Financial Crimes Enforcement Network (FinCEN)
FinCEN proposes revisions to Currency Transaction Report (CTR).
On February 2nd, the Financial Crimes Enforcement Network (FinCEN) proposed amendments to the CTR to remedy some of the limitations of the current BCTR. The proposed notice does not propose any new regulatory requirements or changes to the requirements related to actual reporting, but rather seeks input on technical matters designed to improve the layout and reporting of the BCTR.
FinCEN withdraws findings and proposed rulemakings.
On February 19th, FinCEN announced that it was withdrawing three findings and related proposed rulemakings under Section 311 of the USA PATRIOT Act. FinCEN had determined that the subjects of the rulemakings no longer posed a money laundering threat to the U.S. financial system.
Private bank to pay $6.5 million for willful AML violations.
Fincen announced the assessment of a $4 million civil money penalty (CMP) against a bank in Florida for willful violations of the federal anti-money laundering law, the Bank Secrecy Act (BSA). Although first warned of its BSA/AML deficiencies in 2010, the bank’s compliance failures persisted until its primary regulatory, the Office of the Comptroller of the Currency (OCC), placed the bank under a Consent Order in 2014. The OCC is also assessing a $2.5 million CMP against the bank.
Office of Foreign Assets Control (OFAC)
Specially Designated Global Terrorist (SDGT) designated.
On February 10th, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) added Nayf Salam Muhammad Ujaym al-Hababi to OFAC’s SDN Lists pursuant to Executive Order 13224, which targets terrorists and those providing support to terrorists or acts of terrorism.
More OFAC designations for ISIL.
The Department of the Treasury announced the designations of senior ISIL oil official Faysal al-Zahrani, foreign fighter facilitator Husayn Juaythini, and senior ISIL official Turki al-Binali pursuant to Executive Order (E.O.) 13224, which supports President Obama’s strategy to degrade and destroy ISIL.
OFAC settles with Barclays for $2 million.
In February, OFAC announced a $2,485,890 settlement with Barclays Bank over potential civil liabilities regarding 159 apparent violations of the Zimbabwe Sanctions Regulations.
Federal Deposit Insurance Corporation (FDIC)
December enforcement actions published.
At the end of January, the Federal Deposit Insurance Corporation (FDIC) released a list of orders of administrative enforcement actions taken against banks and individuals in December, a total of one notice and 41 orders, including consent orders, removal and prohibition orders, restitution orders, and more.
FDIC settles for $62.95 million.
On February 2nd, the FDIC, as a receiver for three failed banks, announced a $62.95 million settlement for residential mortgage-backed securities (RMBS) claims against Morgan Stanely & Company LLC, bringing the total RMBS claim settlements by the FDIC with Morgan Stanley to $86.95 million.
FDIC proposes large bank deposit recordkeeping rule.
The FDIC announced a proposal for recordkeeping requirements for FDIC-insured institutions with a large number of deposit accounts to facilitate rapid payment of insured deposits to customers if the institutions were to fail. The FDIC is currently accepting comments on the proposal.
Office of the Comptroller of the Currency (OCC)
CRA evaluations for January issued.
On February 3rd, the Office of the Comptroller of the Currency (OCC) released a list of Community Reinvestment Act (CRA) performance evaluations that became public during the period of January 1, 2016 through January 31, 2016. The list contains only national banks, federal savings associations, and insured federal branches of foreign banks that have received ratings.
$13.4 million in civil money penalties assessed.
The OCC terminated mortgage servicing-related consent orders against two banks and assessed civil money penalties for previous violations of the orders. The OCC found that the two financial institutions failed to correct deficiencies identified in 2011 consent orders in a timely fashion.
OCC publishes supplemental BSA/AML guidance.
On February 29th, the OCC issued a bulletin supplementing the 2007 “Interagency Statement on Enforcement of Bank Secrecy Act/Anti-Money Laundering Requirements.” The bulleting provides guidance on the process the OCC uses to provide institutions with an opportunity to respond to potential noncompliance issues.
Securities and Exchange Commission (SEC)
Lending company and brokerage firm charged with fraud.
On February 2nd, the Securities and Exchange Commission (SEC) announced fraud charges against a Manhattan-based lending company and its owner. Allegedly the firm repeatedly lied to investors purchasing high-yield securities.
Firm given $1 million civil money penalty for violations.
In February the SEC announced that a Miami-based brokerage firm will pay a $1 million penalty to settle charges that it violated anti-money laundering rules by allowing foreign entities to buy and sell securities without verifying the identities of the non-U.S. citizens who beneficially owned them.
$795 million settlement reached for FCPA violations.
On February 18th, the SEC announced a global settlement along with the U.S. Department and Dutch regulators that requires a telecommunications provider to pay more than $795 million to resolve its violations of the Foreign Corrupt Practices Act (FCPA). Allegedly, the provider offered and paid bribes to an Uzbek government official related to the Uzbeki President.
Consumer Financial Protection Bureau (CFPB)
CFPB takes action to improve checking account access.
