Top Story Compliance Related

The OCC has reported it has finalized revisions to its recovery planning guidelines for certain large insured national banks, federal savings associations, and federal branches (banks).

The revisions to the recovery planning guidelines are part of the OCC’s effort to ensure that large banks are adequately prepared for and have developed plans to respond to the financial effects of severe stress, particularly in light of the contagion effects and systemic risks they may pose.

The revisions:

• Expand the recovery planning guidelines to apply to banks with at least $100 billion in assets
• Incorporate a testing standard for recovery plans
• Clarify the role of non-financial risk (including operational and strategic risk) in recovery planning
• Provide covered banks with time frames in which to comply with the recovery planning guidelines, including development of a testing framework and conducting testing

The revisions, published in today's Federal Register at 89 FR 84255, are effective on January 1, 2025, with staggered compliance dates. They will apply to insured national banks, insured Federal savings associations, and insured Federal branches of foreign banks with average total consolidated assets of $100 billion or more.

FinCEN has added Filing Trend Data by industry updated through the 2023 calendar year to its Interactive SAR Stats website. The new downloadable data is arranged by industry type, and includes rankings by states/territories and suspicious activities.

The FDIC has issued FIL-76-2024 announcing steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Alaska affected by flooding from August 5 to August 6, 2024. The current list of such areas includes Juneau Borough.

The FDIC has announced it is extending the compliance date for amendments to part 328 subpart A of its regulations to modernize the rules governing use of the official FDIC sign and insured depository institutions’ advertising statements from January 1, 2025, to May 1, 2025. This extension will provide additional opportunity for IDIs to establish processes and systems, and make technological updates, necessary to implement the new regulatory requirements under subpart A. The compliance date for amendments to part 328, subpart B, relating to misrepresentations of deposit insurance, remains January 1, 2025.

The OCC has released enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with banks the OCC supervises.

• Formal Agreement with Axiom Bank, N.A., Maitland, Florida, for unsafe or unsound practices, including those related to the bank’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program and violations of 12 CFR 21.21(d)(1) and (d)(3) (BSA/AML internal controls and BSA officer).
• Formal Agreement with First National Bank of Dennison, Dennison, Ohio, for unsafe or unsound practices, including those related to board and management oversight, credit underwriting, and credit administration.
• Formal Agreement with First National Bank of Lake Jackson, Lake Jackson, Texas, for unsafe or unsound practices, including those related to strategic and capital planning, liquidity risk management, and interest rate risk management.
• Formal Agreement with The First National Bank of Waverly, Waverly, Ohio, for unsafe or unsound practices, including those relating to strategic planning, capital planning, and liquidity risk management.
• The previously announced Cease and Desist Order and Civil Money Penalty against TD Bank, N.A., Wilmington, Delaware, and TD Bank USA, N.A., Wilmington, Delaware, for deficiencies in the banks’ BSA/AML compliance program.
• Orders of Prohibition against—
  • Tanya Jazmin Cortez, former Teller and Concierge at Los Angeles County, California, branches of Citibank, N.A., Sioux Falls, South Dakota, for selling confidential bank customer information to a third party, resulting in check fraud and a loss to the bank of approximately $348,000.
  • Alexis LeaAnne Day (f/k/a Alexis LeaAnne Adcock), former Client Relationship Consultant at a Clarksville, Tennessee, branch of U.S. Bank, N.A., Cincinnati, Ohio, for misappropriating approximately $10,000 from a bank ATM.
  • Leronne D. Kornegay, former Associate Banker at a Brooklyn, New York, branch of JPMorgan Chase Bank, N.A., Columbus, Ohio, for engaging in a scheme to steal bank funds and falsely reporting the receipt of counterfeit bills in the bank’s general ledger. The bank suffered a loss of at least $201,000.
  • Lexus Inez Lewis, former Fraud Operations Specialist, at a Jacksonville, Florida, branch of Citibank, N.A., Sioux Falls, South Dakota, resolving the Notice of Charges, in which the OCC alleged, among other things, that Lewis made false representations in her employment application and became employed at the bank in violation of federal law; caused fraudulent transactions totaling at least $389,000 to incur on bank customers’ credit card accounts; and kept bank equipment without authorization. Lewis consented to the Order without admitting or denying the allegations in the Notice.

The Securities and Exchange Commission has announced that RTX Corporation, a Virginia-based aerospace and defense company formerly known as Raytheon Technologies Corp., agreed to pay more than $124 million to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA) in connection with payments made to assist in obtaining contracts with the Qatari military.

