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June 2019 Compliance Journal: Compliance Notes

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

FDIC issued the June 2019 Consumer Compliance Supervisory Highlights. The publication is intended to provide supervised institutions and the public with information and observations related to the FDIC’s consumer compliance supervision activities in 2018. The report may be viewed at: https://www.fdic.gov/regulations/examinations/consumercomplsupervisoryhighlights.pdf


OFAC imposed sanctions on an Iraq-based Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) financial conduit, South Wealth Resources Company (SWRC), which has trafficked hundreds of millions of dollars’ worth of weapons to IRGC-QF-backed Iraqi militias.  SWRC and its two Iraqi associates, who are also being designated, have covertly facilitated the IRGC-QF’s access to the Iraqi financial system to evade sanctions. SWRC and its two associates are being designated as Specially Designated Global Terrorists pursuant to Executive Order 13224, which targets terrorists and those providing support to terrorists or acts of terrorism. The notice may be viewed at: https://home.treasury.gov/news/press-releases/sm706


FRB released 2019 Minority Owned Depository Institutions Data. The data may be viewed at: https://www.federalreserve.gov/releases/mob/current/default.htm


FRB has released its list of insured U.S.-chartered commercial banks with consolidated assets of $300 million or more as of March 31, 2019. There are 1,835 banks on the list, with total consolidated assets of $16.33 trillion. The list may be viewed at: https://www.federalreserve.gov/releases/lbr/current/default.htm


CFPB announced its first symposium will be held on June 25 at 9 a.m. The symposium, part of a series announced earlier this year, will focus on the Dodd-Frank Act’s prohibition on abusive acts or practices. The symposium will be webcast on CFPB’s website. The announcement may be viewed at: https://www.consumerfinance.gov/about-us/newsroom/cfpb-hold-first-symposium-june-25/


FRB posted the April 2019 G.19 Consumer Credit Data. In April, consumer credit increased at a seasonally adjusted annual rate of 5-1/4 percent. Revolving credit increased at an annual rate of 8 percent, while nonrevolving credit increased at an annual rate of 4-1/4 percent. The notice may be viewed at: https://www.federalreserve.gov/releases/g19/current/default.htm 


FCC voted to make clear that voice service providers may aggressively block unwanted robocalls before they reach consumers. Specifically, FCC approved a Declaratory Ruling to affirm that voice service providers may, as the default, block unwanted calls based on reasonable call analytics, as long as their customers are informed and have the opportunity to opt out of the blocking. The announcement may be viewed at: https://docs.google.com/viewer?url=https%3A%2F%2Fdocs.fcc.gov%2Fpublic%2Fattachments%2FDOC-357852A1.pdf


FTC provided its annual enforcement report to CFPB regarding FTC’s enforcement activities related to compliance with Regulation Z (the Truth in Lending Act or TILA); Regulation M (the Consumer Leasing Act or CLA); and Regulation E (the Electronic Fund Transfer Act or EFTA). The report may be viewed at: https://www.ftc.gov/system/files/documents/reports/ftc-enforcement-activities-related-compliance-regulation-z-truth-lending-act-regulation-m-consumer/cfpb_2018_report_re_tila_and_cla_and_efta.pdf


NCUA has released data on the financial performance of federally insured credit unions for the quarter ending March 31, 2019. NCUA’s Quarterly Data Summary Reports include an overview of the quarterly Call Report data as well as tables showing the recent history of major credit union performance indicators. The data may be viewed at: https://www.ncua.gov/files/publications/analysis/quarterly-data-summary-2019-Q1.pdf


FHFA has launched the new Uniform Mortgage-Backed Security (UMBS), which combines the separate Fannie Mae and Freddie Mac To-Be-Announced markets into one. The FHFA’s statement may be viewed at: https://www.fhfa.gov/Media/PublicAffairs/Pages/Statement-of-FHFA-Deputy-Director-Robert-Fishman-on-the-launch-of-the-new-Uniform-Mortgage-Backed-Security.aspx


CFPB has published an article for consumers on how to avoid mortgage closing scams. The FBI has reported that scammers are increasingly taking advantage of homebuyers during the closing process. Through a sophisticated phishing scam, they attempt to divert your closing costs and down payment into a fraudulent account by confirming or suggesting last-minute changes to your wiring instructions. In fact, reports of these attempts have risen 1,100 percent between 2015 and 2017, and in 2017 alone, there was an estimated loss of nearly $1 billion in real estate transaction costs. The article and tools for avoiding the scam may be viewed at: https://www.consumerfinance.gov/about-us/blog/mortgage-closing-scams-how-protect-yourself-and-your-closing-funds/   


CFPB released the latest quarterly consumer credit trends report, which explores the relationship between fluctuations in consumers’ credit scores and the timing of consumers’ applications for credit. The ability of consumers to access various types of credit can be affected by their credit scores, as many lenders require a minimum credit score before credit will be extended. Given the critical role that credit scores play in determining access to credit, there has been a push in recent years to make credit scores more available to consumers and to educate them on how their scores are used and calculated. The report may be viewed at: https://files.consumerfinance.gov/f/documents/cfpb_consumer-credit-trends_timing-applications-consumer-credit_2019-05.pdf


