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NYDFS pens guidance for vetting key senior officials within financial institutions
On January 22, NYDFS issued an industry letter titled “Guidance on Assessment of the Character and Fitness of Directors, Senior Officers, and Managers” for banks and other financial institutions (Covered Institutions) to notify them of NYDFS’s expectations. The final guidance came after a review process conducted over the past year where twenty comments indicated the need for Covered Institutions to build “robust character and fitness” policies. NYDFS asked that these Covered Institutions develop and maintain a framework to vet senior officials’ character and fitness during onboarding and on a regular basis.
According to the guidance, each Covered Institution is expected to “define sensitive issues, warning signs, and other indicators” that would be cause for concern. The depth and nature of each Covered Institution’s assessment is tailored to each institution, and the guidance does not demand a defined period for the review, but NYDFS supplied a list of suggested questions for Covered Institutions to use as best practices for vetting key individuals. (These questions are not mandated, however.) NYDFS noted that Covered Institutions are expected to review materials related to the character and fitness assessment of key persons. The guidance’s appendix lists suggested questions, including whether the key person has reviewed and understood pertinent policies and whether the interviewee has ever been charged or convicted of a crime or has previously been sanctioned or censured by a securities regulator.
FSB report addresses financial risk concerns with third-party relationships
On December 4, the Financial Stability Board (FSB) published a report titled “Enhancing Third-Party Risk Management and Oversight: A Toolkit for Financial Institutions and Financial Authorities,” as summarized in this press release. The report provides a toolkit that: (i) defines common terms to improve consistency among financial institutions, including “third-party service relationship,” “service provider,” and “critical service,” among others; (ii) outlines tools for financial institutions to identify critical third-party services and manage potential risks throughout the service lifecycle, onboarding and monitoring of service providers, and reporting incidents, among others; and (iii) outlines tools for financial authorities to manage third-party risks, including how to identify third-party dependencies and potential systemic risks. In preparing the report, the FSB received public feedback over the past summer regarding risk concerns stemming from outsourcing and third-party service relationships.
Michigan regulator urges institutions to protect stimulus payments from overdrafts, fees
On March 15, the Michigan Department of Insurance and Financial Services issued a bulletin “strongly” encouraging financial institutions to protect payments made to customers under the American Rescue Plan from overdrafts and fees. The bulletin further instructs that if a financial institution’s system automatically applies such a payment to a preexisting overdraft, the institution should reverse the application of the direct payment as promptly as possible.
Virginia issues modified stay at home order identifying banks and financial institution as essential retail businesses
On December 10, the governor of Virginia issued a modified stay at home order limiting travel and gatherings for Virginia residents and operations for certain businesses. However, banks and other financial institutions with retail functions are considered essential retail businesses and may continue to remain open during normal business hours. All businesses, including essential retail businesses, are advised to adhere to the Guidelines for All Business Sectors.
Rhode Island Division of Banking issues guidance on workplace practices to mitigate spread of Covid-19
On November 6, the Rhode Island Department of Business Regulation, Division of Banking issued Banking Bulletin 2020-6 announcing certain standards for personnel and office operations that it encourages financial institutions to implement to mitigate further spread of Covid-19. These standards include, among others, guidelines for employee mask-wearing and congregation, and arrangement of office furniture to encourage social distancing.
Washington Department of Financial Institutions extends “work from home” guidance
On October 26, the Washington Department of Financial Institutions issued interim regulatory guidance to licensed mortgage loan originators and companies that sponsor them relating to temporary remote work. The guidance extends earlier interim guidance (previously covered here, here, and here) permitting mortgage loan originators to work from home, provided certain data security obligations are met. The guidance extends through March 31, 2021.
Hawaii regulator extends authorization for reduced office hours, temporary closures
On October 2, the Hawaii Division of Financial Institutions extended interim guidance allowing Hawaii-located financial institutions to reduce hours or close offices during Hawaii’s Covid-19 state of emergency (see here and here for previous coverage). Similar to previously issued guidance, financial institutions and escrow depositories are required to provide notice of closures or reductions in hours. While mortgage loan originators, mortgage servicers and money transmitters are not required to provide notice, the regulator requests a courtesy notification of any closure or reduction in hours. The guidance is extended “in accordance with the county emergency orders found on each county website.”
Hawaii regulator extends guidance permitting licensees to reduce office hours, temporarily close
On August 13, the Hawaii Division of Financial Institutions extended, until September 30, 2020, interim guidance permitting licensees with locations in Hawaii to reduce hours or close offices during Hawaii’s Covid-19 emergency period. Consistent with the previous guidance, covered here, financial institutions and escrow depositories are required to provide notice of closures or reductions in hours. While mortgage loan originators, mortgage servicers, and money transmitters are not required to provide notice, the regulator requests a courtesy notification of any closure or reduction in hours.
West Virginia extends remote working for depository and non-depository entities
The West Virginia Division of Financial Institutions extended, through September 1, 2020, its guidance temporarily permitting employees of regulated entities to work from home or some other remote location approved by the financial institution, whether in West Virginia or another state. The initial guidelines were announced on March 13 (previously discussed here) and had been previously extended through June 15, as previously covered here.
New York extends expiration date of licenses issued by the Division of Licensing Services
Pursuant to Executive Order 202.11 (previously discussed here), the Department of State, Division of Licensing Services, announced that any license issued by the division that expires after March 27, 2020, will remain in effect until September 5, 2020. Further, the announcement notes that the Appraisal Subcommittee of the Federal Financial Institutions Examination Council has advised that appraisers within New York have been granted a 90-day deferment for meeting continuing education requirements. A license holder that is eligible to renew and does not need the extension is encouraged to renew the license. Other license holders may rely on the above extensions.