According to the SEC’s order, Raytheon used sham subcontracts with a supplier to pay bribes of nearly $2 million to Qatari military and other officials from 2011 to 2017 to obtain Qatari military defense contracts. Additionally, the order finds that from the early 2000s into 2020, Raytheon paid more than $30 million to a Qatari agent who was a relative of the Qatari Emir and who, despite being retained as Raytheon’s representative in Qatar, had no prior background in military defense contracting. Raytheon obtained additional defense contracts through the agent under circumstances with significant corruption risks. The order finds that Raytheon continued working with the agent even after numerous Raytheon employees raised concerns about risks of corruption and despite a lack of adequate documentation of the agent’s services.

The SEC’s order finds that Raytheon violated the antibribery, internal accounting controls, and books and records provisions of the FCPA. Raytheon consented to the entry of the SEC’s order requiring it to cease and desist from committing or causing any future violations and to pay disgorgement and prejudgment interest of approximately $49 million and a civil penalty of $75 million, $22.5 million of which will be offset by a criminal fine in a parallel criminal action. As part of the resolution, Raytheon must retain an independent compliance monitor for three years.

Yesterday, OFAC designated three individuals and four associated companies involved in a Lebanon-based sanctions evasion network that generates millions of dollars in revenue for Hizballah. Hizballah’s finance team is responsible for the establishment and operation of Hizballah commercial projects throughout Lebanon, some of which are financed and facilitated by Iran. OFAC also designated three individuals involved in the illegal production and trafficking of Captagon that has benefited Bashar al-Assad’s regime and its allies, including Hizballah. The illegal trade in Captagon, a dangerous, highly addictive amphetamine, has become a billion-dollar illicit enterprise operated by senior members of the Syrian regime.

For the names and identification information of the designated parties, see yesterday's BankersOnline OFAC Update.

The Federal Trade Commission is today announcing a final "click-to-cancel" rule that will require sellers to make it as easy for consumers to cancel their enrollment as it was to sign up. Most of the final rule’s provisions will go into effect 180 days after it is published in the Federal Register.

The Commission’s updated rule will apply to almost all negative option programs in any media. The rule also will prohibit sellers from misrepresenting any material facts while using negative option marketing; require sellers to provide important information before obtaining consumers’ billing information and charging them; and require sellers to get consumers’ informed consent to the negative option features before charging them.

PUBLICATION AND EFFECTIVE DATE:
Published 11/15/2024 at 89 FR 90476, effective 1/14/2025. Regulated entities have until 5/14/2025, to comply with §§ 425.4 through 425.6.

The Financial Crimes Enforcement Network (FinCEN) has announced the renewal of its Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in non-financed purchases of residential real estate.

The terms of the GTOs are effective beginning October 16, 2024, and ending on April 14, 2025. The GTOs continue to provide valuable data on the purchase of residential real estate by persons possibly involved in various illicit enterprises. Renewing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity, as well as continuing to inform FinCEN’s regulatory efforts in this sector.

FinCEN renewed the GTOs that cover certain counties and major U.S. metropolitan areas in California, Colorado, Connecticut, Florida, Hawaii, Illinois, Maryland, Massachusetts, Nevada, New York, Texas, Washington, Virginia, and the District of Columbia.

The purchase price threshold remains $300,000 for each covered metropolitan area, with the exception of the City and County of Baltimore, where the purchase price threshold is $50,000.

In August 2024, FinCEN issued a final rule requiring certain industry professionals to report information to FinCEN about non-financed transfers of residential real estate to a legal entity or trust. This nationwide reporting framework will replace the GTOs and goes into effect on December 1, 2025.

The CFPB has reported that the Bureau and the Justice Department (DOJ) yesterday took action to end Fairway Independent Mortgage Corporation’s illegal mortgage lending discrimination against majority-Black neighborhoods in the greater Birmingham, Alabama, area. The CFPB and DOJ allege that Fairway illegally redlined Black neighborhoods, including through its marketing and sales actions. Fairway’s actions discouraged people from applying for mortgage loans in the Birmingham metropolitan area’s Black neighborhoods. If entered by the court, the settlement announced yesterday would require Fairway to pay a $1.9 million civil penalty to the CFPB’s victims relief fund. Fairway would also be required to provide $7 million for a loan subsidy program to offer affordable home purchase, refinance, and home improvement loans in majority-Black neighborhoods, and pay at least $1 million to serve neighborhoods it redlined.

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