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OFAC sanctions persons exploiting Guatemala mining sector
On November 18, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 against a Russian national and a Belarusian national, as well as three associated entities, “for their role in exploiting the Guatemalan mining sector.” OFAC noted that the designations demonstrate “the U.S. government’s ongoing commitment to impose tangible and significant consequences on corrupt actors in order to protect the U.S. financial system from abuse,” as well as its commitment “to identifying acts of corruption and promoting accountability for corrupt actors and disrupting their access to the U.S. and international financial system.” As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless exempt or authorized by a general or specific OFAC license.
OFAC announces sanctions tied to Mexican drug cartel
On November 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 14059 against a Mexican drug cartel and its co-leaders for “having engaged in, or attempted to engage in, activities or transactions that materially contributed to, or pose a significant risk of materially contributing to, the international proliferation of illicit drugs or their means of production.” OFAC attributed its actions in part to a “critical” partnership with the Drug Enforcement Administration and the Mexican government. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons.
Republicans say social media company made misleading statements on China data-sharing practices
On November 22, Ranking Member James Comer (R-KY), Committee on Oversight and Reform, and Ranking Member Cathy McMorris Rodgers (R-WA), Committee on Energy and Commerce, sent a follow-up letter to a global social media company claiming it may have provided misleading or false information about its data sharing and privacy practices related to China. According to the lawmakers, the company claimed in a briefing to the committee that it does not track users’ internet data if they are not using the app, and that China-based employees cannot access U.S. users’ location-specific data—both of which appear to be “misleading at best, and at worst, false.” The lawmakers referenced reports alleging the company “clandestinely” gathers U.S. users’ sensitive internet history, and expressed concerns about statements made by employees responsible for company data that “‘it is impossible to keep data that should not be stored in [China] from being retained in [China]-based servers.’” Claiming the company has withheld information, the lawmakers are seeking additional information, including documents and communications related to the monitoring of U.S. users’ browsing data and location tracking.
Arizona establishes new limits on consumer debt collection
Recently, the Arizona governor approved Proposition 209, which decreases the maximum lawful annual interest rate on “medical debt” from 10 percent to three percent. Among other things, the proposition defines “medical debt” as “a loan, indebtedness, or other obligation arising directly from the receipt of health care services or of medical products or devices.” Accordingly, in addition to judgments on medical debt, the three percent annual rate limit applies to loans or other financing for health care services or medical products or devices. The proposition also decreases the share of borrowers’ wages that lenders can garnish. The current limit is 25 percent, but that percentage will decrease to 10 percent for many consumers, and to five percent for consumers dealing with extreme economic hardship. Additionally, the proposition increases various exemption amounts, including: (i) $400,000 (up from $150,000) for the homestead exemption; and (ii) $15,000 (up from $6,000) for household furniture, furnishing, goods, and appliances. The proposition is effective immediately.
On December 7, a state court granted a temporary restraining order, which stopped the enactment of the approved measure. An evidentiary hearing is set to happen in December where the plaintiffs are seeking to have the proposition nullified.
Hair clinic must pay $500,000 to resolve data breach
On November 21, the U.S. District Court for the Central District of California granted final approval to a $500,000 class action settlement resolving allegations that a ransomware attack and data breach exposed the personal information of over 100,000 of the defendant hair-restoration clinic’s customers. According to the order, the plaintiffs alleged that defendant violated California's consumer protection statutes by failing to: (i) protect consumers' personal information; (ii) notify them quickly enough about the breach; and (iii) monitor its network for vulnerabilities and breaches. The order provided attorneys’ fees of $262,500, and awards of $1,250 each to the class representatives.
Fed fines bank for flood insurance violations
On December 1, the Federal Reserve Board announced a civil money penalty against a New-York based bank. In its order, the Fed alleged that the bank violated the National Flood Insurance Act (NFIA) and Regulation H. The order assesses a $105,500 civil money penalty against the bank in connection with its “alleged pattern or practice of violations of Regulation H,” but does not specify the number or the precise nature of the alleged violations. The maximum civil money penalty under the NFIA for a pattern or practice of violations is $2,392 per violation.
