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  • Agencies again defer action against foreign funds under Volcker Rule

    Agency Rule-Making & Guidance

    On July 17, the FDIC, the Federal Reserve Board, and the OCC (collectively, the “agencies”) announced that they will not take action against foreign banks for qualifying foreign excluded funds, subject to certain conditions, under the Volcker Rule for an additional two years. The announcement notes that the agencies consulted with the SEC and the CFTC on the decision. Since 2017, the agencies have deferred action on qualifying foreign funds that might be covered under the Volcker Rule (covered by InfoBytes here and here). In a joint statement, the agencies note that they have not finalized revisions to regulations implementing Section 13 of the Bank Holding Company Act, and in order to “provide interested parties greater certainty about the treatment of qualifying foreign excluded funds in the near term,” the agencies are proposing not to take action through July 21, 2021.

    Agency Rule-Making & Guidance Volcker Rule FDIC Bank Compliance Of Interest to Non-US Persons Federal Reserve SEC CFTC

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  • FDIC approves amendments to deposit insurance recordkeeping, joint account determinations

    Agency Rule-Making & Guidance

    On July 16, the FDIC approved amendments to two final rules designed to resolve issues related to deposit insurance regulations. As previously covered by InfoBytes, the first of the final rules amends Part 370 of the FDIC’s Rules and Regulations for “Recordkeeping for Timely Deposit Insurance Determination,” to address issues raised during implementation of the final rule adopted in November 2016 (covered by InfoBytes here). Among other things, the amendments to Part 370 require banks with at least two million deposit accounts to upgrade deposit recordkeeping to allow the FDIC to determine the necessary deposit insurance coverage. The rule also allows for an optional one-year extension of the rule’s compliance date of April 1, 2020, provided prior notice is given to the FDIC. The final rule is effective October 1. FDIC Director Gruenberg dissented from the final rule’s approval.

    The second final rule amends Part 330—applicable to banks of all sizes—to update the requirements for verifying participants in joint deposit accounts. Part 330 provides alternatives to the traditional signature card, and will allow satisfaction of proof of joint-ownership to be established by other information contained in a bank’s deposit account records and not solely by signed signature cards of each co-owner. The final rule takes effect 30 days after publication in the Federal Register.

    Agency Rule-Making & Guidance FDIC Deposit Insurance Bank Compliance

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  • OCC releases guidance documents for final rule implementing HOLA amendments

    Agency Rule-Making & Guidance

    On July 1, the OCC issued Bulletin 2019-31, which describes the process for federal savings associations to make an election to operate as “covered savings associations,” with the rights and privileges of national banks under the May 24 Home Owners’ Loan Act (HOLA) final rule. As previously covered by InfoBytes, the OCC issued a final rule—pursuant to section 206 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, amending the Home Owners’ Loan Act (HOLA)—which establishes standards permitting federal savings associations with total consolidated assets of $20 billion or less as of December 31, 2017, to elect to operate as “covered savings associations,” with the rights and privileges of national banks. The final rule provides that associations who choose this election will retain their federal savings association charters and existing governance frameworks, and will generally be subject to the same duties, restrictions, penalties, liabilities, conditions, and limitations that apply to national banks.

    Bulletin 2019-31 reminds entities of the July 1 effective date of the final rule and provides details on the process for making an election pursuant to the rule. Additionally, along with the Bulletin, the OCC released a set of Frequently Asked Questions covering the final rule.

    Agency Rule-Making & Guidance OCC Home Owners' Loan Act Bank Compliance EGRRCPA

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  • Federal agencies release host state loan-to-deposit ratios

    Agency Rule-Making & Guidance

    On May 28, the Federal Reserve Board, the FDIC, and the OCC released the current host state loan-to-deposit ratios for each state or U.S. territory, which the agencies use to determine compliance with Section 109 of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. Under the Act, banks are prohibited from establishing or acquiring branches outside of their home state for the primary purpose of deposit production. Branches of banks controlled by out-of-state bank holding companies are also subject to the same restriction. Determining compliance with Section 109 requires a comparison of a bank’s estimated statewide loan-to-deposit ratio to the yearly host state loan-to-deposit ratios. If a bank’s statewide ratio is less than one-half of the yearly published host state ratio, an additional review is required by the appropriate agency, which involves a determination of whether a bank is reasonably helping to meet the credit needs of the communities served by the bank’s interstate branches.

    Agency Rule-Making & Guidance OCC Federal Reserve FDIC Bank Compliance

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  • OCC issues final rule allowing certain federal savings associations to operate with national bank powers

    Agency Rule-Making & Guidance

    On May 24, the OCC issuedfinal rule, which establishes standards permitting federal savings associations with total consolidated assets of $20 billion or less as of December 31, 2017, to elect to operate as “covered savings associations,” with the rights and privileges of national banks. The final rule—issued pursuant to section 206 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, which amended the Home Owners’ Loan Act (HOLA)—provides that associations who choose this election will retain their federal savings association charters and existing governance frameworks, and will generally be subject to the same duties, restrictions, penalties, liabilities, conditions, and limitations that apply to national banks. Among other things, the final rule also states that “a covered savings association may continue to operate as a covered savings association if, after the effective date of the election, it has total consolidated assets greater than $20 billion.” The final rule takes effect July 1.

