Top Story Compliance Related

The OCC has reported that Acting Comptroller of the Currency Michael J. Hsu yesterday discussed three long-term trends that are reshaping banking in remarks at the Exchequer Club.

Mr. Hsu’s written remarks in support of his appearance discussed the increasing number and size of large banks, the complexity of bank-nonbank relationships, and the rise in polarization. Mr. Hsu described how the OCC is uniquely positioned to address each trend.

The FDIC's final rule amending Part 328 — "Advertisement of Membership, False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC's Name or Logo" — became effective on April 1, 2024, with compliance required as of January 1, 2025.

The FDIC has posted Questions and Answers Related to the FDIC’s Part 328 Final Rule, which will be updated periodically, with answers to a collection of questions about the rule.

The Q&A clarifies several questions resulting from some misinterpretations of wording in the regulation.

The FDIC has issued FIL-40-2024 with guidance to provide regulatory relief to financial institutions and facilitate recovery in areas of Texas affected by Hurricane Beryl July 5–9, 2024.

The Federal Emergency Management Agency (FEMA) declared a federal disaster for selected areas affected in Texas on July 9, 2024. FEMA may make additional designations after damage assessments are completed in the affected areas. A current list of designated areas is available at www.fema.gov.

The U.S. Treasury Department yesterday announced that OFAC has sanctioned three Mexican accountants and four Mexican companies linked, directly or indirectly, to timeshare fraud led by the Cartel de Jalisco Nueva Generacion (CJNG). Concurrently, the Financial Crimes Enforcement Network (FinCEN) issued a Notice, jointly with OFAC and FBI, to financial institutions that provides an overview of timeshare fraud schemes in Mexico associated with CJNG and other Mexico-based transnational criminal organizations.

For the names and identification information of the designated parties, see this July 16, 2024, BankersOnline OFAC Update.

FinCEn, OFAC, and the FBI have issued a joint notice to financial institutions, urging them to be vigilant in detecting, identifying, and reporting timeshare fraud perpetrated by Mexico-based transnational criminal organizations (TCOs). According to the FBI, since at least 2012, the Jalisco New Generation Cartel (CJNG) and other Mexico-based TCOs have increasingly targeted U.S. owners of timeshare properties in Mexico. Older adults, including retirees, are frequent victims in these schemes. The TCOs use proceeds from timeshare fraud to diversify their revenue streams and finance other criminal activities,
including the manufacturing and trafficking of illicit fentanyl and other deadly synthetic drugs into the United States.

The notice provides an overview of methodologies associated with these schemes and related financial typologies, highlights red flag indicators, and reminds financial institutions of their reporting requirements under the Bank Secrecy Act (BSA). In addition to filing BSA reports, financial institutions are critical partners in preventing their customers from becoming victims of timeshare fraud in Mexico, assisting those that become victims, and—in the case of older customers—reporting suspected elder financial exploitation to law enforcement, their state-based Adult Protective Services, and any other appropriate authorities.

The White House’s Office of Information and Regulatory Affairs has released its Spring 2024 Unified Agenda of Regulatory and Deregulatory Actions, or URA. This semi-annual report details each federal agency’s upcoming plans to issue or rescind regulations.

The Consumer Financial Protection Bureau’s agenda includes four proposed rule actions, addressing the Fair Credit Reporting Act, or FCRA, mortgage servicing, the Financial Data Transparency Act and consumer financial product contracts under Regulation AA. The bureau released last month the initial part of its FCRA rulemaking and a final rule regarding the attributes a standard-setting body must demonstrate in order to be recognized by the CFPB for purposes of the personal data rights rule; the Bureau plans to finalize the remainder of the proposed rule regarding personal data rights rule in October. The proposed rules for mortgage servicing were issued last week and the Regulation AA proposal is expected in September.

According to the URA, the CFPB projects it will release final rules on non-sufficient fund fees in October and on overdraft fees in January 2025.

On the BSA/AML front, FinCEN expects an August 2024 unveiling of its final AML/CFT rules applicable to investment advisers and certain real estate professionals. FinCEN reported an October target for its proposed revisions to the Customer Due Diligence rule, and is aiming for a May 2025 reveal of proposed rules on 314(b) information sharing protections.

The IRS issued a consumer alert yesterday following bad advice circulating on social media about a non-existent “Self Employment Tax Credit” that's misleading taxpayers into filing false claims.

Promoters and social media are marketing something they describe as the “Self Employment Tax Credit” as a way for self-employed people and gig workers to get big payments for the COVID-19 pandemic period. Similar to misleading marketing around the Employee Retention Credit, there is inaccurate information suggesting many people qualify for the tax credit and payments of up to $32,000 when they actually do not.

In reality, the underlying credit being referred to in social media is not called the “Self Employment Tax Credit.” It is a much more limited and technical credit called “Credits for Sick Leave and Family Leave.” Many people simply do not qualify for this credit, and the IRS is closely reviewing claims coming in under this provision so people filing claims do so at their own risk.

The National Credit Union Administration has published a notice [89 FR 57946] in today's Federal Register of the next meeting of the NCUA Board, to be held at 10:00 a,m., Thursday, July 18, 2024, at the NCUA's Board Room. Matters to be considered include:

• NCUA Rules and Regulations, Parts 701 and 741 (Succession Planning)
• NCUA Rules and Regulations, Parts 741 and 751 (Incentive-Based Compensation Agreements)
• Federal Credit Union Loan Interest Rate Ceiling

The Federal Housing Finance Agency on Friday announced a set of required tenant protections for multifamily properties financed by Fannie Mae and Freddie Mac (the Enterprises). This announcement results from FHFA’s extensive and ongoing engagement with market participants and key stakeholders on tenant issues and represents the first time that tenant protections will be a standard component of Enterprise multifamily financing.

Covered housing providers will be required to provide tenants with:

• a 30-day written notice of a rent increase
• a 30-day written notice of a lease expiration
• a 5-day grace period for rent payments

The Enterprises will monitor and enforce the tenant protections announced on Friday, and failure to comply could result in penalties under the loan agreement. These protections will be required for new loans signed on or after the policy effective date, February 28, 2025. A detailed description of the tenant protection policies is expected to be published by the Enterprises in August 2024.