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The FDIC has issued Financial Institution Letter FIL-53-2024, "Classification of Interactive Teller Machines as Domestic Branches or Remote Service Units."

Interactive Teller Machine (ITM) technology has become increasingly sophisticated in recent years. State nonmember banks have sought guidance from the FDIC regarding whether the proposed use of an ITM at a location other than an established branch facility would require the filing of a domestic branch application, or would qualify for the RSU exclusion to the definition of domestic branch (meaning no branch application would be necessary). ITMs generally resemble automated teller machines but allow customers to interact with live tellers to complete a variety of banking transactions.

The FDIC would not consider an ITM established by a state nonmember bank to be a “domestic branch” subject to FDIC approval under section 18(d) of the FDI Act under the following circumstances:

• The ITM is an automated, unstaffed banking facility owned or operated by, or operated exclusively for, the bank, which is equipped to enable existing customers to initiate an interactive session with remotely located bank personnel;
• State nonmember banks may also provide access to ITM facilities to non-customers as long as the ITM services available to non-customers are limited to the same functionality typically provided by an Automated Teller Machine (ATM) to non-customers (e.g., withdrawal of cash) and such users are unable to engage a live remote teller to remotely perform core banking functions for the customer; and,
• To the extent that bank personnel have the ability to remotely assist the customer with the operation of the ITM to perform core banking functions, customers must also be able to perform such transactions without the involvement of bank personnel and must have the sole discretion to initiate and terminate interactive sessions with bank personnel.

ITMs that operate outside of these parameters may require a branch application.

The CFPB yesterday announced it had filed a proposed order to resolve its lawsuit against Daniel A. Rosen, Inc., d/b/a Credit Repair Cloud and Daniel A. Rosen, its CEO, for providing substantial assistance or support to credit repair businesses that charge illegal advance fees to consumers. The proposed order, if entered by the court, would impose a $2 million civil penalty against Rosen and a $1 million civil penalty against Credit Repair Cloud. The order would also require the company and Rosen to take steps to ensure credit repair companies using Credit Repair Cloud stop charging consumers illegal advance fees.

On September 20, 2021, the Bureau filed a lawsuit against Credit Repair Cloud — a Los Angeles, California, company that since at least 2013 has provided an “all-in-one solution” for people to start their own credit repair businesses — and its owner and CEO, Daniel Rosen. On January 7, 2022, the Bureau filed an amended complaint. The Bureau alleged that Credit Repair Cloud and Daniel Rosen violated the Telemarketing Sales Rule by providing substantial assistance to credit repair businesses that violated the Telemarketing Sales Rule’s advance-fee prohibition. Specifically, the Bureau alleged that Rosen and Credit Repair Cloud encouraged the credit repair businesses that use their services — including Credit Repair Cloud’s trainings, materials, and software — to telemarket and charge unlawful advance fees. The Bureau further alleges that Rosen and Credit Repair Cloud knew or consciously avoided knowing that these credit repair businesses were telemarketing their services and charging consumers unlawful advance fees. The Bureau also alleges that by violating the Telemarketing Sales Rule, Credit Repair Cloud and Daniel Rosen violated the Consumer Financial Protection Act of 2010.

Yesterday, the OCC announced it will allow national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices in areas of Maryland, North Carolina, South Carolina, Virginia, and Washington, D.C. if the offices are directly affected by potentially unsafe conditions caused by Hurricane Debby.

On Thursday, the Federal Reserve Board announced the execution of a written agreement among Customers Bancorp, Inc., West Reading, Pennsylvania, Customers Bank, Malvern, Pennsylvania (together, the "organization"), and the Federal Reserve Bank of Philadelphia, Pennsylvania.

According to the agreement, Customers Bancorp, Inc., the holding company for Customers Bank, has pursued a business strategy that involves offering banking services to digital asset customers, and also operates an instant payments platform that allows commercial clients to make tokenized payments over a distributed ledger technology system to other commercial clients of the Bank. Recent examinations of the holding company and bank by the Reserve Bank identified significant deficiencies related to the Bank’s risk management practices and compliance with the applicable laws, rules, and regulations relating to anti-money laundering, including the Bank Secrecy Act and the regulations issued by OFAC.

