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The Agencies issued a joint Fact Sheet that lists considerations for a risk-based approach when it comes to charities and nonprofits. While the Fact Sheet purports to not impose additional obligations on banks, it is hard to view the “considerations” as anything but.

On November 19, 2020, the Federal Reserve, the FDIC, the FinCEN, the NCUA, and the OCC (collectively, Agencies) issued a press release and joint fact sheet (Fact Sheet) to provide clarity to banks on how to apply a risk-based approach to charities and other nonprofit organizations (NPOs), consistent with the customer due diligence (CDD) requirements contained in FinCEN’s CDD Rule.

Last week’s state attorney general races brought little change on the surface, but change in Washington significantly increases the risk of enforcement and litigation by the states. If it seems counterintuitive, it is. But this Washington changeover heightens the complexity of the relationship between Washington and state capitols.

State attorneys general wear two hats. On the one hand they are typically their state’s chief law enforcement and legal officer. On the other hand, they are a statewide elected official. Thus, a pairing of legal and political. They also may well be the most powerful officials in our government because there are few checks on their authority to investigate and litigate. A governor may sign laws only after legislatures enact them, and legislatures are rarely monolithic. But, an attorney general can file a complaint or issue a subpoena with the stroke of their pen.

The Office of the Comptroller of the Currency (OCC) issued a final rule on October 27 that determines when a national bank or federal savings association (bank) makes a loan and is the “true lender” in the context of a partnership between a bank and a third party, such as a marketplace lender. This is a significant regulatory development that warrants the close attention of the national banking community and those who do business with national banks and federal savings associations.

The five federal banking agencies (Federal Reserve, CFPB, FDIC, NCUA, and OCC – collectively Agencies) issued a proposed rule on October 20 on the role of supervisory guidance. The proposal codifies and expands upon a 2018 statement from the same agencies about which we previously reported. In November 2018, the Agencies (aside from the NCUA) received a petition for a rulemaking, as permitted under the Administrative Procedure Act, requesting that the Agencies codify the 2018 statement.

The main thrust of the 2018 statement was that supervisory guidance does not have the force and effect of law, and that the Agencies do not take enforcement actions based on supervisory guidance. The current proposal not only reaffirms and clarifies the 2018 statement but, in certain respects, goes further.

The Consumer Financial Protection Bureau (CFPB or Bureau) on October 20 issued a final rule to extend the government-sponsored enterprises patch (GSE Patch), i.e., the “temporary qualified mortgage” exemption within the qualified mortgage/ability-to-repay rule.

The Consumer Financial Protection Bureau (CFPB or Bureau) issued a policy statement on October 5 establishing a process to allow for early termination of consent orders. The policy statement is applicable on October 8, 2020.

The Dodd-Frank Act provides that the Bureau may enter into administrative consent orders where the Bureau has identified violations of federal consumer financial law. Consent orders, which generally have a five-year term, describe the Bureau’s findings and conclusions concerning the identified violations by an entity and generally impose injunctive relief, monetary relief, penalties, and reporting, recordkeeping, and cooperation requirements.

An August 31 memorandum issued by the Office of Information and Regulatory Affairs (OIRA), an arm of the Office of Management and Budget (OMB) within the Executive Branch, could dramatically change the way agencies handle civil and administrative enforcement proceedings. The memorandum directs covered agencies to provide greater due process to individuals and companies under investigation and reemphasizes the principle that the burden of proof of a violation rests solely with the government. The memorandum was issued to implement the directives contained in Section 6 of Executive Order 13924, Executive Order on Regulatory Relief to Support Economic Recovery (issued May 19, 2020). In relevant part, the executive order directed agency heads to revise agency procedures and practices in light of “the principles of fairness in administrative enforcement and adjudication.”

The Financial Crimes Enforcement Network (FinCEN) issued a final rule that requires minimum standards for anti-money laundering (AML) programs for banks lacking a federal functional regulator (the Federal Reserve Board, OCC, FDIC, OTS, NCAU, and SEC), i.e., banks and similar financial institutions that are subject only to state regulation and supervision, and certain international banking entities (collectively, “covered banking entities”).

The final rule also extends customer identification program (CIP) and beneficial ownership requirements (also known as the Customer Due Diligence or CDD Rule) to covered banking entities. Such banking entities may include private banks, international banking entities, non-federally-insured credit unions, state banks, savings associations, and trust companies.

On the heels of an interpretive letter allowing national banks and federal savings associations (FSAs) to provide cryptocurrency custody services to customers (see our LawFlash), the US Office of the Comptroller of the Currency (OCC) issued another interpretive letter on September 21 clarifying that national banks and FSAs are authorized to hold stablecoin reserves. The interpretive letter only addresses stablecoin that is:

  • stored in a hosted wallet, defined by the OCC to mean “an account-based software program for storing cryptographic keys controlled by an identifiable third party” that receives, stores, and transmits cryptocurrency transactions on behalf of accountholders, which generally do not have access to such keys themselves;
  • backed on a 1:1 basis by a single fiat currency; and
  • verified by the bank at least daily to confirm that reserve account balances are always equal to or greater than the number of the issuer’s outstanding stablecoins.

Section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act (ECOA) to require financial institutions to compile, maintain, and submit to the Consumer Financial Protection Bureau (CFPB or Bureau) certain data on applications for credit for women-owned, minority-owned, and small businesses. The Bureau took the next step to implement this mandate on September 15, 2020 by releasing its Outline of Proposals under Consideration and Alternatives Considered (Outline) regarding small business lending data collection and reporting. Coinciding with the issuance of the Outline, the Bureau also released a high-level summary.