September Regulatory Compliance Briefing

The September Regulatory Compliance Briefing includes recent alerts, advisories, and pending actions to be aware of this month.

Recap of August & September Compliance Alerts

Consumer Financial Protection Bureau (CFPB)

CA-203 Delay of CFPB Small Business Lending Rule for Certain Banks

• Rule/Action Final: N/A
• Effective Date: July 31, 2023
• Alert Date: September 20, 2023

CA-204 CFPB Small Business Lending Rule Injunction

• Rule/Action Final: August 29, 2023
• Effective Date: September 14, 2023
• Alert Date: September 20, 2023

CA-206 CFPB Annual Updates to Reg. Z Dollar Thresholds

• Rule/Action Final: September 18, 2023
• Effective Date: January 1, 2024
• Alert Date: September 25, 2023

National Credit Union Administration (NCUA)

CA-205 NCUA Final Financial Innovation Rule: Loan Participations, Eligible Obligations, and Notes of Liquidating Credit Unions

• Rule/Action Final: September 21, 2023
• Effective Date: October 21, 2023
• Alert Date: September 25, 2023

Additional Advisories and Announcements

The selected advisories and/or announcements below provide information that may be helpful to your organization but were not included as compliance alerts because they do not contain any regulatory changes.

Consumer Financial Protection Bureau (CFPB)

CFPB Updated Filing Instructions Guide for Small Business Lending Data

On August 17, 2023, the CFPB released an update to the Filing Instructions Guide for Small Business Lending Data. The updates include: 1) reordering certain demographic information codes to better correlate with Home Mortgage Disclosure Act data, 2) minor wording clarifications to the pricing information data point, and 3) minor administrative updates to the validation IDs. The changes were also incorporated into the Small Business Lending Rule Data Points Chart.

CFPB Updates to Small Business Lending Frequently Asked Questions

On September 14, 2023, the CFPB added additional questions to its Small Business Lending Rule FAQs. The questions were added to the existing categories of Institutional Coverage, Coverage Credit Transactions, and Small Businesses, as well as two new categories: Firewall and Record Retention.

Federal Deposit Insurance Corporation (FDIC)

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of Hawaii Affected by Wildfires

On August 11, 2023, the FDIC issued FIL-41-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Hawaii affected by wildfires.

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of Mississippi Affected by Severe Storms, Straight-line Winds, and Tornadoes

On August 15, 2023, the FDIC issued FIL-42-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Mississippi affected by severe storms, straight-line winds, and tornadoes.

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of Illinois Affected by Severe Storms and Flooding

On August 18, 2023, the FDIC issued FIL-43-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Illinois affected by severe storms and flooding.

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of Alaska Affected by Flooding

On August 28, 2023, the FDIC issued FIL-44-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Alaska affected by flooding.

FDIC Updated Equal Housing Lender Posters

On August 31, 2023, the FDIC announced updates to the Equal Housing Lending posters that FDIC-supervised institutions are required to maintain in branches. The changes include updating the name of the office to which complaints should be addressed, as well as adding the web address of the FDIC’s web-based complaint portal.

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of Florida Affected by Hurricane Idalia

On September 1, 2023, the FDIC issued FIL-48-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Florida affected by Hurricane Idalia.

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of Georgia Affected by Hurricane Idalia

On September 13, 2023, the FDIC issued FIL-50-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Georgia affected by Hurricane Idalia.

Financial Crimes Enforcement Network (FinCEN)

FinCEN Notice to Financial Institutions: Payroll Tax Evasion and Workers’ Compensation Fraud in the Construction Sector

On August 15, 2023, FinCEN issued Notice FIN-2023-NTC1, to call financial institutions’ attention to what law enforcement has identified as a concerning increase in state and federal payroll tax evasion and workers’ compensation insurance fraud in the U.S. residential and commercial real estate construction industries. The Notice describes the schemes and select red flag indicators, and requests that financial institutions reference the Notice in SAR field 2 (Filing Institution Note to FinCEN) and the narrative.

National Credit Union Administration (NCUA)

NCUA Letter to Credit Unions 23-CU-07: Cyber Incident Notification Requirements

On August 14, 2023, the NCUA Issued a Letter to Credit Unions to remind credit unions that beginning September 1, 2023, all federally insured credit unions must notify the NCUA as soon as possible, and no later than 72 hours, after the credit union reasonably believes it has experienced a reportable cyber incident or received a notification from a third party regarding a reportable cyber incident. The Letter to Credit Unions discusses the amendments to part 748, known as the Cyber Incident Notification Requirement Rule.

Federal Reserve Board (FRB)

FRB Supervision and Regulation Letter: Supervisory Nonobjection Process for State Member Banks Seeking to Engage in Certain Activities Involving Dollar Tokens

On August 8, 2023, the FRB issued Supervision and Regulation Letter SR 23-8, describing the supervisory nonobjection process for state member banks seeking to engage in certain activities involving tokens denominated in national currencies and issued using distributed ledger technology or similar technologies to facilitate payments. To obtain a written notification of supervisory nonobjection, a state member bank should demonstrate that it has established appropriate risk management practices for the proposed activities, including having adequate systems in place to identify, measure, monitor, and control the risks of its activities, and the ability to do so on an ongoing basis.

