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Consumer Financial Protection Bureau (CFPB)

Several banking trade groups petition for more time to comply with Military Lending Act (MLA) final rule

The Department of Defense’s (DoD) Military Lending Act (MLA) final rule took effect October 1, 2015. Testing of banks’ compliance with this rule was scheduled for early next month. However, several banking trade groups including the American Banker Association are seeking a six-month extension, until March 3, 2017, before federal bank regulators begin testing compliance with this new rule. Late issuance of DoD interpretive guidance is cited as the primary reason for this request. Consequently, the industry contends more time is needed to establish the necessary controls to ensure effective compliance. The MLA final rule addresses how banks manage active service duty members’ accounts across a host of products including select closed end loans, payday loans, credit cards, and some private and federal student loans.

One of the largest U. S. banks receives record CFPB fine for widespread consumer sales fraud practices

The Consumer Financial Protection Bureau (CFPB) assessed record fines against a well-known U. S. bank for violations of the Dodd-Frank Wall Street Reform and Consumer Protection Act. According to the bank’s own analysis, aggressive sales targets and attractive incentives prompted sales employees to open new accounts (deposit, credit and debit card) by using funds and personal data associated with existing customer accounts. Specifically, employees transferred monies from existing accounts to new ones in order to meet sales goals. This practice was covert and unauthorized. Moreover, it resulted in fraudulent customer account billing and fees. The scope and breadth of these employee behaviors was widespread. Consequently, the CFPB levied its highest civil money penalty to date against the bank. Additionally, the Office of the Comptroller of the Currency (OCC) has also assessed a financial penalty against the bank. Restitution to harmed account holders is also required by the consent order. Collectively, the record assessment is $185 M.


Proposed OCC rule prohibits banks and thrifts from investments and transactions in industrial or commercial metals

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (section 620) requires federal bank regulators to review the permitted federal and state banking activities and investments for associated risks and identify risk reduction options. To that end, the Office of the Comptroller of the Currency (OCC) is proposing that national banks and savings and loans cease dealings and investments in industrial and commercial metals including copper cathodes, previously allowed, and aluminum T-bars. The 60-day comment period is underway.   


The Office of Foreign Asset Controls (OFAC)

OFAC increases sanctions pressures on Russia and eases Myanmar sanctions

The Office of Foreign Asset Controls (OFAC) has increased its sanctions against Russia by adding three additional executive orders and adding 37 more specially designated nationals (SDNs) to its list of sanctioned individuals. These actions indicate the US Department of Treasury’s commitment to its sanctions against Russia for its interventions in the Ukraine and its annexation attempts in Crimea. Ultimately, it is hoped that these recent sanctions, coupled with those of the European Union (EU) sectoral sections, will result in compliance with the Minsk agreements--namely, a broad ceasefire, arms and militia withdrawal, a restoration of Ukrainian control over its international borders, as well as earnest efforts toward a diplomatic solution development. Additionally, trade sanctions have been lifted against Myanmar.

The Securities and Exchange Commission (SEC)

The SEC settles with two investment advisory firms regarding Investment Advisers Act of 1940 violations

Two investment advisory firms settled with the Securities and Exchange Commission (SEC) over Investment Advisers Act of 1940 violations. Two investment advisory firms, located in Florida and Milwaukee respectively, failed to provide written procedures explaining how to calculate commission costs associated with sub advisors and wrap fee programs. Lacking this critical information, clients were unaware of additional charges beyond the single wrap program fee. While neither admitting nor disputing these SEC charges, each investment advisory firm agreed to pay a civil penalty of $600,000 and $250,000 respectively.