Financial Crimes Enforcement Network (FinCEN)
FBAR filing postponed.
The Financial Crimes Enforcement Network (FinCEN) has extended the filing deadline for the Report of Foreign Bank and Financial Accounts (FBAR) to April 15, 2017. This extension applies to the reporting of signature authority held during the 2015 calendar year. For all other individuals with an FBAR filing obligation, the filing due date remains June 30, 2016.
Enforcement action leads to \$650,000 settlement.
On December 17, 2015, FinCEN announced its settlement with a “card club” gaming establishment, the Oaks Card Club of California. The club admitted to violating the program and reporting requirements of the Bank Secrecy Act (BSA). FinCEN required Oaks to pay a fine of $650,000 for willful violations, including inaccurate and misleading anti-money laundering (AML) policies and reporting requirements.
FinCEN provides documents on Customer Due Diligence (CDD).
On December 23rd, FinCEN announced the availability of two documents that are part of the Customer Due Diligence Requirements for Financial Institutions Proposed Rulemaking: A Regulatory Impact Assessment (RIA) and an Initial Regulatory Flexibility Analysis (IRFA). These documents are available on FinCEN’s site for viewing.
$200,000 CMP assessed for AML violations.
FinCEN announced the assessment of a $200,000 civil money penalty against a precious metals business for willful violations of the Bank Secrecy Act’s (BSA’s) federal anti-money laundering (AML) laws. The business failed to adequately assess its risks and did not conduct due diligence on its highest risk customers.
Office of Foreign Assets Control (OFAC)
Boko Haram leaders sanctioned.
At the beginning of December, the Office of Foreign Assets Control (OFAC) added two Boko Haram leaders to its Specially Designated Global Terrorists (SDN) List. Individuals added to the SDN List are blocked and U.S. persons are generally prohibited from dealing with them.
Burma general license issued.
On December 7th, OFAC issued a six-month general license to authorize activities that would otherwise be prohibited with regard to Burma. General licenses allow all US persons to engage in the activity described in the general license without needing to apply for a specific license. This is General License Number 20, “Certain Transactions incident to Exportation to or from Burma.”
SDN List updated with North Korean leaders.
The Treasury Department’s OFAC announced the designation of several individuals and entities with ties to North Korea’s weapons proliferation network to OFAC’s SDN List. OFAC’s action against six individuals and three entities is designed to counter attempts to circumvent U.S. and UN sanctions, prevent the North Korean Government from accessing the U.S. financial system, and maintain the effectiveness of U.S. sanctions on individuals and entities that are linked to North Korea’s procurement of weapons of mass destruction (WMD)-related materials and proliferation activities.
Los Chatas designated per Kingpin Act.
In December, OFAC designated the criminal subgroup known as Los Chatas, which operates under the umbrella of Colombian criminal group La Oficina de Envigado (La Oficina) and is based in Bello, Colombia. OFAC designated La Oficina as a Specially Designated Narcotics Trafficker pursuant to the Kingpin Act on June 26, 2014.
Federal Deposit Insurance Corporation (FDIC)
List of banks examined for CRA compliance issued.
On December 3rd, the Federal Deposit Insurance Corporation (FDIC) issued its list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA) in September 2015.
Bank to pay $4.3 million for unfair and deceptive practices.
On December 23rd, the FDIC announced a settlement with a Delaware bank for unfair and deceptive practices in violation of Section 5 of the Federal Trade Commission (FTC) Act. The bank will pay a civil money penalty of $3 million and restitution of about $1.3 million to harmed consumers.
Banks to pay $31 million for FTC Act violations.
The FDIC announced settlements with Utah and Connecticut banks for deceptive practices in violation of Section 5 of the FTC Act. The Connecticut bank will pay a civil money penalty of $2.23 million and the Utah bank a civil money penalty of %1.75 million, and together will pay a total restitution of approximately $31 million to almost one million harmed consumers.
November enforcement actions announced.
At the end of December, the FDIC issued a list of enforcement actions taken against banks and individuals in November. There are a total of 23 orders listed, including consent orders, removal and prohibitions orders, Section 19 orders, and civil money penalties.
Office of the Comptroller of the Currency (OCC)
OCC charges bank CEO with unsafe banking practices.
The Office of the Comptroller of the Currency (OCC) announced a public hearing on OCC enforcement actions against the president, chief executive officer (CEO), and director of a Maryland bank. The OCC alleges that the CEO engaged in violations of law and regulation, unsafe or unsound banking practices, and breaches of fiduciary duty in his role at the bank, and is seeking a civil money penalty of $250,000.
