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November 2018 Compliance Journal: Compliance Notes

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

IRS issued the 2019 annual inflation adjustments for many tax provisions as well as the 2019 tax rate tables for individuals and estates and trusts. The notice may be viewed at: https://www.irs.gov/pub/irs-drop/rp-18-57.pdf


CFPB has issued updated versions of its Small Entity Compliance Guides for the HOEPA and Loan Originator rules to reflect the broadened and expanded exemption for manufactured home retailers in section 107 of the Economic Growth, Regulatory Relief, and Consumer Protection Act and certain other updates detailed in the Version Log for each guide document. The HOEPA Guide may be viewed at: https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/bcfp_hoepa_small-entity_compliance-guide.pdf
The Loan Originator Rule Guide may be viewed at: https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/bcfp_loan-originator_small-entity_compliance-guide.pdf


FHA released its 2018 Annual Report to Congress on the economic condition of the agency’s Mutual Mortgage Insurance Fund (MMI Fund). FHA reports that at the end of Fiscal Year (FY) 2018, the MMI Fund had a total Economic Net Worth of $34.8 billion and a Capital Reserve Ratio that remains above the statutory minimum for a fourth consecutive year. The full report may be viewed at: https://www.hud.gov/sites/dfiles/Housing/documents/2018fhaannualreportMMIFund.pdf 


FHFA has issued its FY 2018 Performance and Accountability Report. The report outlines FHFA’s responsibilities, goals, and how the agency has met them in FY 2018. The full report may be viewed at: https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FHFA-2018-PAR.pdf


FTC issued its Fiscal Year 2018 Agency Financial Report, which describes the agency’s strong fiscal management and key program performance of the agency during the past year. The report highlights FTC accomplishments in furtherance of its missions to protect consumers and promote competition, and reaffirms the agency’s commitment to responsible stewardship of resources and sound financial operations. Prepared in accordance with OMB Circular A-136, the report includes annual audited financial statements, as well as the Office of the Inspector General’s assessment of FTC’s key management accomplishments and opportunities for performance improvements. FTC’s FY 2018 independent financial statement audit marks the agency’s 22nd consecutive unmodified opinion, the highest audit opinion available. The report may be viewed at: https://www.ftc.gov/news-events/press-releases/2018/11/ftc-issues-agency-financial-report-fiscal-year-2018 


FDIC has released the 2018 version of the instructor-led Money Smart for Adults financial education curriculum. Instructors can use the fully scripted materials with minimal preparation to deliver unbiased, relevant, and accurate financial education. The new version includes expanded content on topics such as mobile banking, reading a pay statement, renting an apartment, and creative ways to save money, as well as updated information on standard topics such as credit reports and scores. Information on the Money Smart program may be viewed at: https://www.fdic.gov/consumers/consumer/moneysmart/index.html


OCC issued a bulletin announcing the release of its Policies and Procedures Manual (PPM) for enforcement actions against institution-affiliated parties (IAP) of national banks, federal savings associations, and federal branches and agencies of foreign banks. The PPM generally sets forth the OCC’s existing policies and procedures for taking enforcement actions against a current or former IAP in response to violations of laws, regulations, final agency orders, conditions imposed in writing, or written agreements; unsafe or unsound practices; or breaches of fiduciary duty. OCC also updated its policies and procedures regarding bank enforcement actions and related matters, and civil money penalties, primarily to ensure consistency with its policies and procedures for enforcement actions against IAPs. The bulletin may be viewed at: https://www.occ.gov/news-issuances/bulletins/2018/bulletin-2018-41.html 


FRB released the October 2018 Senior Loan Officer Opinion Survey (SLOOS), which addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally corresponds to the third quarter of 2018. Regarding loans to business borrowers, banks indicated that they eased their standards and terms for commercial and industrial (C&I) loans while experiencing weaker demand for such loans on balance. At the same time, banks reportedly left their standards unchanged on most categories of commercial real estate (CRE) loans, while demand reportedly weakened for most categories of such loans. The full survey results may be viewed at: https://www.federalreserve.gov/data/sloos/sloos-201810.htm 


DATCP has extended the deadline to apply for 2019 Industrial Hemp Research Pilot Program licenses and registrations to 03/01/2019. The final 2018 report for participants is still due 12/15/2018. The notice may be viewed at: https://datcp.wi.gov/Pages/Programs_Services/IndustrialHemp.aspx 


FDIC added new items to its cybersecurity awareness resources for financial institutions. This includes two new vignettes for the Cyber Challenge, which consists of exercises that are intended to encourage discussions of operational risk issues and the potential impact of information technology disruptions on common banking functions. The announcement and resources may be viewed at: https://www.fdic.gov/news/news/financial/2018/fil18063.html 


