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August 2020 - Compliance Alert

Consumer Financial Protection Bureau (CFPB)

CFPB Issues NPRM to Create New Qualified Mortgages Category  

The Consumer Financial Protection Bureau issued a Notice of Proposed Rule Making (NPRM) that would create a new category of seasoned qualified mortgages (Seasoned QMs). This new category would hopefully “encourage safe and responsible innovation in the mortgage origination market” according to CFPB Director, Kathleen L. Kraninger. The proposed rule would also ensure that a loan would not be disqualified from becoming a Seasoned QM if the consumer failed to make full payments but received a temporary payment accommodation due to a disaster or pandemic-related national emergency.   

The Office of the Comptroller of the Currency (OCC) 

OCC and Other Agencies Issue Clarifications of BSA Due Diligence Requirements for Politically Exposed Persons  

The Office of the Comptroller of the Currency and other regulatory agencies released a statement clarifying due diligence requirements under the Bank Secrecy Act (BSA) for customers who may be considered “politically exposed persons” (PEPs). The statement clarified that the due diligence given to these customers should be proportionate to the risk posed by the PEP relationship and that the customer due diligence does not create a regulatory requirement.  

 

Securities and Exchange Commission

SEC Proposes Amendments to CAT NMS Plan to Improve Data Security  

The Securities and Exchange Commission proposed amendments to the Consolidation Audit Trail national market system plan (the “CAT NMS Plan”) to enhance the data security of the Consolidation Audit Trail (CAT). The plan currently establishes a number of security and confidentiality requirements for CAT data, but the proposed amendments would further the actions taken by the SEC to limit the scope of sensitive information collected by CAT and improve security.    

 

National Credit Union Administration

Federal Financial Institutions Examination Council Issues Statement On COVID-19 Loan Accommodations  

The Federal Financial Institutions Examination Council issued a statement establishing new principles for risk management and consumer protection that institutions should consider while they work with borrowers now that COVID-related loan accommodation periods are ending and additional accommodations are considered. The agencies in the Federal Financial Institutions Examination Council encourage institution to continue to consider prudent additional accommodations for those still affected by the pandemic.  

 

Federal Reserve Board

FRB Highlights Enhanced Understanding of Central Bank Digital Currencies   

The Federal Reserve highlighted research and experimentation completed to better understand the opportunities and risks related to central bank digital currencies. The FRB looked at opportunities to use digital currency as a “complement to cash” and looked at the possible risks and rewards and experimented with the latest payment technologies.   

July 2020 - Compliance Alert

Consumer Financial Protection Bureau (CFPB)

CFPB Develops New Saving Tool to Boost the Financial Resilience of Workers 

The Consumer Financial Protection Bureau announced that under its Compliance Assistance Sandbox (CAS) Policy, it had issued a Compliance Assistance Statement of Terms Template (CAST Template) that would allow employers to create automatic savings accounts for their employees. The Template would serve as the basis for an application to be approved by the Bureau to create the program. The goal of the CFPB is to empower employers to help employees bolster their savings to become more financial resilient.  

The Office of the Comptroller of the Currency (OCC) 

OCC Proposes New True Lender Rule  

The Office of the Comptroller of the Currency proposed a new rule that would resolve some uncertainty when a national or federal financial institution makes a loan when in partnership with third parties, stating clearly the bank was the “true lender” if the bank is named as lender in the loan agreement or funds the loan as of the date of origination. The new rule is designed to encourage the relationships between banks and third parties and the innovation and affordable credit that have been the results of these relationships.  

 

Securities and Exchange Commission

SEC Issues New Guidance on Investment Advisers’ Responsibilities Regarding Proxy Voting  

The Securities and Exchange Commission voted to amend rules that govern proxy solicitations. The amended rules are intended to make sure the clients of proxy voting advice businesses can access clear and timely information to make voting decisions. The goal is to allow those who use proxy voting advice, such as investors, to make well informed decisions when voting without unnecessary costs or delays that could slow proxy voting advice.  

