August 2018 Compliance Journal: Compliance Notes

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

WBA, along with 51 other state bankers associations, signed on to the American Bankers Association’s comment letter to HUD regarding the reconsideration of HUD’s Implementation of the Fair Housing Act’s Disparate Impact Standard. The letter points out that the HUD rule stands in direct conflict with the Supreme Court’s 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project. In that decision, the Court established that “disparate impact” analysis to demonstrate discrimination claims is recognized under the Fair Housing Act, but it included key limitations that placed the burden of proof in disparate impact cases with the plaintiffs. ABA and the state bankers associations called on HUD to amend the rule to include a proper definition of a disparate impact claim; articulate the cautionary standards, safeguards, limitations and other requirements described by the Supreme Court in its Inclusive Communities decision; and provide further guidance to the industry. The full letter may be viewed at: 

FRB launched the Consumer Compliance Supervision Bulletin, a new publication that will provide bankers and others interested in consumer protection with high-level summaries of pertinent supervisory issues. The Bulletin, which will be published by FRB’s Division of Consumer and Community Affairs, is intended to enhance transparency regarding the Federal Reserve’s consumer compliance supervisory program, and highlight violations that have been identified. It will also provide practical steps for institutions to consider when managing consumer compliance risks. The full announcement and first issue may be viewed at:

FRB issued the August 2018 Report to Congress on Government-Administered, General-Use Prepaid Cards. The report shows that for calendar year 2017, government agencies disbursed $144 billion through prepaid cards across reported programs. Consistent with years prior, the Supplemental Nutritional Assistance Program (SNAP) disbursed the largest share of total funds through prepaid cards across all reported programs in 2017. The full report may be viewed at: 

CFPB and FFIEC have made available a HMDA File Format Verification Tool. The tool is a resource for testing whether files meet certain formatting requirements specified in the HMDA Filing Instructions Guide. There is a unique File Format Verification Tool for each HMDA data collection year. The tool may be accessed at:

FRB released the June 2018 Consumer Credit report which shows consumer credit increased at a seasonally adjusted annual rate of 4-1/2 percent during the second quarter. Revolving credit increased at an annual rate of 4 percent, while nonrevolving credit increased at an annual rate of 5 percent. In June, consumer credit increased at an annual rate of 3 percent. The report may be viewed at:

CFPB working in collaboration with 11 financial regulators and related organizations, announced an initiative to create the Global Financial Innovation Network (GFIN). The network will seek to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas. It will also create a new framework for cooperation between financial services regulators on innovation-related topics. The announcement may be viewed at:

FDIC released the summer 2018 edition of its Consumer News newsletter which celebrates the 25th anniversary of the publication. The anniversary edition of the newsletter features information drawn from updated versions of some of Consumer News’ best articles throughout the years. The publication may be viewed at:

FATF issued Financial Flows from Human Trafficking, a report discussing the financial implications of human trafficking. It is estimated that forced labor generates $150.2 billion each year, the study identifies the challenges national authorities frequently face in detecting, investigating and prosecuting money laundering and terrorist financing from human trafficking. The study also identifies good practices to mitigate some of these challenges. The report may be viewed at:

CFPB announced it will be hosting a day- long symposium on access to fair and responsible credit. The symposium will be held 09/17/2018 in Washington D.C. Further information may be viewed at:

OCC issued an updated Version 1.1 of “Business Combinations” booklet of the Comptroller’s Licensing Manual that makes minor technical corrections and to reflect a change in the public comment period calculation. The updated booklet may be viewed at:

Treasury released a report identifying improvements to the regulatory landscape that will better support nonbank financial institutions, embrace financial technology, and foster innovation. reasury’s report identifies just over 80 recommendations that are designed to embrace the efficient and responsible use of consumer financial data and competitive technologies; streamline the regulatory environment to foster innovation and avoid fragmentation; modernize regulations for an array of financial products and activities; and facilitate “regulatory sandboxes” to promote innovation. The report may be viewed at:—Nonbank-Financials-Fintech-and-Innovation_0.pdf

OCC announced it will begin accepting applications for national bank charters from nondepository financial technology (fintech) companies engaged in the business of banking. The decision was documented in a policy statement and supplement to the OCC’s Comptroller’s Licensing Manual. Fintech companies that apply and qualify for, and receive, special purpose national bank charters will be supervised like similarly situated national banks, to include capital, liquidity, and financial inclusion commitments as appropriate. The release may be viewed at:

FATF has issued a professional money laundering report which looks at the techniques and tools used by professional money launderers, to help countries identify and dismantle them. The report identifies the key characteristics of the individual professional money launderer, the professional money laundering organization and the professional money laundering network of associates and contacts that work together to facilitate money laundering. The report may be viewed at:

FHFA announced it will not make a decision in 2018 about updating the credit score model used by Fannie Mae and Freddie Mac (the Enterprises) as previously announced and, instead, is shifting its focus to implementation of Section 310 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law 115-174) enacted in May (the Act).  The Act requires FHFA to define, through rulemaking, the standards and criteria the Enterprises will use to validate credit score models. The announcement may be viewed at: 

OCC issued the “Capital and Dividends” booklet of the Comptroller’s Handbook. The revised booklet presents the regulatory capital framework and discusses the regulatory capital rules that define regulatory capital and establish minimum capital standards. The booklet also provides guidance to examiners for assessing banks’ capital adequacy and compliance with capital and dividend regulations. The booklet may be viewed at:

FDIC issued a FIL summarizing the recent changes made to all three versions of the Consolidated Reports of Condition and Income (Call Report) which are taking effect as of the June 30, 2018, report date. The FIL may be viewed at: 

By, Ally Bates