Financial Crimes Enforcement Network (FinCEN)
CMP of $700,000 assessed.
At the beginning of May, FinCEN assessed a $700,000 civil money penalty (CMP) against a company and its wholly-owned subsidiary as a result of willful violations of several requirements of the Bank Secrecy Act (BSA). The company acted as a money services business (MSB) and sold virtual currency without implementing and maintaining an adequate anti-money laundering (AML) program or registering with FinCEN. More information can be found here.
Geographic Targeting Order (GTO) issued.
At the end of April, FinCEN issued a GTO to 700 Miami businesses to shed light on cash transactions that may have been tied to trade-based money laundering (TBML) schemes used by drug cartels. Generally speaking, businesses that receive more than $10,000 in currency in a single transaction or multiple related transactions are required to file with FinCEN. The GTO, effective for 180 days beginning on April 28, 2015, lowers the $10,000 reporting threshold to $3,000 for covered businesses. More information can be found here.
Online FBAR filing method announced.
To better accommodate certain filers, FinCEN has announced that the BSA E-Filing System now provides an alternative E-Filing method for Individuals filing the Report of Foreign Bank and Financial Accounts (FBAR). Filers can now use a new online form that only requires an Internet browser, in addition to the method of filing using an Adobe PDF file. More information on these processes can be found here.
USA PATRIOT Act provisions expire.
The sunset deadline for the USA PATRIOT Act provision authorizing the collection of phone metadata passed after a rare Sunday Senate session. The Senate voted to consider the USA Freedom Act, which would end the collection of data by the National Security Agency (NSA). Other provisions that expired include the "lone wolf" provision and the "roving wiretap" provision, as well as Section 215 of the Patriot Act. More information about the USA PATRIOT Act can be found on the FinCEN's website here.
Federal Deposit Insurance Corporation (FDIC)
Final rule issued on appraisal management companies (AMCs).
The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Consumer Financial Protection Bureau (CFPB), the Federal Housing Finance Agency (FHFA), and the National Credit Union Administration (NCUA) issued a final rule requiring state registration and supervision of AMCs. The rule implements Title XI of the Financial Institution Reform, Recovery, and Enforcement Act of 1989 made by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. More information can be found here.
Bank closing will cost DIF $16.8 million.
The FDIC announced the closing of an Illinois Bank on May 8 and estimated that it would cost the Deposit Insurance Fund (DIF) $16.8 million. To protect depositors, another bank has assumed all of the deposits, estimated at approximately $90 million. For more information on the acquisition, please visit the FDIC’s website here.
Institutions said to have earned $39.8 billion in first quarter.
The FDIC has reported that commercial banks and savings institutions that are FDIC-insured have earned up to 6.9% more than year ago. The rise in earnings was attributed to a $4.3 billion rise in net operating revenue. The FDIC report can be found here.
Office of the Comptroller of the Currency (OCC)
Final rule issued on integrating licensing activities.
On May 18, the OCC announced a finale rule integrating policies and procedures for corporate activities and transactions of national banks and federal savings associations. The rule makes some technical changes as well as eliminates unnecessary requirements and promotes fairness in supervision. The rule is effective July 1, 2015. More information on the rule can be found here.
Enforcement actions issued.
Every month the OCC releases enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. As always, these include Cease and Desist Orders, Civil Money Penalty Orders, and Removal/Prohibition Orders. They can be viewed here.
Discussions over CRA and small businesses.
The OCC Comptroller, Thomas J. Curry, offered remarks concerning how the Community Reinvestment Act (CRA) might help small business lending. These were delivered at the 2015 State Small Business Credit Initiative conference on May 12. They can be viewed here.
Securities and Exchange Commission (SEC)
Company to pay $55 million for misstated financials.
The SEC announced charges against Deutsche Bank AG for filing misstated financial reports. The bank agreed to pay a $55 million penalty as well as cease and desist from committing or causing any violations or future violations of the Securities Exchange Act of 1934. More information can be found here.
Fraud charges announced against education company.
In a press release on May 12, the SEC announced fraud charges against ITT Educational Services Inc., in addition to its chief executive officer (CEO) and chief financial officer (CFO). The for-profit operator is accused on fraudulently concealing the looming financial impact of two of its student loan programs. More information on the charges can be found here.
$4.6 million charge for market manipulation.
The SEC has announced fraud charges against a securities lawyer and two stock promoters for market manipulation schemes. The lawyer, who orchestrated promotional campaigns designed to entice investors into buying stock at inflated prices, agreed to pay $4.6 million to settle the charges. More information can be found here.
Consumer Financial Protection Bureau (CFPB)
Spring rulemaking agenda released.
The CFPB released its rulemaking agenda for Spring 2015. The agency will look at the Home Mortgage Disclosure Act (HMDA), Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) integrated disclosures, Dodd-Frank implementation rules, and more. More information on the agenda topics can be found here.
PayPal to pay $25 million fine.
The CFPB filed a complaint and proposed a consent order against PayPal for illegally signing up consumers for its online credit product, PayPal Credit. Under the order, PayPal would be required to pay $15 million in consumer redress as well as a $10 million civil money penalty. More information can be found here.
