All in Regulatory Update

FinCEN Issues Fact Sheet on CDD Expectations for Charities & Non-Profits

Adam Witmer
BSA, Regulatory Update

On 11/19/2020, the Financial Crimes Enforcement Network (FinCEN), in coordination with the Federal Banking Agencies, issued a joint fact sheet for banks to better understand how to apply a risk-based approach to charities and other non-profit organizations, often referred to as NPOs. In their release, the CFPB explains that the joint fact sheet highlights the importance of ensuring that legitimate charities have access to financial services and can transmit funds through legitimate and transparent channels, especially during the current COVID-19 pandemic. The joint fact sheet also reminds banks to apply a risk-based approach to customer due diligence (CDD) requirements when developing the risk profiles of charities and other non-profit customers.

CFPB Announces 2021 Thresholds Under Reg Z & Reg M

Adam Witmer
Regulatory Update

On 11/18/2020, the CFPB issued a number of thresholds for 2021 under Regulation Z, as well as a threshold under Regulation M. First, the CFPB announced that the threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans during 2021 will remain the same as it was in 2020, at $27,200. In addition, the threshold exempting certain loans from the Truth in Lending Act as well as the Consumer Leasing Act in 2021 will continue to apply to consumer credit transaction and consumer lease of $58,300 or less.

FHFA Again Extends COVID-Related Loan Flexibilities

Adam Witmer
Regulatory Update

On 11/13/2020, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac extended several loan origination flexibilities until December 31, 2020. Most recently set to expire on 11/30/2020, the extended flexibilities include:

  • Alternative appraisals on purchase and rate term refinance loans;

  • Alternative methods for documenting income and verifying employment before loan closing; and

  • Expanding the use of power of attorney to assist with loan closings.

NCUA Updates Corporate Credit Union Rule

Adam Witmer
Regulatory Update

On 11/12/2020, the NCUA issued a final rule to amend the NCUA’s corporate credit union regulation. As explained in the Federal Register, the final rule updates, clarifies, and simplifies several provisions of the NCUA's corporate credit union regulation, including: Permitting a corporate credit union to make a minimal investment in a credit union service organization (CUSO) without the CUSO being classified as a corporate CUSO under the NCUA's rules; expanding the categories of senior staff positions at member credit unions eligible to serve on a corporate credit union's board; and amending the minimum experience and independence requirement for a corporate credit union's enterprise risk management expert.

OCC Releases Fall 2020 Semiannual Risk Perspective

Adam Witmer
Compliance Management, Regulatory Update

On 11/9/2020, the OCC published their fall 2020 edition of the publication, Semiannual Risk Perspective. In their release, the OCC explains that Banks remain in strong financial condition but profitability is stressed due to low interest rates and increasing levels of provisions for problem loans. As would be expected, the OCC identified credit, strategic, operational, and compliance risks as key themes for financial institutions.

CFPB Requests Comment for Payday Loan Disclosure Testing

Adam Witmer
Regulatory Update

On 11/12/2020, the CFPB issued a notice in the Federal Register seeking comment on a Generic Information Collection titled, “Payday Loan Disclosure Testing” under the Generic Information Collection Plan entitled, “Generic Information Collection Plan for the Development and Testing of Disclosures and Related Materials” prior to requesting the Office of Management and Budget's (OMB's) approval of this collection.

FinCEN Issues Advisory on FATF Identified Deficient Jurisdictions

Adam Witmer
BSA, Regulatory Update

On 11/6/2020, the Financial Crimes Enforcement Network (FinCEN) issued an advisory on the Financial Action Task Force (FATF)-identified jurisdictions with anti-money laundering, combating the financing of terrorism, and the proliferation deficiencies. In short, FATF recently (10/23/2020) updated its list of jurisdictions with strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. These changes may affect US financial institutions’ obligations and risk-based approaches with respect to relevant jurisdictions. FinCEN requests that financial institutions filing a SAR for related activity reference their advisory in SAR field 2 (Filing Instruction Note to FinCEN) and the narrative by including the key term “October 2020 FATF FIN-2020-A009.”

Interagency Statement on Reference Rates for Loans

Adam Witmer
Regulatory Update

On 11/6/2020, the joint regulators (Federal Reserve, OCC, and FDIC) issued a statement reiterating that the agencies do not endorse a specific replacement rate for the London InterBank Offered Rate (Libor), which is expected to cease after 2021. The statement explains that banks may use any reference rate for loans that the banks determine to be appropriate for their funding models and customer needs. In addition, the statement encourages banks to include appropriate language in lending contracts that provides for using a robust fallback rate if the initial reference rate is discontinued.

OCC Director's Toolkit Updated

Adam Witmer
Regulatory Update

On 11/5/2020, the OCC announced updates to its Director’s Toolkit, which is intended to assist directors of national banks and federal savings associations fulfill their corporate governance responsibilities. Th guide covers topics like strategic issues, risk management, and compliance responsibilities and updates include a revised Director's Book: Role of Directors for National Banks and Federal Savings Associations as well as a new publication, the Director’s Reference Guide to Board Reports and Information.

FinCEN Geographic Targeting Orders Renewed Again

Adam Witmer
BSA, Regulatory Update

On 11/4/2020, FinCEN Director Kenneth Blanco issued a renewal of a Geographic Targeting Order that requires title insurance companies to collect and report information about the persons involved in certain residential real estate transactions. This order covers certain transactions in which residential real property is purchased by a legal entity in the amount of $300,000 or more without the use of a loan in certain metropolitan areas. In conjunction with the geographic targeting orders, FinCEn has also released a set of FAQs to help clarify the requirements.

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