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The CFPB reports it has ordered Fay Servicing LLC to pay a $2 million penalty for violations of mortgage servicing laws, as well as for violations of a 2017 agency order that addressed its illegal foreclosure practices. The company failed to implement the order’s requirements and continued to break the law. Fay Servicing took prohibited foreclosure actions against borrowers requesting mortgage assistance, failed to offer borrowers mortgage assistance options available to them, and overcharged for private mortgage insurance. In addition to the civil money penalty, the CFPB’s order requires Fay Servicing to pay consumer redress of $3 million and to invest $2 million to update its servicing technology and compliance management systems. The order also puts compensation limits on Edward Fay, the company’s Chairman of the Board and Chief Executive Officer (CEO), if Mr. Fay does not take actions necessary to ensure compliance with the order.

In 2017, the CFPB took action against Fay Servicing for failing to provide mortgage borrowers with the protections against foreclosure that are required by consumer financial protection law. The CFPB found that the company kept borrowers in the dark about critical information about the process of applying for foreclosure relief. The CFPB also found instances where the servicer illegally launched or moved forward with the foreclosure process when borrowers were actively seeking help to save their homes. The CFPB ordered Fay Servicing to stop its illegal practices and to pay $1.15 million to harmed borrowers.

The OCC, Federal Reserve, FDIC, NCUA, CFPB, FHFA, CFTC, SEC, and Treasury Department have published [89 FR 67890] in today's Federal Register, their previously announced notice of proposed rulemaking to establish data standards to promote interoperability of financial regulatory data across these agencies. Final standards established pursuant to this rulemaking will later be adopted for certain collections of information in separate rulemakings by the agencies or through other actions taken by the agencies. The agencies are proposing this rule as required by the Financial Data Transparency Act of 2022.

Comments on the proposal will be accepted for 60 days, through October 21, 2024.

The Securities and Exchange Commission has announced settled charges against New York-based registered transfer agent Equiniti Trust Company LLC, formerly known as American Stock Transfer & Trust Company LLC, for failing to assure that client securities and funds were protected against theft or misuse. Those failures led to the loss of more than $6.6 million of client funds as a result of two separate cyber intrusions in 2022 and 2023. American Stock Transfer was able to recover approximately $2.6 million of the losses and fully reimbursed the clients for their losses. To settle the SEC’s charges, Equiniti agreed to pay a civil penalty of $850,000.

• SEC Order

The IRS has issued interim guidance for sponsors of 401(k) and similar retirement plans that provide, or wish to provide, matching contributions based on eligible student loan payments made by their participating employees.

Notice 2024-63 implements section 110 of the SECURE 2.0 Act of 2022, which for the first time permits employers to provide matching contributions for employees based on their payments on student loans. The 2022 legislation permits employers with a 401(k) plan, 403(b) plan, governmental 457(b) plan or SIMPLE IRA plan to provide matching contributions based on student loan payments, rather than based only on elective contributions to retirement plans, in plan years beginning after December 31, 2023.

Yesterday, the Federal Trade Commission reported it had filed an amicus brief in a lawsuit brought by a group of parents who are suing IXL Learning, Inc. The FTC’s brief disputes the company’s argument that under the Children’s Online Privacy Protection Act and the COPPA Rule, the schools’ agreement to binding arbitration also applied to parents.

The Securities and Exchange Commission yesterday announced charges against Carl C. Icahn and his publicly traded company, Icahn Enterprises L.P. (IEP), for failing to disclose information relating to Icahn’s pledges of IEP securities as collateral to secure personal margin loans worth billions of dollars under agreements with various lenders. IEP and Icahn agreed to pay $1.5 million and $500,000 in civil penalties, respectively, to settle the SEC’s charges.

The FDIC has issued FIL-56-2024 to alert financial institutions it has updated its Questions and Answers page for the final rule governing FDIC Official Signs and Advertising Requirements, False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC Name or Logo (part 328). The Q&As provide clarifying information on the final rule to support stakeholders in the implementation of part 328.

The Q&As cover key implementation topics that include, for example, the placement and display of the official digital sign and non-deposit sign, use of the advertising statement on various deposit-taking channels on websites, mobile apps, ATMs, and social media, as well as information on technical assistance support, such as where to obtain downloadable versions of the official digital sign.

