Financial Crimes Enforcement Network (FinCEN)
FinCEN combats stolen identity tax refund fraud.
In July, FinCEN issued a Geographic Targeting Order (GTO) for South Florida check cashers in order to temporarily enhance customer identification requirements. In recent years check cashers in South Florida have become more susceptible to stolen identity tax refund fraud. According to the GTO, check-cashers in Miami-Dade and Broward counties will be required to obtain and record additional identifying information about customers cashing tax refund checks over $1,000. More information can be found here.
FinCEN fines $60,000 for AML failures.
At the beginning of June, FinCEN announced a CMP against a money services business (MSB) and its owner/compliance officer for willful and repeated violations of the Bank Secrecy Act (BSA). The MSB reportedly failed to maintain a required anti-money laundering (AML) program, and engaged in high-risk transactions including processing millions of dollars in international wire transactions without maintaining proper records or performing any due diligence on the individuals involved in the transactions. More information on the CMP can be found here.
International AML/CFT Advisory issued.
On July 20, FinCEN issued an Advisory on the Financial Action Task Force (FATF)-identified jurisdictions with Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) deficiencies. The Advisory included guidance regarding the listed jurisdictions as well as general guidance. The Advisory can be found here.
Federal Deposit Insurance Corporation (FDIC)
$31.7 million bank closes.
In July, a Colorado bank with approximately $31.7 million in total assets and $29.6 million in total deposits was closed. To protect the depositors, the FDIC entered into a purchase and assumption agreement with an Indiana bank to assume all of the deposits of the Colorado bank. More information on the merger can be found here.
FDIC issues list of state nonmember banks evaluated for CRA compliance.
At the beginning of July, the FDIC issued a list of state nonmember banks evaluated for compliance with the Community Reinvestment Act (CRA). The July 2015 list of banks examined for CRA compliance can be found here.
$140 million civil money penalty assessed.
The FDIC announced the assessment of a $140 million civil money penalty against a California bank for Bank Secrecy Act (BSA) and anti-money laundering (AML) violations. It was determined that the bank failed to implement an effective BSA/AML Compliance Program over an extended period of time. More information on the enforcement can be found here.
Office of the Comptroller of the Currency (OCC)
Final rule clarifying regulatory capital framework published.
On July 15th, the OCC, the Board of Governors of the Federal Reserve System (Board), and the Federal Deposit Insurance Corporation (FDIC) published a final rule concerning certain aspects of the regulatory capital framework for certain large, internationally active banking organizations. More information on the final rule can be found in the Federal Register 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.
Citibank to pay $700 million for FTC Act violations.
The OCC announced a $35 million penalty assessment against Citigroup Inc., as well as the order to identify and make restitution to harmed customers for billing and marketing practices that violate the Federal Trade Commission Act prohibiting unfair and deceptive acts or practices. The action was taken in collaboration with the CFPB. The bank was also ordered to pay $700 million in restitution to harmed consumers. More information on the action can be found here.
Securities and Exchange Commission (SEC)
Investment advisory firms to pay $5 million for antifraud violations.
In July, the SEC charged a Connecticut-based investment advisory firm for fraudulently inflating the prices of securities in hedge fund portfolios. The firm agreed to pay $5 million to settle the charges. More information on the action can be found here.
Permanent injunction sought against stockbroker for Ponzi scheme.
The SEC announced charges against a former Pennsylvania stockbroker for conducting a Ponzi scheme that resulted in the theft of over $15 million from at least 50 different investors. The stockbroker allegedly fraudulently sold certificates of deposits (CDs) by falsely claiming that he could get them higher interest rates of return on FDIC-insured CDs. More information on the charges can be found here.
Company to pay over $1 million to settle auditor independence rules violations.
The SEC charged an LLP with violating auditor independence rules when a consulting affiliate maintained a business relationship with a trustee serving on the boards and audit committees of three funds that were audited. More information on the case can be found at the SEC’s website here.
Consumer Financial Protection Bureau (CFPB)
TRID Postponed to October 3.
In July, the CFPB announced a final rule postponing the effective date of the TILA-RESPA Integrated Disclosures (Know Before You Owe, or TRID) Rule, from August 1 to October 3, 2015. The final rule includes two technical corrections in addition to this change. More information on the ruling can be found here.
Vendors to pay almost $10 million for unfair charges.
In July, the CFPB took action against two credit card add-on product vendors for unfairly charging consumers for benefits that they did not receive. Under the proposed consent orders, one group would pay approximately $6.8 million in monetary relief for eligible consumers and a $1.9 million civil money penalty, while another group would pay approximately $55,000 in monetary relief and $1.2 million in civil money penalties. More information can be found here.
Chase to pay $216 million for selling bad credit card debt.
On July 8th, the CFPB and Attorneys General in 47 states as well as the District of Columbia took action against JPMorgan Chase for selling bad credit card debt and illegally robo-signing court documents. Chase has been ordered to pay $50 million in consumer refunds, $136 million in penalties and payments to the CFPB and states, and a $30 million penalty to the Office of the Comptroller of the Currency (OCC). More information can be found here.