 

Federal Deposit Insurance Corporation 

FDIC and FRB Provide Information for Next Resolution Plans to Largest Domestic Banking Firms 

The Federal Deposit Insurance Corporation and the Federal Reserve Board provided information that will guide the next resolution plans of the eight largest domestic banking organizations, due July 1, 2021. The resolutions plans, also known as living wills, describe the institution’s strategy for fast and organized bankruptcy in case of financial issues or a total failure of the bank. The plans will be the first “targeted” resolution plans, which were introduced in updates to the resolution plan rule finalized last year.  

National Credit Union Administration

NCUA Announces that All COVID-19 Urgent Need Grants are Utilized  

The Federal Reserve recently published the FraudClassifier Model. The model is used to better classify and understand fraudulent activity – as well as the ways it occurs and how often it occurs across the financial industry. The model was developed by FRB fraud experts of the Fraud Definitions Work Group.

June 2020 - Compliance Alert

Consumer Financial Protection Bureau (CFPB)

CFPB Issues Two NPRMs Regarding Expiration of GSE Patch

The Consumer Financial Protection Bureau issued two Notices of Proposed Rulemaking (NRPMs) that aim to ensure a smooth transition as the Government-Sponsored Enterprises Patch (GSE) expires as scheduled in January 2021 and the temporary qualified mortgage (QM) loan definitions of the GSE expire with it. The first NRPM proposes a change to the General QM definition in Regulation Z, replacing the DTI limit with an approach based on price. The second NRPM proposes amending Regulation Z to extend the expiration of the GSE to accommodate a final rule regarding the amendments made in the first NRPM.

The Office of the Comptroller of the Currency (OCC) 

The OCC Approves Interim Final Rule Reducing Assessments Due to COVID-19

The Office of the Comptroller of the Currency approved an interim final rule (IFR) that reduces the number of OCC assessments owed to the OCC on September 30, 2020. This IFR is aimed at providing relief to institutions affected by the national emergency declared to halt the spread of COVID-19. This one-time change will allow banks assessments due on September 30, 2020 to be calculated using the December 31, 2019 call report for each institution rather than the June 30, 2020 call report, reducing the number of assessments due.

 

Securities and Exchange Commission

SEC Announces Extension for In-Person Voting Relief

The Securities and Exchange Commission announced that it would extend the conditional relief originally established in March 2020 regarding in-person voting requirements for fund boards to at least December 31, 2020. The extension is designed to ease pressures with in-person meeting that may continue due to COVID-19. The SEC will continue to monitor the effects of COVID-19 on investors and market participants.

 

Federal Deposit Insurance Corporation 

FDIC and Other Agencies Release State Loan-to-Deposit Ratios

The Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency issued the host state loan-to-deposit ratios, replacing the rations from last year, released on May 28, 2019. These ratios are used in determining compliance with section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, which requires a loan-to-deposit ratio test that compares the statewide ratio of the bank to the host state ratio for banks in a certain state.

Federal Resevce Board

FRB Releases FraudClassifier Model

The Federal Reserve recently published the FraudClassifier Model. The model is used to better classify and understand fraudulent activity – as well as the ways it occurs and how often it occurs across the financial industry. The model was developed by FRB fraud experts of the Fraud Definitions Work Group.

May 2020 - Compliance Alert

Consumer Financial Protection Bureau (CFPB)

CFPB Defines Financial Firms' Responsibilities During COVID-19 Pandemic

The Consumer Financial Protection Bureau released a document with an outline of the responsibilities of certain financial firms and FAQs during the COVID-19 pandemic. The statement defines credit card providers’ billing error obligations, as well as the obligations of open-end non-home secured creditors. It also encourages financial firms to continue to assist their communities by waiving fees, lowering minimum balance obligations, and changing account terms in a way that benefits customers.

The Office of the Comptroller of the Currency (OCC) 

OCC and other Agencies Share Standards in Issuing Sensible Small-Dollar Loans

The Office of the Comptroller of the Currency and other regulatory agencies issued guidance for financial institutions on how to responsibly offer small-dollar loans to their customers to meet the short-term credit needs of those customers during the COVID-19 pandemic or other extraordinary circumstances that may cause temporary cash-flow irregularities.