The Federal Trade Commission has announced it is taking action against a large automotive dealer group, Asbury Automotive, for systematically charging consumers for costly add-on items they did not agree to or were falsely told were required as part of their purchase. The FTC also alleges that Asbury discriminates against Black and Latino consumers, targeting them with unwanted and higher-priced add-ons.

In an administrative complaint, the FTC alleges that three Texas dealerships owned by Asbury that operate as David McDavid Ford Ft. Worth, David McDavid Honda Frisco, and David McDavid Honda Irving, along with Ali Benli, who acted as general manager of those dealerships, engaged in a variety of practices to sneak hidden fees for unwanted add-ons past consumers. These tactics included a practice called “payment packing,” where the dealerships convinced consumers to agree to monthly payments that were larger than needed to pay for the agreed-upon price of the car, and then “packed” add-on items to the sales contract to make up that difference.

While some consumers reported that salespeople never discussed these products during the sales process, others said that they specifically declined these products only to find they were added on without consent. The FTC says that Asbury’s sales and financing process made it difficult, if not impossible, for consumers to know they were being charged for these add-ons, with consumers being asked to sign documents on electronic devices that showed only the places where they should sign and not the full documents. In other cases, consumers who noticed the add-on charges were falsely told they were mandatory.

In addition, according to the complaint, company documents show that the dealerships treated Black and Latino consumers differently from non-Latino White consumers, charging them hundreds of dollars extra on average for add-ons – including those add-ons for which they were charged without consent. The complaint alleges that there was no non-discriminatory reason for these higher costs.

The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.

The CFPB has issued the 2025 Small Business Lending Filing Instructions Guide, which updates dates used in the filing instructions to correspond with the new compliance dates for the rule. Additionally, the Action Taken Date and Application Date data point examples have been updated to reflect the new compliance dates and use year 2025.

The Bureau also updated other Small Business Lending reporting resources to reflect the extended compliance dates.

FDIC FIL-57-2024 was issued Friday with information to provide regulatory relief to FDIC-supervised financial institutions and facilitate recovery in areas of Florida affected by Hurricane Debby. The affected areas are Columbia, Dixie, Gilchrist, Hamilton, Lafayette, Levy, Manatee, Sarasota, Suwannee, and Taylor Counties.

The FDIC has published [89 FR 67002] in this morning's Federal Register a proposal to amend its filing requirements and processing procedures for notices filed under the Change in Bank Control Act (CBCA) by removing the exemption from the notice requirement for acquisitions of voting securities of a depository institution holding company with an FDIC-supervised subsidiary institution for which the Board of Governors of the Federal Reserve System (FRB) reviews a notice under the CBCA and by making conforming definitional changes. The FDIC also seeks information and comment regarding its approach to change in control notices under the CBCA with regard to persons who may be directly or indirectly exercising control over an FDIC-supervised institution.

Comments are due by October 18, 2024.

The Federal Reserve Board yesterday announced the execution of two enforcement actions —

• A Written Agreement with Heritage Bancshares Group Inc. Employee Stock Ownership Plan and Trust, Spicer, Minnesota, and Heritage Bancshares Group, Inc., Spicer, Minnesota
• A Written Agreement with SNB Bancshares, Inc., Eufaula, Oklahoma, and Bank of Eufaula, Eufaula, Oklahoma

Yesterday, the OCC announced the release of its annual update to the Bank Accounting Advisory Service (BAAS).

The BAAS contains staff responses to frequently asked questions from the banking industry and bank examiners on a variety of accounting topics and promotes consistent application of accounting standards and regulatory reporting among national banks and federal savings associations.

This edition of the BAAS revises certain content for general clarity and also removes superseded content. The updates do not alter the OCC Office of the Chief Accountant’s prior conclusions or interpretations.

The BAAS does not represent rules or regulations of the OCC. Rather, it represents the OCC Office of the Chief Accountant’s interpretations of generally accepted accounting principles and regulatory guidance based on the facts and circumstances presented.

The Treasury Department has reported that OFAC has sanctioned several companies, individuals, and vessels for their involvement in the shipment of Iranian commodities, including oil and liquefied petroleum gas, to Yemen and the United Arab Emirates on behalf of the network of Iran-based, Islamic Revolutionary Guard Corps-Qods Force-backed Houthi financial official Sa’id al-Jamal. OFAC also updated the Specially Designated Nationals and Blocked Persons List entry for the sanctioned vessel ARTURA (IMO: 9150365), which was responsible for shipping commodities for Sa’id al-Jamal, to reflect the changing of its name to OHAR.

