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Compliance Alert- March 2017



Office of the Comptroller of Currency

Counterfeit Cashier’s Checks reported at Florida Bank

A bank in Florida has reported some variations of counterfeit cashier’s checks using a correct routing number. The counterfeit checks are being used nationwide posing as online job opportunities and auction scams.

The counterfeit checks may be identified by some of the following traits:

  • The checks presented are blue with a black and white logo in the upper-left corner.
  • The name “Jake Smith” or “Jim Kirk” appears under the bank logo.
  • “CASHIER’S CHECK” is located in the lower-left portion of the check.


The Consumer Financial Protection Bureau CFPB

CFPB Fines Experian $3 Million for Deceiving Consumers




Other Regulatory Bodies

The Federal Trade Commission

FTC Returns Money to Victims of Debt Relief Scheme

The Federal Trade Commission is mailing over 500 checks totaling more than $148,000 to people who lost money to Payday Support Center, a debt relief scam that targeted people with outstanding payday loans. The defendants are banned from promoting or selling debt relief services under a federal court order.

People who lost money will get back an average of $264. Recipients should deposit or cash checks within 60 days. The FTC never requires people to pay money or provide account information to cash refund checks.



FINRA Receives SEC Approval on Rule Proposal Addressing Financial Exploitation of Seniors

The Securities and Exchange Commission has approved FINRA’s rule proposal about financial exploitation of seniors. FINRA issued Regulatory Notice 17-11 announcing a February 5, 2018 effective date for the proposed rule.

The SEC approved changes that involve two key steps to protect investors. First, firms will be required to gather information regarding the name and contact information for a trusted contact person of a customer’s account. Second, firms must place a temporary hold on a disbursement of funds or securities when they believe there may be a chance of financial exploitation.

The need for the proposal became crucial when calls into FINRA's Securities Helpline for Seniors® highlighted some of the issues firms are dealing with when it comes to senior investors.


Compliance Alert- April 2017


The Consumer Financial Protection Bureau CFPB

CFPB Issues Fine to Auto Lender for Violating Consent Order

The Consumer Financial Protection Bureau (CFPB) imposed a fine against Security National Automotive Acceptance Company (SNAAC), an auto lender specializing in loans to military servicemembers, for violating a Bureau consent order. In 2015, the CFPB ordered SNAAC to pay a civil penalty due to illegal debt collection tactics. SNAAC violated the 2015 order by failing to provide more than $1 million in refunds and credits. This error has affected more than 1,000 consumers. The consent order requires SNAAC to pay the money it owes to those consumers and pay an additional $1.25 million penalty.


On April 20th, the CFPB released a final rule pushing back the general effective date of their rule governing prepaid accounts. The rule is now due to take effect on April 1st, 2018. 



Financial Crimes Enforcement Network (FinCEN)

Western Union Agrees to pay $184 Million in Penalties.

Western Union financial Services, Inc. (WUFSI) has been found to have willfully violated the Bank Secrecy Act’s Anti-Money Laundering requirements prior to 2012 by failing to maintain a risk-based AML program, and by failing to promptly file suspicious activity reports. WUFSI consented to FinCEN’s findings in recognition of their past AML shortcomings and have agreed to a number of increased security measures in an effort to prove the company’s commitment to AML.



The FDIC Advisory Committee on Economic Inclusion (ComE-IN) met on Thursday April 27th to discuss possible measures banks may consider to reach underserved populations, such as “collaborations with community-based organizations; resources for affordable mortgage lending; and new research that may be used to more effectively target resources to promote broader access to bank branches in underserved neighborhoods.” 




Other Regulatory Bodies



Proposed Rule Change to Amend the Customer And Industry Codes to Expedite List Selection in Arbitration

The Financial Industry Regulatory Authority, Inc. (“FINRA”) announced earlier this month that the National Adjudicatory Council (NAC) revised the Sanction Guidelines to include a new section on coverage for financial exploitation of seniors and other vulnerable individuals. It also includes three new guidelines relating to systemic supervisory failures, borrowing and lending arrangements, and short interest reporting.

Compliance Alert- May 2017


The Consumer Financial Protection Bureau CFPB

CFPB released an analysis of student loan industry data 

This month the CFPB released an analysis of one student loan industry data sample which shows that 9 in 10 of the highest-risk borrowers are not enrolled in federal affordable repayment plans. This data is significant because student loan providers are obligated to inform borrowers about any affordable repayment options that they may qualify for.

From the point of view of the CFPB, this data offers new evidence that borrowers, taxpayers, and student loan companies would benefit from a clearer, more streamlined process to help previously defaulted borrowers succeed over the long term, and to ensure borrowers avoid default in the first place. Last year, the Bureau warned that hundreds of thousands of struggling student loan borrowers may end up back in default over the next two years, racking up at least $125 million in unnecessary interest charges along the way.




