Find Top Stories by Day or Week

The Treasury Department has reported that OFAC has sanctioned Integrity Technology Group, Incorporated, a Beijing-based cybersecurity company, for its role in multiple computer intrusion incidents against U.S. victims. These incidents have been publicly attributed to Flax Typhoon, a Chinese malicious state-sponsored cyber group that has been active since at least 2021, often targeting organizations within U.S. critical infrastructure sectors.

Chinese malicious cyber actors continue to be one of the most active and most persistent threats to U.S. national security, as highlighted in the most recent Office of the Director of National Intelligence Annual Threat Assessment. These actors continue to target U.S. government systems as part of their efforts, including the recent targeting of Treasury’s own IT infrastructure.

For identification information on Integrity Technology, see the January 3, 2025, BankersOnline OFAC Update.

The OCC has released a list of Community Reinvestment Act performance evaluations that became public during the month of December 2024. Thirteen of the institutions on the list received a CRA rating of Satisfactory.

Ratings of Outstanding were listed for —

• The First National Bank of Sparta, Sparta, Illinois
• First Seacoast Bank, Dover, New Hampshire
• Metropolitan Bank and Trust Company, New York, New York

OFAC has announced a $22,172 settlement with SkyGeek Logistics, Inc. SkyGeek agreed to settle its potential civil liability for six apparent violations of OFAC sanctions related to Russia’s aerospace and technology sectors.

In 2024, SkyGeek attempted two refunds and sent four shipments to two Specially Designated Nationals in the United Arab Emirates sanctioned in connection with these sectors. The settlement amount reflects OFAC's determination that the apparent violations were non-egregious and that certain of its conduct was voluntarily self-disclosed.

Additional details are available in OFAC's enforcement release, which indicates that two of SkyGeek's apparent transaction violations were blocked and reported to OFAC by a financial institution.

The Treasury Department on Tuesday reported OFAC sanctions actions.

• A Russian judge was sanctioned for her role in the arbitrary detention of Moscow city councilor and human rights defender Alexei Gorinov. The judge was designated under the authority of Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption.
• OFAC also designated a subordinate organization of Iran’s Islamic Revolutionary Guard Corps (IRGC), and a Moscow-based affiliate organization of the Russian Main Intelligence Directorate (GRU) and its director under the authority of Executive Order 13848 (U.S. election interference). As affiliates of the IRGC and GRU, these actors aimed to stoke socio-political tensions and influence the U.S. electorate during the 2024 U.S. election.

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

The National Credit Union Administration has announced it has permanently prohibited two individuals from participating in the affairs of any federally insured depository institution.

• Demetria Baker, former chief executive officer at Lynchberg Municipal Federal Employees Credit Union (LMFECU), Lynchburg, Virginia, was issued a prohibition order after a finding that she made a series of loans to herself and her son that were in violation of LMEFCU policies for approval, documentation, or underwriting, and that a significant amount of cash was removed from a cash drawer that was only accessible to her.
• Teresa Paulo, a former employee at Southern Pine Credit Union, Valdosta, Georgia, received a notice of prohibition after she was convicted and sentenced for aggravated identity theft and bank fraud resulting from her misconduct at the credit union

The Federal Housing Finance Agency has reported that U.S. house prices rose 0.4 percent in October, according to the FHFA’s seasonally adjusted monthly House Price Index. House prices rose 4.5 percent from October 2023 to October 2024. The previously reported 0.7 percent price growth in September remained unchanged.

“Annual house price gains have been trending down since February, stabilizing around 4.5 percent during the last three months,” said Dr. Anju Vajja, Deputy Director for FHFA’s Division of Research and Statistics. “Even with elevated house prices and mortgage rates putting continued pressure on affordability, house prices continued to grow at a steady rate, likely due to a historically low inventory of homes for sale.”

The Consumer Financial Protection Bureau yesterday published [89 FR 106446] a notice to advise credit card issuers that they may voluntarily submit credit card price and availability data through the CFPB's Terms of Credit Card Plans (TCCP) Survey.

The Federal Trade Commission has reported it has referred its federal court case against online cash advance firm Dave Inc. to the U.S. Department of Justice (DOJ), which has filed an amended complaint in the case that names Dave CEO Jason Wilk as a defendant and seeks civil penalties.

The FTC first brought its case against Dave in November 2024, charging that the company uses misleading marketing to deceive consumers about the amount of its cash advances, charges consumers undisclosed fees, and charges so-called “tips” to consumers without their consent.