For the names and identification information of the designated parties, see this August 15, 2024, BankersOnline OFAC Update.

The SEC yesterday announced it has obtained a preliminary injunction, asset freeze, and other emergency relief against Atlanta-based Drive Planning LLC and its founder and CEO, Russell Todd Burkhalter, to halt a $300 million real estate Ponzi scheme impacting more than 2,000 investors. Additionally, a receiver was appointed over Drive Planning. The SEC alleges the defendants misappropriated millions of dollars of investor funds to fund Burkhalter’s lavish lifestyle and to make Ponzi-like payments.

The SEC’s complaint alleges that, from 2020 through at least June 2024, Drive Planning and Burkhalter raised more than $300 million for purported real estate investments, telling investors their money would be used to fund land development projects. The defendants promised 10% interest every 3 months and encouraged investors to tap their savings, retirement accounts, and even open lines of credit to invest. In reality, the defendants did not have a business capable of generating the promised returns, and they instead used investor funds to make Ponzi-like payments, according to the complaint. The complaint further alleges that Burkhalter stole investor funds to fund his luxurious lifestyle, including to buy a $3.1 million yacht and spending $4.6 million on chartering private jets and luxury car services and $2 million on a luxury condo.

The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants, and an officer-and-director bar against Burkhalter. The complaint also names Jacqueline Burkhalter, Burkhalter’s spouse, and several related entities as relief defendants and seeks disgorgement of ill-gotten gains from them.

The White House has issued a Fact Sheet on a new administration effort to address "hassles that waste Americans’ time and money."

Among the initiatives listed in the Fact Sheet, there are two that could affect banks. The CFPB will initial a rulemaking to require businesses under its jurisdiction to provide consumers direct, one-button access to a live human being instead of being forced to listen to a series of long messages and menu options. The Bureau will also issue rules or guidance to crack down on ineffective and time-wasting chatbots used by some banks and other financial institutions in lieu of customer service. The CFPB will identify when the use of automated chatbots or AI voice recordings is unlawful, including in situations in which customers are led to believe they are speaking with a human being.

The Federal Trade Commission yesterday announced a final rule that will combat fake reviews and testimonials by prohibiting their sale or purchase and allow the agency to seek civil penalties against knowing violators.

The rule prohibits:

• Fake or false consumer reviews, consumer testimonials, and celebrity testimonials
• Buying positive or negative reviews
• Insider reviews and consumer testimonials
• Company-controlled review websites
• Review suppression
• Misuse of fake social media indicators

The rule will become effective 60 days after it is published in the Federal Register.

Publication and effective date update: Published at 89 FR 68034 in the 8/22/2024 Federal Register, with an effective date of 10/21/2024

The FDIC has issued FIL-55-2024 to notify FDIC-supervised institutions of an amendment of the U.S. Department of Labor’s (DOL) Prohibited Transaction Class Exemption rule (PTE 84-14) for Qualified Professional Asset Manager (QPAM) exemptions. The QPAM Exemption (hereafter, PTE 84-14) provides broad relief for employee benefit plan and individual retirement account transactions that would otherwise be prohibited by Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA) and Title II of ERISA, as codified in the Internal Revenue Code of 1986, as amended, as long as the transactions involve a QPAM. Under the prior rule, QPAMs did not need to notify the DOL that they were relying on the Exemption. However, under the newly amended rule, a one-time notice is now required in order to continue to rely on the Exemption, provided certain conditions are met.

The revised DOL QPAM Exemption PTE 84-14 was published [89 FR 23090] in the Federal Register on April 3, 2024, and became effective June 17, 2024. Among other things, PTE 84-14 will require institutions relying on the exemption to:

• Notify DOL of their intent to rely upon the Exemption. Each QPAM that relies upon the Exemption must report its legal name (and any name the QPAM may be operating under) by email to the DOL at QPAM@dol.gov within an initial 90-day period from the date the Exemption became effective, with an additional 90-day period to cure inadvertent failures to report;
• Meet the adjusted QPAM asset management and equity thresholds, which will phase in through incremental changes in 2024, 2027, and 2030;
• Become familiar with Section I(g)(3)’s expanded list of types of misconduct and entities that may cause ineligibility for the QPAM exemption;
• Comply with the new recordkeeping requirements in PTE 84-14 section VI(u), which would require maintaining records for six years demonstrating compliance with this exemption; and
• Request any individual exemptions in case a bank becomes ineligible or anticipates becoming ineligible under the new PTE 84-14 section I(k).