Enforcement actions issued.
On December 18th, the OCC released new enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations. The list includes civil money penalty orders leveled against Florida, Ohio, and Rhode Island banks.
Third quarter trading revenue at $5.3 billion.
Insured U.S. commercial banks and savings associations reported trading revenue of $5.3 billion in the third quarter of 2015, a drop of 4% or $200 million from the previous second quarter, according to the OCC report issued on December 21st. Trading revenue in the third quarter was $300 million or 5%lower than in the year earlier period.
Securities and Exchange Commission (SEC)
Fraud charges against investment advisory firm announced.
An investment advisory firm was accused of investing clients in certain bonds with a hidden financial benefit to a broker-dealer connected to the firm. Reportedly the firm invested more than $43 million of client funds in illiquid funds, according to the fraud charges announced by the Securities and Exchange Commission (SEC).
Man charged with violations of antifraud provisions.
On December 15th, the SEC announced charges against a New Jersey man for illicitly pocketing $13 million from an elaborate pump-and-dump scheme, in violation of the federal securities laws antifraud provisions. The complaint seeks a permanent injunction and other financial penalties.
Martin Shkreli charged with violating Securities Act and committing fraud.
On December 17th, the SEC announced charges against Martin Shkreli, the former CEO of the pharmaceutical company Retrophin. He was charged with committing fraud by misappropriating money from two hedge funds he founded.
Wealth management subsidiaries to pay $267 million for disclosure failures.
The SEC announced a settlement with two J.P. Morgan wealth management subsidiaries, who agreed to pay $267 million and admit wrongdoing regarding their failure to disclose conflicts of interest to clients. In a parallel action, J.P. Morgan Chase Bank agreed to pay an additional $40 million penalty to the U.S. Commodity Futures Trading Commission (CFTC).
Traders to pay almost $1 million to settle insider trading charges.
On December 28th, the SEC announced that two China and Hong Kong traders agreed to pay more than $920,000 to settle an insider trading case levied against them. Allegedly the two men traded health care company stocks based on nonpublic information about impending acquisitions by private equity firms.
Consumer Financial Protection Bureau (CFPB)
Credit reporting company to pay $8 million for illegal practices.
On December 3rd, the Consumer Financial Protection Bureau (CFPB) took action against a nationwide credit reporting company for illegally obtaining consumer credit reports and by failing to appropriately investigate consumer disputes. The company is required to pay an $8 million penalty to the CFPB for violations of the Fair Credit Reporting Act (FCRA).
Debt collection firm to pay over $2.5 million in refunds and penalties.
The CFPB filed a federal complaint against a Massachusetts debt collection firm, for reporting and collecting on old cellphone debt that consumers disputed and were not verified by the firm. If entered by the court, the proposed consent order would require the firm to overhaul its debt collection practices, refund at least $743,000 to consumers, and pay a $1.85 million civil money penalty.
Lender to pay $10 million for illegal debt collection practices.
On December 16th, the CFPB took action against a small-dollar lender for allegedly visiting consumers illegally at their homes and workplaces, empty threats of legal action, lying about consumers’ rights, and exposing consumers to bank fees through unlawful electronic withdrawals. The lender was ordered to refund $7.5 million and pay $3 million in penalties.
Auto dealer to pay $6.4 million civil money penalty.
The CFPB took action against an auto dealer and its affiliated financing company for providing damaging, inaccurate consumer information to credit reporting companies. The companies were ordered to cease illegal activities and pay a $6,465,000 civil penalty.
TILA/HMDA adjustments issued.
The CFPB issued two final rules regarding annual threshold adjustments for the Home Mortgage Disclosure Act (HMDA) and the Truth in Lending Act (TILA). The asset-size exemption for banks, savings associations, and credit unions will remain at $44 million. As a result, these institutions with assets of $44 million or less as of December 31, 2015, are exempt from collecting HMDA data in 2016. In terms of TILA, the asset-size threshold exemption for certain creditors will decrease from $2.060 billion to $2.052 billion for 2016; these creditors with assets of less than $2.052 billion (including assets of certain affiliates) as of December 31, 2015, that also meet other requirements of Regulation Z will be exempt from the requirement to establish escrow accounts for higher-priced mortgage loans in 2016.
Law firm penalized for operating an illegal debt collection lawsuit mill.
On December 28th, the CFPB filed a proposed consent order to resolve a lawsuit against a Georgia-based law firm for operating an illegal debt collection lawsuit mill. If approved by the court, the order would require the firm and its principals to pay $3.1 million for the CFPB’s Civil Penalty Fund.
