BSA Statement on CDD for PEPs

Adam Witmer
BSA, Regulatory Update

On 8/21/2020, the joint agencies (Federal Reserve, FDIC, FinCEN, NCUA, and OCC) issued a joint statement clarifying that Bank Secrecy Act (BSA) due diligence requirements for customers who may be considered “politically exposed persons” (PEPs) should be commensurate with the risks posed by the PEP relationship. Of particular note, the statement clarifies that PEPs refer to senior foreign individuals and that “the Agencies do not interpret the term “politically exposed persons” to include U.S. public officials.”

TD Bank Fined for Overdraft and FCRA Violations

Adam Witmer
FCRA, Regulatory Update, UDAAP

On 8/20/2020, the CFPB announced a settlement with TD Bank regarding its marketing and sale of its optional overdraft service, referred to by the as Debit Card Advance (DCA). In addition to the issues with their overdraft practices, the CFPB also found that “TD Bank violated FCRA and Regulation V by failing to establish and implement reasonable written policies and procedures concerning the accuracy and integrity of consumer-account information it furnished to two nationwide specialty consumer reporting agencies.” The consent order requires TD Bank to provide an estimated $97 million in restitution to about 1.42 million consumers and to pay a civil money penalty of $25 million.

CFPB Proposes New QM Category

Adam Witmer
Regulatory Update, Regulation Z

On 8/18/2020, the CFPB issued a proposal to create a new category of seasoned qualified mortgages, referenced as “Seasoned QMs.” According to the CFPB’s release, loans could qualify as Seasoned QMs if they are “first-lien, fixed-rate covered transactions that have met certain performance requirements over a 36-month seasoning period.”

FinCEN Statement on BSA Enforcement

Adam Witmer
BSA, Regulatory Update

On 8/18/2020, the Financial Crimes Enforcement Network (FinCEN) issued a statement that explains its approach to enforcing BSA/AML rules and regulations. This statement corresponds with the interagency statement issued on 8/13/2020 by the FDIC, Federal Reserve, OCC, and NCUA. In their release, FinCEN explains that this statement is intended to provide clarity and transparency to its approach when contemplating compliance or enforcement actions against covered financial institutions that violate the Bank Secrecy Act. The statement outlines administrative actions available to FinCEN, provides an overview of the information FinCEN analyzes in order to determine the appropriate outcome of BSA violations, and encourages financial institutions to voluntarily and promptly report violations as well as candidly and completely cooperate with any investigation.

Interagency Statement on BSA Enforcement

Adam Witmer
BSA, Regulatory Update

On 8/13/2020, the joint regulators (FDIC, Federal Reserve, OCC, and NCUA) issued an updated joint statement on enforcement of BSA/AML requirements. As explained in the FDIC’s release (FIL-76-2020), this statement - which runs about 13 pages long - does not create new expectations or standards, but describes circumstances in which an agency will issue a mandatory cease and desist order to address noncompliance with BSA/AML requirements.

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