The agreement acknowledges that the organization has begun to address the identified deficiencies and sets forth specific further steps the organization must take in that regard.

The United States, Italy, and Saudi Arabia virtually hosted a meeting last month of the Counter ISIS Finance Group (CIFG) under the auspices of the Global Coalition to Defeat ISIS. The CIFG co-leads yesterday issued a joint statement exhorting the Coalition members to continue working together and encouraging them to implement a list of comprehensive strategies to counter ISIS financing worldwide.

The joint statement was accompanied by a Fact Sheet on ISIS Financing.

The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) has announced the launch of a public service announcement (PSA) campaign as part of its ongoing efforts to educate the small business community about new beneficial ownership reporting requirements. To directly reach business owners, educate stakeholders about these reporting requirements, and encourage compliance, television and radio PSAs are now running nationwide in tandem with digital and print ads.

The Treasury Department has announced that Treasury, the CFPB, and the FTC have taken actions to address unfair and deceptive consumer acts and practices in the residential solar power sector. Treasury, CFPB, and FTC released Consumer Advisories warning the public on how to spot potential unfair and deceptive practices and encouraging consumers to file complaints of suspicious behavior to FTC, CFPB, and state consumer protection offices.

Treasury, CFPB, and FTC, along with the Departments of Energy and Housing and Urban Development, also announced an interagency partnership with the goal of coordinating efforts to prevent predatory practices. The new partnership will foster greater communication and collaboration between the agencies and better protect consumers from bad actors.

Treasury Resources:

• Consumer Solar Awareness website
• Solar Consumer Advisory
• Before You Buy Solar Panels
• Before You Sign a Solar Lease
• Before You Sign A Power Purchase Agreement
• Before You Sign A Solar Subscription

FTC Resources:

• Consumer: How To Avoid Getting Burned
• Business: Don't Waste Your Energy On a Solar Scam

CFPB Resources:

• Issue Spotlight
• Consumer Advisory

The FDIC has published [89 FR 64353] in today's Federal Register a final rule revising its regulations to conform with the Fair Hiring in Banking Act (FHBA)—which was enacted on and immediately effective as of December 23, 2022. Among other provisions, the FHBA excluded or exempted categories of otherwise-covered offenses from the scope of statutory prohibitions on participation in banking. These categories pertain to certain older offenses, offenses committed by individuals 21 or younger, and relatively minor offenses. The FHBA also clarified several definitions in section 19 and provided application-processing procedures. The FDIC considers most of the revisions to its regulations to be required by the FHBA. Most other revisions reflect the FDIC's interpretation of statutory prohibitions in light of the FHBA.

The amendments will become effective October 1, 2024.

The Treasury Department has reported that OFAC has designated Paraguayan tobacco company Tabacalera del Este S.A. (Tabesa) for providing financial support to Paraguay’s former president, Horacio Manuel Cartes Jara, whom OFAC sanctioned on January 26, 2023, for his involvement in corruption. Tabesa was designated pursuant to Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act.

BankersOnline’s August 6, 2024, OFAC Update includes identification information on Tabesa.

Our quick look this morning at the Federal Reserve Board's archive of Community Reinvestment Act evaluations revealed that the Reserve Banks released 21 evaluations last month. We congratulate The Northwestern Bank (Chippewa Falls, Wisconsin), State Street Bank and Trust Company (Boston, Massachusetts), and Vista Bank (Dallas, Texas) on their Outstanding ratings. The remaining eighteen banks received Satisfactory ratings.

The FDIC has issued a list of 54 state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA).

One of the banks — Farmers Bank & Trust, Great Bend, Kansas, received a rating of "needs to improve." Fifty-one banks received ratings of "satisfactory." We congratulate two banks — Stock Yards Bank & Trust Company, Louisville, Kentucky, and First Federal Bank of Kansas City, Lees Summit, Missouri — on their "outstanding" ratings.

