January 2020 Compliance Journal: Compliance Notes

The below article is the Compliance Notes section of the January 2020 Compliance Journal. The full issue may be viewed by clicking here.

OCC issued an alert that Stephenson National Bank & Trust, Marinette, Wis., has reported that counterfeit cashier’s checks using the bank’s routing number of 075901011 are being presented for payment nationwide in connection with secret shopper employment scams. There are a variety of counterfeit items in circulation, none of which resemble the bank’s authentic item. Further information may be viewed in the full alert: https://www.occ.gov/news-issuances/alerts/2020/alert-2020-2.html

On Dec. 20, 2019, President Donald Trump signed into law the provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) which contains several provisions that will impact qualified retirement plans. A summary of the Act may be viewed at: https://www.wisbank.com/articles/2020/01/secure-act-summary/

The Wisconsin Department of Financial Institutions, Division of Banking, has calculated the interest rate to be paid on escrow accounts subject to s. 138.052 (5) (am) 2., Stats., to be 0.17% for 2020. The interest rate shall remain in effect through December 31, 2020. The notice may be viewed at: https://docs.legis.wisconsin.gov/code/register/2019/768A2/register/public_notices/public_notice_2020_interest_rate_on_escrow_accounts/public_notice_2020_interest_rate_on_escrow_accounts.pdf

FRB has issued the December 2019 Consumer Compliance Supervision Bulletin. This issue discusses FRB supervisory observations regarding fintech, and the use of technological innovation to provide financial products and services. The bulletin may be viewed at: https://www.federalreserve.gov/publications/files/201912-consumer-compliance-supervision-bulletin.pdf

FinCEN released a new tool to visualize aggregated Suspicious Activity Reports filed by financial institutions in the United States. The interactive maps may be viewed at: https://www.fincen.gov/Reports/sar-stats/sar-stats-map

FDIC released its Fall 2019 Supervisory Insights. With the volume of commercial real estate loans held by FDIC-insured banks reaching a record of $2.4 trillion in 2019, FDIC focused on CRE risk management in the report. The report also focuses on leveraged lending. The report may be viewed at: https://www.fdic.gov/regulations/examinations/supervisory/insights/sifall19/si-fall-2019.pdf

OCC announced Brian James as Deputy Comptroller for the Central District. In this role, James will oversee 320 community banks and federal savings associations in Illinois, Indiana, Michigan, North Dakota, Ohio, Wisconsin, and parts of Kentucky, Minnesota and Missouri. James will manage more than 380 examiners and other professional personnel who ensure the financial institutions they supervise operate in a safe, sound, and fair manner. James assumes these duties in January 2020. OCC’s announcement may be viewed at: https://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-3.html

FRB issued and updated User’s Guide for the Bank Holding Company Performance Report which provides definitions of the financial ratios and items presented on each page of the report. The guide may be viewed at: https://www.federalreserve.gov/publications/files/_A_Users_Guide_for_the_Bank_Holding_Company_Performance_Report_Final.pdf

Treasury announced it plans to issue a 20-year nominal coupon bond in the first half of calendar year 2020. Consistent with Treasury’s longstanding issuance practice, Treasury plans to issue this product in a regular and predictable manner in benchmark size. Additional information regarding the launch of the 20-year bond will be provided in Treasury’s quarterly refunding statement on Wednesday, February 5, 2020. The announcement may be viewed at: https://home.treasury.gov/news/press-releases/sm878

FDIC and SBA released two updates to the popular Money Smart for Small Business curriculum. The updated modules focus on banking and credit, and are now available for banks and small business development organizations to use to help small business owners succeed. The updated Banking Services module now includes a discussion of traditional banking products, non-bank financing options and sources, and how to avoid fraud and scams. Similarly, the updated Building Strong Credit module explains how a business owner’s personal credit history can impact their business, how business credit reporting works, and how a potential lender evaluates the overall creditworthiness of a small business. A case study brings both modules together and asks participants to put the lessons they have learned into practice. The materials were updated based on input from industry experts and other practitioners, including more than two dozen organizations that have used previous versions of the Money Smart materials. The updated modules may be viewed at: https://www.fdic.gov/consumers/banking/businesslending/index.html

