All in Regulatory Update

CIP Exemption for Premium Finance Lending

Adam Witmer
Regulatory Update

On 10/5/2020, the joint agencies (OCC, FDIC, NCUA, Federal Reserve, and FinCEN) issued an order to exempt CIP (customer identification program) requirements for loans extended by banks to facilitate purchases of property and casualty insurance policies. This order comes after a group of banks jointly submitted letters in 2016 and 2017 requesting an exemption or interpretation regarding the application of the CIP rules to insurance premium finance lending. These letters asserted that CIP was not needed for insurance premium finance lending because this activity presents a very low risk of money laundering because of the purpose for which the loans are extended and the limitations on the ability of a customer to use such funds for any other purpose. On 9/27/18, an initial exemption was granted by the joint agencies specifically for commercial customers. This new order extends the exemption to all customers, not just commercial customers.

SBA Releases Simpler PPP Loan Forgiveness Application

Adam Witmer
Regulatory Update

On 10/8/20, the Small Business Administration (SBA) released a simpler loan forgiveness application for Paycheck Protection Program (PPP) loans of $50,000 or less. In a release by the US Department of the Treasury, it was explained that this action “streamlines the PPP forgiveness process to provide financial and administrative relief to America’s smallest businesses while also ensuring sound stewardship of taxpayer dollars.”

Citibank CMP for Risk Management Deficiencies

Adam Witmer
Compliance Management, Regulatory Update

On October 7, 2020, the Office of the Comptroller of the Currency (OCC) announced that they had assessed a $400 million civil money penalty (CMP) against Citibank due to deficiencies in enterprise-wide risk management, compliance risk management, data governance, and internal controls. In their release, the OCC explained that these measure were taken “based on the bank’s unsafe or unsound banking practices for its long-standing failure to establish effective risk management and data governance programs and internal controls.”

CFPB RESPA FAQs Released

Adam Witmer
Regulatory Update, RESPA

On 10/7/2020, the CFPB released fourteen new frequently asked Questions (FAQs) on their website. These FAQ are divided into four main categories including sections on general information, section 8(a), gifts and promotional activity, and marketing services agreements. In conjunction with the release of these FAQs, the CFPB also explained - in a blog post - that it is rescinding Compliance Bulletin 2015-05, RESPA Compliance and Marketing Services Agreements. In the blog post, the CFPB explained that the compliance bulletin does not provide the regulatory clarity needed on how to comply with RESPA and Reg X so, therefore, this guidance is being rescinded.

Treasury Issues Ransomware Advisories

Adam Witmer
Regulatory Update, BSA

On October 1, 2020, the US Department of the Treasury issued a pair of advisories regarding ransomware. The first advisory was issued by FinCEN and is titled Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments. This advisory provides information on the role of financial intermediaries in payments, ransomware trends and typologies, and related financial red flags.

The second advisory was issued by OFAC and is titled Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments. This advisory explains the sanctions risks associated with making ransomware payments. For example, some individuals or entities who install ransomware and demand payment are actually found on the OFAC list, making it illegal for businesses who get ransomware on their computers to pay these entities and regain access to their systems and data.

CFPB Releases TRID Assessment

Adam Witmer
Regulatory Update

On 10/1/2020, the CFPB issued a formal review of its TRID rule, as required by the Dodd-Frank Act. To complete this required report, the CFPB began work on the assessment in early 2019 and solicited public comment on its research plan and other questions. The report begins with a message from Director Kathleen Kraninger, and she highlights some key findings and conclusions of the report.

Flood Program Extended Through September 2021

Adam Witmer
Flood, Regulatory Update

On 10/1/2020, President Trump signed H.R.8337 which extends the National Flood Insurance Program (NFIP) through September 30, 2021. While funding for the flood program, and other government programs, expired for about an hour after the September 30, 2020 deadline had passed, CNBC reports that President Trump signed the bill early Thursday after apparently getting back from a campaign trip to Minnesota. While the bill only extends many government functions through December 31, 2020, it does specifically extend the NFIP through September 30, 2021.

OCC Updates Truth in Lending Act Booklet

Adam Witmer
Regulatory Update, Regulation Z, TRID

On 9/30/2020, the Office of the Comptroller of the Currency rescinded their “Truth in Lending Act” booklet from the Comptroller’s Handbook and instructed examiners to rely on revised interagency procedures. In their release, the OCC explains that the FFIEC has adopted revised interagency examination procedures for the Truth in Lending Act and the revised interagency procedures reflect amendments to Regulation Z published in the Federal Register through May 18, 2018.

FinCEN Speech Addresses Pandemic Issues

Adam Witmer
BSA, Regulatory Update

On 9/29/2020, FinCEN Director, Kenneth Blanco, presented a speech at the ACAMS Virtual AML Conference. After beginning the speech with a discussion on FinCEN’s response to the global health crisis, Director Blanco shared some fraud trends FinCEN is seeing related to COVID-19. Though much was a reiteration of applicable advisories issued by FinCEN, it was explained that the most common trend seen in COVID-19 related SARs involves fraudsters “targeting multiple COVID-19 related government stimulus programs, employing money mules and cyber techniques.”

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