October 2019 Compliance Journal: Compliance Notes

The below article is the Compliance Notes section of the October 2019 Compliance Journal. The full issue may be viewed by clicking here.

CFPB announced that it will establish a taskforce to examine ways to harmonize and modernize federal consumer financial laws. The Taskforce on Federal Consumer Financial Law will examine the existing legal and regulatory environment facing consumers and financial services providers and report to Director Kraninger its recommendations for ways to improve and strengthen consumer financial laws and regulations. The announcement may be viewed at: https://www.consumerfinance.gov/about-us/newsroom/cfpb-announces-taskforce-federal-consumer-financial-law/


FRB issued a statement regarding monetary policy implementation, announcing the FRB will purchase Treasury bills at least into the second quarter of next year in order to maintain over time ample reserve balances at or above the level that prevailed in early September 2019. In addition, FRB will conduct term and overnight repurchase agreement operations at least through January of next year to ensure that the supply of reserves remains ample even during periods of sharp increases in non-reserve liabilities, and to mitigate the risk of money market pressures that could adversely affect policy implementation. The notice may be viewed at: https://www.federalreserve.gov/newsevents/pressreleases/monetary20191011a.htm


OCC released its bank supervision operating plan for fiscal year (FY) 2020. The plan provides the foundation for policy initiatives and for supervisory strategies as applied to individual national banks, federal savings associations, federal branches, federal agencies, and technology service providers. OCC staff members use this plan to guide their supervisory priorities, planning, and resource allocations. The plan may be viewed at: https://www.occ.gov/news-issuances/news-releases/2019/nr-occ-2019-111.html


IRS issued a reminder that taxpayers with expiring Individual Taxpayer Identification Numbers (ITINs) can get their ITINs renewed more quickly and avoid refund delays next year by submitting their renewal application soon. Any ITIN with middle digits 83, 84, 85, 86 or 87 will expire at the end of this year. In addition, any ITIN not used on a tax return in the past three years will expire. As a reminder, ITINs with middle digits 70 through 82 that expired in 2016, 2017 or 2018 can also be renewed. IRS urges anyone affected to file a complete renewal application, Form W-7, Application for IRS Individual Taxpayer Identification Number, as soon as possible. The reminder may be viewed at: https://www.irs.gov/newsroom/2-million-itins-set-to-expire-in-2019-to-avoid-refund-delays-apply-soon


CFTC, FinCEN, and SEC issued a joint statement to remind persons engaged in activities involving digital assets of their anti-money laundering and countering the financing of terrorism (AML/CFT) obligations under the Bank Secrecy Act (BSA). AML/CFT obligations apply to entities that the BSA defines as “financial institutions,” such as futures commission merchants and introducing brokers obligated to register with the CFTC, money services businesses (MSBs) as defined by FinCEN, and broker-dealers and mutual funds obligated to register with the SEC. Among those AML/CFT obligations are the requirement to establish and implement an effective anti-money laundering program (AML Program) and recordkeeping and reporting requirements, including suspicious activity reporting (SAR) requirements. The statement may be viewed at: https://www.fincen.gov/sites/default/files/2019-10/CVC%20Joint%20Policy%20Statement_508%20FINAL_0.pdf


SEC’s Office of Investor Education and Advocacy and Retail Strategy Task Force this week released new videos and Investor Alerts to help show investors what fraud looks like. Fraudsters will use every gimmick they can think of to get their hands on investors’ hard-earned money. These videos, along with our other investor education materials on Investor.gov,  provide practical information that Main Street investors can use to avoid fraud and become empowered to make the best investment decisions possible for a strong financial future. The notice and the videos may be viewed at: https://www.sec.gov/news/press-release/2019-209


IRS issued two new pieces of guidance for taxpayers who engage in transactions involving virtual currency. Expanding on guidance from 2014, the IRS is issuing additional detailed guidance to help taxpayers better understand their reporting obligations for specific transactions involving virtual currency. The new guidance includes Revenue Ruling 2019-24 and frequently asked questions (FAQs). The new revenue ruling addresses common questions by taxpayers and tax practitioners regarding the tax treatment of a cryptocurrency “hard fork”. In addition, a set of FAQs address virtual currency transactions for those who hold virtual currency as a capital asset. The announcement may be viewed at: https://www.irs.gov/newsroom/virtual-currency-irs-issues-additional-guidance-on-tax-treatment-and-reminds-taxpayers-of-reporting-obligations