OCC and FDIC issued an interagency statement on heightened cybersecurity risk. The statement focuses on risk management principles that can reduce the risk of a cyber-attack and minimize business disruptions. The statement elaborates on standards articulated in the Interagency Guidelines Establishing Information Security Standards as well as resources provided by FFIEC members, such as the FFIEC Statement on Destructive Malware. The statement may be viewed at: https://www.fdic.gov/news/news/financial/2020/fil20003a.pdf

The latest edition of the Consumer Compliance Outlook is now available. This issue focuses on fintech topics such as internet marketing, and developments in fintech regulation. The publication may be viewed at: https://consumercomplianceoutlook.org/

FRB has issued frequently asked questions (FAQs) in response to questions from institutions regarding the final rules to tailor certain prudential standards for large domestic and foreign banking organizations to more closely match their risk profiles. The FAQs may be viewed at: https://www.federalreserve.gov/supervisionreg/srletters/SR2002a1.pdf

CFPB announced it has filed suit against several companies and individuals involved in offering student loan debt-relief services for allegedly obtaining consumer reports illegally, charging unlawful advance fees, and engaging in deceptive conduct. The announcement may be viewed at: https://www.consumerfinance.gov/about-us/newsroom/cfpb-announces-action-against-monster-loans-lend-tech-loans-and-student-loan-debt-relief-companies/

Treasury’s Bureau of the Fiscal Service (Fiscal Service) today announced the selection of Comerica Bank as the financial agent for the Direct Express® prepaid debit card program. The new agreement is for five years, beginning in January 2020. The Direct Express® program provides 4.5 million Americans – the majority of whom do not have a bank account – with a prepaid debit card to receive their monthly Social Security or Veterans benefit payments. For most cardholders, this payment is their sole source of income and is essential for basic living needs such as housing, food, and medicine. The announcement may be viewed at: https://www.fiscal.treasury.gov/news/comerica-bank-continues-debit-card-for-unbanked.html

NMLS issued a reminder that its Reinstatement Period will start January 2, 2020 and end at midnight ET on February 29, 2020. Further information on reinstatement may be viewed at: https://fedregistry.nationwidelicensingsystem.org/Institutions/Pages/Renew.aspx

FRB, FDIC, and OCC issued an interagency statement to explain that the federal banking agencies will exercise discretion to not take enforcement action against depository institutions or asset managers that become principal shareholders of institutions with respect to certain extensions of credit by institutions that otherwise would violate Federal Reserve Regulation O. The statement may be viewed at: https://www.fdic.gov/news/news/financial/2019/fil19085a.pdf

FRB has published its January 2020 Financial Accounting Manual for Federal Reserve Banks. The manual contains the accounting standards that should be followed by the Federal Reserve Banks. The manual may be viewed at: https://www.federalreserve.gov/aboutthefed/files/BSTfinaccountingmanual.pdf

CFPB issued its Financial Literacy Annual Report for fiscal year 2019. The report may be viewed at: https://files.consumerfinance.gov/f/documents/bcfp_financial-literacy_annual-report_2019.pdf

FRB released Uncertain Terms: What Small Business Borrowers Find When Browsing Online Lender Websites, a report that examines the information that prospective small business borrowers encounter when researching and comparing credit products offered by online lenders. Nonbank online lenders are becoming more mainstream alternative providers of financing to small businesses. In 2018, nearly one-third of small business owners seeking credit reported having applied at a nonbank online lender. The industry’s growing reach has the potential to expand access to credit for small firms, but also raises concerns about how product costs and features are disclosed. The report’s analysis of a sampling of online content finds significant variation in the amount of upfront information provided, especially on costs. The full report may be viewed at: https://www.federalreserve.gov/publications/files/what-small-business-borrowers-find-when-browsing-online-lender-websites.pdf

CFPB has published additional guidance relating to disclosing construction and construction-permanent loans under the TRID Rule. There are two new guides, one on disclosing construction and construction-permanent loans with a separate loan estimate and closing disclosure for each phase of the transaction, and one on using one combined loan estimate and one combined closing disclosure for both phases of a construction-permanent transaction. The guides may be viewed at:

By, Ally Bates