$24 million to be paid to borrowers for discriminatory auto loan pricing.
On July 14th, the CFPB and Department of Justice (DOJ) announced consent orders filed against the American Honda Finance Corporation for discretionary auto loan pricing and compensation practices. Honda was ordered to change its pricing and compensation system to reduce dealer discretion and minimize the risks of discrimination. In addition, Honda was ordered to pay $24 million in restitution to affected borrowers. More information can be found here.
National Credit Union Administration (NCUA)
New charter granted to federal credit union.
At the beginning of July, the NCUA granted a charter to the ELCA Federal Credit Union in Illinois, the first new consumer federal credit union in the state since 2006. It is the third new federally chartered credit union of 2015. More information on the financial institution can be found here.
$131.5 million credit union liquidated.
On July 10th, the NCUA liquidated a Pennsylvania credit union with holding assets of $131.5 million after the credit union was found to be insolvent with no prospect for restoring viable operations. To protect the interests of its consumers, the credit union’s members and deposits were assumed by another credit Pennsylvania credit union. More information on the proceedings can be found here.
Fixed-asset rule issued to provide relief to over 3,000 credit unions.
On July 23rd, the NCUA approved a final rule providing regulatory relief to more than 3,900 federal credit unions by removing the 5% aggregate limit on fixed-asset investments, among other things. The Board Action Bulletin discussing other proceedings from the NCUA Board meeting can be found here.
Federal Reserve Bank
Enforcement actions issued.
On July 2nd, the Federal Reserve Board announced the execution of several enforcement actions and actions terminating enforcement for late June. The 2015 Enforcement Actions can be found here.
Board proposes modifying capital planning and stress testing regulations.
The Federal Reserve Board proposed a rule to modify its capital planning and stress testing regulations, which would take effect for the 2016 capital plan and stress testing cycles. The proposed rule would modify the timing for several requirements, among other things. Comments on the changes are being accepted through September 24, 2015. More information can be found here.
Final rule passed to strengthen capital positions of largest bank holding companies.
On July 20th, the Federal Reserve Board approved a final rule requiring the largest, most systemically important U.S. bank holding companies to further strengthen their capital positions. The rule establish criteria for identifying a GSIB and the methods that those firms will use to calculate a risk-based capital surcharge. More information on the final rule can be found here.
Department of Justice
Former DEA agent pleads guilty to money laundering and extortion.
The Department of Justice charged a former DEA agent with money laundering, extortion, and obstruction of justice, which were committed while working as an undercover agent investigating the Silk Road, an illegal online marketplace for narcotics and other contraband. More information on the case can be found here.
Organization to pay $7.8 million for alleged false claims.
The DOJ announced charges against a corporation for making false statements to obtain contracts through the Small Business Administration’s (SBA’s) 8(a) Business Development Program for Small Disadvantaged Businesses. More information on the case can be found here.
Real estate developers sentenced for roles in $27.8 million mortgage fraud scheme.
On July 8th, the DOJ sentenced three Miami real estate developers to prison for their roles in a $27.8 million mortgage fraud scheme. In addition, they were ordered to forfeit $35,252,331 in fraudulent proceeds and to pay $21,240,064 in restitution after being convicted of wire fraud, bank fraud, and conspiracy. More information on the case can be found here.
Michigan resident to pay $14.1 million for fraud scheme.
A Michigan resident was ordered to pay $14.1 million in restitution and entered a forfeiture judgment for the same amount for his leading role in a $12.6 million Medicare fraud and tax fraud scheme. He was also sentenced to 80 months in prison. More information on this case can be found here.
Other Regulatory Bodies
Consumers to receive $4 million from debt collection scheme.
On June 30th, the Federal Trade Commission (FTC) mailed almost 95,000 checks totaling $4 million to consumers who lost money to a debt collection operation that was prosecuted in May 2014. More information on the settlement can be found here.
Individuals indicted for smuggling counterfeit products from China into U.S.
On July 1st, the United States Immigration and Custom Enforcement (ICE) announced an indictment against four individuals for allegedly smuggling counterfeit Sony and Apply products from China for sale into the United States, with an estimated value of $15 million. More information on the case can be found here.
Final Military Lending Act Rule published.
The Department of Defense issued the final Military Lending Act (MLA) rule on July 21st which works toward protecting servicemen and servicewoman from predatory credit practices by expanding financial protections provided to servicemembers, and helping ensure military families receive the consumer protections they deserve. More information on the final rule can be found here.
FATF talks money laundering risks with gold.
On July 20th, the Financial Action Task Force (FATF) issued a money laundering report on the terrorist financing vulnerabilities associated with gold. The report notes that, “Gold provides an alternative means for criminals to store or move their assets as regulators implement stronger anti-money laundering and counter terrorist financing measures to protect the formal financial sector from abuse.” More information can be found here.