    Agency Rule-Making & Guidance OCC Home Owners' Loan Act Bank Compliance EGRRCPA

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  • FDIC proposes changes to record keeping requirements for deposit insurance determinations

    Agency Rule-Making & Guidance

    On March 29, the FDIC Board of Directors approved proposals to amend two rules, which would simplify the process for making deposit insurance determinations in the event a bank enters receivership. The first proposal amends Part 370 of the FDIC’s Rules and Regulations for “Recordkeeping for Timely Deposit Insurance Determination,” to address issues raised during implementation of the final rule adopted in November 2016 (covered by InfoBytes here). Among other things, the proposal provides an optional one-year extension of the rule’s compliance date of April 1, 2020. The second proposal amends Part 330, which would allow satisfaction of proof of co-ownership for deposits of a joint account to be insured separately from deposits in respective individual accounts, to be established by other information contained in deposit account records, and not solely by signed signature cards of each co-owner. Comments on each proposal will be due within 30 days of publication in the Federal Register.

    Agency Rule-Making & Guidance FDIC Bank Compliance Deposit Insurance

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  • OCC releases February 2019 enforcement actions

    Federal Issues

    On February 15, the OCC released a list of recent enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with such entities. The new enforcement actions include a civil money penalty order against an individual, a notice of prohibition against an individual, and three removal and prohibition consent orders against individuals, and a cease and desist consent order described below.

    On January 7, the OCC entered into a consent order with a federal savings bank related to allegations of unsafe or unsound banking practices. The OCC alleges the bank failed to implement and maintain an effective compliance management system, risk governance framework, and information technology (IT) program. Among other provisions, the order requires the bank to develop written plans to strengthen the compliance, risk governance, and IT programs, and requires the Board to ensure the bank has adopted and implemented all the corrective actions required by the order. The bank neither admits nor denies the allegations and the OCC did not assess any monetary penalties against the bank.

    Federal Issues OCC Enforcement Bank Compliance Risk Governance Consent Order

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  • OCC revises the Comptroller’s Licensing Manual

    Agency Rule-Making & Guidance

    On January 31, the OCC announced an updated version of its “Subsidiaries and Equity Investments” booklet of the Comptroller’s Licensing Manual. According to Bulletin 2019-4, the revised booklet now provides additional guidance describing activities that the OCC has determined may be performed in operating subsidiaries and servicer corporations, or through pass-through investments.

    Agency Rule-Making & Guidance OCC Comptroller's Licensing Manual Bank Compliance

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  • NYDFS fines London-based bank $40 million for alleged FX violations

    Securities

    On January 29, NYDFS announced a $40 million settlement with a London-based financial services company to resolve allegations the bank engaged in unsafe and unsound practices in its foreign exchange (FX) trading business. According to the consent order, the company did not implement and maintain sufficient controls to identify illegal tactics used by traders to maximize profits or minimize losses at the expense of the company’s customers, competitors, and the market as a whole. Among other things, the order states that between 2007 and 2013 the company’s FX traders (i) improperly coordinated trading through a chat room; (ii) improperly shared confidential consumer information; and (iii) engaged in “deliberate underfills” of consumer accounts. In addition to the fine, the company is required to improve its internal controls and programs to comply with applicable New York State and federal laws and regulations, submit a written plan to improve its compliance risk management program, and provide an enhanced written internal audit program. NYDFS acknowledged the company’s full cooperation with the investigation, in addition to taking disciplinary action against those identified as engaging in the misconduct.

    Securities NYDFS Enforcement Bank Compliance Foreign Exchange Trading Of Interest to Non-US Persons

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  • Federal Reserve issues enforcement action against Texas bank for BSA/AML compliance issues

    Financial Crimes

    On January 8, the Federal Reserve Board announced an enforcement action against a Texas bank for alleged weaknesses in its anti-money laundering risk management and compliance programs, including failure to comply with applicable rules and regulations, such as the Bank Secrecy Act. Under the terms of the order, the bank is required to (i) develop and implement a written plan to strengthen the board of directors’ oversight of Bank Secrecy Act/anti-money laundering (BSA/AML) compliance; (ii) submit an enhanced written compliance program that complies with BSA/AML requirements; (iii) ensure the bank provides effective training for all personnel related to BSA/AML compliance responsibilities; (iv) submit an enhanced, written customer due diligence plan; (v) submit a program to ensure compliant, timely, and accurate suspicious activity monitoring and reporting; (vi) retain an independent third party to ensure the effectiveness of the bank’s transaction monitoring system; and (vii) submit a written plan for independent testing of the bank’s compliance with all applicable BSA/AML requirements. A civil money penalty was not assessed against the bank.

    Financial Crimes Federal Reserve Anti-Money Laundering Bank Compliance Bank Secrecy Act

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