted in the arrest of 74 individuals in the U.S. and overseas. BEC, also known as “cyber-enabled financial fraud,” is a sophisticated scam often targeting employees with access to company finances and businesses working with foreign suppliers and/or businesses that regularly perform wire transfer payments. The announcement may be viewed at: https://www.justice.gov/opa/pr/74-arrested-coordinated-international-enforcement-operation-targeting-hundreds-individuals


FRB will be hosting a webinar on fintech titled Keeping Fintech Fair: Thinking About Fair Lending and UDAP Risks. The webinar will be held on 07/16/2018 at 1:00 pm central. Further information may be viewed at: https://www.consumercomplianceoutlook.org/outlook-live/2018/keeping-fintech-fair-thinking-about-fair-lending-and-udap-risks/


CFPB issued its May 2018 Complaint Snapshot which includes a focused look at complaints about debt collection. According to the report, CFPB has received approximately 400,500 debt collection complaints since July 2011, accounting for 27 percent of the total complaints received. In addition to focusing on debt collection, the Snapshot also examines complaint trends more broadly. The report may be viewed at: https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/bcfp_complaint-snapshot_debt-collection_052018.pdf


FRB issued its Annual Performance Plan for 2018. The plan is broken up into six sections: Project development and resource allocation; Workforce; Physical infrastructure; Technology; Data; and Public engagement and accountability. The plan may be viewed at: https://www.federalreserve.gov/publications/2018-gpra-annual-performance-plan.htm


OCC issued its Semiannual Risk Perspective for Spring 2018 which reports credit, operational, compliance, and interest rate risks are key themes for the federal banking system. The report notes that the continued increase in market interest rates may eventually lead to higher funding costs for banks, as economic growth increases loan demand and competition for funding pressures banks to raise deposit yields. The full report may be viewed at: https://www.occ.gov/publications/publications-by-type/other-publications-reports/semiannual-risk-perspective/semiannual-risk-perspective-spring-2018.pdf 


NMLS issued the 2017 NMLS Mortgage Industry Report, compiling data concerning companies, branches, and mortgage loan originators (MLOs) who are licensed or registered in NMLS in order to conduct mortgage activities. Among its findings, the report indicated that during 2017, the number of state-licensed mortgage companies grew 3.8 percent. The number of licensed mortgage loan originators grew by 8.9 percent and the number of licenses held by MLOs grew by 15.3 percent. The full report may be viewed at: https://mortgage.nationwidelicensingsystem.org/about/Reports/2017%20Mortgage%20Report.pdf 


FRB issued its 104th Annual Report to Congress, detailing the agency’s operations and activities in calendar-year 2017. Among its findings, the report indicates that economic activity increased at a solid pace over the second half of 2017, and the labor market continued to strengthen. Measured on a 12-month basis, inflation has remained below the Federal Open Market Committee’s longer-run objective of 2 percent. The full report may be viewed at: https://www.federalreserve.gov/publications/files/2017-annual-report.pdf


CFPB published 2018 TILA-RESPA Rule updates to both versions of the Small Entity Compliance Guides and Guides to Forms. The updated documents may be viewed at: https://www.consumerfinance.gov/policy-compliance/guidance/implementation-guidance/tila-respa-disclosure-rule/


CFPB published an article titled “What to Know if You Are Facing Foreclosure After a Natural Disaster,” providing information and resources to consumers who may be struggling to make their mortgage payments following a natural disaster. The article may be viewed at: https://www.consumerfinance.gov/about-us/blog/what-know-if-you-are-facing-foreclosure-after-natural-disaster/ 


The Federal Reserve Bank of Philadelphia published a discussion paper on elder financial victimization and how consumers can avoid it. The paper presents seven important steps that consumers aged 50 or older can take to protect themselves. It also provides consumers with a list of six questions to determine how well their financial institutions are prepared to detect signs of diminished financial capacity, elder fraud, and financial abuse, and to prevent financial losses from occurring. The full paper may be viewed at: https://www.philadelphiafed.org/-/media/consumer-finance-institute/payment-cards-center/publications/discussion-papers/2018/dp18-02.pdf?la=en

By, Ally Bates