OFAC released its annual Terrorist Assets Report to Congress concerning the nature and extent of assets held in the United States by terrorism-supporting countries and organizations engaged in international terrorism. The report may be viewed at: https://www.treasury.gov/resource-center/sanctions/Programs/Documents/tar2018.pdf


The Military Lending Act’s website recently made significant changes to enhance security of the site and better protect the personal information of Service members. All users of the site will be required to create user accounts. A user account will be required to access both the Single Record Request and the Multiple Record Request capabilities of the MLA website. No search for active service on the MLA website will be possible without a user account. The announcement may be viewed at: https://mla-ap.dmdc.osd.mil/mla/#/news


HUD announced it is awarding an additional $1.2 million under its Fair Housing Initiatives Program (FHIP) to support the efforts of 11 organizations to educate the public and housing providers about their rights and responsibilities under the Fair Housing Act. The announcement may be viewed at: https://www.hud.gov/press/press_releases_media_advisories/HUD_No_19_084


Treasury announced the creation of a Financial Innovation Partnership with the United Kingdom’s HM Treasury. The partnership aims to build on and deepen bilateral engagement on emerging trends in financial services innovation.  This will include encouraging collaboration in the private sector, sharing information and expertise about regulatory practices, and promoting growth and innovation. The announcement may be viewed at: https://home.treasury.gov/news/press-releases/sm698


FDIC issued a reminder about the Summary of Deposits Survey, the annual survey of branch office deposits as of June 30 for all FDIC-insured institutions, including insured U.S. branches of foreign banks. All institutions with branch offices are required to submit the survey; institutions with only a main office are exempt. All survey responses are required by July 31, 2019. No filing extensions will be granted. The notice may be viewed at: https://www.fdic.gov/news/news/financial/2019/fil19028.html


FRB, FDIC, and OCC issued the host state loan-to-deposit ratios that they will use to determine compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. These ratios replace the prior year’s ratios, which were released on June 15, 2018. The notice may be viewed at: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20190528a.htm.


OCC issued the updated “Foreword” booklet of the Comptroller’s Handbook. The booklet describes the overall organization and format of the Comptroller’s Handbook. The booklet may be viewed at: https://www.occ.gov/publications/publications-by-type/comptrollers-handbook/foreword/pub-ch-foreword.pdf 


FRB’s latest Report on the Economic Well-Being of U.S. Households found that most measures of economic well-being and financial resilience in 2018 were similar to, or slightly better than, those in 2017. Overall, the financial experiences reported by the 11,000 adults surveyed in 2018 were largely positive, and many families have experienced substantial gains since the survey began in 2013, in line with the nation’s ongoing economic expansion. When asked about their overall economic well-being, 75 percent of U.S. adults said they were “doing okay” or “living comfortably”—up 12 percentage points from 2013.  The full report may be viewed at: https://www.federalreserve.gov/publications/files/2018-report-economic-well-being-us-households-201905.pdf


FDIC has resolved a lawsuit with Advance America, Cash Advance Centers, Inc.; Check Into Cash, Inc.; and Northstate Check Exchange. Advance America et al. v. Federal Deposit Insurance Corporation et al. (D.D.C.). The lawsuit had alleged terminations of payday lender bank accounts. In exchange for the plaintiffs’ agreement to dismiss the lawsuit, the FDIC is issuing: (1) a statement summarizing its longstanding policies and guidance regarding the circumstances in which the FDIC recommends that a financial institution terminate a customer’s deposit account and reiterating preexisting public guidance to financial institutions about providing banking services and carrying out Bank Secrecy Act obligations; and (2) a cover letter transmitting the statement to the plaintiffs that reiterates prior correspondence from the FDIC Chairman, summarizes applicable FDIC policy, and notes that the FDIC is conducting additional training of its workforce. FDIC’s accompanying statement may be viewed at: https://www.fdic.gov/news/news/press/2019/pr19040a.pdf


CFPB published an article regarding research that showed that veterans, similarly to servicemembers, experience somewhat higher levels of financial well-being than non-veterans. The article may be viewed at: https://www.consumerfinance.gov/about-us/blog/servicemembers-exhibit-higher-levels-financial-well-being-us-population/


OCC issued its Semiannual Risk Perspective which addresses key issues facing banks, focusing on those that pose threats to the safety and soundness of banks and their compliance with applicable laws and regulations. The report may be viewed at: https://www.occ.gov/publications/publications-by-type/semiannual-risk-perspective/pub-semiannual-risk-perspective-spring-2019.pdf


FATF issued its May 2019 Business Bulletin which provides a brief update on recent FATF outcomes of interest to the private sector, including those of the 2019 FATFPrivate Sector Consultative Forum and the FATF/MONEYVALJoint Experts’ meeting. The bulletin may be viewed at: http://www.fatf-gafi.org/media/fatf/documents/FATF-Business-Bulletin-May-2019.pdf 

By, Ally Bates