All in Regulatory Update

OCC Issues Final CRA Rule

Adam Witmer
Regulatory Update

On 5/20/2020 the OCC issued a final CRA rule. This final rules was released by only the OCC as the FDIC and Federal Reserve have not yet participated in this final rule and, interestingly, the rule was released hours before OCC Comptroller, Joseph Otting - who was the one pushing for CRA reform and apparently driving this new rule - announced that he will be stepping down from his duties at the OCC.

In their release, the OCC states that the final rule reflects consideration of more than 7,500 comments submitted in response to the December 2019 proposal and the OCC states they made several changes to the proposal due to comments received, including…

FTC Settles with Payment Processor

Adam Witmer
Regulatory Update

On 5/19/2020, the Federal Trade Commission (FTC) announced a settlement of more than $40.2 million against one of the biggest payment processing companies and its former executive. In their release, the FTC explained that the fine will settle charges that the payment processor and its former executive knowingly processed payments and laundered, or assisted laundering of, credit card transactions for scams that targeted hundreds of thousands of consumers.

According to the FTC’s complaint, First Data Merchant Services, LLC allegedly ignored repeated warnings from employees, banks, and others that a former independent sales agent (ISO -Chi “Vincent” Ko), was laundering payments through First Data for companies that were breaking the law over a number of years. Ko was later hired as an executive at First Data. According to the complaint, Ko, as an ISO, opened hundreds of merchant accounts for at least four scams. The FTC alleges that Ko opened accounts under false names, provided Wells Fargo Bank with deceptive information to open the accounts, and ignored evidence that his clients were engaged in fraud. The complaint also alleges that First Data ignored numerous warnings about Ko’s activity and that the defendants violated the FTC Act and the Telemarketing Sales Rule.

FinCEN Issues Law Enforcement Awards

Adam Witmer
Regulatory Update

On 5/29/2020, FinCEN announced the 2020 recipients of their annual Law Enforcement Awards Program, which recognizes law enforcement agencies that used Bank Secrecy Act (BSA) reporting to successfully pursue and prosecute criminal investigations. These awards can often be beneficial for BSA professionals to review as they often identify trends in money laundering.

CFPB Settles with Mortgage Lender

Adam Witmer
Regulatory Update

On 5/14/20, the CFPB announced a judgement to resolve its allegations against a California mortgage lender (Chou Team Realty, LLC), which does business as Monster Loans, and several individuals and related companies, including Thomas Chou and Sean Cowell. The Bureau alleged that Chou and Cowell were among the leaders of a scheme to use Monster Loans’ account with a major credit bureau to unlawfully obtain consumer reports for their associated student loan debt-relief companies, which in turn used the consumer reports to deceptively market their services nationwide and then charged consumers illegal fees.

CFPB Guidance on Financial Institution Responsibilities

Adam Witmer
Regulatory Update

On May 13, 2020, the CFPB issued a statement regarding the impact the COVID-19 pandemic is having on the financial well-being of many consumers and on the operations of many financial institutions, including creditors subject to Regulation Z. In short, the CFPB explained that they issued this statement to inform creditors of the Bureau’s flexible supervisory and enforcement approach during this pandemic regarding the timeframe within which creditors complete their investigations of consumers’ billing error notices. Specifically, in evaluating a creditor’s compliance with the maximum timeframe for billing error resolution set forth in Regulation Z, the CFPB states that they intend to consider the creditor’s circumstances and do not intend to cite a violation in an examination or bring an enforcement action against a creditor that takes longer than required by the regulation to resolve a billing error notice, so long as the creditor has made good faith efforts to obtain the necessary information and make a determination as quickly as possible (and complies with all other requirements pending resolution of the error).

Fed Updates Reg D FAQs

Adam Witmer
Regulation D, Regulatory Update, Regulation CC

On 5/13/2020, the Federal Reserve updated their Frequently Asked Questions regarding Regulation D and the recent changes to the rule. Among other things, the updates to the FAQs include the following clarifications:

  • Question 3 answers the question of whether or not the recent amendments to Regulation D are temporary or permanent. As explained in the answer, the Federal Reserve does not expect the changes to be “short term” and “does not have plans to re-impose transfer limits,” but could if future conditions warrant it.

  • Question 13 explains what we have been saying the last few weeks: that the recent Reg D changes do not cause savings deposits to be subject to Reg CC hold requirements.

CFPB Releases Final Rule on Remittance Transfers

Adam Witmer
Regulation E, Regulatory Update

On May 11, 2020, the CFPB issued a final rule covering remittances transfers, which imposes requirements on entities that send international money transfers (i.e. remittance transfers) on behalf of consumers. Among its requirements, the Remittance Rule mandates that remittance transfer providers generally must disclose the exact exchange rate, the amount of certain fees, and the amount expected to be delivered to the recipient. The existing Remittance Rule also allows for depository institutions to estimate certain fees and exchange rate information under certain circumstances, but by statute, this provision expires in July 2020.

The new final rule allows certain banks and credit unions to continue to provide estimates of the exchange rate and certain fees under certain conditions. This could preserve consumers’ ability to send remittances from their bank accounts to certain countries or recipient institutions. In addition, the new final rule also increases the threshold that determines whether an entity makes remittance transfers in the normal course of its business and is subject to the Rule. Specifically, entities making 500 or fewer transfers annually in the current and prior calendar years would not be subject to the Rule. In their issuance, the CFPB states that this will reduce the burden on over 400 banks and almost 250 credit unions that send a relatively small number of remittances.

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