President Donald Trump issued an Executive Order on Promoting the Rule of Law Through Improved Agency Guidance Documents. The Order declares that “it is the policy of the executive branch, to the extent consistent with applicable law, to require that agencies treat guidance documents as non-binding both in law and in practice, except as incorporated into a contract, take public input into account when appropriate in formulating guidance documents, and make guidance documents readily available to the public. Agencies may impose legally binding requirements on the public only through regulations and on parties on a case-by-case basis through adjudications, and only after appropriate process, except as authorized by law or as incorporated into a contract.” The Executive Order may be viewed at: https://www.whitehouse.gov/presidential-actions/executive-order-promoting-rule-law-improved-agency-guidance-documents/


CFPB announced the appointment of members to the Consumer Advisory Board (CAB), Community Bank Advisory Council (CBAC), Credit Union Advisory Council (CUAC), and Academic Research Council (ARC). These experts advise CFPB leadership on a broad range of consumer financial issues and emerging market trends. The announcement may be viewed at: https://www.consumerfinance.gov/about-us/newsroom/cfpb-announces-advisory-committee-members/


OCC issued updates to the “Bank Supervision Process,” “Community Bank Supervision,” “Federal Branches and Agencies Supervision,” and “Large Bank Supervision” booklets of the Comptroller’s Handbook. Updates to Comptroller’s Handbook booklets are summarized in the “Table of Updates Since Publication” in the back of each booklet. The notice may be viewed at: https://www.occ.gov/news-issuances/bulletins/2019/bulletin-2019-44.html


FRB issued its Semiannual Report on Banking Applications Activity: January 1–June 30, 2019. The report provides information regarding the applications filed by banking organizations and reviewed by FRB as of the most recent reporting period ending on June 30 and December 31 of each calendar year. The notice may be viewed at: https://www.federalreserve.gov/publications/2019-september-semiannual-report-on-banking-applications-activity.htm


FHFA sent a letter to the 11 Federal Home Loan Banks instructing them that, as of December 31, 2019, they should stop purchasing investments in assets tied to LIBOR with a contractual maturity beyond December 31, 2021. As of March 31, 2020, the Federal Home Loan Banks should no longer enter into all other LIBOR-based transactions involving advances, debt, derivatives, or other products with maturities beyond December 31, 2021, with only very limited exceptions granted by FHFA.  While implementing the transition away from LIBOR, FHFA will continue to examine the impact of LIBOR-based transactions on all regulated entities. The notice may be viewed at: https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Instructs-FHLBanks-to-Begin-Transitioning-Away-from-LIBOR.aspx


FDIC issued the September 2019 issue of FDIC Consumer News, featuring an article on whether funds on a prepaid card are FDIC-insured. The issue may be viewed at: https://www.fdic.gov/consumers/consumer/news/september2019.pdf


CFPB has published its Filing Instructions Guide (FIG) for data collected in 2020 and a new resource, the Supplemental Guide for Quarterly Filers. Both may be viewed at: https://ffiec.cfpb.gov/


FDIC’s Office of the Ombudsman published its 2018 Annual Report outlining the office’s structure, outreach activities, and goals. In 2018, the Ombudsman Office handled 142 industry cases, many of which were able to be resolved by providing information and assistance for bank-specific questions or issues. The office also conducted outreach visits to nearly 500 external stakeholders, including banks, trade associations, and state banking authorities. The full report may be viewed at: https://www.fdic.gov/regulations/resources/ombudsman/annualreport/2018-oo-annual-report.pdf


FRB announced a pause in their previously announced plans for a three-phased migration to the ISO 20022 messaging standard for the Fedwire Funds Service. As a result, Phase 1 will not be implemented in November 2020. The Federal Reserve Banks will provide an update regarding their implementation plans once the assessment is complete. The notice may be viewed at: https://www.frbservices.org/news/press-releases/092319-fedwire-funds-migration-iso20022-messages.html


CFPB announced that it will continue the publication of consumer complaints, data fields and narrative descriptions through CFPB’s Consumer Complaint Database while making several enhancements to the information available to users of the database. The enhancements include: modified disclaimers to provide better context to the published data; integrating financial information and resources into the complaint process to help address questions and better inform consumers before they submit a complaint; and information to assist consumers who wish to contact the financial company to get answers to their specific questions. Additionally, CFPB will work to provide enhanced features for the database that include dynamic visualization tools on recent complaint data. The announcement may be viewed at: https://www.consumerfinance.gov/about-us/newsroom/bureau-enhance-consumer-complaint-database/

By, Ally Bates