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Yesterday, the CFPB announced it has sued student lender Climb Credit, and its largest shareholder 1/0 (“one zero”), for inducing students to take out loans by misrepresenting the quality of the training programs at their partner schools and making false claims about graduates’ hiring rates and salaries. The lawsuit alleges Climb Credit and 1/0 claimed to have vetted its partners’ schools for “outcomes and value” but in fact offered loans for programs that had failed the defendants’ own return-on-investment analysis or which they had not analyzed at all. The lawsuit also alleges that the defendants failed to properly disclose annual percentage rates in online marketing materials and illegally hid loan origination fees in disclosures. The CFPB is asking the court to order Climb Credit and 1/0 to stop their illegal practices, compensate the borrowers they harmed, and pay a civil penalty to the CFPB’s victim relief fund.

The FDIC has announced it is extending the compliance date for amendments to part 328 subpart A of its regulations to modernize the rules governing use of the official FDIC sign and insured depository institutions’ advertising statements from January 1, 2025, to May 1, 2025. This extension will provide additional opportunity for IDIs to establish processes and systems, and make technological updates, necessary to implement the new regulatory requirements under subpart A. The compliance date for amendments to part 328, subpart B, relating to misrepresentations of deposit insurance, remains January 1, 2025.

Yesterday, OFAC designated three individuals and four associated companies involved in a Lebanon-based sanctions evasion network that generates millions of dollars in revenue for Hizballah. Hizballah’s finance team is responsible for the establishment and operation of Hizballah commercial projects throughout Lebanon, some of which are financed and facilitated by Iran. OFAC also designated three individuals involved in the illegal production and trafficking of Captagon that has benefited Bashar al-Assad’s regime and its allies, including Hizballah. The illegal trade in Captagon, a dangerous, highly addictive amphetamine, has become a billion-dollar illicit enterprise operated by senior members of the Syrian regime.

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

The SBA has announced that it has exhausted funds for its disaster loan program after warnings that funding would soon run out following increased demand from Hurricane Helene. Until Congress appropriates additional funds, the SBA is pausing new loan offers for its direct, low-interest, long-term loans to disaster survivors. However, SBA is encouraging individuals and small businesses to continue to apply for loans given assurances from congressional leaders that additional funding will be provided upon Congress’s return in November.

The Financial Crimes Enforcement Network (FinCEN) has announced the renewal of its Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in non-financed purchases of residential real estate.

The terms of the GTOs are effective beginning October 16, 2024, and ending on April 14, 2025. The GTOs continue to provide valuable data on the purchase of residential real estate by persons possibly involved in various illicit enterprises. Renewing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity, as well as continuing to inform FinCEN’s regulatory efforts in this sector.

FinCEN renewed the GTOs that cover certain counties and major U.S. metropolitan areas in California, Colorado, Connecticut, Florida, Hawaii, Illinois, Maryland, Massachusetts, Nevada, New York, Texas, Washington, Virginia, and the District of Columbia.

The purchase price threshold remains $300,000 for each covered metropolitan area, with the exception of the City and County of Baltimore, where the purchase price threshold is $50,000.

In August 2024, FinCEN issued a final rule requiring certain industry professionals to report information to FinCEN about non-financed transfers of residential real estate to a legal entity or trust. This nationwide reporting framework will replace the GTOs and goes into effect on December 1, 2025.

Yesterday, the Treasury Department announced that OFAC, in a joint action with Canada, designated the Samidoun Palestinian Prisoner Solidarity Network, or “Samidoun,” a sham charity that serves as an international fundraiser for the Popular Front for the Liberation of Palestine (PFLP) terrorist organization. Also designated was Khaled Barakat, a member of the PFLP’s leadership. Together, Samidoun and Barakat play critical roles in external fundraising for the PFLP.

For identification information on Samidoun and Barakat, see BankersOnline’s October 15, 2024, OFAC Update.

The CFPB has posted its beta release of the HMDA Platform for data that will be collected in 2025. The 2025 Beta Platform provides financial institutions and vendors an opportunity to test whether their sample loan/application register (LAR) data comply with the reporting requirements outlined in the Filing Instructions Guide for HMDA data collected in 2025.

