February Regulatory Compliance Briefing

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.

Recap of January Compliance Alerts

No compliance alerts sent since last compliance briefing.

Compliance Alerts Expected in February

National Credit Union Administration (NCUA)

2/23/2023 – CA-196 NCUA Final Rule on Cyber Incident Reporting

Regulatory Effective Dates – Next 90 Days

FRB Final Rule to Implement the Adjustable Interest Rate (LIBOR) Act

Effective – Februrary 27, 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 Proposed Rule Requiring Registration of Nonbanks

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.

CFPB Circular 2023-01 Unlawful Negative Option Marketing Practices

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.

Federal Deposit Insurance Corporation (FDIC)

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

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.

FDIC Guidance to Help 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-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.

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of California Affected by Severe Winter Storms, Flooding, Landslides, and Mudslides

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.

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

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.

Financial Crimes Enforcement Network (FinCEN)

FinCEN Alert on Human Smuggling

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.

FinCEN Alert on Potential U.S. Commercial Real Estate Investments by Sanctioned Russian Elites, Oligarchs, and Their Proxies

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.

National Credit Union Administration (NCUA)

NCUA Letter to Credit Unions 23-CU-01: 2023 Supervisory Priorities

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.

NCUA Extends Loan Interest Rate Ceiling

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.

Federal Reserve Board (FRB)

FRB Policy Statement to Promote a Level Playing Field for all Banks with a Federal Supervisor, Regardless of Deposit Insurance Status

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.

Office of the Comptroller of the Currency (OCC)

OCC Bulletin 2023-2: Fair Lending: Revised Comptroller’s Handbook Booklet and Rescissions

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. 

Federal Bank Regulatory Agencies

Joint Statement on Crypto-Asset Risks to Banking Organizations

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.

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.

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 Rule on Reportable Cyber Incidents — public comment period ended on September 26, 2022.
• NCUA Proposed Amendments to Subordinated Debt Rule — public comment period ended on December 5, 2022.
• NCUA Proposed Amendments to FCU Bylaws related to member expulsion — public comment period ended on December 2, 2022.
• NCUA Proposed Financial Innovation Rule — public comment period ends on February 28, 2023.

Joint Federal Banking Agency Proposed Rules

• OCC, NCUA, FDIC, FRB — Joint, proposed rulemaking regarding their uniform rules and procedures for administrative hearings. The public comment period ended on June 13, 2022.
• OCC, FRB, FDIC, NCUA, FHFA, and CFPB — Rulemaking to implement quality control standards for the use of automated valuation models by mortgage originators and secondary market issuers. Notice of Proposed Rulemaking was expected in October 2022.

Stay on Top of Compliance Changes

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