Generally, banks have until September 24, 2024, to notify DOL of their intent to rely upon the Exemption; see the exemption amendment to PTE 84-14 for additional information.

• Fact Sheet

Yesterday, the CFPB announced it had released an advisory opinion and research report on a form of home seller financing that is often referred to as contract for deed.

Under contract-for-deed deals, the seller agrees to turn over a home’s deed only after the buyer completes a series of payments. During the contract term, the borrower often carries the responsibilities of homeownership, including repairs, property taxes, and improvements. The deals often have little oversight, and investment groups and other sellers can set a series of traps that leave buyers in unlivable homes, on the hook for tax liens and expensive repairs, and at risk of losing their down payments and homes. The advisory opinion affirms that federal home lending rules and laws cover contracts for deed and provide key consumer protections. In yesterday’s report, the CFPB traces the history of contract-for-deed lending. The CFPB has found that these products often target Black, Hispanic, immigrant, and religious communities.

The CFPB's opinion holds that these contracts are in fact covered by the federal Truth in Lending Act. This law imposes certain requirements on larger sellers – often investment groups – such that they must assess borrowers' ability to repay loans, provide informative and accurate disclosures, and limit or avoid balloon payments.

PUBLICATION UPDATE: Published at 89 FR 68086 on 8/23/2024.

The CFPB also issued a Consumer Advisory on Contracts for Deed.

The CFPB has released its 2023 Financial Literacy Annual Report to Congress, which describes the CFPB’s financial literacy activities and strategy to improve the financial literacy of consumers. This year’s report includes information about the CFPB’s efforts to be a source of unbiased, objective information consumers can trust, as well as examples of effective financial education using the CFPB’s research-based approach.

The Securities and Exchange Commission has reported it has charged Cynthia and Eddy Petion, along with their company, NovaTech Ltd., for operating a fraudulent scheme that raised more than $650 million in crypto assets from more than 200,000 investors worldwide, including many in the Haitian-American community. The SEC also charged Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley for their roles in promoting NovaTech to investors.

According to the SEC’s complaint, the Petions operated NovaTech as a multi-level marketing (MLM) and crypto asset investment program from 2019 through 2023. They lured investors by claiming NovaTech would invest their funds on crypto asset and foreign exchange markets. Cynthia Petion assured investors that their investments would be safe and promised that “[i]n this program, you are in profit from day one, because again you have access to that capital.” In reality, NovaTech used the majority of investor funds to make payments to existing investors and to pay commissions to promoters, using only a fraction of investor funds for trading. The complaint further alleges that the Petions siphoned millions of dollars of investor assets for themselves. When NovaTech ultimately collapsed, most investors were not able to withdraw their investments, resulting in substantial losses, according to the complaint.

The complaint also alleges that NovaTech’s top promoters, Zizi, Dunbar, Corbett, Sampson, Garofano, and Hadley, each recruited a wide network of investors and promoters. NovaTech paid them substantial commissions for the investors they and their networks recruited. When Zizi, Dunbar, Corbett, and Sampson became aware of certain red flags about NovaTech, including regulatory actions taken against it by U.S. and Canadian regulators, they continued recruiting investors and downplayed the red flags.

FinCEN has published in today's Federal Register three notices and requests for comment on proposals to renew, without change, certain recordkeeping requirements. Comments on each of the notices will be accepted through October 15, 2024.

• Additional Records to be Made and Retained by Dealers in Foreign Exchange and Additional Records to be Made and Retained by Brokers or Dealers in Securities (89 FR 65980)
• Anti-Money Laundering Program Requirements for Casinos (89 FR 65977)
• Records to be Made and Retained by Financial Institutions, Banks, and Providers and Sellers of Prepaid Access (89 FR 65971)

OTC Link LLC, a New York-based broker-dealer, has agreed to pay $1.19 million to settle SEC charges that it failed to file numerous reports of suspicious financial transactions (SARs) for a period of more than three years, according to an SEC news release.

The SEC’s order finds that, from March 2020 through May 2023, OTC Link failed to adopt or implement reasonably designed anti-money laundering (AML) policies and procedures to surveil transactions conducted through its three alternative trading systems (ATSs) for possible red flags of suspicious activity. As a result, OTC Link did not file a single SAR over this time period. The three ATSs are used by broker-dealers on a daily basis to execute or facilitate tens of thousands of transactions in over-the-counter (OTC) securities, many of which are considered microcap or penny stock securities.