The Beta Platform can be accessed at https://ffiec.beta.cfpb.gov/filing/. Log in and select 2025 from the dropdown to start testing. Financial institutions can use their log-in credentials from the previous filing periods or, if they have not previously filed data, establish log-in credentials and upload sample 2025 HMDA files to perform validation on their data. Use of this platform (and compliance with HMDA) requires financial institutions to have a Legal Entity Identifier (LEI) which uniquely identifies the institution, and that LEI must be recognized by the HMDA Platform. If your institution has not registered for an LEI and intends to file HMDA data, visit the Global LEI Foundation for information on obtaining an LEI.

The Securities and Exchange Commission has announced that RTX Corporation, a Virginia-based aerospace and defense company formerly known as Raytheon Technologies Corp., agreed to pay more than $124 million to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA) in connection with payments made to assist in obtaining contracts with the Qatari military.

According to the SEC’s order, Raytheon used sham subcontracts with a supplier to pay bribes of nearly $2 million to Qatari military and other officials from 2011 to 2017 to obtain Qatari military defense contracts. Additionally, the order finds that from the early 2000s into 2020, Raytheon paid more than $30 million to a Qatari agent who was a relative of the Qatari Emir and who, despite being retained as Raytheon’s representative in Qatar, had no prior background in military defense contracting. Raytheon obtained additional defense contracts through the agent under circumstances with significant corruption risks. The order finds that Raytheon continued working with the agent even after numerous Raytheon employees raised concerns about risks of corruption and despite a lack of adequate documentation of the agent’s services.

The SEC’s order finds that Raytheon violated the antibribery, internal accounting controls, and books and records provisions of the FCPA. Raytheon consented to the entry of the SEC’s order requiring it to cease and desist from committing or causing any future violations and to pay disgorgement and prejudgment interest of approximately $49 million and a civil penalty of $75 million, $22.5 million of which will be offset by a criminal fine in a parallel criminal action. As part of the resolution, Raytheon must retain an independent compliance monitor for three years.

The FDIC has announced its Board of Directors has approved the appointment of Hansel J. Cordeiro as Director of the agency’s new Office of Professional Conduct (OPC).

In June, the Board announced the creation of the OPC to serve as a single point of entry for employee complaints of harassment and other interpersonal misconduct. In this role, Mr. Cordeiro will lead the OPC’s work to receive, investigate and report on complaints of interpersonal misconduct within the FDIC workplace. OPC will also determine and discipline anyone violating the FDIC’s anti-harassment or anti-retaliation policies. Mr. Cordeiro will report on the work of the OPC directly to the FDIC Board.

The FDIC has issued FIL-73-2024 to help financial institutions and facilitate recovery in areas of Arizona affected by the San Carlos Apache Tribe Watch Fire, and FIL-74-2024 to assist banks and facilitate recovery in areas of Florida affected by Hurricane Milton.

The Federal Deposit Insurance Corporation, the Federal Reserve Board, the Florida Office of Financial Regulation, the National Credit Union Administration, and the Office of the Comptroller of the Currency have issued a statement on supervisory practices regarding financial institutions affected by Hurricane Milton. The agencies recognize the serious impact of Hurricane Milton on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision. The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities.

The agencies' statement addresses particularly the areas of lending, temporary facilities, publishing requirements, and regulatory reporting requirements.

The CFPB has reported that the Bureau and the Justice Department (DOJ) yesterday took action to end Fairway Independent Mortgage Corporation’s illegal mortgage lending discrimination against majority-Black neighborhoods in the greater Birmingham, Alabama, area. The CFPB and DOJ allege that Fairway illegally redlined Black neighborhoods, including through its marketing and sales actions. Fairway’s actions discouraged people from applying for mortgage loans in the Birmingham metropolitan area’s Black neighborhoods. If entered by the court, the settlement announced yesterday would require Fairway to pay a $1.9 million civil penalty to the CFPB’s victims relief fund. Fairway would also be required to provide $7 million for a loan subsidy program to offer affordable home purchase, refinance, and home improvement loans in majority-Black neighborhoods, and pay at least $1 million to serve neighborhoods it redlined.

• Complaint

The Federal Trade Commission is today announcing a final "click-to-cancel" rule that will require sellers to make it as easy for consumers to cancel their enrollment as it was to sign up. Most of the final rule’s provisions will go into effect 180 days after it is published in the Federal Register.

