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Financial Services Law Insights and Observations


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  • New Hampshire clarifies licensing requirements

    On May 27, the New Hampshire governor signed HB 312, which clarifies certain deadlines and provisions in consumer credit applications and licensing requirements for mortgage loan originators. Among other things, HB 312 states that company licensees or persons must “deliver to the commissioner a list of all New Hampshire consumers who have contracted with the licensee or with whom the licensee is otherwise engaged in business regulated under this chapter, and other requested lists summarizing the business of the licensee, within 7 days of receipt of the request” or be subject to a $50 fine per day for each day. The bill further stipulates that a “license shall not be issued and effective unless the applicant or licensee is licensed or registered in the state where its principal office is located.” This provision modifies the previous requirements, in that it is now only applicable to nondepository mortgage bankers, brokers, and servicers, but no longer applies to mortgage loan originators. Additional provisions address, among other things, “examinations of family trust companies, delegation by credit union boards to committees, qualifications of the banking commissioner, and authorizing depository banks to elect benefit corporation status.” The act takes effect 60 days after its passage.

    Licensing State Legislation New Hampshire Mortgages Credit Union

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  • Court approves $9.7 million overdraft fee settlement


    On February 25, the U.S. District Court for the Northern District of New York approved a roughly $9.7 million class action settlement resolving claims that a New York credit union improperly assessed banking fees, including overdraft fees, when members had sufficient funds in their checking accounts to pay for the transactions presented for payment. The plaintiffs also alleged, among other things, that the credit union (i) improperly charged fees on a variety of transactions for members who did not opt-in to the credit union’s protection programs; (ii) assessed fees in instances where there was no contractual basis to assess the fees; (iii) transferred money from members’ savings accounts into checking accounts to avoid negative balances and resulting fees, but still imposed the fee; and (iv) violated the terms of its contracts and various laws by imposing non-sufficient funds fees more than once on the same transaction. The settlement requires the credit union to pay approximately $5.85 million into a settlement fund, plus nearly $2.53 million in attorneys’ fees, $168,030 in costs, and $15,000 service awards to each of the three named plaintiffs. The settlement amount also includes the value of the policy changes to be made by the credit union.

    Courts Credit Union Settlement Overdraft Class Action State Issues

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  • CFPB and NCUA announce supervision MOU

    Federal Issues

    On January 14, the CFPB announced a Memorandum of Understanding (MOU) with the NCUA, which is intended to improve supervision coordination of credit unions with over $10 billion in assets. According to the Bureau’s press release, the MOU covers (i) the sharing of the Covered Reports of Examination and final Reports of Examination for covered institutions, using secure, two-way electronic means; (ii) collaboration in semi-annual strategy planning sessions for examination coordination; (iii) information sharing on training activities and content; and (iv) information sharing related to potential enforcement actions.

    Federal Issues CFPB NCUA MOUs Supervision Credit Union

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  • Maryland Commissioner of Financial Regulation issues advisories on customer identification for depository and non-depository institutions

    State Issues

    On July 15, the Maryland Commissioner of Financial Regulation issued industry advisories to depository and non-depository institutions on identification requirements for customers. In light of an executive order extending the expiration date for certain licenses, permits, and registrations, depository and non-depository institutions may continue to accept driver’s licenses and/or identification cards that expired or are eligible for renewal after March 12, 2020.

    State Issues Covid-19 Maryland Non-Depository Institution Licensing Insurance Securities GSE Financial Institutions Credit Union

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  • California Department of Business Oversight will monitor licensees’ compliance with face covering guidance

    State Issues

    The California Department of Business Oversight announced that it will monitor licensees’ compliance with face covering guidance issued by the California governor and the California Department of Public Health. All customers must be required to wear appropriate face coverings under circumstances outlined in the guidance, and those who refuse to comply and do not meet the outlined exemptions should be refused entry to banks, credit unions, and other places of business.

