Financial Crimes Enforcement Network (FinCEN)
Geographic Target Orders renewed.
On August 7th, FinCEN announced the renewal of a Geographic Targeting Order (GTO) in place for armored cars and other common carriers of currency at two border crossings in Southern California. A new, similar GTO was issued that applies to carriers crossing the border at eight major ports of entry in Texas. These were issued in coordination with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and U.S. Customs and Border Protection. For more information, please visit FinCEN’s website.
FinCEN offers ruling on bitcoin block chain.
In August, FinCEN ruled that companies using the bitcoin block chain to transfer precious metals are considered money transmitters as defined by the Bank Secrecy Act (BSA) and implementing regulations, and therefore subject to anti-money laundering (AML) restrictions. This was in response to an unnamed company in a letter that can be found on FinCEN’s website.
New FinCEN rule a "death sentence" for foreign bank.
After a rule issued by FinCEN in July naming a bank as a foreign financial institution of primary money laundering concern pursuant to Section 311 of the USA PATRIOT Act (Section 311), the financial institution has filed a complaint against the Department of the Treasury and FinCEN, citing the rule as a “death sentence.” According to the bank, the ruling would cut it off from the United States financial system without proof of money-laundering claims. The original ruling can be found here.
Federal Deposit Insurance Corporation (FDIC)
Company to pay $31.5 million for unadjusted deposit errors.
The CFPB, in conjunction with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), has announced enforcement orders against a financial group and its two subsidiaries for failing to credit customers with the full amount of their deposited funds between 2008 and 2013. The company is also accused of misleading customers by implying that the bank would ensure that customers were credited with the correct deposit amount. The company and its subsidiaries have been ordered to pay $11 million in restitution and $20.5 million in civil money penalties. The details of the case can be found here.
FDIC issues list of state nonmember banks evaluated for CRA compliance.
The FDIC issued a list of state nonmember banks evaluated for compliance with the Community Reinvestment Act (CRA). The list of banks examined for CRA compliance can be found here.
FDIC release June enforcement actions.
On July 31st, the FDIC released a list of orders of administrative enforcement actions taken against banks and individuals in June. No administrative hearings are scheduled for August 2015. The full list can be found here.
Office of the Comptroller of the Currency (OCC)
CRA evaluations released.
On August 5th, the Office of the Comptroller of the Currency (OCC) released a list of Community Reinvestment Act (CRA) performance evaluations that were public during the month of July 2015. The list is available here.
$10 million penalty assessed for unfair and deceptive practices.
On August 12th, the OCC announced the assessment of a $10 million penalty against a Rhode Island bank that failed to notify customers when discrepancies in their deposits were found. The OCC alleges that the bank failed to resolve discrepancies between the amount of funds deposited by customers and the amount encoded from the accompanying deposit slip, among other deceptive practices. The consent order can be found on the OCC’s website here.
Deputy Comptroller for Capital and Regulatory Policy named.
On August 13th, the OCC announced the appointment of Amrit Sekhon as the Deputy Comptroller for Capital and Regulatory Policy. Mr. Sekhon will serve as the key advisor to the Comptroller on current and emerging domestic and international policies related to bank capital and as the Comptroller’s representative for Basel Committee meetings. The OCC issued a press release on the news.
Securities and Exchange Commission (SEC)
SEC charges company with accounting fraud.
On August 6th, the Securities and Exchange Commission (SEC) announced charges alleging that an energy company, its chief financial officer, and its current chief operating officer inflated values of oil and gas properties, resulting in fraudulent financial reports. The company is alleged to have violated anti-fraud provisions of U.S. securities laws and a related SEC anti-fraud rule.
Businessman charged with operating $114 million Ponzi scheme.
The SEC charged a businessman with a $114 million Ponzi scheme that defrauded more than 300 investors in multiple offerings of promissory notes issued by two partnerships owned by the businessman. The man agreed to settle the SEC’s complaint by consenting to permanent injunctions against committing these violations in the future. They also agreed to asset freezes and other emergency relief, and to pay civil penalties and return allegedly ill-gotten gains with interest in amounts to be set later by the court.
Rule adopted for security-based swap dealers.
On August 5th, the SEC announced that adoption of new rules to provide a comprehensive, efficient process for security-based swap dealers and major security-based swap participants to register with the SEC. The SEC posted the Fact Sheet online.
Rule adopted addressing pay ratio disclosure.
The SEC adopted a final rule requiring a public company to disclose the ratio of the compensation of its chief executive officer (CEO) to the median compensation of its employees. The new rule, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, provides companies with flexibility in calculating this pay ratio, and helps inform shareholders when voting on “say on pay.” The Fact Sheet detailing the ruling is posted online.
Citigroup to pay $180 million for hedge fund fraud.
On August 17th, the SEC announced a $180 million settlement for charges that a company defrauded investors in two hedge funds by claiming that they were safe, low-risk, and suitable for traditional bond investors. The press release detailing the administrative proceedings can be found on the SEC's website.
Consumer Financial Protection Bureau (CFPB)
Mortgage company to pay over $1.5 million for illegal practices.
Late last month, the Consumer Financial Protection Bureau (CFPB) announced charges against a mortgage company for blocking consumers’ attempts to save their homes. The servicer failed to honor modifications for loans transferred from other servicers, treated consumers as if they were in default when they were not, and other allegations. The company agreed to pay $1.5 million in restitution to victims and a $100,000 civil money penalty. More information can be found here.