The Commission’s updated rule will apply to almost all negative option programs in any media. The rule also will prohibit sellers from misrepresenting any material facts while using negative option marketing; require sellers to provide important information before obtaining consumers’ billing information and charging them; and require sellers to get consumers’ informed consent to the negative option features before charging them.

On Friday, the Treasury Department reported that in response to Iran's October 1 attack on Israel, the U.S. is expanding sanctions on Iran’s petroleum and petrochemical sectors, to intensify financial pressure on Iran, limiting the regime’s ability to earn critical energy revenues to undermine stability in the region and attack U.S. partners and allies. The Secretary of the Treasury, in consultation with the Secretary of State, has identified the petroleum and petrochemical sectors of the Iranian economy under authority of Executive Order (E.O.) 13902, which allows Treasury to target a broader range of activities relating to Iran’s trade in petroleum and petrochemical products. E.O. 13902 provides authority to identify and impose sanctions on key sectors of Iran’s economy to deny the Iranian government financial resources that may be used to fund and support its nuclear program, missile development, terrorism and terrorist proxy networks, and malign regional influence.

OFAC also designated 10 entities in multiple jurisdictions and identified 17 vessels as blocked property, under E.O. 13846, for their involvement in shipments of Iranian petroleum and petrochemical products in support of the U.S.-designated National Iranian Oil Company (NIOC) and Triliance Petrochemical Co. Limited (Triliance). The U.S. Department of State also designated six entities and identified six vessels as blocked property pursuant to E.O. 13846 for knowingly engaging in a significant transaction for the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran.

For the names and identifying information of the designated entities and vessels, and a link to the Treasury Secretary's determination document, see Friday's BankersOnline OFAC Summary.

NCUA Chairman Todd Harper has commented on the U.S. Department of Justice’s recent settlement with Citadel Federal Credit Union to resolve lending discrimination allegations. Citadel is a $6 billion financial institution in Southeastern Pennsylvania.

“The Justice Department’s settlement with Citadel Federal Credit Union is significant. It signals that federal credit unions must follow fair lending laws. It signals to all communities that discrimination through redlining will not be tolerated. And, it brings communities who have been discriminated against a step closer to an equitable opportunity to access safe, fair, and affordable financial services and to closing the wealth gap.

“The NCUA maintains a strong relationship with the Justice Department’s Civil Rights Division and the department’s Combating Redlining Initiative, which investigates potential fair lending violations and helps to end discriminatory lending practices. That productive relationship will continue through our fair lending examination and referral process."

The October 10 press release from the Justice Department said that Citadel has agreed to pay over $6.5 million to resolve allegations that it engaged in a pattern or practice of lending discrimination by redlining predominantly Black and Hispanic neighborhoods in and around Philadelphia. This agreement is the Justice Department’s first redlining settlement with a credit union, making it a historic achievement for the department's Combating Redlining Initiative.

The FDIC has posted an agenda for its next Board of Directors meeting, to be held at 10 a.m. on October 17, 2024.

The meeting will be open to the public for observation via webcast.

The current agenda lists the following items for consideration at the meeting:

• Briefing: Semi-annual Update on the Deposit Insurance Fund Restoration Plan
• Designated Reserve Ratio for 2025
• Delay of Compliance Date for [Certain] [Subpart A] Amendments to FDIC Official Sign and Advertising Rule
• Minutes of a previous Board meeting

Yesterday, the CFPB announced its has banned private dispute resolution platform Ejudicate from arbitrating disputes about consumer financial products after the company misled student borrowers about its neutrality and initiated sham arbitration proceedings. Ejudicate initiated those proceedings for the company Prehired, which was permanently shut down in 2023 by the CFPB and several state attorneys general for its illegal lending practices. Ejudicate acted as a service provider to Prehired by providing these sham arbitration services. The CFPB found that Ejudicate treated borrowers unfairly and was not truthful about its role while hiding that its financial interests were aligned with Prehired.

FinCEN has published [89 FR 82499] in today's Federal Register an order issued under authority from the Combating Russian Money Laundering Act to prohibit certain transmittals of funds by any covered financial institution involving PM2BTC, a financial institution operating outside of the United States determined to be of a primary money laundering concern in connection with Russian illicit finance.

The order became effective on publication.

