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The FDIC has issued FIL-84-2024, "Consolidated Reports of Condition and Income for Fourth Quarter 2024," with instructions to all FDIC-insured financial institutions for completion and submission of their fourth quarter Call Reports.

The Federal Reserve Board reports it will soon seek public comment on significant changes to improve the transparency of its bank stress tests and to reduce the volatility of resulting capital buffer requirements.

The Board intends to propose changes that include, but are not limited to: disclosing and seeking public comment on all of the models that determine the hypothetical losses and revenue of banks under stress; averaging results over two years to reduce the year-over-year changes in the capital requirements that result from the stress test; and ensuring that the public can comment on the hypothetical scenarios used annually for the test, before the scenarios are finalized. These proposed changes are not designed to materially affect overall capital requirements.

For the 2025 stress test, the Board plans to take immediate steps to reduce the volatility of the results and begin to improve model transparency. The Board intends to begin the public comment process on its comprehensive changes to the stress test during the early part of 2025.

The OCC on Monday announced it has issued a Consent Cease and Desist Order against Bank of America, N.A., for deficiencies related to its Bank Secrecy Act (BSA) and sanctions compliance programs.

The OCC's press release indicates the agency took this action based on violations and unsafe or unsound practices relating to these programs, including a failure to timely file suspicious activity reports and failure to correct a previously identified deficiency related to its Customer Due Diligence processes. The order also identifies deficiencies in the internal controls, governance, independent testing, and training components of the bank’s BSA compliance program.

The CFPB has reported it has sued Walmart, Inc. and Branch Messenger, Inc. for forcing delivery drivers to use costly deposit accounts to get paid and for deceiving workers— “last mile” drivers in Walmart’s Spark Driver program—about how they could access their earnings.

The CFPB’s complaint alleges that Walmart and Branch opened Branch accounts for Spark Drivers, and Walmart then deposited drivers’ pay into these accounts, without the drivers’ consent. Walmart told Spark Drivers that they were required to use Branch to get paid and that they would terminate workers who did not want to use these accounts. Walmart and Branch also misled workers about the availability of same-day access to their earnings. Drivers had to follow a complex process to access their funds, and when they finally did, they faced further delays or fees if they needed to transfer the money they earned into an account of their choice. This resulted in workers paying more than $10 million in fees to transfer their earnings to an account of their choice.

Walmart, the multinational retail corporation headquartered in Bentonville, Arkansas, operates the Spark Driver Program, through which gig economy drivers make “last-mile” deliveries from Walmart stores nationwide. Branch is a financial technology company that offers a deposit account at Evolve Bank & Trust that consumers access through a digital app and debit card.

The CFPB also alleges that Branch engaged in a host of illegal activities related to consumer accounts, including failing to investigate alleged errors, failing to honor stop payment requests, failing to maintain necessary records, failing to provide certain disclosures, and illegally requiring consumers to waive their rights under the law.

The CFPB’s lawsuit seeks to stop the companies’ unlawful conduct, to provide redress for harmed consumers, and the imposition of a civil money penalty, which would be paid into the CFPB’s victims relief fund.

The IRS has announced plans to issue about $2.4 billion in automatic payments later this month to eligible people who did not claim the Recovery Rebate Credit on their 2021 tax returns.

The IRS announced the special step after reviewing internal data showing many eligible taxpayers who filed a return but did not claim the credit. The Recovery Rebate Credit is a refundable credit for individuals who did not receive one or more Economic Impact Payments (EIP), also known as stimulus payments.

No action is needed for eligible taxpayers to receive these payments, which will go out automatically in December and should arrive in most cases by late January 2025. The payments will be automatically direct deposited or sent by paper check; eligible taxpayers will also receive a separate letter notifying them of the payment.

The Securities and Exchange Commission has announced it has charged registered broker-dealer Deutsche Bank Securities Inc., a subsidiary of Deutsche Bank AG, for failing to file certain Suspicious Activity Reports (SARs) in a timely manner. Deutsche Bank Securities has agreed to pay a $4 million civil penalty to settle the SEC’s charges.

According to the SEC’s order, Deutsche Bank Securities received requests in connection with law enforcement or regulatory investigations or litigation that prompted it to conduct SARs investigations. However, the SEC’s order finds that, in certain instances from April 2019 to March 2024, Deutsche Bank Securities failed to conduct or complete the investigations within a reasonable period of time, including at least two instances where Deutsche Bank Securities took more than two years to file the SARs.

The CFPB has announced it has brought suit against the operator of Zelle and three of the country's largest banks for failing to protect consumers from widespread fraud on America’s most widely available peer-to-peer payment network.

In its Complaint filed with the U.S. District Court for the District of Arizona, the CFPB alleges that Early Warning Services, LLC, which operates Zelle, along with three of its owner banks—Bank of America, JPMorgan Chase, and Wells Fargo—rushed the network to market to compete against growing payment apps such as Venmo and CashApp, without implementing effective consumer safeguards. Customers of the three banks named in today’s lawsuit have lost more than $870 million over the network’s seven-year existence due to these failures. The CFPB’s lawsuit describes how hundreds of thousands of consumers filed fraud complaints and were largely denied assistance, with some being told to contact the fraudsters directly to recover their money. Bank of America, JPMorgan Chase, and Wells Fargo also allegedly failed to properly investigate complaints or provide consumers with legally required reimbursement for fraud and errors. The CFPB is seeking to stop the alleged unlawful practices, secure redress and penalties, and obtain other relief.