The amended complaint charges Dave and Wilk with violating the FTC Act and the Restore Online Shoppers’ Confidence Act and seeks both refunds for consumers and civil penalties against the defendants, as well as asking the court to stop the company’s unlawful actions.

• FTC Case file information

The OCC, Federal Reserve Board, and FDIC on Friday issued a revised interagency statement to supersede the “Extension of the Revised Statement Regarding Status of Certain Investment Funds and their Portfolio Investments for Purposes of Regulation O and Reporting Requirements under Part 363 of FDIC Regulations.” The prior interagency statement was issued on December 15, 2023, and was set to expire on January 1, 2025.

The revised interagency statement explains that the agencies will continue to exercise discretion not to take action against banks or against certain companies that sponsor, manage, or advise investment funds and institutional accounts (fund complexes) that become principal shareholders of banks (principal shareholder fund complexes). The discretion relates to certain extensions of credit by banks to portfolio companies of the principal shareholder fund complex (fund complex–controlled portfolio companies) that otherwise would violate Regulation O, 12 CFR 215, provided certain eligibility criteria are satisfied. The agencies also clarify the eligibility criteria in the revised interagency statement.

• FDIC FIL-85-2024
• OCC Bulletin 2024-37

The FDIC on Friday made public its November 2024 administrative enforcement actions against banks and individuals. There were two orders of prohibition, two consent orders, three orders for civil money penalties (CMPs), one combined order of prohibition and order for restitution, and one notice of charges for assessment of a CMP.

Assessment of Civil Money Penalties:

• Spring Valley Bank, Wyoming, OH, a $19,800 CMP for violations of the Home Mortgage Disclosure Act (HMDA) and of Regulation C for failing to follow HMDA reporting requirements.
• Rockland Trust Company, Rockland, MA, a $10,000 CMP for engaging in a pattern or practice of violations of the Flood Disaster Protection Act and section 339.3(a) of the FDIC's Rules and Regulations, in 10 instances by making, increasing, extending, and/or renewing designated loans secured by personal property not covered by flood insurance by failing to require borrowers to get flood insurance covering contents pledged as security when contents are owned by a non-borrower guarantor.
• Citizens State Bank, Hudson, WI, a $6,000 CMP for engaging in a pattern or practice of committing violations of the FDPA and Part 339 of the FDIC Rules and Regulations, 12 C.F.R. Part 339, by failing to obtain flood insurance on a building securing a designated loan at the time of the origination of one loan; failing to obtain adequate flood insurance at the time of the origination of four loans; and failing to follow force placement flood insurance procedures in four instances

Notice of Charges and of Hearing for Assessment of Civil Money Penalty:

• CBW Bank, Weir, KS, related to a determination that the bank violated laws and regulations by failing to maintain an adequate Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) compliance program, which led to multiple incidents where the bank repeatedly violated the Bank Secrecy Act and its implementing regulations. If the bank fails to timely request a hearing on the FDIC's charges, a CMP of $20,448,000 will be imposed.

Assessment of Civil Money Penalty and Removal/Prohibition Order:

• Carlos Acosta, formerly a senior vice president and Chief auditor of Citizens Business Bank, Ontario, CA, for recording confidential meetings, including meetings with FDIC and state examiners, without consent, and attempting to extort bank executives. CMP: $70,000.
• Bryan E. Dalton, a former loan officer at RiverBank, Pocahontas, AR, in an adjudicated decision, a $35,000 CMP and a notice of prohibiiton for a scheme by which he misappropriated $87,951.50 from the accounts of four loan customers.

Removal/Prohibition Orders:

• Stacia S. Wilson, former vice president at St. Clair County State Bank, Osceola, MO, after a finding that she created false and fictitious loans using bank customer information without their knowledge, misappropriated funds to fund payments on those loans, and used the proceeds of the loans for her personal gain.
• Jessica Ann Marshall, former branch manager at Bank of Idaho, Idaho Falls, ID, for stealing cash and embezzling funds from the bank in the amount of $345,774.66, and falsifying documents and directing bank employees to falsify documents to hide her actions.

FinCEN has posted an alert on its Beneficial Ownership Information webpage reporting that the U.S. Court of Appeals for the Fifth Circuit on December 23, 2024, issued a temporary stay of the U.S. District Court for the Eastern District of Texas's preliminary injunction in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al. The temporary stay reinstated the enforceability of the Corporate Transparency Act (CTA) and its requirement that covered entities file reports of their beneficial ownership with FinCEN pending the government's appeal of the District Court's conclusion that both the CTA and the reporting requirement are unconstitutional.

