The February Regulatory Compliance Briefing includes an upcoming final ruling from the Federal Reserve Board, plus other advisories and pending actions and alerts to be aware of this month.
No compliance alerts sent since last compliance briefing.
2/23/2023 – CA-196 NCUA Final Rule on Cyber Incident Reporting
Effective – Februrary 27, 2023
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.
On January 11, 2023, the CFPB issued a Proposed Rule that would require nonbanks subject to the CFPB’s supervisory authority, with limited exceptions, to register each year in a nonbank registration system established by the CFPB. The nonbanks would be required to register if they use specific terms and conditions defined in the Proposed Rule that attempt to waive consumers’ legal protections, to limit how consumers enforce their rights, or to restrict consumers’ ability to file complaints or post reviews. The CFPB would publish information identifying registrants and their use of such terms and conditions.
On January 19, 2023, the CFPB issued a Circular answering the question of whether persons engaged in negative option marketing practices can violate the prohibition on unfair, deceptive, or abusive acts or practices in the Consumer Financial Protection Act. “Negative option” refers to a term under which a seller may interpret a consumer’s silence, failure to take an affirmative action to reject a product or service, or failure to cancel an agreement as acceptance or continued acceptance of the offer—for example, automatic renewal plans. The Circular explains that negative option marketing practices may violate the prohibition where a seller (1) misrepresents or fails to clearly and conspicuously disclose the material terms of a negative option program; (2) fails to obtain consumers’ informed consent; or (3) misleads consumers who want to cancel, erects unreasonable barriers to cancellation, or fails to honor cancellation requests that comply with its promised cancellation procedures.
On January 9, 2023, the FDIC issued FIL-02-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Florida affected by Hurricane Nicole.
On January 18, 2023, the FDIC issued FIL-03-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Alabama affected by severe storms, straight-line winds, and tornadoes.
On January 18, 2023, the FDIC issued FIL-04-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of California affected by severe winter storms, flooding, landslides, and mudslides.
On January 20, 2023, the FDIC issued FIL-05-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Georgia affected by severe storms, straight-line winds, and tornadoes.
On January 13, 2023, FinCEN issued FIN-2023-Alert001 FinCEN Alert on Human Smuggling along the Southwest Border of the United States. The Alert is intended to aid financial institutions in the detection of financial activity related to human smuggling along the U.S. southwest border. The alert provides red flag indicators to help financial institutions better identify transactions potentially related to human smuggling and reminds financial institutions of their Bank Secrecy Act reporting obligations.
On January 25, 2023, FinCEN issued FIN-2023-Alert002 FinCEN Alert on Potential U.S. Commercial Real Estate Investments by Sanctioned Russian Elites, Oligarchs, and Their Proxies. The Alert highlights sanctions evasion–related vulnerabilities in the CRE sector and is based on a review of Bank Secrecy Act reporting indicating that sanctioned Russian elites and their proxies may exploit them to evade sanctions.
On January 18, 2023, the NCUA issued a Letter to Credit Unions outlining its 2023 supervisory priorities. The NCUA’s primary areas of focus include: Interest Rate Risk, Liquidity Risk, Credit Risk, Fraud Prevention and Detection, Information Security (Cybersecurity), and Consumer Financial Protection.
On January 26, 2023, the NCUA announced that it will maintain the current 18% interest rate ceiling for loans made by federal credit unions, for a new 18-month period from March 11, 2023 through September 10, 2024.
On January 27, 2023, the FDIC issued a Policy Statement intended to make clear that uninsured and insured banks supervised by the FRB will be subject to the same limitations on activities, including novel banking activities, such as crypto-asset-related activities. And further, that uninsured and insured banks supervised by the FRB would be subject to the limitations on certain activities imposed on national banks, which are overseen by the Office of the Comptroller of the Currency.
On January 12, 2023, the OCC issued a revised version of the Fair Lending Booklet, replacing the January 2010 version. The revised Booklet reflects changes to laws and regulations since the Booklet was last published; reflects the current OCC approach to fair lending examinations; includes new and clarified details on examination scenarios; includes clarified and expanded risk factors for a variety of examination types; and includes clarifying edits regarding supervisory guidance, sound risk management practices, and applicable legal standards.
On January 3, 2023, the FRB, FDIC, and OCC issued a Joint Statement on crypto-asset risks to banking organizations. The term “crypto-assets” refers to any digital asset implemented using cryptographic techniques. The joint statement highlights key risks for banking organizations associated with crypto-assets and the crypto-asset sector and outlines approaches to supervision. The Statement indicates that issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized network, or similar system is highly likely to be inconsistent with safe and sound banking practices.
For access to the complete analysis, executive summaries, and actions needed to ensure compliance, contact us.