Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

Filter

Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.

  • FDIC assesses bank $12.5 million BSA penalty

    Federal Issues

    On January 29, the FDIC released a list of administrative enforcement actions taken against banks and individuals in December. During the month, the FDIC issued 10 orders consisting of “three consent orders, one termination of consent order, three section 19 orders, two removal and prohibition orders and two orders to pay civil money penalties.” Among the orders, the FDIC issued a $12.5 million civil money penalty order against a New York-based bank resolving allegations that the bank violated the Bank Secrecy Act (BSA) and its implementing regulations from April 2014 through September 2018, including failing to comply with the FDIC’s December 2015 consent order, which required the bank to strengthen its BSA/anti-money laundering oversight. The $12.5 million civil money penalty is reflective of the “the financial resources and good faith of the [bank], the gravity of the violations by the [bank], the history of previous violations by the [bank], and such other matters[.]”

    Federal Issues FDIC Enforcement Financial Crimes Bank Secrecy Act Anti-Money Laundering Bank Regulatory

    Share page with AddThis
  • Court denies dismissal of OCC CRA rule challenge

    Courts

    On January 29, the U.S. District Court for the Northern District of California denied dismissal of an action brought against the OCC by two community coalitions, requesting the court block the agency’s final rule to revise the regulatory framework implementing the Community Reinvestment Act (CRA). As previously covered by InfoBytes, in June 2020, the groups filed a complaint alleging that, among other things, the OCC failed to provide for meaningful public input on key revisions to the agency’s final rule, and that the May 20 rule (covered by a Buckley Special Alert) failed to consider the impact of the Covid-19 pandemic and is in violation of the Administrative Procedures Act. The OCC moved to dismiss the action, arguing that the community groups lack standing, or in the alternative, that they do not fall within the CRA’s “zone of interests.” The district court disagreed. Specifically, the court concluded that the community groups adequately alleged standing because the members of their organizations “compete for OCC-regulated banks’ CRA dollars,” and their members “will now have to compete with investment opportunities that could not previously receive CRA credit.” Moreover, among other things, the court concluded that the community groups satisfy the “the zone-of-interests test, because they receive grants and loans for which banks obtain CRA credit, making them direct beneficiaries of the statute.”

    Courts Federal Issues OCC CRA Administrative Procedures Act Bank Regulatory

    Share page with AddThis
  • OCC releases CRA determinations, distressed and underserved areas

    Federal Issues

    On January 29, the OCC published Bulletin 2021-5, containing lists of bank type determinations and distressed and underserved areas for 2021, and its computation of the banking industry’s median hourly compensation value. The information is applicable to national banks, federal and state savings associations, and federal branches of foreign banks subject to the agency’s 2020 final rule to modernize the regulatory framework implementing the Community Reinvestment Act rule (CRA). As previously covered by a Buckley Special Alert, the 2020 final rule, among other things (i) updated deposit-based assessment areas; (ii) mandated the inclusion of consumer loans in CRA evaluations; and (iii) included a non-exhaustive illustrative list of activities that qualify for CRA consideration. The 2021 list of bank type determinations identifies banks based on asset size or business model. According to the OCC, a bank’s type will “generally determine[] the performance standards and related examination procedures used to evaluate that bank’s CRA performance.” The agency’s list of distressed or underserved areas identifies tracts where banks participating in qualifying activities may receive CRA consideration under the final rule’s community development definition. Finally, the OCC states that the banking industry median hourly compensation value applicable to qualifying community development service activities will be $39.03. This figure, the agency explains, will be “used to quantify the value of a bank’s community development services” performed from October 1, 2020 through December 31, 2021.

    Federal Issues OCC CRA Of Interest to Non-US Persons Bank Regulatory

    Share page with AddThis
  • OCC delays fair access rule

    Agency Rule-Making & Guidance

    On January 28, the OCC announced it has paused publication of a final rule that would ensure covered national banks, federal savings associations, and federal branches and agencies of foreign bank organizations provide all customers fair access to financial services. Delaying publication in the Federal Register “will allow the next confirmed Comptroller of the Currency to review the final rule and the public comments the OCC received, as part of an orderly transition,” the agency explained. Under the final rule (covered by InfoBytes here), banks would be required to grant fair access to financial services, capital, and credit based on the risk assessment of individual customers, rather than broad-based decisions affecting whole categories or classes of customers. The OCC confirmed, however, that its “long-standing supervisory guidance stating that banks should avoid termination of broad categories of customers without assessing individual customer risk remains in effect.”

    As previously covered by InfoBytes, on January 20, the Biden administration broadly directed the heads of executive departments and agencies across the federal government (without specifying which departments or agencies are covered) to “immediately withdraw” or delay action on any pending regulations not yet published in the Federal Register.

    Agency Rule-Making & Guidance OCC Dodd-Frank Bank Compliance Of Interest to Non-US Persons Bank Regulatory

    Share page with AddThis
  • OCC releases recent enforcement actions

    Federal Issues

    On January 21, 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. Included is a civil money penalty order against a Texas-based bank, which requires the payment of $382,500 for an alleged pattern or practice of violations of the Flood Disaster Protection Act and its regulations.