CFPB gives guidance on PMI cancellation and termination.
On August 4th, the CFPB issued guidance to mortgage servicers regarding the cancellation and termination of private mortgage insurance. The bulletin further clarifies Homeowners Protection Act (HPA) requirements. The announcement and its corresponding resources can be found on the CFPB’s website.
Complaint filed against offshore payday lender.
The CFPB announced the filing of a lawsuit against a group of commonly controlled companies for collecting money that consumers did not owe. According to the complaint, the defendants allegedly collected loan amounts and fees that were illegal and void, or that consumers had no obligations to repay, and falsely threatened consumers with lawsuits and imprisonment. More information on the suit can be found on the CFPB’s website.
National Credit Union Administration (NCUA)
$2 million in grants awarded.
On August 5th, the NCUA announced that grants totaling more than $2 million were awarded to 225 low-income credit unions to expand products and services, open branches or relocate offices, advance digital growth and provide greater security for their members. More information on the grants can be found on the NCUA’s website.
Prohibition orders issued.
The NCUA announced four prohibition orders issued at the end of July banning several individuals from participating in the affairs of any federally insured financial institution due to various charges, including elder theft, forgery, grand larceny, and grand theft. More information on these individuals can be found on the NCUA’s website.
Credit union closes.
On August 5th, the NCUA announced the voluntary liquidation of a credit union in Virginia after it was determined that the credit union would not be able to restore viable operations. The credit union had served 172 members and had assets of $101,630. More information can be found on the NCUA’s website here.
Federal Reserve Bank
Enforcement actions issued.
The Federal Reserve Board announced the execution of several enforcement actions and actions terminating enforcement for July and August. The 2015 Enforcement Actions can be found here.
Clarification issued on Regulation II.
On August 10th, the Federal Reserve issued clarification on Regulation II (Debit Card Interchange Fees and Routing) regarding the inclusion of transaction-monitoring costs in the interchange fee standard. More information on the regulatory policy can be found on the Federal Reserve’s website.
Federal Open Market Committee minutes released.
On August 19th, the Federal Reserve Board and the Federal Open Market Committee released minutes of the Committee meeting held on July 28th and 29th. The minutes can be read in their entirety here.
Department of Justice
Ohio man convicted of money laundering in telemarketing scheme.
On August 5th, the Department of Justice (DOJ) announced the conviction of an individual from Ohio for his role in a Costa Rican telemarketing scheme. He was charged with one count of conspiracy to commit money laundering and six counts of international money-laundering concealment. More information can be found on the DOJ’s archive.
Swiss banks reach resolution under DOJ Swiss Bank Program.
The Swiss Bank Program provides a path for Swiss banks to resolve potential criminal liabilities in the United States. In August, three Swiss banks reach resolutions under the DOJ’s program. Details on the resolution can be found on the DOJ’s website.
Three men charged in $17 million conspiracy.
On August 6th, the DOJ announced charged against three men from the Virgin Islands based on their participation in a bribery scheme involving over $17 million in construction contracts awarded by the Virgin Islands Public Finance Authority. The case is under consideration by the court; details can be found here.
Eight sentenced in $24 million fraud ring.
The DOJ sentenced eight defendants to more than 31 years in prison, collectively, for their roles in a $24 million stolen identity refund fraud (SIRF) conspiracy. The scheme involved a complex money laundering operation through which almost $10 million in fraudulent tax refund checks were cashed at various businesses in Alabama, Georgia, and Kentucky. More information can be found on the DOJ’s website.
Other Regulatory Bodies
Defendants to pay $76 million for Ponzi scheme.
On July 31st, the U.S. Commodity Futures Trading Commission (CFTC) charged two individuals and their companies for their connections with a foreign currency exchange (forex) scheme in violation of the Commodity Exchange Act (CEA). The Orders also impose permanent trading and registration bans on the Defendants and prohibit them from further violations of the anti-fraud provisions of the CEA, as charged. The defendants were sentenced to a collective 44.5 years in prison. More information on the case can be found here.
Futures Commission Merchant ordered to pay $300,000 CMP.
On August 6th, the CFTC ordered a registered Futures Commission Merchant and provisionally registered swap dealer to pay a $300,000 civil monetary penalty for failing to hold sufficient U.S. Dollars in segregated accounts in the United States to meet all of its U.S. Dollar obligations to cleared swaps customers. More information on the case can be found here.
OFAC settles $270,000 Foreign Assets Control Regulations violations.
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with an insurance company for violations of the Foreign Assets Control Regulations. The company allegedly issued global protection and indemnity insurance policies providing coverage to certain flagged vessels. More information can be found here.
Mortgage companies to pay $300,000 CMP and more.
On August 10th, the U.S. Department of Housing and Urban Development (HUD) settled with two mortgage companies on violations of mortgage regulations. Allegedly, one company artificially increased mortgage costs and agreed wot pay a $169,419 civil money penalty, although it did not admit fault. The second lender agreed to a $300,000 CMP. More information on the allegations can be found here.
$7.1 million judgment imposed for data brokers scam.
The Federal Trade Commission (FTC) charged a data broker operation with illegally selling payday loan applicants’ financial information to a scam operation that took millions of dollars from consumers. The order against two individuals imposes a judgment of $7.1 million while an order against another imposes a judgment of more than $3.7 million. More information can be found here.