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Financial Services Law Insights and Observations

FDIC fines banks for flood insurance, BSA violations

Federal Issues FDIC Enforcement Flood Insurance Flood Disaster Protection Act Bank Secrecy Act Mortgages

Federal Issues

On May 31, the FDIC announced its release of a list of administrative enforcement actions taken against banks and individuals in April. The list reflects that the FDIC issued 17 orders, which includes “two consent orders; three terminations of consent orders; five Section 19 orders; three removal and prohibition orders; and four orders to pay civil money penalty.” Among other actions, the FDIC assessed civil money penalties against three separate banks (see here, here, and here) for alleged violations of the Flood Disaster Protection Act, including failing to (i) obtain flood insurance coverage on loans at or before origination; (ii) maintain, increase, extend, renew, or provide written notification to borrowers concerning flood insurance coverage on loans secured by collateral located in special flood hazard areas; (iii) follow force-placement flood insurance procedures; or (iv) provide borrowers with notice of the availability of federal disaster relief assistance within a reasonable timeframe.

The FDIC also assessed a civil money penalty against a New York-based bank related to alleged violations of the Bank Secrecy Act.

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