All in Regulatory Update

FTC Complaint Against Cash Advance Provider

Adam Witmer
Regulatory Update

On 8/3/2020, the Federal Trade Commission (FTC) file a law suit against Yellowstone Capital and associated employees. The complaint alleges that the cash advance servicer “ used deception to lure small business customers, then regularly withdrew money from their accounts without consent even after the customers had repaid the money they owed.”

New FinCEN FAQs on CDD

Adam Witmer
BSA, Regulatory Update

On 8/3/2020, the Financial Crimes Enforcement Network (FinCEN) issued responses to three frequently asked questions (FAQs) regarding customer due diligence requirements for covered financial institutions. These FAQs are in addition to those published on July 19, 2016 and April 3, 2018. The first FAQ discusses the collection of customer information for CDD, while the second question focuses on establishing a customer risk profile. The third question relates to performing ongoing monitoring of the customer relationship.

FFIEC Statement on Loan Accommodations

Adam Witmer
Regulatory Update

On 8/3/2020, the Federal Financial Institutions Examination Council (FFIEC) issued a joint statement to provide prudent risk management and consumer protection principles for financial institutions to consider while working with borrowers as loans near the end of initial loan accommodation periods applicable during the pandemic. The statement explains that the guidance provided should be applied to both commercial and retail loan accommodations and should be tailored to a financial institution’s size, complexity, and loan portfolio risk profile.

FATF Webinars on Money Laundering

Adam Witmer
Regulatory Update

In late July, the Financial Action Task Force (FATF) held two webinars on money laundering and terrorist financing. The first webinar was held on July 28, 2020 on Money Laundering and the Illegal Wildlife Trade, while the second webinar was held on July 31, 2020 on Money Laundering and Terrorist Financing related to COVID-19.

FinCEN CyberCrime Advisory

Adam Witmer
BSA, Regulatory Update

On 7/30/2020, the Financial Crimes Enforcement Network (FinCEN) issued an advisory to alert financial institutions to potential indicators of cybercrime and cyber-enabled crime observed during the COVID-19 pandemic. This advisory provides a number of red flags for financial institutions to look for and includes SAR filing instructions of including the key term “COVID19-CYBER FIN-2020-A005”. Institutions filing SARs should also select SAR field 42 (Cyber Event) for each applicable filing.

CFPB Seeking Comments on Preventing Discrimination

Adam Witmer
Fair Lending, Regulatory Update

In July of 2020, the CFPB issued a Request for Informatino on the Equal Credit Opportunity Act and Regulation B which is seeking comments and information to identify opportunities to prevent credit discrimination, encourage responsible innovation, promote fair, equitable, and nondiscriminatory access to credit, address potential regulatory uncertainty, and develop viable solutions to regulatory compliance challenges under the Equal Credit Opportunity Act (ECOA) and Regulation B. Comments are due 60 days after publication in the Federal Register.

ICE Issue COVID-19 Fraud Warning

Adam Witmer
Regulatory Update

On 7/28/2020, the U.S. Department of Immigration and Customs Enforcement (ICE) issued a news release warning the public to remain vigilant about COVID fraud. In their release, ICE states that in “the first 100 days of Operation Stolen Promise [ICE had] more than 500 criminal investigations, over 900 seized shipments and more than $7 million in illicit proceeds seized.”

CFPB Settles with Mortgage Companies Regarding UDAAP

Adam Witmer
Regulatory Update, UDAAP

On 7/24/2020, the CFPB issued consent orders against two California-based mortgage lenders: Sovereign Lending Group, Inc. (Sovereign) and Prime Choice Funding, Inc. (Prime Choice). According to the CFPB, both companies had violated UDAAP by mailing consumers advertisements for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or lacked required disclosures. The consent orders require the companies to pay civil money penalties and impose requirements to prevent future violations.

2021 Reg Z Inflation Adjustments

Adam Witmer
Regulation Z, Regulatory Update

In July of 2020, the CFPB published a number of annual threshold adjustments in the Federal Register related to Regulation Z. Effective January 1, 2021, a Regulation Z final rule implements the Truth in Lending Act and satisfies the CFPB’s requirement to calculate annually the dollar amounts for several provisions in Regulation Z. While most of these thresholds will most likely be updated by a financial institution’s loan operating software (LOS) provider, managers should ensure these threshold changes are appropriately made.

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