National Credit Union Administration (NCUA)
Proposed rule published to amend chartering and membership rules.
On December 10th, the National Credit Union Administration (NCUA) published proposed rule 80 FR 76747, recommending amendments to its chartering and field of membership rules. These amendments would implement changes in policy affecting the definition of communities, the expansion of multiple common bond credit unions, and more. Comments on the proposal are being accepted through February 8, 2016.
Financial firm to pay $225 million to settle claims.
The NCUA announced a settlement with Morgan Stanley for $225 million to resolve claims arising from losses related to corporate credit unions’ purchases of faulty residential mortgage-backed securities. Net proceeds from this settlement and others are used to pay claims against the failed corporate credit unions, including those of the Temporary Corporate Credit Union Stabilization Fund.
Final IOLTA rule published.
The NCUA published a final rule amending its share insurance regulations to implement statutory amendments to the Federal Credit Union Act resulting from the recent enactment of the Credit Union Share Insurance Fund Parity Act. The amendments are effective January 27, 2016.
Federal Reserve Bank
Final rule issued concerning Board's revised capital framework.
On December 4th, the Federal Reserve Board issued a final rule providing information about how to apply the Board's revised capital framework issued in June 2013 to depository institution holding companies that are not organized as traditional stock corporations. The final rule, which becomes effective July 1, 2016, is generally similar to the proposed rule, issued in December 2014.
Firm ordered to pay $26 million for deceptive practices.
On December 23rd, the Federal Reserve Board assessed a civil money penalty and a consent order to cease and desist against a Connecticut institution. The order requires the firm to provide restitution of approximately $24 million in fees and pay a civil money penalty of over $2 million.
Rates updated for Regulation A.
On December 23rd, the Federal Reserve Board published a final rule amending Regulation A (12 CFR Part 201) to increase the rate for primary credit at each Federal Reserve Bank. The secondary credit rate at each Reserve Bank automatically increased by formula as a result of the Board's primary credit rate action. These amendments were effective December 23, 2015. Rate changes for primary and secondary credit were applicable on December 17th.
Department of Justice
Hospitals to pay over $28 million for False Claims Act violations.
On December 18th, the Department of Justice announced that it had reached settlements with over 130 hospitals totaling approximately $105 million to resolve allegations that they mischarged Medicare for kyphoplasty procedures, following the announcement that thirty-two hospitals agreed to pay the United States more than $28 million to settle False Claims Act violations.
Airline to pay $2.8 million to settle Federal Aviation Administration safety violations.
In December an airline settled a lawsuit alleging that the company had violated Federal Aviation Administration (FAA) safety regulations in the maintenance of its Boeing 737s. The airline agreed to pay a $2.8 million civil penalty and up to $5.5 million in deferred civil penalties if it does not implement the operational changes set forth in the settlement agreement.
Chemical distributor to pay $1.5 million in penalties.
The Department of Justice announced that a chemical distributor pleaded guilty to illegally storing hazardous waste and to illegally transporting hazardous waste. As part of the settlement, the company agreed to pay $1 million in criminal fines for these violations as well as $250,000 to fund environmental community service projects and a $250,000 penalty to settle alleged violations of improper hazardous waste storage.
Other Regulatory Bodies
New loan limits announced.
On December 9th, the Federal Housing Administration (FHA) announced the new schedule of loan limits for 2016, effective through the end of the year. Due to changes in housing prices, the maximum loan limits for forward mortgages increased in 188 counties, while there were no areas with a decrease in the maximum loan limits.
FTC charges settled regarding risky consumer payment card information placement.
A hotel and resort chain agreed to settle Federal Trade Commission (FTC) charges concerning the company’s security practices. The company will be required to establish a comprehensive information security program designed to protect cardholder data – including payment card numbers, names and expiration dates. In addition, the company is required to conduct annual information security audits and maintain safeguards in connections to its franchisees’ servers.
Company to pay $100 million to settle FTC deceptive advertising charges.
On December 17th, the FTC announced a $100 million settlement with a company that violated the terms of a 2010 federal court order requiring the company to secure consumers’ personal information.
Egmont Group mobilizes global membership against terrorist financing.
On December 23rd, the Egmont Group issued a notice reaffirming its commitment to fighting global terrorism, citing the recent terrorist acts in Turkey, Egypt, Labanon, Mali, and France. The notice recognized leading global organizations dedicated to Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) for meeting to discuss the terrorist threat to peace and prosperity on December 12th.