OCC announces 2023 assessment schedule
On December 1, the OCC released its 2023 assessment schedule. Among other things, the OCC noted that it would reduce the rates in the general assessment fee schedule and maintain assessment rates from 2022 for the independent trust and independent credit card fee schedules. The changes include reductions by 40 percent for all banks on their first $200 million in total balance sheet assets, and a 20 percent reduction for balance-sheet assets above $200 million and up to $20 billion. The OCC also noted that it is not adjusting the assessment rates for inflation. Additionally, the OCC said that it will increase the hourly fee for special examinations from $155 to $161. The OCC also highlighted that assessments are due March 31 and September 30, based on Call Report information as of December 31 and June 30. The OCC further explained that the schedule continues to include a surcharge for national banks, federal savings associations, and federal branches and agencies of foreign banks that require increased supervisory resources.
HUD increases FHA loan limits for 2023
On December 1, HUD announced the 2023 loan limits for Single Family Title II Forward and Home Equity Conversion Mortgage (HECM) insurance programs. (See also Mortgagee Letter 2022-20 and Mortgagee Letter 2022-21). For FHA case numbers assigned on or after January 1, 2023, the maximum loan limits for FHA forward mortgages will increase in 3,222 counties and remain unchanged in 12 counties. The HECM maximum claim amount will also increase from $970,800 to $1,089,300.
FHFA announces 2023 conforming loan limits
On November 29, FHFA announced that it will raise the maximum conforming loan limits (CLL) for mortgages purchased in 2023 by Fannie Mae and Freddie Mac from $647,200 to $726,200 (the 2022 CLL limits were covered by InfoBytes here). In most high-cost areas, the maximum loan limit for one-unit properties will be 1,089,300. According to FHFA, due to generally rising home values, “the CLLs will be higher in all but two U.S. counties or county equivalents.” A county-specific list of 2023 conforming loan limits for all counties and county-equivalent areas in the U.S. can be accessed here.
CFPB denies crypto lender’s petition to set aside CID
On November 22, the CFPB denied a petition by a cryptocurrency lender to set aside a civil investigative demand (CID) issued by the Bureau last December. According to the Bureau, the lender (which states on its website that it is licensed by various state regulators to engage in consumer lending and money transmitting) and its affiliates market a range of products, including interest-accruing accounts and lines of credit. The CID informed the lender that a company representative was required to provide oral testimony at an investigational hearing into whether the lender's conduct is subject to federal consumer financial law, whether the lender had violated the Consumer Financial Protection Act and Regulation E, and whether an enforcement action would be in the public interest.
The lender petitioned the Bureau in March to modify or set aside the CID, arguing, among other things, that the Bureau lacks authority to investigate its Earn Interest Product because the SEC had previously made clear in a different matter (covered by InfoBytes here) that interest-bearing crypto lending products like the lender’s Earn Interest Product are securities. Accordingly, the lender contended that the Earn Interest Product fell outside of the Bureau’s jurisdiction. Furthermore, the lender asserted that in light of the SEC’s action, it stopped offering its Earn Interest Product to new U.S. customers and “began working to implement other changes by which current users would no longer earn interest on new funds in their Earn Interest Product accounts.”
In rejecting the lender’s arguments, the Bureau said that lender “is trying to avoid answering any of the Bureau’s questions about the Earn Interest Product (on the theory that the product is a security subject to SEC oversight) while at the same time preserving the argument that the product is not a security subject to SEC oversight. This attempt to have it both ways dooms [the lender’s] petition from the start.” The Bureau also emphasized that unresolved facts related to the lender’s Earn Interest Product make it impossible to determine whether any of the challenged conduct is subject to an exclusion from the Bureau’s authority under the CFPA or an exemption to Regulation E. The Bureau further noted that courts have established that the recipient of a CID cannot challenge an agency investigation by contesting facts that the agency might find, at least in situations “where the investigation is not patently outside the agency’s authority.”