The OCC, Federal Reserve Board, Department of Justice and FinCEN have announced coordinated actions against Toronto-Dominion Bank, TD Bank US Holding Company, TD Bank, N.A., and TD Bank USA, N.A. for deficiencies in the bank’s Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance program. Yesterday’s actions also impose a restriction on the growth of the bank and a measure designed to ensure that the bank invests sufficient resources to remediate its BSA/AML deficiencies in a timely manner.

The regulators and the Justice Department found that the bank failed to develop and maintain a BSA/AML program reasonably designed to assure and monitor compliance with the BSA and its implementing regulations. Deficiencies in the bank’s BSA/AML program included those related to internal controls and risk management practices; risk assessments; customer due diligence; customer risk ratings; suspicious activity identification, evaluation, and reporting; governance; staffing; independent testing; and training, among others.

The OCC also found that the bank had significant, systemic breakdowns in its transaction monitoring program. The bank processed hundreds of millions of dollars of transactions with clear indicia of highly suspicious activity, creating a potential for significant money laundering, terrorist financing, or other illicit financial transactions. The bank repeatedly failed to take appropriate and timely corrective action to address the highly suspicious activity and failed to properly emphasize BSA/AML compliance.

The bank had a systemic breakdown in its processes to identify and report suspicious activity, and a pattern or practice of noncompliance with the suspicious activity report filing requirement, resulting in numerous violations. The bank also violated currency transaction reporting requirements on numerous occasions.

• The OCC imposed a $450 million civil money penalty and imposed a limit on asset growth on TD Bank, N.A. and TD Bank USA, N.A.
• FinCEN imposed a $1.3 billion penalty and a four-year monitoring requirement.
• The Federal Reserve Board reported it has fined Toronto-Dominion Bank $123.5 million and imposed enhanced measures to comply with anti-money laundering laws and to correct its risk management deficiencies.
• The Department of Justice announced that TD Bank N.A., and its parent company TD Bank US Holding Company pleaded guilty and agreed to pay over $1.8 billion in penalties.

For additional information see "TD Bank to pay $3 billion and restrict growth for BSA/AML deficiencies," in the BankersOnline Penalties pages.

The Federal Housing Finance Agency yesterday announced new national datasets on price trends for manufactured homes.

Following yesterday’s release, pricing data for manufactured homes will be updated quarterly and included along with the flagship FHFA HPI — released monthly and quarterly — featuring publicly available data series on trends in single-family home prices. The new data release for manufactured homes includes purchase-only as well as all-transactions house price indexes (the latter combining purchase and refinance data). Both measure quarterly changes in prices since 2000, on a national scale, based on repeat-sale transactions for individual homes. The data series on median manufactured home prices list the national median prices in dollars for every quarter since the beginning of 1985. The price indexes and data on median prices are still in development and may undergo changes in the future.

According to the FHFA, house price indexes for manufactured homes increased by 7.9 percent between the second quarters of 2023 and 2024. They increased by 3.2 percent in the second quarter of 2024 compared with the first quarter. In the second quarter of 2024, the median price of manufactured homes for sale was $231,000. This represents an increase of $1,000 from the second quarter of 2023.

• Introductory video on YouTube
• Data
• Technical Notes

The FDIC has issued FIL-72-2024 to extend the comment period on its August 24, 2024, proposed amendments that would strengthen the prudential protections of the safety and soundness rules on brokered deposit in 12 CFR 337.6 and 12 CFR 303.243.

The comment period, which was scheduled to end on October 22, has been extended to end on November 21, 2024.

The Federal Bureau of Investigation has issued a Public Service Announcement concerning a counterfeit check scheme in which fraudsters target law firms engaged in collections work by deceptively contracting their services to ultimately defraud them. The FBI said the scheme may focus on any type of representation where a lawyer is hired to assist in the transfer or collection of money, e.g. real estate, collection matters, collaborative law agreements in family matters, etc. This scenario continues to be replayed as part of a sophisticated scam that targets collections lawyers and the scope is constantly evolving.

In general, said the FBI, the scheme involves a phony debtor sending a fraudulent check to a collections law firm to satisfy a non-existing debt, and the law firm wire transferring all or part of the check to its client -- the party behind the scheme. The law firm's bank charges the deposited check back to the law firm when it learns it was fraudulent, and the law firm is left with the loss.