 

Securities and Exchange Commission

SEC Amends CAT NMS Plan Improving Transparency and Financial Accountability

The Securities and Exchange Commission voted to amend the national market system plan regulating the consolidation audit trail (“CAT NMS Plan”) that will add more transparency, authority, and financial responsibility to the application of the plan.  The amendments entail FINRA and the self-regulatory organizations involved in the CAT NMS Plan publishing and filing a comprehensive implementation plan for CAT and quarterly progress reports.

 

Federal Deposit Insurance Corporation 

FDIC Proposes Rule to Mitigate the Deposit Insurance Assessment Effects of Participation in the PPP, PPPLF, and the MMLF

The Federal Deposit Insurance Corporation approved a notice of proposed rulemaking that would mitigate the deposit insurance assessment effects of participating in the Paycheck Protection Program (PPP) established by the U.S. Small Business Administration and the Paycheck Protection Program Lending Facility (PPPLF) and Money Market Mutual Fund Liquidity Facility (MMLF) established by the Board of Governors of the Federal Reserve System. To provide certainty to insured depository institutions (IDIs) regarding the assessment effects of participating in these programs, the FDIC is proposing an effective date by June 30, 2020, and an application date of April 1, 2020, which would ensure that the changes are applied to assessments starting in the second quarter of 2020.

National Credit Union Administration

NCUA and Other Agencies Issue Policy Statement on Allowances for Credit Losses and Guidance on the Credit Risk Review Systems

The National Credit Union Association and four other federal regulatory agencies approved a policy statement encouraging uniformity in the interpretation and use of the Financial Accounting Standards Board’s credit losses accounting standard regarding the current expected credit losses methodology.

April 2020 - Compliance Alert

Consumer Financial Protection Bureau (CFPB)

CFPB Announces Remittance Transfer Guidance During Pandemic

The Consumer Financial Protection Bureau announced that it was taking action to ensure that customers can use remittance transfers without disruption during the COVID-19 Pandemic. Many people use these transfers to send money to family and friends overseas and the CFPB issued a policy statement that would make the Bureau’s supervision of remittance transfers more flexible, enabling insured institutions to better serve their customers.

CFPB and FHFA Begin New Borrower Protection Program

The Consumer Financial Protection Bureau and the Federal Housing Finance Agency announced a joint effort that allows these agencies to easily share service information, protecting borrowers during the COVID-19 pandemic. Through the new program, called the Borrower Protection Program, the CFPB will share complaint information and analytical tools with the FHFA and the FFHA will share information about forbearance, modifications and other loss mitigation initiatives by Fannie Mae and Freddie Mac.

 

The Office of the Comptroller of the Currency (OCC) 

Comptroller Releases FFIEC BSA/AML Manual Statement

The Comptroller of the Currency issued a statement that announced changes to the BSA/AML Examination Manual. The changes improve and clarify the examinations’ risk-focus by giving examiners more focused directions.

 

 

Securities and Exchange Commission

SEC Announces Formation of COVID-19 Market Monitoring Group

The Securities and Exchange Commission announced that they were creating a temporary cross-divisional COVID-19 Market Monitoring Group internally. This senior-level group will focus on assisting with actions and analysis of the effects of COVID-19 markets, issuers, etc. and responding to requests from other agencies for information, analysis and help.


 

Federal Deposit Insurance Corporation 

FDIC and Other Regulators to Defer Appraisals and Evaluation for Real Estate Transactions

The Federal Deposit Insurance Corporation and other federal agencies announced an interim final rule that would temporarily defer real estate appraisals and evaluations as a temporary relief, allowing regulated institutions to finance creditworthy households and businesses as quickly as possible during the COVID-19 Pandemic.

 

National Credit Union Administration

NCUA Approves Regulatory Relief During COVID-19 Pandemic

The board of the National Credit Union Administration approved three items during their third open meeting of 2020 which included a temporary final rule allowing regulatory relief that helps federally insured credit unions stay operational during the COVID-19 emergency, a final rule increasing the appraisal requirement threshold for resident real estate-related transactions and the deferral of real estate evaluations and appraisals to help with social distancing measures.

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