Early Warning Services, LLC is a financial technology and consumer reporting company based in Scottsdale, Arizona. Early Warning Services designed and operates the Zelle network. It is co-owned by seven of the largest banks in the United States: Bank of America, Capital One, JPMorgan Chase, PNC Bank, Truist, U.S. Bank, and Wells Fargo.

Zelle allows near-instant electronic money transfers through linked email addresses or U.S.-based mobile phone numbers, known as “tokens.” Users can create multiple tokens across different banks and quickly reassign them between institutions, a feature that the CFPB alleges has left consumers vulnerable to fraud schemes. The CFPB alleges that Bank of America, JPMorgan Chase, Wells Fargo, and Early Warning Services violated federal law through critical failures including leaving the door open to scammers, allowing repeat offenders to hop between banks, ignoring red flags that could prevent fraud, and abandoning consumers after fraud occurred.

• Press Call Remarks of CFPB Director Rohit Chopra

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

• A Formal Agreement with the The Fairfield National Bank, Fairfield, Illinois, for unsafe or unsound practices, including those related to staffing and training, credit risk rating, credit underwriting, credit administration, loan review, allowance for credit losses, and a violation related to failure to file true and correct Reports of Condition and Income.
• A Formal Agreement with The First National Bank of Williamson, Williamson, West Virginia, for unsafe or unsound practices, including those related to staffing, capital planning, strategic planning, interest rate risk management, audit committee oversight, allowances for credit losses, credit administration, and commercial credit.
• The Cease and Desist Order against USAA, Federal Savings Bank that we reported in yesterday's Top Stories.
• A Notice of Charges for an Order of Prohibition against Armando De Leon, former Store Manager at a Hialeah, Florida, branch of TD Bank, N.A., Wilmington, Delaware, alleging, among other things, that while he was a bank employee, De Leon submitted fraudulent Payment Protection Program loan applications that received over $80,000 in funding.
• A Notice of Charges for Order of Prohibition against Emily M. Niedwiecky, former Senior Customer Service Representative at a Raleigh, North Carolina, Auto Operations Center of Wells Fargo Bank, N.A., Sioux Falls, South Dakota, alleging, among other things, that Niedwiecky falsely disputed with the bank approximately $22,000 in purchases she made with her personal debit cards.
• An Order of Prohibition against Wendell Pialet, former Business Relationship Manager at a San Diego, California, branch of JPMorgan Chase Bank, N.A., Columbus, Ohio, for accepting a bribe to open a bank account that was to be used to receive proceeds from fraudulent Paycheck Protection Program loans.

The Treasury Department issued three news releases yesterday to announce OFAC actions:

• Continued pressure on Houthi procurement and financing schemes: OFAC sanctioned a dozen individuals and entities based in multiple jurisdictions, including the head of the Houthi-aligned Central Bank of Yemen branch in Sana’a, for their roles in trafficking arms, laundering money, and shipping illicit Iranian petroleum for the benefit of the Houthis. OFAC also identified five cryptocurrency wallets associated with Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF)-backed Houthi financial official Sa’id al-Jamal (al-Jamal), who operates under the aliases “Khrpi,” “Ahmad Sa’idi,” and “Hisham,” among others.
• Maintaining pressure on Iranian shadow fleet: OFAC imposed sanctions on four entities and three vessels involved in the trade of Iranian petroleum and petrochemicals, which generate billions of dollars’ worth of revenue for the Iranian regime. Treasury also announced concurrent action by the State Department against four entities in multiple jurisdictions involved in the movement of Iranian petroleum.
• Sanctions against Georgian Ministry of Internal Affairs officials: OFAC sanctioned two Georgian officials from Georgia’s Ministry of Internal Affairs which has engaged in brutal crackdowns on media members, opposition figures, and protesters — including during demonstrations throughout 2024.

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

The Financial Crimes Enforcement Network (FinCEN) has reported it has issued an Alert [FIN-2024-Alert005] to raise awareness of fraud schemes abusing FinCEN’s name, insignia, and authorities for financial gain. These FinCEN-specific fraud schemes include scams that exploit beneficial ownership information reporting; misuse FinCEN’s Money Services Business Registration tool; or involve the impersonation of, or misrepresent affiliation with, FinCEN and its employees.

The alert provides guidance to the public on how to identify and avoid these scams and provides typologies and red flag indicators to help financial institutions detect, prevent, and report potential suspicious activity to FinCEN. The public is reminded that any solicitations from individuals or entities abusing FinCEN’s name, insignia, or authorities, or impersonating a FinCEN employee should be reported to Treasury’s Office of Inspector General and the Federal Trade Commission.

Suspicious Activity Reports concerning these fraud schemes should reference FinCEN's alert by including the key term "“FIN-2024-FINCENSCAMS” in SAR field 2 (Filing Institution Note to FinCEN) and the narrative. Financial institutions should also select SAR field 34(z) (Fraud – Other) and include any other relevant terms, including “BOI Scam,” “MSB Scam,” and/or “FinCEN Imposter Scam” in the text box, as applicable.