    Federal Issues OCC Enforcement Flood Disaster Protection Act Bank Regulatory

    Share page with AddThis
  • OCC addresses permissible activities for chartered national banks

    Agency Rule-Making & Guidance

    On January 11, the OCC published an interpretive letter #1176 addressing the OCC’s authority to charter national banks within the scope of 12 U.S.C. § 27(a) of the National Bank Act. As described by the OCC, the statute “recognizes the authority of the OCC to charter a bank that limits its operations to those of a trust company and activities related thereto.” Trust company activities include those “permissible for a state trust bank or company even if those state authorized activities are not necessarily considered fiduciary in nature under 12 U.S.C. § 92a and 12 CFR Part 9.” Accordingly, the letter explains that a national bank chartered under 12 U.S.C. § 27(a) is not limited to fiduciary activities as defined for purposes of 12 C.F.R. Part 9 and may engage in any permissible activities of a trust company. The letter also discusses (i) standards the OCC considers when assessing whether an activity is conducted in a fiduciary capacity; (ii) implications for chartering de novo institutions that limit activities to those of a trust company; (iii) permissible activities of converting state-chartered institutions and the handling of nonconforming assets; and (iv) permissible activities for national banks that do not have fiduciary powers.

    Agency Rule-Making & Guidance OCC National Bank Act Bank Charter Bank Regulatory

    Share page with AddThis
  • OCC addresses qualifying activities for CRA final rule

    Agency Rule-Making & Guidance

    On January 4, the OCC issued interpretive letter #1177, which addresses qualifying activities of the affiliates and subsidiaries of national banks and savings associations under the OCC’s 2020 final rule to modernize the regulatory framework implementing the Community Reinvestment Act (CRA). As previously covered by a Buckley Special Alert here, the 2020 final rule, among other things (i) updated deposit-based assessment areas; (ii) mandated the inclusion of consumer loans in CRA evaluations; and (iii) included a non-exhaustive illustrative list of activities that qualify for CRA consideration. The interpretive letter states that qualifying activities under the 2020 final rule may include the CRA qualifying activities of the consolidated subsidiaries of a bank, but that a bank’s qualifying activities generally do not include the activities of the bank’s nonbank affiliates. The OCC notes that the “very factors demonstrating the tight link between a bank and its consolidated subsidiary…suggest that activities conducted by a bank’s parent and sister companies should generally not receive CRA credit.” Thus, banks will not be given credit for qualifying activities conducted by such affiliates unless the bank “directly financed or otherwise supported such activities.”

    Agency Rule-Making & Guidance OCC CRA Bank Regulatory

    Share page with AddThis
  • NYDFS virtual currency techsprint set for March

    State Issues

    On January 21, NYDFS announced the details of its first-of-its-kind techsprint focusing on virtual currency that will open on March 1 and culminate on March 12. As previously covered by InfoBytes, the techsprint is a collaboration with the Conference of State Bank Supervisors and the Alliance for Innovative Regulation, and the objective is “to achieve creative and collaborative prototyping as a step toward smarter regulatory reporting in virtual currency.” NYDFS notes that the virtual format will allow flexibility for the techsprint to include a combination of full-day facilitated exercises and self-paced, team-managed efforts. The teams will work to address one of several problem statements, including (i) “[h]ow can DFS achieve real-time or more frequent access to company financial data from virtual currency licensees and receive early warning signs of financial risks to the companies or their customers?” (i) “[h]ow can DFS obtain real-time transaction data from its licensees and automatically analyze the data to safeguard against illicit financing risks?” and (iii) “[h]ow can DFS use tools such as natural language processing, machine learning, and artificial intelligence to identify risks by processing and analyzing supervisory reports that are submitted by licensees in a wide range of formats?”

    State Issues NYDFS Fintech Virtual Currency Techsprint Bank Regulatory

    Share page with AddThis
  • Fed proposes SAR filing exemptions

    Agency Rule-Making & Guidance

    On January 22, the Federal Reserve Board published a notice of proposed rulemaking, which would modify the requirements to file Suspicious Activity Reports (SARs) for state member banks, Edge and agreement corporations, U.S. offices of foreign banking organizations supervised by the Federal Reserve, and bank holding companies and their nonbank subsidiaries. The proposal would amend the Board’s SAR regulations to allow for the issuance of exemptions from the requirements of those regulations. As previously covered by InfoBytes, in December, the FDIC and the OCC issued similar proposals. As with the OCC and the FDIC proposals, the Board’s proposal is intended “to facilitate supervised institutions in meeting Bank Secrecy Act requirements more efficiently and effectively, including through development of innovative solutions.” Comments on the proposed rule are due February 22.

    Agency Rule-Making & Guidance FDIC OCC Federal Reserve SARs Financial Crimes Bank Secrecy Act Of Interest to Non-US Persons Anti-Money Laundering Bank Regulatory

    Share page with AddThis
  • FDIC revises supervisory appeals guidelines

    Agency Rule-Making & Guidance

    On January 19, the FDIC issued FIL-04-2021 announcing the adoption of revised Guidelines for Appeals of Material Supervisory Determinations (Guidelines). The Guidelines, originally proposed last August (covered by InfoBytes here), will establish a new, independent Office of Supervisory Appeals (Office) replacing the current Supervision Appeals Review Committee. The new Office will have final authority to resolve appeals by a panel of reviewing officials and will be independent from other divisions within the FDIC that have authority to issue material supervisory determinations. The Guidelines provide that appeals submitted to the Office will be decided by a panel of term-appointed reviewing officials with bank supervisory or examination experience. Additionally, the division director will make an independent supervisory determination without deferring to the judgments of either party, with communications between the Office and members of either the supervisory staff or the appealing institution to be shared with the other party to the appeal. The Guidelines will also permit an institution to request expedited review of its appeal, and will amend the procedures and timeframes for considering formal enforcement-related decisions through the supervisory appeals process. The Guidelines will take effect once the new Office is fully operational. In the meantime, the current guidelines will remain in effect.

    Agency Rule-Making & Guidance FDIC Supervision Enforcement Bank Regulatory

    Share page with AddThis

Pages