Recent Action Items
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On the Radar
FinCEN proposes additional financial restrictions on North Korea
The Financial Crimes Enforcement Network announced June 1 a notice of finding that the Democratic People’s Republic of Korea (North Korea) is a jurisdiction of “primary money laundering concern” under Section 311 of the USA PATRIOT Act. FinCEN also released a notice of proposed rulemaking recommending a special measure to further isolate North Korea from the international financial system by prohibiting covered U.S. financial institutions from opening or maintaining correspondent accounts with North Korean financial institutions, and prohibiting the use of U.S. correspondent accounts to process transactions for North Korean financial institutions. The notice of finding was published by FinCEN in the June 1 Federal Register.
While U.S. law already generally prohibits U.S. financial institutions from engaging in direct and indirect transactions with North Korean financial institutions, the notice of proposed rulemaking, if finalized, would require U.S. financial institutions to implement additional due diligence measures to prevent North Korean banking institutions from gaining improper indirect access to U.S. correspondent accounts. While North Korea’s financial institutions do not maintain correspondent accounts with U.S. financial institutions, North Korean financial institutions frequently conduct transactions on behalf of the North Korean government and state-controlled corporations. The notice of proposed rulemaking would prohibit the use of third-country banks’ U.S. correspondent accounts to process transactions for North Korean financial institutions.
Comments are due by Aug. 2.
CFPB proposes payday loan rule
The Consumer Financial Protection Bureau announced June 2 a proposed rule that would require lenders who offer covered loan products to determine whether borrowers can afford the full amount of each payment when it is due without having to reborrow within the next month, and limiting lenders’ ability to roll over such debt. Covered loans would include payday loans, single-payment auto title loans and certain high-cost installment loans (those with an “all-in” annual percentage rate over 36%, where payment is secured by creditor access to the consumer’s deposit account or paycheck or holding a vehicle title as collateral).
The CFPB published a fact sheet on the proposed rule as well as proposed model disclosure forms. Comments are due by Sept. 14.
CFPB announces inquiry into emerging risks
On June 2, the Consumer Financial Protection Bureau announced an inquiry into potentially high-risk loan products and practices that are not specifically covered by the payday loan proposed rule. The request focuses on other high-risk loan products such as longer duration installment loans and open-end lines of credit where the lender does not take a vehicle title as collateral. The CFPB also seeks to better understand practices that may impact borrowers’ ability to pay back debt as well as sales and marketing practices of credit insurance, debt suspension or debt cancellation products.
Comments are due by Oct. 14.
Emerging regulatory concerns
CFPB brings spotlight to credit reporting complaints
The Consumer Financial Protection Bureau released the May issue of its Monthly Complaint Report, which focuses on credit reporting complaints. The CFPB reports that consumers continue to complain about incorrect information on their credit reports as well as difficulty having errors resolved. This month’s report also highlights trends seen in complaints coming from New Mexico.
Other Industry Issues of Interest
FDIC announces changes to Summary of Deposits survey
On May 31, the Federal Deposit Insurance Corporation issued its Summary of Deposits, the annual survey of branch office deposits as of June 30 for all FDIC-insured institutions, including insured U.S. branches of foreign banks. All institutions with branch offices are required to submit the survey; institutions with only a main office are exempt. All survey responses are required by July 31.
The FDIC emphasized two key instructions for this year’s submission:
• Beginning this year, the survey will be collected using the Federal Financial Institutions Examination Council’s Central Data Repository (CDR). The use of FDICconnect to submit the survey has been discontinued. The notice was issued earlier than normal this year to provide ample time for institutions to prepare for the change.
• The individual responsible for submitting an institution’s survey must have an account with the CDR. A separate CDR account is not necessary if the SOD submitter and Call Report submitter are the same individual.
Instructions for requesting a CDR account are provided under “Accessing the Central Data Repository” on page 2 of the Financial Institution Letter. Reporting instructions, survey worksheets, access to the CDR, and additional details are available on the FDIC’s Bank Financial Reports webpage.
NCUA announces new search feature to CUSO Registry
The National Credit Union Administration announced June 1 the addition of a search feature to its Credit Union Service Organization Registry. Users can search for information on the nearly 900 registered CUSOs by name, city, state, zip code, registry number or services. Users also can export the data into Excel, CVS and PDF formats. “CUSOs at a Glance,” an annual fact sheet on the CUSO sector, also has been developed to provide key metrics, including the levels of credit union investments in CUSOs, the percentage of CUSOs wholly owned by a single credit union, the number of credit unions CUSOs serve and the types of services CUSOs provide, among other data.
Treasury seeks lockbox proposals
The U.S. Department of Treasury’s Bureau of the Fiscal Service announced June 1 it is seeking proposals from depository financial institutions interested in competing to become a financial agent of the U.S. for the purposes of operating, maintaining, and improving the federal government general (non-tax) lockbox network. The successful financial institution will become a financial agent of the U.S., and will have a principal-agent relationship with the Bureau of the Fiscal Service to provide lockbox and remittance services to the Treasury on behalf of federal agencies.
CFPB updates eRegulations
On June 6, the Consumer Financial Protection Bureau announced the update of its eRegulations platform by adding Regulations C (HMDA), X (RESPA), and DD (TISA). In addition, the Regulation Z eRegulation has been updated to include all amendments through May 2016.