All in Regulatory Update

Fed Extends Reg O Amendment Deadline

Adam Witmer
Regulatory Update, Regulation O

On 7/16/2020, the Federal Reserve Board issued an interim final rule that provides an exception from Reg O for certain Paycheck Protection Program loans guaranteed by the Small Business Administration (SBA). Previously on April 17, 2020, the Federal Reserve Board issued an exception to certain restrictions found in Regulation O for certain PPP loans made to insiders as the Federal Reserve states that PPP loans pose minimal risk. The original Regulation O exception only applied to PPP loans made through June 30 2020 - the original date the Paycheck Protection Program was set to expire. This new amendment to Regulation O extends the existing exception to apply to PPP loans made through August 8, 2020.

FinCEN Updates List of Deficient Countries July 2020

Adam Witmer
BSA, Regulatory Update

On July 14, 2020, FinCEN released an advisory on the FATF-identified jurisdictions with AML/CFT deficiencies. This advisory, known as FIN-2020-A004, relays information to US financial institutions regarding countries the Financial Action Task Force (FATF) has identified as having deficiencies.

FATF is an intergovernmental body comprised of 37 nations that work together to create uniform anti-money laundering standards. When countries don’t meet their standards, FATF communicates deficient countries to the FinCEN, who then provides communication to financial institutions.

This current advisory noted that FATF has temporarily paused its review process for most countries with strategic deficiencies due tot he COVID-19 pandemic. In their advisory, FinCEN explains that FATF made the initial determination

CFPB Ratifies Previous Actions

Adam Witmer
Regulatory Update

On 7/7/2020, the CFPB issued a ratification of a number of previous actions taken by the Bureau, including the large majority of existing regulations. This act of making prior actions officially valid provides financial institutions with clarity that the CFPB’s rules and regulations are still valid in light of a recent court ruling (Seila Law) that the removal provision of the CFPB Director violates law and that the Director must be removable by the President at will. The Seila Law ruling also held that the agency may continue to operate, and this ratification provides clarification to the financial industry that official actions taken by the CFPB from January 4, 2012 to June 30, 2020 are still valid.

FinCEN Issues COVID-19 SCAM Advisory

Adam Witmer
BSA, Regulatory Update

On 7/7/2020, the Financial Crimes Enforcement Network (FinCEN) issued advisory FIN-2020-A003 to alert financial institutions to potential indicators of imposter scams and money mule schemes, which are two forms of consumer fraud that have been discovered so far during the COVID-19 pandemic. This advisory contains descriptions of imposter scams and money mule schemes, financial red flag indicators for both, and information on reporting suspicious activity.

CFPB Sues for UDAAP Violations

Adam Witmer
Regulatory Update, UDAAP

On 7/6/2020, the CFPB announced the filing of a lawsuit against My Loan Doctor LLC and its founder, Edgar Radjabli. In their release, the CFPB alleges that “Loan Doctor and Radjabli made several false, misleading, and inaccurate marketing representations in advertising Loan Doctor’s “Healthcare Finance (HCF) Savings CD Account,” in violation of the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts or practices. As the Bureau’s complaint alleges, starting in August 2019, Loan Doctor took more than $15 million from at least 400 consumers who opened and deposited money into Loan Doctor’s deceptively advertised product.”

CFPB Proposal on HPML Escrow Exemptions

Adam Witmer
Regulatory Update, Regulation Z

On 7/2/2020, the CFPB released a notice of proposed rulemaking that would change Regulation Z to provide a new exemption available to certain banks and credit unions from the requirements to establish escrow accounts for certain higher-priced mortgage loans (HPMLs). This proposal is the Bureau’s last required rule under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).

CFPB Spring 2020 Rulemaking Agenda

Adam Witmer
Regulatory Update

On 6/30/2020, the CFPB published its Spring 2020 rulemaking agenda which lists items the CFPB expects to focus on between May 1, 2020 and April 30, 2021. In their release, the CFPB pointed out that the planning process for this agenda began months before the COVID-19 pandemic, so it may not reflect everything that actually occurs, especially as related to the pandemic.

FFIEC Statement on LIBOR Transition

Adam Witmer
Regulatory Update, Compliance Management

On 7/1/2020, the Federal Financial Institutions Examination Council (FFIEC) issued a statement to highlight the risks that will result from the transition away from LIBOR, which is used by the financial industry as a reference rate for many products and instruments like loans, investments, and deposits. In their release, the regulators encouraged financial institutions to continue working toward a transition to alternative reference rates so that financial, legal, operational, and consumer protection risks can be mitigated. While the transition away from the LIBOR will affect some institutions more than others, the regulators state that the impact will affect almost all institutions and, therefore, it would be beneficial for all financial institutions to consider the risks associated with the LIBOR transition.

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