FinCEN's alert stated that reporting companies' deadlines for filing their reports of beneficial ownership have been extended. The earliest such deadline — for reporting companies created or registered before January 1, 2024 — is now January 13, 2025.

A different panel of the Court of Appeals for the Fifth Circuit on December 26, 2024, issued an order vacating the stay of enforcement in the appeals court's December 23, 2024, order, effectively reinstating the injunction against enforcement by the district court on December 3.

FinCEN has posted an updated alert on its Beneficial Ownership Information page: "In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports."

[Editor's note: This story was initially posted in our Top Stories pages on December 26, 2024. It has been updated to reflect a reversal of the December 23, 2024, stay of the district court's stay of enforcement of the reporting requirement.]

The NMLS has posted a reminder that its annual renewal period for Mortgage Loan Originators ends tomorrow (January 31). The NMLS system will not be available on January 1 (New Year's Day). MLOs who miss the renewal deadline can apply for reinstatement from January 2 through midnight EST February 28, 2025.

The CFPB has filed for public inspection with the Office of the Federal Register a final rule scheduled for publication on December 27, 2024, to adjust the asset-size exemption in the official commentary interpreting requirements of Regulation C (Home Mortgage Disclosure Act) threshold for banks, savings associations, and credit unions. The threshold is adjusted, effective January 1, 2025, from $56 million to $58 million.

Institutions with assets of $58 million or less as of December 31, 2024, are exempt from collecting data in 2025.

[Editor's note: The 12/27/2024 issue of the Federal Register was not yet available at 8:30 a.m. EST on 12/27/2024. UPDATE: Published at 89 FR 105429 on 12/27/2024. The amendment has been posted to section 1003.2(g) of Regulation C in the BankersOnline Regulations section.]

The CFPB has released its fifteenth annual report to Congress on college credit cards as required by the Credit Card Accountability, Responsibility, and Disclosure Act (CARD Act), augmented with information on trends related to student deposit and prepaid card accounts offered and advertised to students through partnerships between colleges and financial service providers. The College Banking and Credit Card Agreements report is informed by account agreements and data from 2022 through 2023, covering over 1.4 million such accounts.

In addition to this year’s findings, the CFPB highlights other products and partnership between financial service providers and colleges which may create risks to students.

The Department of Housing and Urban Development has announced its completion of a project to update webpages for all 50 states, territories, and the District of Columbia on HUD.gov. These updated pages feature a streamlined design and trauma-informed elements, making it easier for communities nationwide to access vital resources, including affordable housing services, homeownership support, housing counseling, disaster recovery assistance, and more.

After months of collaborative work, including feedback from those most likely to use the webpages, HUD has reduced the total number of pages from 2,500 to approximately 100 and made significant edits to streamline the design, prioritizing user experience and accessibility.

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 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 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 CFPB has reported it has sued Rocket Homes Real Estate LLC, JMG Holding Partners LLC and 45 real estate brokerage affiliates, and Jason Mitchell to stop them from providing incentives to real estate brokers and agents in exchange for steering homebuyers to Rocket Mortgage, LLC for loans.

The CFPB alleges that Rocket Homes pressured real estate brokers and agents not to share valuable information with their clients concerning products not offered by Rocket Mortgage, such as the availability of down payment assistance programs, which often save homebuyers thousands of dollars. The CFPB is suing Rocket Homes, The Mitchell Group, and Jason Mitchell to stop the kickback scheme, provide consumer redress, and obtain a civil penalty which will be deposited into the CFPB’s victims relief fund.

The CFPB’s investigation found that Rocket Homes gave referrals and other incentives to real estate brokerages under an agreement or understanding that the real estate brokers and agents would refer real estate settlement business to Rocket Mortgage and a separate Rocket affiliate called Amrock, which handles title, closing, and escrow services.

The Bureau's complaint alleges that the defendants committed multiple violations of the Real Estate Settlement Procedures Act (RESPA).

The Small Business Administration has announced it has granted Small Business Lending Company (SBLC) licenses to four lending institutions committed to expanding access to capital to underserved markets. The addition of four new SBLCs — Cooperative Business Services, A10 Capital, Lafayette Square, and Stonehenge Capital — broadens the availability of SBA 7(a) loans in low-income and other underserved communities nationwide from their locations in Ohio, Idaho, Washington, D.C., and Louisiana, respectively.