FDIC released their new bank development handbook

On May 1st 2017, The Federal Deposit Insurance Corporation (FDIC) released their long awaited plain-language handbook to assist with the development of new banks.  The handbook provides an overview of the requirements of the application process, and is intended to provide interested parties with a clear explanation on the process of obtaining deposit insurance and the three phases of establishing an FDIC insured institution; pre-filing, the application process, and pre-opening.



SEC filed fraud charges on Fitbit stock

SEC recently filed fraud charges against a mechanical engineer who is accused of plotting to manipulate the price of Fitbit stock, by filing a phony regulatory report. The SEC claims that Robert W Murray purchased Fitbit call options minutes before a fake tender offer that he arranged was filed on the SEC’s EDGAR system suggesting that a company named ABM Capital LTD sought to acquire Fitbit’s outstanding shares at a substantial premium.  Fitbit’s stock price temporarily spiked when the tender offer became publicly available, and Murray sold all of his options for a profit of approximately $3,100. 



Other Regulatory Bodies

Federal Reserve Bank fines former Global Head of Foreign Exchange (FX)


The Federal Reserve Board announced that it has imposed a $1.2 million fine against Christopher Ashton, the former Global Head of Foreign Exchange (FX) Spot Trading at Barclays Bank PLC, for his role in the manipulation of FX pricing benchmarks. Ashton also received a lifetime ban from any future employment in the banking industry.


Ashton failed to appear at a hearing in administrative law proceedings after the Board charged him in June 2016 with unsafe and unsound practices related to his use of electronic chat rooms to coordinate FX trading, facilitate manipulation of FX pricing benchmarks, and disclose confidential customer information to traders at other organizations, as well as his failure to appropriately supervise other Barclays traders.

The enforcement proceedings against Ashton came after the Board previously filed enforcement actions against Barclays in May 2015 for unsafe and unsound practices related to its compliance and control failures concerning its practices in the FX markets resulting in Barclays paying $342 million in penalties.

Compliance Alert- January 2017


Office of the Comptroller of the Currency (OCC)

OCC Assesses Civil Penalty Against Foreign Bank

The Office of the Comptroller of the Currency (OCC) recently announced its decision to accept applications for special purpose bank status from financial technology companies, also known as ‘fintechs.’ Fintech charter approval will be contingent upon meeting capital liquidity, consumer protection, and risk management requirements.


Financial Crimes Enforcement Network

FBAR Deadline Revised

The Bank Secrecy Act (BSA) requires annual filings of the Report of Foreign Bank and Financial Accounts (FBAR) by U. S. financial institutions. FinCEN has extended the filing deadline for U. S. financial services professionals who have FBAR signature authority but no financial interest. The new deadline is now April 15, 2018. This extension was granted in anticipation of a new proposed rule, announced in March of 2016, that will amend the BSA FBAR requirements for this group financial service individuals.


Federal Reserve Board

Comment Period Extended for Proposed Enhanced Cyber Risk Management Standards

Large and interdependent entities under the supervision of the Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) have agreed to extend the comment period for the five proposed enhanced cyber risk management standards. The new comment period deadline is now February 17, 2017.



Other Regulatory Bodies


U. S. Commodity Futures Trading Commission

CFTC Levies $900k fine for Supervision Failures

The Commodity Futures Trading Commission (CFTC) fined a global investment bank $900K for clearinghouse exchange and fee reconciliation deficiencies and supervision failures, which resulted in charging customers higher trading and clearing fees for products transacted on several exchanges. Similarly, the CFTC also issued a ‘cease and desist’ order to the firm.


The Federal Trade Commission

The Federal Trade Commission Assesses Revises Antitrust Guidelines

The Federal Trade Commission and the Department of Justice recently published revised antitrust guidelines, Antitrust Guidelines for International Enforcement and Cooperation, for businesses involved in international commerce and operations. This document highlights revised policies and priorities while underscoring the growing importance for cooperation between the international business community and global anti-competition authorities, on antitrust policy, investigations, and enforcement, to better protect the US economy and its consumers.


Department of Housing and Urban Development

HUD Announces Discrimination Charges

The U. S. Department of Housing and Urban Development (HUD) recently announced charges of discrimination against a major American multinational bank. Fairness tests conducted by the National Fair Housing Alliance (NFHA) at the bank’s Charleston, South Carolina branch indicated Hispanic prospective homebuyers were treated disparately in terms of home loan products and mortgage terms and conditions. A federal trial date has been scheduled. A win by NFHA will result in the bank’s payment of NFHA’s attorney fees and civil monetary penalties.


Federal Financial Institutions Examinations Council

Regulatory Notice Issues for Financial Institutions with Assets Less Than $1B

The Federal Financial Institutions Examination Council (FFIEC) issued a regulatory notice that streamlines the ‘Call Report’ for small domestic financial institutions with assets of less than $1B in response to survey comments from this sector. Data from this report aids regulators in monitoring individual small financial institutions as well as the entire industry group.