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The Virginia Bureau of Financial Institutions issued a policy statement encouraging supervised financial institutions to work constructively to mitigate the impacts of Covid-19 on Virginia consumers and businesses. The bureau advised licensees that data security, internal controls, and adherence to safe and sound lending practices are of paramount importance in alternative work programs. The bureau also will work with financial institutions when scheduling examinations and will place an increased emphasis on off-site reviews and examinations. The policy statement is effective through July 1, 2020, unless modified or withdrawn.
On June 5, the Louisiana Office of Financial Institutions, Securities Division, extended through June 26, 2020 an earlier announcement regarding its operations during the statewide “stay at home” order, which we previously covered here. The announcement provides that: (i) paper copies of registration documents and payment of related fees can be mailed to the LOFI, and certain filings can be submitted electronically; (ii) examinations are being conducted remotely using phone and email correspondence in lieu of traditional on-site examinations; (iii) licensing staff continue to process licensing and registration applications through the CRD/IARD systems; and (iv) enforcement staff are limiting in-person contacts with witnesses and regulatory partners, and are using telecommunications technology to complete tasks remotely.
Louisiana Office of Financial Institutions issues declaration to state-chartered financial institutions
On June 5, the Louisiana Office of Financial Institutions issued an emergency declaration granting parity to Louisiana state-chartered financial institutions with federally-chartered financial institutions as it relates to loans made under the Small Business Administration’s Paycheck Protection Program. As such, loans made under the program will be excluded from the legal lending limits of Louisiana state-chartered institutions. This guidance follows previous guidance issued by Louisiana on the same topic, which was previously discussed here. Further, the emergency declaration grants state-chartered financial institutions the authority to (i) temporarily close an existing branch office; (ii) establish a temporary location; and (iii) reduce operations, products, and services. Additionally, state-chartered financial institutions unable to comply with Louisiana law regarding annual meetings may, provided certain requirements are met, (i) permit shareholders or members to participate by means of remote communication or (ii) hold the annual meeting without a physical location. The declaration is effective until June 26, 2020, unless terminated sooner.
On June 4, the Nevada Department of Business and Industry, Financial Institutions Division advised collection agency licensees that they may operate their business while following all remaining emergency directives issued by the governor, state agencies, justice court orders, and all applicable state and federal laws. The issuance follows guidance issued on March 20, which deemed a collection agency a non-essential business under the Nevada governor’s orders to close non-essential business (previously discussed here).
The Office of the Inspector General of the Federal Reserve Board, which provides independent oversight of both the Consumer Financial Protection Bureau and the Federal Reserve Board, issued a statement on Coronavirus pandemic oversight challenges. The statement identifies areas of focus for the OIG, including coordination between the Reserve Banks, data aggregation, and monitoring and tracing the unique features associated with specific programs (e.g., the Paycheck Protection Program). The OIG is also actively monitoring, among other things, measures taken to encourage financial institutions to lend consistent with specific lending programs and the extent to which pandemic response lending efforts reach intended recipients and communities. The OIG has also expanded testing of critical information technology systems and has broadened the scope of security reviews.
The New Hampshire Banking Department has issued guidance on the reopening of branches and other financial institution offices that were closed due to the Covid-19 pandemic. Banks or credit unions planning to reopen branch offices or other offices are requested to provide notice to the in the manner specified in the guidance and must also ensure that customers and members are aware of any planned reopening. Banks and credit institutions are urged to consult Emergency Order 40 for guidance on precautions to protect the safety of the institutions’ staff and customers.
On May 20, the Federal Deposit Insurance Corporation (FDIC) updated its frequently asked questions issued to financial institutions affected by Covid-19 (previously covered here, here, and here). The updated FAQs provide guidance on Community Reinvestment Act requirements, including, among other things, (i) whether Covid-19-affected states and jurisdictions are considered CRA designated disaster areas, (ii) how activities undertaken in response to Covid-19 that are responsive to community needs will be considered in CRA examinations, and (iii) whether bank loans made under the Paycheck Protection Program or Main Street Lending Program are eligible for CRA consideration.
On May 15, the Colorado Banking and Financial Services commissioners provided additional guidance on the Safer at Home orders. The commissioners continue to encourage Colorado state-chartered financial institutions to work with affected borrowers and customers, and provide payment relief to consumers impacted by Covid-19. For example, financial institutions are encouraged to waive fees for services (e.g., overdraft fees, ATM fees) and provide accommodations such as eliminating minimum balance requirements on accounts and increasing daily withdrawal limits on ATMs.
OFAC designates Iranian front company and owner; DOJ files concurrent criminal charges and related civil forfeiture action
On May 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated a dual Iranian and Iraqi national and a company owned, controlled, or directed by the designated individual for their alleged involvement with Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). According to OFAC, the designated individual allegedly provided support for several years to IRGC-QF’s smuggling operations by securing entry to vessels carrying IRGC-QF shipments, using business connections to facilitate logistics, and developing revenue generating illicit business opportunities. As a result of the sanctions, “all property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.” OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons,” and warned foreign financial institutions that knowingly facilitating significant transactions or providing significant financial services to the designated individuals may subject them to U.S. correspondent account or payable-through sanctions.
On the same day, the DOJ announced a two-count criminal complaint against the designated individual and another Iranian national for allegedly conspiring to provide U.S. financial services to help several Iranian entities and their front companies purchase a petroleum tanker. The defendants allegedly concealed that the sale of the vessel was destined for Iran, and attempted to evade the regulations, prohibitions, and licensing requirements of the International Emergency Economic Powers Act and the Iranian Transactions and Sanctions Regulations. The DOJ also filed a related civil forfeiture complaint claiming that more than $12 million is subject to forfeiture.
On May 5, the North Carolina governor signed the Covid-19 Recovery Act, which provides certain relief to North Carolinians in response to the Covid-19 crisis. Among other things, the legislation authorizes emergency video notarization and video witnessing during the state of emergency. The legislation also provides limited immunity to essential businesses from civil liability for claims alleged to have been caused by the Covid-19 pandemic. Essential businesses include financial and insurance institutions, as determined by Executive Order 121, and any business that the Department of Revenue determines is essential.