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 Department of the Treasury has released a report following its 2024 Request for Information (RFI) on the Uses, Opportunities, and Risks of Artificial Intelligence (AI) in Financial Services, which summarizes key themes from respondent feedback and recommends several next steps.

The report highlights increasing AI use throughout the financial sector and underscores the potential for AI – including Generative AI – to broaden opportunities while amplifying certain risks, such as risks related to data privacy, bias, and third-party providers. The report builds on Treasury’s work on AI-related cybersecurity risks in the financial sector, including its March 2024 report.

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 CFPB published [89 FR 104398] a final rule in today's Federal Register amending the official commentary to its Regulation Z to make annual adjustments to the asset-size thresholds exempting certain creditors from the requirement to establish an escrow account for a higher-priced mortgage loan (HPML). The exemption threshold for creditors and their affiliates that regularly extended covered transactions secured by first liens is adjusted to $2.717 billion (up from $2.640 billion) and the exemption threshold for certain insured depository institutions and insured credit unions with assets of $10 billion or less is adjusted to $12.179 billion (up from $11.835 billion).

The amendments will be effective on January 1, 2025. They have been incorporated into the BankersOnline Regulations page for § 1026.35 of Regulation Z.

The FDIC, OCC, and Federal Reserve Board have jointly announced the 2025 updated Community Reinvestment Act (CRA) "small bank" and "intermediate small bank" asset-size thresholds.

As a result of the 2.91 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the period ending in November 2024, the CRA asset-size thresholds for small banks and intermediate small banks are:

• A small bank is an institution that, as of December 31 of either of the prior two calendar years, had assets of less than $1.609 billion.
• An intermediate small bank is a small institution with assets of at least $402 million as of December 31 of both of the prior two calendar years and less than $1.609 billion as of December 31 of either of the prior two calendar years.

These thresholds are in effect from January 1, 2025, through December 31, 2025. A list of the current and historical asset-size thresholds is available here.

• Federal Register Notice

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.

The Federal Reserve Board has announced a written agreement between Lineage Financial Network, Inc., Franklin, Tennessee, and the Federal Reserve Bank of Atlanta.

The Financial Stability Board (FSB) has published a consultation report on leverage in non-bank financial intermediation (NBFI). The proposed policy recommendations are addressed to FSB member authorities and standard-setting bodies. They aim to enhance the ability of authorities and market participants to monitor vulnerabilities from NBFI leverage, contain NBFI leverage where it may create risks to financial stability, and mitigate the impact of these risks.

The nine policy recommendations cover:

• Risk identification and monitoring, supported by a suite of risk metrics, and work to assess and address data challenges
• Measures to address financial stability risks related to NBFI leverage in core financial markets, including measures that affect specific activities, types of entities, and concentration-related risks
• Counterparty credit risk management and private disclosure
• Addressing inconsistencies by adopting the principle of “same risk, same regulatory treatment”
• Enhancing cross-border cooperation and collaboration

Entities in scope are non-bank financial firms that use leverage, either financial or synthetic, including hedge funds, other leveraged investment funds, pension funds, and insurance companies. Where relevant, banks and broker-dealers are also in scope in their role as leverage providers.

• Financial Stability Board press release

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 Department of the Treasury yesterday reported that OFAC had sanctioned two entities and two individuals for their role in developing and procuring components for sensitive navigational systems for the Iranian military. Concurrent with this action, the U.S. Department of State designated one individual and two entities involved in Iranian UAV and missile development.

Treasury also reported that OFAC had designated three individuals and four entities in Bosnia and Herzegovina (BiH) that form part of U.S.-designated Republika Srpska (RS) President Milorad Dodik’s (Dodik) financial network and enable the Dodik family’s continued attempts to evade sanctions. OFAC's action also targets a BiH politician who serves as a key enabler of Dodik’s corruption and destabilizing political agenda. OFAC also designated Viktor Pavlovich Perevalov for operating or having operated in the construction sector of the Russian Federation economy.

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

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 Servicemember Affairs of the CFPB has issued a notice that it plans to retire its Misadventures in Money Management (MiMM.gov) interactive financial education course for young servicemembers on January 3, 2025.

The Consumer Financial Protection Bureau has announced a final rule mandated by Congress (section 307 of the Economic Regulatory Relief and Consumer Protection Act (EGRRCPA)) that applies existing residential mortgage protections to Property Assessed Clean Energy (PACE) loans.

