Top Story Compliance Related

The FDIC has released an update to several sections of its Consumer Compliance Examination Manual (CEM). The December 2024 update includes changes in these Chapters:

• Overview of Compliance Examinations (II-1.1): This chapter was updated with technical changes related to supervisory recommendations.
• Review and Analysis (II-5.1): This chapter was updated with technical changes related to supervisory recommendations.
• Documenting the Examination (II-7.1): This chapter was updated with technical changes related to supervisory recommendations.
• Violation Codes (II-14.1): This chapter was with a technical revision to violation code TILA-B 1026.9(g).
• Fair Lending Laws and Regulations (IV-1.1): This chapter was updated with technical changes related to ECOA.
• Equal Credit Opportunity Act (V-7.1): This chapter was updated with technical changes related to ECOA.
• Fair Housing Act (V-8.1): This chapter was updated with technical changes related to ECOA.
• Home Mortgage Disclosure Act (V-9.1): This chapter was updated with technical changes related to supervisory recommendations.
• Unfair, Deceptive, and Abusive Practices — Federal Trade Commission Act/Dodd-Frank Act (VII-1.1): This chapter was updated with technical changes related to ECOA.
• FTC Rule — Preservation of Claims and Defenses (VII-2.1): This chapter was updated with technical revisions.
• Telephone Consumer Protection Act (VIII-5.1): This chapter was updated with technical changes related to supervisory recommendations.
  

The Treasury Department's Office of Foreign Assets Control (OFAC) has announced a $257,690 settlement with C.H. Robinson International Inc. (CHR). CHR agreed to settle its potential civil liability for 82 apparent violations by five of its non-U.S. subsidiaries, which provided freight brokerage or transportation services for shipments in apparent violation of OFAC sanctions on Cuba and Iran. The settlement amount reflects OFAC's determination that the apparent violations were voluntarily self-disclosed and were not egregious.

CHR is a Minnesota-based global transportation and logistics company. Following a series of overseas acquisitions by CHR of freight and logistics firms, between November 2018 and February 2022 five of CHR’s foreign subsidiaries provided freight brokerage or transportation services for 82 shipments, to or from Iran (in two instances), of Iranian- or Cuban-origin goods, or by dealing with an Iranian airline. The vast majority of the apparent violations appear to have occurred because the subsidiaries’ brokerage management systems had not yet been incorporated into CHR’s system or otherwise updated to include the latest sanctions compliance controls and did not screen for potentially violative transactions.

Further details can be found in OFAC's Enforcement Release.

The FDIC has published [89 FR 101014] a "Sunshine Act" notice of its next Board of Directors meeting, scheduled for 10:00 a.m. EST on Tuesday, December 17, 2024. The meeting will be open to public observation only by webcast. Matters on the agenda for consideration include:

• Proposed 2025 FDIC Operating Budget
• Discussion Draft relating to FDIC Policy regarding the Annunzio-Wylie Anti-Money Laundering Act
• Discussion Draft relating to FDIC Policy on Bank Capital Distributions in Unusual and Exigent Circumstances

The CFPB this morning announced it has finalized its Overdraft Lending: Very Large Financial Institutions Rule, which will apply to banks and credit unions with more than $10 billion in assets. The reforms in the rule will allow large banks three options to manage their overdraft lending program:

• Cap their overdraft fee at $5: Under this simple option, covered banks and credit unions could simply cap their fee at $5, which is the estimated level at which most banks could be able to cover their costs associated with administering a courtesy overdraft program.
• Cap their fee at an amount that covers costs and losses: For banks that wish to offer overdraft as a convenient service rather than as a profit center, the final rule allows financial institutions to set their fee at an amount that covers their costs and losses.
• Disclose the terms of their overdraft loan just like other loans: For financial institutions that wish to profit from overdraft lending, they may do so by complying with the standard requirements governing other loans, like credit cards. This would include giving consumers a choice on whether to open the line of overdraft credit, providing account-opening disclosures that would allow comparison shopping, sending periodic statements, and giving consumers a choice of whether to pay automatically or manually.

The final rule, which will amend Regulations E and Z, is expected to add up to $5 billion in annual overdraft fee savings to consumers, or $225 per household that pays overdraft fees. It will become effective October 1, 2025.

• Executive Summary of the Overdraft Lending: Very Large Financial Institutions rule
• Unofficial Redline of the final rule
• Publication update: Published in the 12/30/2024 Federal Register at 89 FR 106768

The Financial Stability Board (FSB) published today its finalized recommendations to promote greater alignment in data frameworks related to cross-border payments and consistency in the regulation and supervision of bank and non-bank payment service providers.

These recommendations advance key actions from the G20 Roadmap to address legal, supervisory, and regulatory issues in cross-border payments. As part of these efforts and to enhance private sector engagement, the FSB is inviting market stakeholders in cross-border payments to join its Taskforce on Legal, Regulatory, and Supervisory matters (LRS Taskforce).

• Press release

The IRS has posted a reminder to individuals aged 73 or older of the deadline to take required minimum distributions (RMDs) from individual retirement arrangements (IRAs) and other retirement plans, and highlighted updates to that requirement introduced in the SECURE 2.0 Act.

If an account owner fails to withdraw the full amount of the RMD by the due date, the owner is subject to a 25% excise tax on the amount not withdrawn. The 25% excise tax rate is reduced to 10% if the error is corrected within two years.

IRA trustees or plan administrators must either report the RMD amount to the account owner or offer to calculate it. Each IRA plan’s RMD must be calculated separately, however owners can withdraw the total required amount from one or more accounts of their choice as long as the annual requirement is met. An IRA trustee or plan administrator may calculate the RMD, but the account owner is ultimately responsible for ensuring the correct RMD is taken.

The OCC, Federal Reserve Board, and FDIC this morning published [89 FR 99751] a request for comments to inform their review under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA) of agency regulations to identify outdated or otherwise unnecessary regulatory requirements on insured depository institutions and their holding companies.

This is the third of four such requests for comment on multiple categories of regulations. Today's request seeks comment on regulations in the categories of Rules of Procedure; Safety and Soundness; and Securities. Written comments will be accepted through March 11, 2025.

The Department of the Treasury has reported that the EU-U.S. Joint Financial Regulatory Forum took place December 4–5, 2024, with participants exchanging views on topics of mutual interest as part of their regular financial regulatory dialogue. The dialogue was co-chaired by the U.S. Department of the Treasury and the European Commission.

The Forum emphasized close, ongoing U.S. and EU cooperation in a range of areas and focused on seven themes: (1) market developments and financial stability; (2) operational resilience and digital finance; (3) the sharing and financial reporting of financial data; (4) anti-money laundering and countering the financing of terrorism (AML/CFT); (5) sustainable finance; (6) banking and insurance; and (7) capital markets.

The CFPB has released its Semi-Annual Report to Congress covering the period October 1, 2023, through March 31, 2024.

The Treasury Department has reported that OFAC has sanctioned cybersecurity company Sichuan Silence Information Technology Company, Limited, and one of its employees, Guan Tianfeng, both based in the People’s Republic of China, for their roles in the April 2020 compromise of tens of thousands of firewalls worldwide. Many of the victims were U.S. critical infrastructure companies.

For identification information on Sichuan Silence and Guan, see yesterday's BankersOnline OFAC Update.