Our monthly review of the Federal Reserve Board's CRA Evaluation Archives reveals that in September the Reserve Banks released 18 evaluations of state-chartered member banks. Fifteen of those banks received Satisfactory ratings.

Outstanding ratings were attached to the evaluations of Stifel Bank, Saint Louis, Missouri; Stifel Bank and Trust, Saint Louis, Missouri; and The Farmers and Merchants Bank of Craig County, New Castle, Virginia.

The OCC has announced it is soliciting academic research papers on the use of artificial intelligence in banking and finance for submission by December 15, 2024.

The OCC will invite authors of selected papers to present to OCC staff and invited academic and government researchers at OCC Headquarters in Washington, D.C., on June 6, 2025. Authors of selected papers will be notified by April 1, 2025, and will have the option of presenting their papers virtually.

Yesterday, the OCC reported it had issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices in areas of Florida affected by Hurricane Milton.

In issuing the proclamation, the OCC expects that only those bank offices directly affected by potentially unsafe conditions will close. Those offices should make every effort to reopen as quickly as possible to address the banking needs of their customers.

• OCC Bulletin 2012-28, Supervisory Guidance on Natural Disasters and Other Emergency Conditions

Yesterday, the CFPB announced it had published a new edition of Supervisory Highlights describing the agency’s supervisory findings between November 2023 and August 2024 related to illegal practices in auto finance, including lenders repossessing consumers’ cars after the borrower made timely payments or received loan extensions.

Other illegal conduct detailed in the report includes lenders providing inaccurate disclosures, misapplying loan payments, and putting incorrect information on consumers’ credit reports. The report also highlights significant problems with add-on products that are packaged at the front-end of the auto loan, increasing the loan costs, and then not properly refunded at the back end upon early loan termination, when the consumer can no longer use the products.

Yesterday, the Treasury Department reported that OFAC has designated three individuals and one sham charity that are prominent international financial supporters of Hamas, as well as one Hamas-controlled financial institution in Gaza. OFAC also designated a longstanding Hamas supporter and nine of his businesses. These actors play critical roles in external fundraising for Hamas, often under the guise of charitable work, that finance the group’s terrorist activities. Yesterday’s action, which was taken under the counterterrorism authority in Executive Order 13224, highlights the abuse of the non-profit organization (NPO) sector by terrorist financiers through the use of sham charities to generate revenue.

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

The CFPB, Federal Reserve Board, and OCC have announced that the 2025 threshold for higher-priced mortgage loans (HPMLs) that are subject to special appraisal requirements will increase from $32,400 to $33,500, effective January 1, 2025. The increase is based on the 3.4 percent annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as of June 1, 2024.

The change will add paragraph xii. to Official Interpretation comment 35(c)(2)(ii)-3.

The CFPB and the Federal Reserve Board have also announced the dollar thresholds used to determine whether certain credit and lease transactions in 2025 will be subject to certain protections under Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing).

Based on the CPI-W increase noted above, Regulation Z and Regulation M generally will apply to consumer credit transactions and consumer leases of $71,900 or less in 2025 (private education loans and loans secured by real property or by personal property used or expected to be used as the principal dwelling of the consumer, such as mortgages, are subject to Regulation Z regardless of the amount of the loan). The changes will add paragraph 3(b)-3.xvi. to the Official Interpretations of Regulation Z and paragraph 2(e)-11.xvi. to the Official Interpretations of Regulation M.

Each of the changes above has been made to the BankersOnline Regulations pages.

The Federal Reserve Board has released two enforcement actions.

The OCC has issued Bulletin 2024-29 to provide OCC-supervised institutions with commercial loans with guidance for managing credit risk associated with refinance risk, and has rescinded Bulletin 1993-50, "Loan Refinancing."

According to the Bulletin, refinance risk is the risk that borrowers will not be able to replace existing debt at a future date under reasonable terms and prevailing market conditions. Refinance risk increases in rising interest rate environments and can be amplified by large volumes of loans set to mature in underperforming markets. If a borrower cannot refinance under current market conditions, a bank could be burdened with an underperforming or nonperforming loan. Refinance risk primarily affects loans with principal balances remaining at maturity and borrowers who rely on recurring debt to finance their capital structure or business operations. Examples of loan types most affected by refinance risk include interest-only loans, commercial real estate loans, leveraged loans, and revolving working capital lines. Fully amortizing loans to sound borrowers generally have lower refinance risk than loans that are not fully amortizing.

