All in Regulatory Update

FATF Guidance on Risk-Based Supervision

Adam Witmer
BSA, Regulatory Update

On 3/4/21, the Financial Action Task Force (FATF) released guidance titled “Guidance on Risk-Based Supervision” to help financial industry supervisors address the full spectrum of risks and focus resources where the risks are highest. In their release, FATF explains that a risk-based approach will make supervisors efforts to detect and prevent the financial flows that fuel crime and terrorism more effective. This is crucial, they explain, because it is better to detect and prevent money laundering and terrorist financing than to prosecute it after a crime has occurred.

OCC Revises SCRA Handbook

Adam Witmer
SCRA, Regulatory Update

On 3/4/21, the Office of the Comptroller of the Currency (OCC) issued a revised “Servicemembers Civil Relief Act” booklet, which is part of their larger Comptroller’s Handbook. This revised booklet provides information and procedures for examiners in connection with the consumer protections that servicemembers are eligible for under the Servicemembers Civil Relief Act (SCRA).

CFPB Proposes to Delay New General QM Rule

Adam Witmer
Regulatory Update, Regulation Z

On 3/3/21, the CFPB announced the release of a proposed rulemaking to delay the recently set mandatory compliance date of the General Qualified Mortgage (QM) final rule from July 1, 2021 to October 1, 2022. The CFPB states they are proposing to extend the compliance date to ensure homeowners struggling with the financial impacts of the COVID-19 pandemic have the options they need.

CFPB Sues Payment Processor

Adam Witmer
Regulatory Update

On 3/3/21, the CFPB announced that they had filed a lawsuit against a payment processor and its founder for knowingly processing payments for companies engaged in internet-based technical-support fraud. The CFPB alleges that between 2016 and 2018, Howard and BrightSpeed knowingly processed payments for client companies that purported to offer technical-support services and products over the internet, but instead tricked consumers, often older Americans, into purchasing expensive and unnecessary antivirus software or services.

FFIEC Updates BSA Exam Manual

Adam Witmer
BSA, Regulatory Update, Compliance Management

In February of 2021, the FFIEC released the second round of what appears to be an overhaul of the BSA/AML Exam Manual. The February 2021 revisions include updates to four sections including and introduction section to the section on assessing compliance with BSA regulatory requirements, and sections on customer identification programs, currency transaction reporting, and transactions of exempt persons.

FACT CHECK: Is the New URLA Mandatory on March 1?

Adam Witmer
Regulatory Update

Over the last few weeks, we have seen several questions regarding the new Uniform Residential Loan Application (URLA) and whether or not the new version must be used on March 1, 2021. Apparently, some consulting firms are sending marketing material that says the new URLA has mandatory use on March 1, 2021.

Our conclusion is that this statement is only partially correct.

FinCEN Advisory on COVID-19 Economic Impact Payments

Adam Witmer
BSA, Regulatory Update

On 2/24/2021, the Financial Crimes Enforcement Network (FinCEN) issued Advisory FIN-2021-A002 that discusses detecting, and reporting financial crimes related to Economic Impact Payments. The advisory contains descriptions of EIP fraud, 14 associated red flag indicators, and information on reporting suspicious activity, and is part of a series published by FinCEN on COVID-19-related frauds and criminal activity.

CFPB To Reconsider QM Final Rules

Adam Witmer
Regulatory Update, Regulation Z

On 2/23/21, the CFPB issued a statement that they are considering whether to initiate a rulemaking to revisit the recent Seasoned QM Final Rule. If it does, the CFPB stated that it expects it will consider whether “any potential final rule revoking or amending the Seasoned QM Final Rule should affect covered transactions for which an application was received during the period from March 1, 2021, until the effective date of such a final rule.” Additionally, the CFPB announced that they intend to issue a proposed rule that would delay the July 1, 2021 mandatory compliance date of the General QM Final Rule. If this upcoming proposed rule becomes finalized, creditors would have a choice to use either the current GM QM loan definition or the revised GM QM loan definition for applications received from March 1, 2021 through the extended mandatory compliance date (unless a GSE ceases to operate under conservatorship prior to the extended mandatory compliance date).

Federal Reserve Issues Final Rule for Netting Protections Under Regulation E

Adam Witmer
Regulatory Update

On 2/18/2021, the Federal Reserve Board announced a final rule that should reduce risk and increase efficiency in the financial system by applying netting protections to a broader range of financial institutions. This final rule amends Regulation EE - which is the regulation on financial institution netting - to apply netting provisions to certain new entities including swap dealers. The rule would also make minor clarifications to the existing activities-based test in Regulation EE to clarify how the activities-based test applies following a consolidation of legal entities.

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