Top Story Technology Related

The Office of the Comptroller of the Currency yesterday announced it had issued a comprehensive cease-and-desist order against USAA Federal Savings Bank to require the bank to correct a range of deficiencies. This order replaces prior cease-and-desist orders issued against the bank in 2019 and 2022.

The OCC reported it took this action based on unsafe or unsound practices relating to management, earnings, information technology, consumer compliance, and internal audit and suspicious activity reporting violations. The bank also was not in compliance with OCC’s Heightened Standards requirements for large banks detailed at 12 CFR Part 30, Appendix D.

The order incorporates articles from the 2019 and 2022 orders that remain in noncompliance and requires the bank to take comprehensive corrective actions to enhance its risk governance, compliance risk management, information technology management, fraud risk management, and third-party, affiliate, and shared services risk management. The order also imposes limitations on the bank’s ability to add certain new products and services, as well as expanding its membership criteria.

The Office of the Comptroller of the Currency has reported the key issues facing the federal banking system in its Semiannual Risk Perspective for Fall 2024.

The OCC highlighted credit, operational, compliance, and market risks, as the key risk themes in the report. Highlights from the report include:

• Commercial credit risk remains moderate and shows signs of stabilizing as risks are better identified, monitored, and controlled.
• Overall retail credit risk is stable. Delinquency and loss rates on residential real estate-secured loans held by banks remain historically low but are increasing. Delinquencies in other retail asset classes, namely credit cards and auto loans, reflect an increasing trend.
• Operational risk is elevated. Banks continue to respond to an evolving and increasingly complex operating environment. Evolving cyber threats by sophisticated malicious actors target the financial services industry and their key service providers.
• From a compliance risk perspective, banks continue to operate in a dynamic banking environment as customers’ needs and preferences related to products, services, and delivery channels evolve.
• Community Reinvestment Act (CRA) related risks remain stable as the OCC continues to assess banks’ CRA performance under the 1995/2021 regulatory framework.
• Regarding market risk, banks net interest margin (NIM) performance has varied across bank asset sizes.

A special topic in the report focuses on the increasing trend in external fraud activity targeting consumers and the federal banking system. The frequency of both traditional and novel, more sophisticated fraud activities targeting customers and banks continues to increase. Banks should maintain sound fraud risk management practices through prudent controls and appropriate fraud monitoring capabilities to identify, investigate, mitigate, and report fraudulent activity. Banks can also support their customers by providing educational information about trending fraud activities and ways to protect themselves.

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 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 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 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.

The Federal Trade Commission has published [89 FR 99069] in this morning's Federal Register a final rule amending the Telemarketing Sales Rule to extend the Rule's applicability to inbound telemarketing calls in response to an advertisement through any medium or direct mail solicitation in which technical support products or services are offered for sale.

The amendments will be effective January 9, 2025.

On Friday, the Financial Stability Oversight Council unanimously approved its 2024 annual report, which reviews developments in financial markets, identifies vulnerabilities and emerging threats to U.S. financial stability, and makes recommendations to mitigate those vulnerabilities and threats. The report also details the activities of the Council and summarizes significant regulatory developments. The report was developed collaboratively by Council members and their agencies and staffs. Overall, the Council finds that the U.S. financial system remains resilient, though vulnerabilities warrant ongoing vigilance.

The report made recommendations in the following areas:

• Cybersecurity
• Depository institutions
• Third-party service providers
• Commercial real estate credit risk
• Digital assets
• Investment funds

The CFPB on Friday announced it has published an order establishing supervisory authority over Google Payment Corp. While Google Payment Corp. is already subject to CFPB’s enforcement jurisdiction, the CFPB has determined that Google Payment Corp. has met the legal requirements for supervision. The CFPB is making this order public to provide transparency about how it assesses risks using consumer complaints and other factors.

The CFPB's order does not constitute a finding that the entity has engaged in wrongdoing and does not require the CFPB to conduct a supervisory examination.

CNN reported on Friday that Google has filed suit against the CFPB, challenging the Bureau's decision to place Google Payment Corp. under federal supervision. A Google spokesman was quoted as saying "This is a clear case of government overreach involving Google Pay peer-to-peer payments, which never raised risks and is no longer provided in the U.S., and we are challenging it in court.”