PACE loans are used by homeowners for clean energy upgrades and disaster readiness that are paid back through their property tax bills. Because of concerns about subprime-style lending that puts homeowners at risk of losing their home, Congress required the CFPB to enhance protections. The rule will ensure that PACE borrowers have the right to receive standard mortgage disclosures that allow them to compare the cost of the PACE loan with other forms of financing, and the lender will be responsible for ensuring that the borrower is not set up to fail with an unaffordable loan.

While PACE financing can provide quick cash for home improvements, CFPB research shows that:

• Most PACE borrowers are eligible for other forms of financing, often at much cheaper rates than PACE loans.
• PACE loans caused borrowers’ property taxes to increase by about $2,700 per year or an 88 percent increase.
• PACE borrowers were more likely to fall behind on their first mortgage than people who chose not to finance home improvements with PACE.
• PACE loans tend to be more expensive – around five percentage points higher -- than first mortgages, even though PACE loans get paid at a foreclosure sale before first mortgages.

The rule amends Regulation Z to make PACE loans subject to the regulation and its TRID disclosure and ability-to-repay requirements. The amendments will become effective March 1, 2026.

• Federal Register document
• Executive Summary
• CFPB Report: "Property Assessed Clean Energy (PACE) Financing and Consumer Financial Outcomes"
• PUBLICATION UPDATE: Published at 90 FR 2434 in the January 10, 2025, Federal Register

The Federal Reserve Board and the Federal Open Market Committee have released the FOMC statement following its meeting of December 17–18.

The Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/4 to 4-1/2 percent. The implementation note released with the FOMC Statement indicates that the Board of Governors voted unanimously to lower the interest rate paid on reserve balances to 4.4 percent, and to approve a 1/4 percentage point decrease in the primary credit rate to 4.5 percent, both effective December 19, 2024.

• Economic projections by FOMC participants in conjunction with the December meeting

The Treasury Department yesterday reported that OFAC has sanctioned two individuals and one entity involved in a network that launders millions of dollars of illicit funds generated by the Democratic People’s Republic of Korea (DPRK) information technology (IT) workers and cybercrime to support the DPRK Government. Based in the United Arab Emirates (UAE), Lu Huaying and Zhang Jian worked through a UAE-based front company to facilitate money laundering and cryptocurrency conversion services that funneled the illicit proceeds back to Pyongyang. This network is led by OFAC-sanctioned Sim Hyon Sop (Sim), a PRC-based banking representative for the DPRK who orchestrates money laundering schemes to fund the regime.

Treasury also reported OFAC action against 12 individuals and eight entities, located across seven countries, who are linked to the global illicit drug trade. These sanctions are the result of strong collaboration with the Drug Enforcement Administration and a range of international law enforcement partners, including in Colombia, Lithuania, and New Zealand. This action was also enabled with support from Treasury’s Financial Crimes Enforcement Network and reporting from financial institutions under the Bank Secrecy Act, and was coordinated closely with various foreign Financial Intelligence Units.

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

The NCUA has announced that its Board has approved a final rule that will require federally insured credit union boards of directors to establish succession planning processes for key positions.

The rule requires the board of a federally insured credit union to establish a written succession plan that addresses the specified positions that are vital to the operation and management of the credit union, and regularly review these plans to ensure they are current. The rule also requires newly appointed members of the board to be familiar with those plans within six months after their appointment. For federally insured, state-chartered credit unions in states that have established succession planning requirements, the NCUA will defer to the state’s requirements if no conflict exists between the final rule and the state’s rules.

The rule will become effective January 1, 2026, to help ensure that affected credit unions have the time needed to develop their plans.

The CFPB yesterday announced actions taken to protect consumers from illegal credit card practices and help people save money on interest and fees.

In a circular on "Design, marketing, and administration of credit card rewards programs" to other law enforcement agencies, the CFPB warned that some credit card companies operating rewards programs may be breaking the law, including by illegally devaluing rewards points and airline miles.

[Editor's note: The CFPB has placed Circular 2024-07 on file for public inspection with the Office of Federal Register, and scheduled it for publication on 12/30/2024.]

The CFPB also published new research finding that retail credit cards—which typically offer store-specific rewards and loyalty programs—charge significantly higher interest rates than traditional cards.

In addition, the CFPB launched a new tool, Explore Credit Cards, to help consumers find the best credit card rates across both rewards cards and traditional cards. This first-of-its-kind tool enables consumers to compare more than 500 credit cards using unbiased, comprehensive data.