FRB released the inaugural Supervision and Regulation Report. The report summarizes banking conditions and the Federal Reserve’s supervisory and regulatory activities, in conjunction with semiannual testimony before Congress by the Vice Chairman for Supervision. The report may be viewed at: https://www.federalreserve.gov/publications/2018-november-supervision-and-regulation-report-preface.htm 


CFPB has updated some of its youth financial education content to provide K-12 educators with new, free resources to help students develop financial knowledge, skills, and habits. The tools and further information may be viewed at: https://www.consumerfinance.gov/about-us/blog/new-financial-education-resources-help-teachers-bring-youth-financial-capability-classroom/


FFIEC has issued a statement regarding actions taken under OFAC’s Cyber-Related Sanctions Program and to the potential impact that sanctions may have on financial institutions’ operations, including the use of services of a sanctioned entity. The statement may be viewed at: https://www.ncua.gov/newsroom/Documents/joint-statement-ofac-cyber-related-sanctions-program.pdf 


FDIC released the October 2018 edition of the FDIC Consumer News which features an article on credit and debit card billing issues. The full article may be viewed at: https://www.fdic.gov/consumers/consumer/news/october2018.pdf


FRB issued an updated Reserve Maintenance Manual. The manual provides information regarding reserve calculations and account maintenance for depository institutions that file the Federal Reserve (FR) 2900 form (Report of Transaction Accounts, Other Deposits and Vault Cash) with the Federal Reserve, either weekly or quarterly. The update includes revisions to reflect changes in reporting requirements, and calculation of reserve balance requirements. The manual may be viewed at: https://www.federalreserve.gov/monetarypolicy/files/reserve-maintenance-manual.pdf 


CFPB issued a statement announcing its intent to issue proposed rules in January 2019 that will reconsider its rule regarding Payday, Vehicle Title, and Certain High-Cost Installment Loans and address the rule’s compliance date. The statement may be viewed at: https://www.consumerfinance.gov/about-us/newsroom/public-statement-regarding-payday-rule-reconsideration-and-delay-compliance-date/


FFIEC announced the availability of data on small business, small farm, and community development lending reported by certain commercial banks and savings associations, pursuant to the CRA. The data may be accessed at: https://www.ffiec.gov/press/pr102518.htm 


CFPB has issued the Filing Instructions Guide (FIG) for data collected in 2018 to be submitted to CFPB in 2019. The guide may be viewed at: https://s3.amazonaws.com/cfpb-hmda-public/prod/help/2018-hmda-fig-2018-hmda-rule.pdf


CFPB updated its Compliance and Guidance webpage based on feedback received in listening sessions and requests to streamline user experience. The updated page may be viewed at: https://www.consumerfinance.gov/policy-compliance/guidance/


FDIC released the results of the 2017 biennial National Survey of Unbanked and Underbanked Households which indicates that for the third consecutive survey period, the number of U.S. households without a bank account fell. The percentage of U.S. households that were unbanked in 2017 the most recent year of the survey, was 6.5 percent, the lowest rate recorded since the FDIC began conducting the survey in 2009. It was down from 7.0 percent in 2015, and down significantly from a high of 8.2 percent in 2011. The unbanked numbers for 2017 equate to 14.1 million adults in 8.4 million households not having a checking or savings account. The decline in the unbanked rate from 2015 to 2017 can be explained almost entirely by improvements in the socioeconomic circumstances of U.S. households. The number of underbanked U.S. households was also down compared to 2015 levels. The full results of the survey may be viewed at: https://www.fdic.gov/householdsurvey/2017/2017report.pdf 


FFIEC has redesigned its FFIEC BSA/AML InfoBase website which was developed to provide field examiners at the financial institution regulatory agencies with an electronic source for training and distributing needed examination information. The website may be viewed at: https://bsaaml.ffiec.gov/ 


FDIC has provided an optional alternative file format for use in processing an alternative recordkeeping entity accounts (e.g. pass-through account holder, custodian or fiduciary) held at Part 370 covered institutions. Brokers and other alternative recordkeeping entities utilizing this optional process can expect a significant acceleration of both the deposit insurance determination process and the availability of insured funds when compared to the existing process.  FDIC has published a new section in the Deposit Broker’s Processing Guide titled, “VIII. Part 370 Alternative Recordkeeping Entity Processing: Addendum to the Deposit Broker’s Processing Guide” (“Part 370 Addendum”) which may be viewed at: https://www.fdic.gov/deposit/deposits/brokers/ 

By, Ally Bates