Top Story Compliance Related

Our monthly review of the Federal Reserve Board's CRA Evaluation Archives reveals that in September the Reserve Banks released 18 evaluations of state-chartered member banks. Fifteen of those banks received Satisfactory ratings.

Outstanding ratings were attached to the evaluations of Stifel Bank, Saint Louis, Missouri; Stifel Bank and Trust, Saint Louis, Missouri; and The Farmers and Merchants Bank of Craig County, New Castle, Virginia.

Yesterday, the Treasury Department reported that OFAC has designated three individuals and one sham charity that are prominent international financial supporters of Hamas, as well as one Hamas-controlled financial institution in Gaza. OFAC also designated a longstanding Hamas supporter and nine of his businesses. These actors play critical roles in external fundraising for Hamas, often under the guise of charitable work, that finance the group’s terrorist activities. Yesterday’s action, which was taken under the counterterrorism authority in Executive Order 13224, highlights the abuse of the non-profit organization (NPO) sector by terrorist financiers through the use of sham charities to generate revenue.

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

Yesterday, the CFPB announced it had published a new edition of Supervisory Highlights describing the agency’s supervisory findings between November 2023 and August 2024 related to illegal practices in auto finance, including lenders repossessing consumers’ cars after the borrower made timely payments or received loan extensions.

Other illegal conduct detailed in the report includes lenders providing inaccurate disclosures, misapplying loan payments, and putting incorrect information on consumers’ credit reports. The report also highlights significant problems with add-on products that are packaged at the front-end of the auto loan, increasing the loan costs, and then not properly refunded at the back end upon early loan termination, when the consumer can no longer use the products.

The CFPB, Federal Reserve Board, and OCC have announced that the 2025 threshold for higher-priced mortgage loans (HPMLs) that are subject to special appraisal requirements will increase from $32,400 to $33,500, effective January 1, 2025. The increase is based on the 3.4 percent annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as of June 1, 2024.

The change will add paragraph xii. to Official Interpretation comment 35(c)(2)(ii)-3.

The CFPB and the Federal Reserve Board have also announced the dollar thresholds used to determine whether certain credit and lease transactions in 2025 will be subject to certain protections under Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing).

Based on the CPI-W increase noted above, Regulation Z and Regulation M generally will apply to consumer credit transactions and consumer leases of $71,900 or less in 2025 (private education loans and loans secured by real property or by personal property used or expected to be used as the principal dwelling of the consumer, such as mortgages, are subject to Regulation Z regardless of the amount of the loan). The changes will add paragraph 3(b)-3.xvi. to the Official Interpretations of Regulation Z and paragraph 2(e)-11.xvi. to the Official Interpretations of Regulation M.

Each of the changes above has been made to the BankersOnline Regulations pages.

The FDIC has issued its list of 55 state nonmember banks recently evaluated for CRA compliance whose evaluations were assigned in July 2024. Three banks received "Needs to Improve" ratings. One was rated "Substantial Noncompliance." Forty-eight banks received "Satisfactory" ratings.

We congratulate The Dime Bank (Honesdale, PA), Beardstown Savings S.B. (Beardstown, IL), and Toyota Financial Savings Bank (Henderson, NV), for receiving "Outstanding" ratings.

The CFPB has released a Nonbank Registration: Orders Rule Coverage Chart summarizing how an entity may determine if it is required to register an order under the Nonbank Registration Orders Rule.

The chart can be found in the Resources for filers section of the Bureau's nonbank registry portal and public database webpage.

FinCEN has posted additions and updates to its FAQ page on the Beneficial Ownership Information Reporting requirements. Updated and added questions are dated October 3, 2024.

The Federal Reserve Board has released two enforcement actions.

The Treasury Department yesterday reported that OFAC designated one individual and three companies that have facilitated weapons procurement and smuggling operations for Ansarallah, commonly known as the Houthis. This action targets key procurement operatives and suppliers located in Iran and the People’s Republic of China (PRC) that have enabled the Houthis to acquire dual-use materials and components needed to manufacture, maintain, and deploy an arsenal of advanced missiles and unmanned aerial vehicles (UAVs) against U.S. and allied interests.

Additionally, OFAC designated one entity and two vessels linked with illicit Houthi and Iranian commercial shipments, including one that has transported shipments for Houthi financial official Sa’id al-Jamal and an affiliate of Iran’s Armed Forces General Staff.

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

The FDIC, Federal Reserve Board, NCUA, OCC and state financial regulators have issued an interagency statement on supervisory practices regarding financial institutions affected by Hurricane Helene. These agencies recognize the serious impact of Hurricane Helene on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision. The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities.

The statement addressed agency views on lending, temporary facilities, publishing requirements, regulatory reporting requirements, and potential CRA consideration for certain financial institutions' efforts.

For more information, refer to the Interagency Supervisory Examiner Guidance for Institutions Affected by a Major Disaster, which is available as follows:

• State Financial Regulators
• FDIC
• FRB
• OCC
• NCUA