The OCC has announced that national banks, federal savings associations, and federal branches and agencies of foreign banks may close offices in areas of Florida and Georgia directly affected by potentially unsafe conditions caused by Hurricane Debby.

The Federal Reserve Board yesterday issued final joint guidance to help certain large banks further develop their resolution plans. The Board developed the guidance jointly with the Federal Deposit Insurance Corporation, and it is now final following both agencies' approval. These resolution plans, also known as living wills, describe a bank's strategy for orderly resolution under bankruptcy in the event of material financial distress or failure.

The guidance generally applies to domestic and foreign banks with more than $250 billion in total assets but that are not the largest and most complex banks, for which guidance is already in place. The guidance addresses the specific characteristics of, and risks posed by, this group of banks.

Distinct from the guidance to the largest and most complex banks, this guidance provides agency expectations for both single point of entry and multiple point of entry resolution strategies, which are different strategies banks have adopted for their rapid and orderly resolution. It also recognizes that the preferred resolution outcome for foreign banks is often a successful home country-led resolution and guides foreign banks on how to address the global resolution plan in their U.S. plan.

The agencies also announced that they are extending the resolution plan submission deadline for the banks to which the guidance applies. Banks will be required to submit their resolution plans by October 1, 2025, instead of March 31, 2025. The purpose of the extension is to provide reasonable time for banks to consider the final guidance as they develop their plan submissions.

The guidance will be effective upon publication in the Federal Register.

• Guidance for Resolution Plan Submissions of Domestic Triennial Full Filers
• Guidance for Resolution Plan Submissions of Foreign Triennial Full Filers
• Statement by Governor Michelle W. Bowman
• Publication update: Published at 89 FR 66388 (domestic) and 89 FR 66510 (foreign) in the Federal Register. Effective on publication.

The Federal Trade Commission has announced that, as a result of a Federal Trade Commission lawsuit, the owners and operators of a sprawling credit repair operation known as Financial Education Services (FES) will end the practices that the FTC alleged created a pyramid scheme and also violated the Credit Repair Organizations Act. In addition, the proposed court orders [see Case Timeline HERE] include substantial monetary penalties.

The FTC first filed suit against the FES scheme in May 2022, alleging that the company preyed on consumers with low credit scores by luring them in with the false promise of an easy fix and then recruiting them to join a pyramid scheme selling the credit repair services to others, costing them millions of dollars.

The proposed settlements in the case will lead to more than $12 million being turned over to the FTC for use in providing refunds to affected consumers, as well as conduct prohibitions against the defendants.

OFAC has announced upcoming updates for users of its Compliance Hotline service. OFAC is transitioning to a single, user-friendly online platform to receive questions from the public. Users can now submit queries—and provide all necessary details—directly through OFAC’s new OFAC Compliance Hotline page. This new platform is designed to improve OFAC’s tracking of queries and help OFAC assess when additional public guidance may be helpful.

OFAC will fully transition its Compliance Hotline to this web form platform by January 1, 2025, and will retire other existing forms of contacting the OFAC Compliance Hotline according to the following schedule: OFAC will retire the Compliance Hotline email (OFAC_Feedback@treasury.gov) on August 16, 2024; and its Compliance Hotline telephone (1-800-540-6322 and 202-622-2490) on December 31, 2024.

The Federal Reserve Board on Friday announced it is requesting comment on a proposed rule that would establish data standards for certain information collections submitted to financial regulatory agencies. In addition to the Board, the standards have been proposed by several other federal financial regulatory agencies. The proposal would promote interoperability of data collected by financial regulatory agencies through the establishment of data standards for identifiers of legal entities and other data elements.

This proposal is part of the implementation of the Financial Data Transparency Act of 2022. Once the final standards are established, the Board will issue a separate rule that adopts those standards for certain information collected by the Board.