Banks should have processes to identify, measure, monitor, and control refinance risk at both the transaction and portfolio levels. The tools to monitor refinance risk should be tailored to the bank’s size, complexity, risk profile, and types of lending. Sound transaction-level credit risk management practices include assessing refinance risk at underwriting, during ongoing monitoring, and near maturity. At the portfolio level, banks should have systems and processes to monitor the volume and cadence of upcoming loan maturities. Independent credit risk review should consider the level of refinance risk when determining an appropriate review scope and assessing credit quality.

The FDIC has issued its list of 55 state nonmember banks recently evaluated for CRA compliance whose evaluations were assigned in July 2024. Three banks received "Needs to Improve" ratings. One was rated "Substantial Noncompliance." Forty-eight banks received "Satisfactory" ratings.

We congratulate The Dime Bank (Honesdale, PA), Beardstown Savings S.B. (Beardstown, IL), and Toyota Financial Savings Bank (Henderson, NV), for receiving "Outstanding" ratings.

The CFPB has released a Nonbank Registration: Orders Rule Coverage Chart summarizing how an entity may determine if it is required to register an order under the Nonbank Registration Orders Rule.

The chart can be found in the Resources for filers section of the Bureau's nonbank registry portal and public database webpage.

FinCEN has posted additions and updates to its FAQ page on the Beneficial Ownership Information Reporting requirements. Updated and added questions are dated October 3, 2024.

The CFPB yesterday issued an Advisory Opinion on "Debt Collection Practices (Regulation F); Deceptive and Unfair Collection of Medical Debt," to prevent families from being targeted by illegal medical debt collection tactics. The advisory opinion clarifies that debt collectors, which may include third-party “revenue cycle management” companies, are violating federal law when they collect on inaccurate or legally invalid medical debts. These illegal practices include double-dipping to get paid for services already covered by insurance, hounding consumers to pay fake or exaggerated charges, misrepresenting consumers’ rights to contest bills, and collecting on debts without documentation that the amount is actually owed. The CFPB’s action aims to protect consumers from careless or predatory practices that can lead to inflated healthcare costs.

• CFPB press release
• Publication update: Published in the Federal Register at 89 FR 80715 on 10/4/2024, with applicability from 12/3/2024.

The FDIC, Federal Reserve Board, NCUA, OCC and state financial regulators have issued an interagency statement on supervisory practices regarding financial institutions affected by Hurricane Helene. These agencies recognize the serious impact of Hurricane Helene on the customers and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision. The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities.

The statement addressed agency views on lending, temporary facilities, publishing requirements, regulatory reporting requirements, and potential CRA consideration for certain financial institutions' efforts.

For more information, refer to the Interagency Supervisory Examiner Guidance for Institutions Affected by a Major Disaster, which is available as follows:

• State Financial Regulators
• FDIC
• FRB
• OCC
• NCUA

The OCC yesterday released CRA evaluations for 21 national banks and federal savings associations that were made public in September. Sixteen of the evaluations are rated satisfactory. We congratulate the remaining five institutions, whose evaluations received outstanding ratings:

• Capital Bank, National Association, Rockville, MD
• First FS&LA of Valdosta, Valdosta, GA
• First National Bank of Gillette, Gillette, WY
• First National Bank of Pulaski, Pulaski, TN
• Presidential Bank, FSB, Bethesda, MD

The FDIC has issued FIL-71-2024 with materials pertaining to the Call Report for the September 30, 2024, report date and guidance on certain reporting issues. The FIL and accompanying Supplemental Instructions should be shared with the individual(s) responsible for preparing the Call Report at your institution. Completed Call Reports must be received by Wednesday, October 30, 2024.

The FDIC has released the 2024 Small Business Lending Survey Report (SBLS). Conducted in 2022, the SBLS is a nationally representative sample of U.S. banks that offers important insights into their small business lending practices and how banks meet the credit needs of the nation’s small businesses.

The SBLS gathered responses from over a quarter of the nation’s banks on the way they approve and underwrite small business loans, their geographic markets and competition, their use of financial technology, and their lending to start-ups. Overall, the FDIC’s survey found that while most banks are adopting new technologies, these innovations have not replaced the relationship-oriented and staff-intensive nature of small business lending that continues to be focused around local branch office locations.