Sprint and Verizon to refund $120 million, pay $38 million in fines.
The CFPB has accused Sprint and Verizon of engaging in unfair, deceptive, or abusive practices by illegally billing consumers in unauthorized third-party charges. If approved, the settlements with the two companies will return $120 million to affected consumers. The companies will also pay $38 million in federal and state fines. More information on the settlement can be found here.
Lawsuit filed against company for deceptive program.
The CFPB announced that it was filing a lawsuit against a company for misrepresenting the interest savings consumers would achieve through a biweekly mortgage payment program, in violation of the Telemarketing Sales Rule and the Consumer Financial Protection Act’s prohibition against unfair, deceptive, or abusive acts or practices. More information on the lawsuit can be found here.
National Credit Union Administration (NCUA)
Credit unions pay up to $14,000 in penalties.
The NCUA announced that twenty-eight insured credit unions subject to civil money penalties for filing fourth-quarter 2014 Call Reports late have consented to pay penalties ranging from $150 to $6,752 for late filing. The announcement can be found here.
Regulatory proposals on payday lending made.
The NCUA Board Chairman spoke on regulatory issues concerning payday lending rules that could prevent credit unions from making affordable payday alternative loans to the Defense Credit Union Council on May 5th. Her comments can be found here.
Two regulatory amendments published.
The NCUA announced two regulatory amendments. The first final regulation is meant to strengthen the associational common bond provisions of NCUA's chartering and field of membership requirements, and is effective July 6th. The second amendment clarifies the mechanics of certain provisions and makes technical corrections, and is effective June 5th. More information can be found here.
Federal Reserve Bank
$1.8 billion fine imposed by Federal Reserve.
On May 20th, the Federal Reserve announced that it would impose fines totaling more than $1.8 billion against six major banking organizations for safe and unsound practices. The fines are among the largest ever assessed by the Federal Reserve. More information on the case can be found here.
Flood penalty assessed against Virginia and Nashville banks.
The Federal Reserve issued a civil money penalty (CMP) of $2,100 for violations of the Flood Act against a Virginia bank. Flood violations made by a Nashville bank were also penalized with an $11,285 civil money penalty. Information on the enforcements can be found here and here.
Enforcement action taken against company for AML deficiencies.
The Federal Reserve issued an enforcement action against Discover Financial Services (DFS) for deficiencies in the company’s anti-money laundering program. The institution is required to improve compliance; no penalties were assessed. More information on the action can be found here.
Department of Justice
Company to pay $7.9 million for False Claims Act violations.
A company in Missouri has agreed to pay $7.9 million to settle allegations that it engaged in a kickback scheme that violated the False Claims Act. The company offers pharmacy benefit management services that solicited remuneration from a pharmaceutical manufacturer. More details on the case can be found here.
$170,000 settlement paid in SCRA case.
A lawsuit filed under the Servicemembers Civil Relief Act (SCRA) was settled in mid-May after a San Diego-based storage company agreed to pay $170,000 to resolve allegations by the Department of Justice that it unlawfully sold U.S. Navy servicemembers’ stored goods. More information on the case can be found here.
$1.35 million civil money penalty paid for air violations.
The DOJ announced a settlement agreement with a steel corporation for $1.35 million for violations of the Clean Air Act. The company is required to implement procedures to reduce future violations as well as install air filtration systems. More information on the case can be found here.
$3.3 million Medicare fraud scheme results in prison sentence and $1.7 million fine.
The DOJ announced that the former owner of a medical supply company was sentenced to seven years in prison and was ordered to pay over $1.7 million in restitution. The owner’s company fraudulently billed more than $3 million to Medicare for durable medical equipment. More information on the case can be found here.
Other Regulatory Bodies
Approximately $137 million judgment assessed in cancer charity scam.
The Federal Trade Commission (FTC) announced a joint complaint against four cancer charities for schemes that amounted to a theft of over $187 million from consumers. The proposed final orders against some of the charities range from over $30 million to almost $70 million. More information on the case can be found here.
$200 million settlement made in redlining case.
The Department of Housing and Urban Development (HUD) announced an agreement with a Wisconsin bank to resolve a disparate treatment redlining case with a $200 million settlement, the largest of this kind that HUD has ever assessed. More information can be found here.
Several scams halted by FTC.
The FTC took action against several companies that stole mortgage payments from financially distressed homeowners, leading some to foreclosure and bankruptcy. The FTC also announced that it put a halt to a global sweepstakes scam that stole over $28 million from consumers across the globe. More information on these cases can be found here and here.
$1.7 million paid for credit card scheme in Wisconsin.
The FTC announced that a Wisconsin company has been ordered to pay over $1.7 million for violating the FTC Act and the Telemarketing Sales Rule (TSR). More information on the case can be found here.
Updates made to FAQ on changes to Cuba Sanctions program.
In May, the U.S. Department of the Treasury updated their "Frequently Asked Questions on Changes to the Cuba Sanctions Program." These questions provide an overview of the Office of Financial Assets Control's (OFAC's) regulations regarding the Cuba Sanctions, and highlight what changes have been made to the program since the easing of the Cuban embargo on December 17, 2014. The FAQ can be viewed here.