In February the Consumer Financial Protection Bureau (CFPB) announced that it was taking steps to improve checking account access amidst Bureau concerns that consumers are being sidelined by the lack of account options and by inaccurate information used to screen potential customers. The CFPB took several steps, including providing consumers with guidance to help navigate the deposit account system.
Company required to pay up to $21.9 million in restitution.
The CFPB and the Department of Justice (DOJ) resolved an action with Toyota Motor Credit Corporation, who is required to pay up to $21.9 million in restitution to thousands of African-American and Asian and Pacific Islander borrowers who paid higher interest rates than white borrowers for their auto loans, without regard to their creditworthiness, as a result of its past practices.
Bank to pay $8 million in penalties and relief.
On February 23rd, the CFPB took two separate actions against a bank for illegal debt sales and debt collection practices. The bank was ordered to provide nearly $5 million in consumer relief as well as pay a $3 million penalty for selling credit card debt with inflated interest rates and for failing to forward consumer payments promptly to debt buyers.
National Credit Union Administration (NCUA)
NCUA announces January and February prohibition orders.
In February, the National Credit Union Administration announced that six prohibition orders had been issued in January prohibiting individuals from participating in the affairs of any federally insured financial institution. The NCUA also issued four notices of prohibition in February to individuals who had been convicted of crimes of dishonesty.
Credit union conserved.
The NCUA announced that one credit union had entered into conservatorship in February. The institution is a federally insured, state-chartered credit union with a low-income designation that has 710 members and assets of $1.6 million.
Business lending rule approved.
The NCUA approved a final rule giving federally insured credit unions greater flexibility and autonomy to offer member-business loans in a safe and sound manner. The rule becomes effective January 1, 2017.
Federal Reserve Bank
Federal Reserve Banks end support for IE 9/10.
In February, the Federal Reserve Banks announced the discontinuation of support for Microsoft® Internet Explorer® 9 and Internet Explorer 10 for use with the FedLine Web® and FedLine Advantage® access solutions.
FRB repeals Reg AA.
On February 11th, the Federal Reserve Board announced the repeal of Regulation AA in order to comply with statutory provisions that transferred certain consumer protection rule-writing authority to the Consumer Financial Protection Bureau (CFPB). The Board repealed its Regulation AA (Unfair or Deceptive Acts or Practices) as proposed in August 2014 and is inviting public comment on the proposed repeal of Regulation C (Home Mortgage Disclosure).
Interim final rule issued regarding Regulation I.
The Federal Reserve Board issued an interim final rule amending Regulation I to implement provisions of the Fixing America's Surface Transportation (FAST) Act. The FAST Act reduced the dividend rate applicable to Reserve Bank depository institution stockholders with total assets of more than $10 billion.
Department of Justice
Bank to pay $470 million for mortgage abuses.
In February the Department of Justice (DOJ), along with the Consumer Financial Protection Bureau (CFPB), announced that it had reached a $470 million agreement with HSBC Bank and its affiliates regarding mortgage origination, servicing, and foreclosure abuses. Under the agreement, HSBC will pay more than $470 million in relief to consumers and payments to federal and state parties, as well as be bound to mortgage servicing standards and subject to independent monitoring of its compliance.
Lockheed Martin to pay $5 million for False Claims Act violations.
The DOJ announced that Lockheed Martin agreed to pay $5 million to solve allegations that they violated the Resource Conservation and Recovery Act (RCRA) and, in misrepresenting their compliance with RCRA to the Department of Energy (DOE), knowingly submitted false claims for payment under their contracts with DOE.
Subsidiaries to pay over $14 million for foreign bribary charges.
The DOJ announced that two subsidiaries of a large software company had entered into a non-prosecution agreement and agreed to pay a $14.54 million penalty to resolve the government’s investigation into whether the companies improperly provided recreational travel to Chinese government officials in violation of the Foreign Corrupt Practices Act (FCPA).
Other Regulatory Bodies
Regional bank settles with federal government for $1.9 million.
In June 2015, First Tennessee Bank agreed to pay $212.5 million to resolve alleged False Claims Act violations, but the bank is bank on the Departing of Housing and Urban Development’s (HUD’s) radar, as HUD announced a $1.9 million settlement to resolve allegations that the bank discriminated against African-American and Hispanic applicants by denying them mortgage loans and by allegedly failing to place bank branches in minority-concentrated areas.
Bill passed to protect banks from "choke point" abuses.
On February 4th, the House of Representatives passed legislation H.R. 766, which would prohibit a federal banking regulator from ordering a bank to terminate customer accounts unless the regulator has a material reason to do so and the reason is not based solely on reputation risk.
Cybersecurity Commission established.
On February 9th, President Barack Obama issued an Executive Order establishing within the Department of Commerce the Commission on Enhancing National Cybersecurity, as part of a Cybersecurity National Action Plan (CNAP) to help government and businesses better protect Americans from cyber attacks.
Firm pays $750,000 to settle FTC charges.
The Federal Trade Commission (FTC) announced charges against an Independent Sales Organization (ISO), alleging that it had enabled a telemarketing scheme called the Tax Club to use merchant accounts to process credit card payments of consumers. The order imposes a $2.6 million judgement, in partial satisfaction of which the company will pay $750,000.