Texas Judge Puts 1071 Rule on Hold Across US

Adam Witmer
Regulatory Update

On October 26, 2023, the Credit Union Times and Bloomberg reported that the CFPB’s small business lending data collection rule is now on pause nationwide after a Texas federal judge expanded an order that previously applied only to certain banks. In late July 2023, Chief Judge Randy Crane of the US District Court for the Southern District of Texas imposed a preliminary injunction stopping the CFPB from requiring members of the American Bankers Association, Texas Bankers Association, as well as Rio Bank of McAllen, Texas, to comply with the regulation until the Supreme Courts issues its ruling which is expected by June 2024.

FTC and Wisconsin Take Action Against an Auto Center for Discriminating Against American Indian Customers and Charging Unlawful Junk Fees

Adam Witmer
Regulatory Update, Fair Lending

On October 24, 2023, the Federal Trade Commission and the State of Wisconsin took action against Wisconsin auto dealer group Rhinelander Auto Center, its current and former owners, and general manager Daniel Towne for deceiving consumers by adding illegal junk fees onto car prices. In addition, the car dealer was found discriminating against American Indian customers by charging them higher financing costs and fees.

Agencies Issue CRA Final Rule

Adam Witmer
CRA, Regulatory Update

On October 24, 2023, the Federal Reserve Board, the FDIC and the OCC jointly issued a final rule to strengthen and modernize regulations implementing the Community Reinvestment Act (CRA) to better achieve the purposes of the law. The CRA is a landmark law enacted in 1977 to encourage banks to help meet the credit needs of their entire communities, especially in low- and moderate-income neighborhoods, in a safe and sound manner.

FinCEN Issues Alert Regarding Hamas’ Terrorist Activities

Adam Witmer
Regulatory Update, BSA

On October 20, 2023, FinCEN issued an alert to assist financial institutions in identifying funding streams for the terrorist organization Hamas. FinCEN’s action is, according to their press release, a response to Hamas’ horrific terrorist attack on the people of Israel, wherein 1,000 innocent civilians, including citizens of the United States, were wounded, killed, or taken hostage.

CFPB Proposes Rule to Accelerate Shift to Open Banking

Adam Witmer
Regulatory Update

On October 19, 2023, the CFPB proposed a rule that would accelerate a shift toward open banking, where consumers would have control over data about their financial lives and would gain new protections against companies misusing their data. According to the CFPB, the proposed rule would jumpstart competition by forbidding financial institutions from hoarding a person’s data and by requiring companies to share data at the person’s direction with other companies offering better products. 

FinCEN Proposes New Rule to Enhance Transparency in CVC Mixing and Combat Terrorist Financing

Adam Witmer
BSA, Regulatory Update

On October 19, 2023, FinCEN announced a Notice of Proposed Rule Making (NPRM) that identifies international Convertible Virtual Currency Mixing (CVC mixing) as a class of transactions of primary money laundering concern. The NPRM highlights the risks posed by the extensive use of CVC mixing services by a variety of illicit actors throughout the world and proposes a rule to increase transparency around CVC mixing to combat its use by malicious actors including Hamas, Palestinian Islamic Jihad, and the Democratic People’s Republic of Korea (DPRK). 

FRB Fines Metropolitan Commercial Bank for BSA Violations

Adam Witmer
BSA, Regulatory Update

On October 19, 2023, the Federal Reserve Board issued an enforcement action and fined Metropolitan Commercial Bank, of New York, New York, approximately $14.5 million for violations of customer identification rules and for deficient third-party risk management practices relating to the bank's issuance of prepaid card accounts. The Board conducted an investigation of MCB’s issuance of general purpose reloadable prepaid cards with MovoCash, Inc.,  a former third-party program manager for MCB’s Global Payments Group, that identified deficiencies in the Bank’s third-party risk management and compliance with the Customer Identification Program under BSA.

VIDEO: Filling Out the 1071 Data Collection Form

VIDEO: Filling Out the 1071 Data Collection Form

Adam Witmer
Regulation B

In this Compliance Clip (video), Adam answers a question about who can fill out the 1071 data collection form when there are multiple principal owners of a business opening an account. I other words, can one principal owner answer the demographic questions on behalf of the other principal owners, or do they each need to answer their own questions?

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