Without admitting or denying the SEC’s findings, OTC Link agreed to a censure and a cease-and-desist order in addition to the $1.19 million penalty. The SEC’s order also directs OTC Link to continue its engagement of a compliance consultant to review and recommend changes to the firm’s AML policies and procedures.

On Friday, the Treasury Department reported that OFAC has acted against 19 individuals, 14 entities, and one aircraft under Belarus-related Executive Order 14038. This action targets persons involved in supporting Russia’s war in Ukraine through military resource production and transshipment of goods to Russia, sanctions evasion on behalf of Belarusian defense entities, and revenue generation for Belarusian oligarchs in Alyaksandr Lukashenka’s inner circle. OFAC concurrently designated five of these targets—three individuals and two entities—under Russia-related Executive Order 14024.

For identification information on the designated individuals, entities, and aircraft, see BankersOnline’s August 9, 2024, OFAC Update.

The Federal Reserve Board has reported the Federal Open Market Committee’s tentative meeting schedule for 2025 and 2026.

For 2025:

• Tuesday, January 28, and Wednesday, January 29
• Tuesday, March 18, and Wednesday, March 19
• Tuesday, May 6, and Wednesday, May 7
• Tuesday, June 17, and Wednesday, June 18
• Tuesday, July 29, and Wednesday, July 30
• Tuesday, September 16, and Wednesday, September 17
• Tuesday, October 28, and Wednesday, October 29
• Tuesday, December 9, and Wednesday, December 10

For 2026:

• Tuesday, January 27, and Wednesday, January 28
• Tuesday, March 17, and Wednesday, March 18
• Tuesday, April 28, and Wednesday, April 29
• Tuesday, June 16, and Wednesday, June 17
• Tuesday, July 28, and Wednesday, July 29
• Tuesday, September 15, and Wednesday, September 16
• Tuesday, October 27, and Wednesday, October 28
• Tuesday, December 8, and Wednesday, December 9
• Tuesday, January 26, and Wednesday, January 27, 2027

The Committee releases a policy statement at 2 p.m. Eastern Time on the second day of each regularly scheduled meeting, and the Chair holds a news conference at 2:30 p.m. Eastern Time the same day.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Treasury Resources:

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

FTC Resources:

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

CFPB Resources:

• Issue Spotlight
• Consumer Advisory

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

The amendments will become effective October 1, 2024.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The FTC is sending checks to 25,563 consumers.

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

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

Outstanding ratings were awarded to—

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

The FDIC Board of Directors meeting yesterday resulted in approval of:

• A Notice of Proposed Rulemaking that would amend the FDIC's regulations in 12 CFR parts 303 and 337 relating to the brokered deposits restrictions that apply to less than well-capitalized insured depository institutions. Comments will be accepted for 60 days following Federal Reserve publication. UPDATE: This proposed rule was published at 89 FR 68244 with a comment period ending on 10/22/2024.
• A Notice of Proposed Rulemaking that would amend its regulations in 12 CFR Part 354 governing parent companies of industrial banks and industrial loan companies. There will be a 60-day comment period.
• A Request for Information on deposit data that is not currently reported in Call Reports. The request has a 60-day comment period.
• Final Guidance for Title I Resolution Plan Triennial Full Filers [Domestic] [Foreign], to be effective upon publication
• A proposed rulemaking regarding the Change in Bank Control Act Regulations and Procedures, with a 60-day comment period
• A final rule revising the FDIC's Section 19 regulations in 12 CFR Parts 303 and 308, to become effective on October 1, 2024.

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

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

A notice was posted yesterday on the Department of Defense's Military Lending Act (MLA) website announcing a scheduled update to version 5.21 is scheduled for Thursday, August 8, 2024. Due to the update, the MLA website will not be available from 6:00 p.m. until 9:00 p.m. PDT (9:00 p.m. until midnight EDT) on August 8.

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

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

• Implementation Note

The second 2024 issue of Consumer Compliance Outlook has been released by the Federal Reserve, with a focus on consumer complaints. The issue includes these articles:

• The Benefits of a Formal Complaint Management Program
• Consumer Complaints 2023: A Review of Federal Reserve Data
• Enhancing the Compliance Management Program with Complaint Data

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

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

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

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