The FDIC yesterday issued FIL-70-2024 with guidance to help financial institutions and facilitate recovery in areas affected by Hurricane Helene in Florida, Georgia, North Carolina, and South Carolina, on September 23, 2024, and continuing.

The NMLS has posted a reminder that the NMLS annual renewal period begins November 1 (and ends December 31). All MLO institutions must renew their registrations in NMLS in that two-month period, and individual mortgage loan originators actively registered before July 1, 2024, must be renewed for 2025. The NMLS provides details on its Renew-Reactive page.

The Treasury Department yesterday reported that OFAC designated one individual and three companies that have facilitated weapons procurement and smuggling operations for Ansarallah, commonly known as the Houthis. This action targets key procurement operatives and suppliers located in Iran and the People’s Republic of China (PRC) that have enabled the Houthis to acquire dual-use materials and components needed to manufacture, maintain, and deploy an arsenal of advanced missiles and unmanned aerial vehicles (UAVs) against U.S. and allied interests.

Additionally, OFAC designated one entity and two vessels linked with illicit Houthi and Iranian commercial shipments, including one that has transported shipments for Houthi financial official Sa’id al-Jamal and an affiliate of Iran’s Armed Forces General Staff.

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

The OCC has released its bank supervision operating plan for fiscal year (FY) 2025. The plan outlines the OCC’s supervision priorities and objectives for the year. It also facilitates the implementation of supervisory strategies for individual national banks, federal savings associations, federal branches and agencies of foreign banking organizations, and third-party service providers subject to OCC examination. OCC staff uses this plan to guide its supervisory priorities, planning, and resource allocations.

Heightened focus areas include:

• Financial
  • Credit
  • Allowance for credit losses
  • Asset and liability management
  • Capital
  • Climate-related financial risks for banks with over $100 billion in total consolidated assets
• Operational
  • Cybersecurity
  • Enterprise change management
  • Operations
  • Third-party risks
  • Payments
• Compliance
  • Bank Secrecy Act/anti-money laundering/countering the financing of terrorism and Office of Foreign Assets Control
  • Consumer compliance
  • Community Reinvestment Act
  • Fair lending

The National Credit Union Administration has announced it has issued a Consent Prohibition Order against Monica Jackson, formerly the operation and marketing director at Koin Credit Union, Brentwood, Tennessee, after a finding that she took cash out of the credit union’s vault, made unauthorized transfers to herself out of the account of a deceased member, and fraudulently opened and used lines of credit in the names of nominees for her own personal gain. She further used the master administration access code to lock one of the accounts she was using to conceal her fraudulent activity from other employees and KCU. Her fraudulent activities caused the credit union significant financial loss.

The NCUA also issued a Notice of Prohibition to Autumn S. Smith formerly employed by SecurityPlus Federal Credit Union, Baltimore, Maryland, after a conviction for the offense of theft ($1,500 to under $25,000) resulting from her misconduct at the credit union.

The Treasury Department yesterday announced that OFAC was designating Hilltop Youth, a violent extremist group that has repeatedly attacked Palestinians and destroyed Palestinian homes and property in the West Bank.

The Treasury Department alsoreported that OFAC was designating seven individuals and two entities associated with the Russia-based cybercriminal group Evil Corp, in a tri-lateral action with the United Kingdom’s Foreign, Commonwealth & Development Office (FCDO) and Australia’s Department of Foreign Affairs and Trade (DFAT). Additionally, the U.S. Department of Justice has unsealed an indictment charging one Evil Corp member in connection with his use of BitPaymer ransomware targeting victims in the United States.

For identification information on the sanctioned individuals and entities, see BankersOnline’s October 1, 2024, OFAC Update.

The U.S. Small Business Administration has published [89 FR 79734] in today's Federal Register a Direct Final Rule amending regulations governing SBA's 504 Loan Program for debt refinancing with expansion and debt refinancing without expansion. The changes will streamline the loan application process, expand eligibility criteria for small businesses borrowers, and make minor corrections. The amendments include: removing the 50% cap on debt refinance without expansion to conform with current legislation; raising the loan to value requirement on debt refinancing without expansion projects that include other business expenses to 90% and eliminating the cap on Eligible Business Expenses; aligning the “substantially all” standard for 504 debt refinancing with expansion so it is consistent with the debt refinancing without expansion standard of 75%; eliminating the 10% substantial benefit test on 504 debt refinancing with expansion and 504 debt refinancing without expansion on refinancing other government debt; and allowing certain “other secured debt” to be included as an Eligible Business Expense.

