All in Regulatory Update

FinCEN Issues Alert on Potential Real Estate Investments by Sanctioned Russian Entities

Adam Witmer
BSA, Regulatory Update

On January 25, 2023, FinCEN issued an alert to financial institutions on potential investments in the U.S. commercial real estate sector by sanctioned Russian elites, oligarchs, their family members, and the entities through which they act. The alert lists potential red flags and typologies involving attempted sanctions evasion in the commercial real estate sector, and reminds financial institutions of their Bank Secrecy Act (BSA) reporting obligations. 

CFPB Warns Companies Offering Negative Option Subscriptions

Adam Witmer
Regulatory Update

On January 19, 2023, the CFPB issued a new circular affirming that companies offering “negative option” subscription services must comply with federal consumer financial protection law. Negative option programs include subscription services that automatically renew unless the consumer affirmatively cancels, and trial marketing programs that charge a reduced fee for an initial period and then automatically begin charging a higher fee. The circular highlights examples of unlawful behavior by companies that have used dark patterns and other manipulative tactics to trick consumers into paying recurring charges for products and services they do not want.

FinCEN Seeks Comments on Proposed Collection for FinCEN Identifier

Adam Witmer
Regulatory Update

On January 17, 2023,  FinCEN issued a request for comments on the application that will be used to collect information from individuals who seek to obtain a FinCEN identifier, consistent with the Beneficial Ownership Information Reporting Requirements final rule that was published on September 30, 2022. Individuals who seek to obtain a FinCEN identifier must submit an application and update the information provided on the application as necessary. 

Hsu on Managing Large Banks

Adam Witmer
Regulatory Update

On January 17, 2023, Acting Comptroller of the Currency Michael J. Hsu spoke at the Brookings Institution. In his speech, Hsu talked about the limits of large bank manageability, or what some call the too-big-to-manage (TBTM) problem. Hsu stressed the contribution of large banks to the economy and how, as they are becoming bigger and more complex, managing large banks is becoming more challenging.

HUD Fines Three Landlords for Race Discrimination

Adam Witmer
Regulatory Update

On January 12, 2023, the HUD announced that the Administrative Law Judge (ALJ) has ordered three Plano, Texas landlords to pay damages, civil penalties, and attorney’s fees totaling $140,649 for violating the Fair Housing Act. The ALJ found that agent Quang Dangtran and property owners Ha Nguyen and HQD Enterprise, LLC refused to rent to a Black woman because of race, made discriminatory statements, placed discriminatory advertisements on Craigslist, and retaliated against the woman because she filed a complaint with HUD.

HUD Addresses Bias in FHA-Financed Home Appraisal Process

Adam Witmer
Regulatory Update, Appraisals

On January 12, 2023, HUD Secretary Marcia L. Fudge announced that HUD, through the Federal Housing Administration, is creating a process that people seeking FHA financing can use to request a review of their appraisal if they believe the results may have been skewed by racial bias. The proposed change to FHA policy represents the first step to solidify the processes that lenders must follow when a borrower requests a Reconsideration of Value (ROV) review if concerns arise around unlawful discrimination in residential property valuation

FinCEN Prohibits Fund Transmittals Involving Bitzlato

Adam Witmer
BSA, Regulatory Update

On January 18, 2023, FinCEN issued an order that identifies the virtual currency exchange Bitzlato Limited (Bitzlato) as a “primary money laundering concern” in connection with Russian illicit finance. This is the first order issued pursuant to section 9714(a) of the Combating Russian Money Laundering Act, as amended, and highlights the serious threat that business operations that facilitate and support Russian illicit finance pose to U.S. national security and the integrity of the U.S. financial sector. 

CFPB Updates Mortgage Servicing Exam Procedures

Adam Witmer
Regulatory Update

On January 18, 2023,  issued updates to the Mortgage Servicing Examination Procedures. The Examination Procedures describe the types of information that CFPB examiners gather to evaluate mortgage servicers’ policies and procedures; assess whether servicers are complying with applicable laws; and identify risks to consumers related to mortgage servicing. The updates to the procedures aim to provide transparency to stakeholders about how CFPB does its work.

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