Comments on the proposal are due 60 days following joint publication by the Board, the OCC, FDIC, NCUA, CFPB, FHFA, Commodity Futures Trading Commission, SEC, and the Department of the Treasury in the Federal Register.

Publication and comment period update: Published by the agencies in the August 22, 2024, Federal Register with a 60-day comment period ending on October 21, 2024.

The OCC has released a list of 27 Community Reinvestment Act performance evaluations that became public during July 2024. Of the 27 evaluations, one is rated substantial noncompliance, 20 are rated satisfactory, and six are rated outstanding.

The Lemont National Bank, Lemont, Illinois, received the substantial noncompliance rating.

Outstanding ratings were awarded to—

• Black Hills Community Bank, National Association, Rapid City, South Dakota
• Eastern Savings Bank, FSB, Hunt Valley, Maryland
• First National Bank, Fort Pierre, South Dakota
• Home Savings and Loan Association of Carroll County, F.A., Norborne, Missouri
• Queensborough National Bank & Trust Company, Louisville, Georgia
• Sterling Federal Bank, F.S.B., Sterling, Illinois

The Federal Trade Commission has reported it is sending more than $12 million in refunds to consumers who paid Zurixx, LLC for a real estate investment training program that allegedly made empty promises about earning big profits by “flipping” houses.

A complaint filed by the FTC and the Utah Department of Commerce Division of Consumer Protection (UDCP) alleged that Zurixx and its owners operated a real estate investment coaching scheme that sold live seminars and telephone coaching using false earnings claims that convinced consumers to pay them thousands or tens of thousands of dollars in a relatively short amount of time by “flipping” or wholesaling real estate using Zurixx’s system. The defendants bolstered sales by partnering with home-improvement and flipping television personalities. The defendants agreed to a settlement in February 2022, that included a monetary judgment and permanently banned them from marketing or selling any real estate or business coaching programs and prohibited them from making misleading earnings claims and from using contract terms to restrict consumers’ ability to review their products or speak to law enforcement agencies.

The FTC is sending checks to 25,563 consumers.

The NCUA yesterday reported it issue2 two prohibition orders in July barring individuals from participating in the affairs of any federally insured depository institution. The orders were issued to:

• Jose Prado-Valero, a former employee of Financial Center First Credit Union in Indianapolis, Indiana, after finding that he engaged in an elaborate fraud to share credit union members’ personal information with non-members who fraudulently withdrew members’ funds, in exchange for a portion of the proceeds of the fraud. Valero pleaded guilty to a one-count information in federal court in April 2024.
• Tracy H. Thibodeau, a former employee of Vermont VA Federal Credit Union in White River Junction, Vermont, after finding that, as a branch manager of the credit union, she fraudulently obtained a personal Vermont VA FCU credit card and exempted herself from credit limits, late fees, interest payments, and making minimum monthly payments, defrauding the credit union of $137,170. She subsequently pleaded guilty to a charge of bank fraud in federal court.

The Federal Reserve has issued the Federal Open Market Committee Statement following the committee's July 30–31, 2024, meeting.

In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. The Committee is strongly committed to returning inflation to its 2 percent objective.

• Implementation Note

The Department of the Treasury yesterday reported that OFAC has sanctioned two individuals and four companies that have facilitated weapons procurement for Ansarallah, commonly referred to as the Houthis. This action targets key actors located in the People’s Republic of China, including Hong Kong, and Yemen who have directly supported Houthis’ efforts to procure military-grade materials abroad and ship these items to Houthi-controlled areas of Yemen, enabling the group’s ongoing attacks.

For the names and identification information of the designated parties, see this July 31, 2024, BankersOnline OFAC Update.

FDIC FIL-50-2024, issued yesterday, lists steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Missouri affected by severe storms, straight-line winds, and flooding from May 19 to May 27, 2024.

FIL-51-2024, also issued yesterday, lists steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Kentucky affected by severe storms, straight-line winds, tornadoes, landslides, and mudslides from May 21 to May 27, 2024.