The rule will become effective November 15, 2024. SBA must receive comments on this direct final rule on or before October 31, 2024. If adverse comment is received, SBA will publish a timely withdrawal of the rule in the Federal Register.

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The Securities and Exchange Commission has announced charges against registered broker-dealer TD Securities (USA) LLC for manipulating the U.S. Treasury cash securities market through an illicit trading strategy known as spoofing. The bank was also charged for failing to supervise the then-head of its U.S. Treasuries trading desk, who allegedly made hundreds of illegal trades over a 13-month period.

According to the SEC's order, between April 2018 and May 2019, the former TD Securities trader spoofed the U.S. Treasury cash securities market by entering orders on one side of the market that he had no intention of executing (herein, non-bona fide orders), so he could obtain more favorable execution prices on bona fide orders he was entering simultaneously on the other side of the market. After the bona fide orders were filled, resulting in profits to TD Securities, the trader allegedly then canceled the non-bona fide orders. The SEC’s order also finds that TD Securities lacked adequate controls and that it failed to take reasonable steps to scrutinize the trader after receiving warnings of his potentially irregular trading activity.

TD Securities consented to the entry of the SEC’s order finding that it violated an antifraud provision of the federal securities laws and failed to reasonably supervise the trader. TD Securities was further ordered to cease and desist from future violations of the relevant antifraud provision, was censured, and was ordered to pay disgorgement of $400,000, prejudgment interest, and a civil penalty of $6.5 million. In a related matter, TD Securities has entered into a deferred prosecution agreement with the U.S. Department of Justice and has agreed to pay a total monetary sanction of more than $15 million as part of that agreement, of which $400,000 will be credited by disgorgement to the SEC. TD Securities has separately agreed to pay a $6 million fine to the Financial Industry Regulatory Authority to resolve related charges.

The FDIC his released a list of enforcement orders issued in August 2024.

• Comenity Bank, Wilmington, Delaware, and Comenity Capital Bank, Draper, Utah, each received an order to pay and agreed to pay a civil money penalty of $1 million after a finding, which the banks neither admit nor deny, that they engaged in unfair acts and practices in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act related to reward programs and the processing of automatic payments matters resulting from the conversion from an internal core system platform to an external core system platform.
• Removal and prohibition orders were issued to:
  • Sammy Sims, former CFO of Eastern International Bank, Los Angeles, California (use of bank funds to purchase life insurance for bank employees without their knowledge, for which his wife received compensations as insurance broker)
  • Debra L. Poulsen, former officer and director of Ericson State Bank, Ericson, Nebraska (failure to report to directors misconduct of which she was aware, including repeated violations of Nebraska's legal lending limit, unsafe and unsound overdrafts, etc.)
  • Jackie L. Poulsen, former president and director of Ericson State Bank, Ericson, Nebraska (underwriting loans without appropriate documentation or risk mitigation, making loans "vastly exceeding" Nebraska's lending limit, failing to obtain real estate appraisals, etc.)
  • Patricia Jean Niemeyer, former cashier and director of Ericson State Bank, Ericson, Nebraska (aiding and abetting the actions of Jackie Poulsen).
  • Robert S. Catanzaro, former CEO and director of Independence Bank, East Greenwich, Rhode Island, for failing to implement and supervise appropriate oversight and management practices over the bank's SBA Small Loan Advantage lending program, causing the bank to suffer over $1.7 million in losses.

On Friday, the Treasury Department announced OFAC actions to defend and protect U.S. campaign and government officials from Iranian attempts to interfere in U.S. elections. OFAC designated seven individuals as part of a coordinated U.S. government response to Iran’s operations that sought to influence or interfere in the 2024 and 2020 presidential elections.

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

The FDIC has issued guidance to help banks and facilitate recovery in areas of Georgia (FIL-68-2024) and Vermont (FIL-69-2024) affected by severe weather.