All in Regulatory Update

FinCEN Issues Alert on COVID-19 Vaccine Related Scams

Adam Witmer
BSA, Regulatory Update

On 12/28/2020, the Financial Crimes Enforcement Network (FinCEN) issued a notice to alert financial institutions about the potential for fraud, ransomware attacks, or similar types of criminal activity related to COVID-19 vaccines and their distribution. This Notice also provides specific instructions for filing Suspicious Activity Reports (SARs) regarding such suspicious activity related to COVID-19 vaccines and their distribution.

NCUA Proposes SAR Exemptions

Adam Witmer
BSA, Regulatory Update

On December 23, 2020, the National Credit Union Administration (NCUA) Board issued a notice of proposed rulemaking that would permit the NCUA to issue, on a case-by-case basis, exemptions from SAR filing requirements to federally insured credit unions, when the exemption is consistent with safe and sound practices and can improve the effectiveness and efficiency of Bank Secrecy Act reporting. The proposed rule would also make it possible for the NCUA to grant exemptions, in conjunction with the Financial Crimes Enforcement Network, to federally insured credit unions that develop innovative solutions to meet Bank Secrecy Act requirements.

Federal Reserve Proposes Final Reg D Rule

Adam Witmer
Regulatory Update, Regulation D

On 12/22/2020, the Federal Reserve Board issued a notice of proposed rulemaking regarding proposed amendments under Regulation D. Under the proposal, references to an "interest on required reserves" ("IORR") rate and to an "interest on excess reserves" ("IOER") rate would be replaced with a single "interest on reserve balances" ("IORB") rate. The proposed amendments would make other conforming changes, such as simplifying the formula used to calculate the amount of interest paid on balances maintained by or on behalf of eligible institutions in master accounts at Federal Reserve Banks. Comments on the proposed rulemaking will be accepted for 60 days after publication in the Federal Register.

Concurrently, the Board announced that it is adopting as a final rule, without change, an interim final rule amending Regulation D to lower reserve requirement ratios on transaction accounts maintained at depository institutions to zero percent. The Board received no comments on the interim final rule.

CFPB Issues Advisory Opinion on Special Purpose Credit

Adam Witmer
Regulatory Update, Regulation B

On 12/21/2020, the CFPB issued an advisory opinion related to special purpose credit programs (SPCPs) as it relates to uncertainty under Regulation B. The ECOA and Regulation B prohibit discrimination on certain prohibited bases in any aspect of a credit transaction, but they clarify that it is not discrimination for for-profit organizations to provide SPCPs designed to meet special social needs. In their release, the Bureau clarifies that they have issued this advisory opinion to clarify the content that a for-profit organization must include in a written plan that establishes and administers a SPCP under Regulation B. The advisory opinion also clarifies the type of research and data that may be appropriate to inform a for-profit organization’s determination that a SPCP would benefit a certain class of people.

2021 HMDA Exemption Threshold

Adam Witmer
HMDA, Regulatory Update

On December 22, 2020, the CFPB adjusted the HMDA exemption threshold from $47 million to $48 million. The adjustment is based on the 1.3 percent increase in the average of the CPI-W for the 12-month period ending in November 2020 (down from 2.6 in 2018 and 1.6 in 2019). Therefore, banks, savings associations, and credit unions with assets of $48 million or less as of Dec. 31, 2020, are exempt from collecting data in 2021.

Escrow Exemption Threshold for 2021

Adam Witmer
Regulatory Update, Regulation Z

On December 22, 2019, the CFPB announced the annual adjustment to the asset size threshold for small creditors under Regulation Z. This threshold applies to both the exemption to the requirement to establish an escrow account for higher-priced mortgage loans as well as the thresholds for small creditors to originate small-creditor portfolio and balloon-payment qualified mortgages.

FinCEN Proposes Virtual Currency Rule

Adam Witmer
Regulatory Update, BSA

On 12/18/2020, the Financial Crimes Enforcement Network (FinCEN) requested comments on a new proposed requirements for certain transactions involving convertible virtual currency (CVC) or digital assets with legal tender status. Under the proposal, banks and money services businesses (MSBs) would be required to submit reports, keep records, and verify the identity of customers in relation to transactions above certain thresholds involving CVC/LTDA wallets not hosted by a financial institution (also known as “unhosted wallets”) or CVC/LTDA wallets hosted by a financial institution in certain jurisdictions identified by FinCEN.

OCC Proposes SAR Exemptions

Adam Witmer
BSA, Regulatory Update

On 12/17/2020, the OCC issued a proposal to modify the requirements to file suspicious activity reports (SARs) for OCC regulated institutions (national banks and federal savings associations). According to the OCC’s release, the proposed rule would allow the OCC to issue exemptions from SAR reporting requirements. The proposed rule would make it possible for the OCC to grant relief to national banks or federal savings associations that develop innovative solutions intended to meet Bank Secrecy Act requirements more efficiently and effectively.

It should be noted, however, that OCC regulated banks that are also subject to FinCEN’s SAR regulations, would need to gain an exemption from both the OCC and FinCEN in order to be exempt from SAR reporting requirements.

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