June Regulatory Compliance Briefing

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

Recap of June Compliance Alerts

Federal Reserve System, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC)

CA-201 Interagency Guidance on Risk Management of Third-Party Relationships

• Rule/Action Final: June 6, 2023
• Effective Date: June 6, 2023
• Alert Date: June 16, 2023

Regulatory Effective Dates – Next 90 Days

National Credit Union Administration (NCUA)

NCUA Final Rule on Cyber Incident Reporting

• Effective Date: September 1, 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 Circular on Reopening Deposit Accounts that Consumers Previously Closed

On May 10, 2023, the CFPB issued Circular 2023-02, providing that after consumers have closed deposit accounts, if a financial institution unilaterally reopens those accounts to process debits or deposits, it can constitute an unfair practice under the Consumer Financial Protection Act. The Circular indicates that the CFPB has brought an enforcement action regarding the practice of account reopening under the CFPA’s UDAAP prohibition.

Federal Deposit Insurance Corporation (FDIC)

FDIC Proposed Rule on Special Assessment Pursuant to Systemic Risk Determination

On May 11, 2023, the FDIC issued a Proposed Rule to implement a special assessment to recover the cost associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. Banking organizations with total assets under $5 billion would not be subject to the special assessment. The FDIC is proposing to collect the special assessment beginning with the first quarterly assessment period of 2024 and would continue to collect special assessments for an anticipated total of eight quarterly assessment periods.

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

On May 5, 2023, the FDIC issued FIL-23-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Florida affected by severe storms, tornadoes, and flooding.

FDIC Guidance to Help Financial Institutions and Facilitate Recovery in Areas of Guam Affected by Typhoon Mawar

On June 2, 2023, the FDIC issued FIL-27-2023, announcing a series of steps intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Guam affected by Typhoon Mawar.

Interagency Proposed Rules and Guidance

Joint Proposed Rule on Quality Control Standards for Automated Valuation Models

On June 1, 2023, the CFPB, OCC, FRB, FDIC, FHFA, and NCUA issued a Proposed Rule to implement the quality control standards mandated by the Dodd-Frank Act for the use of automated valuation models (AVMs) by mortgage originators and secondary market issuers in determining the collateral worth of a mortgage secured by a consumer’s principal dwelling.

The Proposed Rule would require lenders that use AVMs in connection with making credit decisions to adopt policies, practices, procedures, and control systems to ensure that AVMs used to determine the value of mortgage collateral adhere to quality control standards designed to: ensure a high level of confidence in the estimates produced by AVMs; protect against the manipulation of data; seek to avoid conflicts of interest; require random sample testing and reviews; and comply with applicable nondiscrimination laws.

Proposed Interagency Guidance on Reconsiderations of Value of Residential Real Estate Valuations

On June 8, 2023, the CFPB, OCC, FRB, FDIC, and NCUA issued proposed interagency guidance on reconsiderations of value (ROV) of residential real estate valuations. The Proposed Guidance: 1) describes the risks associated with deficient residential real estate valuations; 2) outlines applicable statutes, regulations, and existing guidance that govern ROVs and collateral valuations; 3) describes how financial institutions may incorporate ROV processes and controls into established risk management functions; and 4) provides examples of ROV policies, procedures, and controls that a financial institution may choose to establish.

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 – comment period ends 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 Amendments to FCU Bylaws related to member expulsion — public comment period ended on December 2, 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.

Stay on Top of Compliance Changes

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