    State Issues Covid-19 California CDBO Licensing Compliance Bank Compliance Credit Union

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  • NCUA releases additional guidance to credit unions serving hemp businesses

    Agency Rule-Making & Guidance

    Recently, the NCUA released updated guidance to federally insured credit unions on serving hemp businesses. As previously covered by InfoBytes, in August 2019, NCUA released interim guidance allowing federally insured credit unions to service hemp businesses. The guidance explained that the Agriculture Improvement Act of 2018 (2018 Farm Bill) removed hemp from Schedule I of the Controlled Substances Act, but noted that hemp could not be produced lawfully under federal law, beyond a 2014 pilot program, until the USDA promulgated regulations and guidelines to implement the hemp production provisions of the 2018 Farm Bill. In October 2019, the USDA issued an interim final rule, which outlined provisions to approve plans submitted by state or Native American tribes that want to retain primary regulatory authority over the production of hemp and a federal licensing plan for producers in states and tribal territories that do not have their own USDA-approved plans.

    The newly released guidance reminds credit unions to stay current with the federal, state, and Native American tribal laws and regulations that apply to any hemp-related businesses, as the interim final rule does not preempt or limit any law state or tribal law that that is more stringent than the 2018 Farm Bill. Among other things, the guidance notes that NCUA examiners will collect data concerning the types of services credit unions are providing to hemp-related businesses and states that the NCUA expects credit unions to employ sufficient customer due diligence procedures as part of their BSA/AML compliance program to ensure hemp growers possess a valid state or USDA license.

    Agency Rule-Making & Guidance NCUA Credit Union Bank Secrecy Act Anti-Money Laundering Hemp Businesses

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  • Massachusetts Division of Banks issues guidance to credit unions on annual meetings

    State Issues

    On June 12, the Massachusetts Office of Consumer Affairs and Business Regulation, Division of Banks, issued industry guidance regarding annual meetings for Massachusetts chartered credit unions. Massachusetts credit unions that have not yet held their annual membership meeting may postpone the annual meeting until the state of emergency is lifted, the order declaring the state of emergency has expired or is rescinded, or such time as the credit union believes it may safely hold the meeting. Alternatively, a credit union may remotely hold the annual meeting, or may conduct a hybrid meeting consisting of a combination of remote communication in conjunction with a limited in-person meeting. A credit union may also utilize mail voting with either options. Credit unions that exercise a virtual meeting option must comply with certain requirements in the guidance.

    State Issues Covid-19 Massachusetts Credit Union Financial Institutions Banking

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  • New Hampshire issues guidance for reopening of branches of financial institutions

    State Issues

    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.

    State Issues Covid-19 New Hampshire Credit Union Financial Institutions Bank Compliance

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  • NCUA approves interim final rule regarding corrective action regulations

    Agency Rule-Making & Guidance

    On May 21, the NCUA approved an interim final rule (IFR) making two temporary changes to its prompt corrective action regulations to provide relief for credit unions that temporarily fall below the well-capitalized level due to the Covid-19 pandemic. The first change will temporarily reduce the earnings retention requirement for “adequately capitalized” credit unions, and will allow these credit union to decrease earnings retention amounts without submitting a written application requesting approval. Credit unions that exhibit material safety and soundness concerns or pose an undue risk to the Share Insurance Fund may be required to submit an earnings transfer waiver request. The second change will temporarily allow undercapitalized credit unions to submit streamlined, “significantly simpler” net worth restoration plans, provided the credit union is able to demonstrate that the reduction in capital was primarily caused by share growth and that such share growth is a temporary condition due to the Covid-19 pandemic. The IFR’s temporary changes will expire December 31, 2020, and take effect upon publication in the Federal Register. Comments will be received for 30 days.

    The same day, the NCUA also approved a proposed rule to amend its share insurance regulation, which governs the requirements for a share account to be separately insured as a joint account. Specifically, the proposed rule will provide an alternative method for credit unions to satisfy the membership card or account signature card requirement by “explicitly provid[ing] that the signature-card requirement could be satisfied by information contained in the account records of the insured credit union establishing co-ownership of the share account.” Comments on the proposed rule are due 30 days after publication in the Federal Register.

    Agency Rule-Making & Guidance NCUA Credit Union Covid-19

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  • Nebraska authorizes virtual annual meetings for credit unions

    State Issues

    On May 18, the director of the Nebraska Department of Banking and Finance released guidance allowing state-chartered credit unions to hold their annual meetings and certain special member meetings virtually, provided that certain requirements are met. 

    State Issues Covid-19 Nebraska Credit Union

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