Office of the Comptroller of the Currency (OCC)

OCC Bulletin: Loan Purchase Activities: Legal Lending Limit Guidance

On August 8, 2023, the OCC issued Bulletin 2023-27, providing guidance regarding the applicability of the legal lending limit (LLL) to purchased loans. Unless an exception applies, all loans and extensions of credit made by banks are subject to the LLL, which provides limitations on the total amount of loans and extensions of credit to any one borrower. Whether a loan that a bank purchases is attributable to the seller under the LLL regulation depends on specific facts and circumstances.

Interagency Announcements

Interagency Statement on Supervisory Practices Regarding Financial Institutions Affected by the Hawaii Wildfires

On August 17, 2023, the FDIC, FRB, NCUA, OCC, and state financial regulators issued an Interagency Statement on Supervisory Practices Regarding Financial Institutions Affected by the Hawaii Wildfires. The Statement indicates that the agencies recognize the serious impact of the recent Hawaii wildfires on the customers and operations of many financial institutions, and the agencies will provide appropriate regulatory assistance to affected institutions subject to their supervision. The Statement discusses supervisory practices in the areas of lending, temporary facilities, publishing requirements, regulatory reporting requirements, Community Reinvestment Act, and investments.

Joint Proposed Rulemaking to Impose a Long-Term Debt Requirement for Certain Insured Depository Institutions

On August 29, 2023, the FDIC, FRB, and OCC jointly issued a Proposed Rule that would require insured depository institutions (IDIs) that are not consolidated subsidiaries of U.S. global systemically important banks and that (1) have at least $100 billion in consolidated assets, or (2) are affiliated with IDIs that have $100 billion in consolidated assets to have a minimum amount of eligible long-term debt outstanding. In addition, the FRB is proposing to require the covered entities of such IDIs to also maintain a prescribed amount of long-term debt and to comply with specified clean holding company requirements.

Interagency Statement on Supervisory Practices Regarding Financial Institutions Affected by Hurricane Idalia

On September 1, 2023, the FDIC, FRB, NCUA, OCC, and state financial regulators issued an Interagency Statement on Supervisory Practices Regarding Financial Institutions Affected by Hurricane Idalia. The Statement indicates that the agencies recognize the serious impact of Hurricane Idalia on the customers and operations of many financial institutions, and the agencies will provide appropriate regulatory assistance to affected institutions subject to their supervision. The Statement discusses supervisory practices in the areas of lending, temporary facilities, publishing requirements, regulatory reporting requirements, Community Reinvestment Act, and investments.

Future & Pending Regulatory Actions and Compliance Alerts

Financial Crimes Enforcement Network (FinCEN)

• FinCEN Advance Notice of Proposed Rulemaking to address the vulnerability of the U.S. real estate market to money laundering and other illicit activity — public comment period ended February 14, 2022.
• FinCEN Pilot Program for SARs Sharing proposed rule — public comment period ended March 28, 2022.
• FinCEN Proposed Phase II Beneficial Ownership Rule — public comment period ended February 14, 2023.

Consumer Financial Protection Bureau (CFPB)

• CFPB Notice and Request for Comment Regarding the CFPB’s Inquiry Into Buy-Now-Pay-Later (BNPL) Providers — public comment period ended on March 25, 2022.
• CFPB Proposed Rule on Credit Card Late Fees – public comment period ended on April 3, 2023.
• CFPB Statement of Policy Regarding Prohibition of Abusive Acts and Practices – public comment period ended on July 3, 2023.

Federal Deposit Insurance Corporation (FDIC)

• FDIC Climate Risk Principles — public comment period ended on June 1, 2022.

National Credit Union Administration (NCUA)

• NCUA rulemaking to modernize and improve the NCUA’s investment rule and to provide regulatory relief was expected in September 2022.
• NCUA Proposed Financial Innovation Rule — public comment period ended on February 28, 2023.
• NCUA Proposed Field of Membership Rule – public comment period ended on May 30, 2023.

Interagency Proposed Rules

• OCC, NCUA, FDIC, FRB — Joint, proposed rulemaking regarding uniform rules and procedures for administrative hearings. The public comment period ended on June 13, 2022.
• CFPB, OCC, FRB, NCUA, FDIC, and FHFA — Joint, proposed rule to implement automated valuation model (AVM) quality control standards. The public comment period ended on August 21, 2023.
• FDIC, FRB, OCC — Joint, proposed interagency rulemaking on amendments to the regulatory capital rule; comment period ends November 30, 2023.
• FDIC, FRB, OCC — Joint, proposed rulemaking to impose a long-term debt requirement for certain insured depository institutions; comment period ends November 30, 2023.

Stay on Top of Compliance Changes

For access to the complete analysis, executive summaries, and actions needed to ensure compliance, contact us.