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Financial Services Law Insights and Observations


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  • CFPB Amends Regulations J and L of Interstate Land Sales Full Disclosure Act to Allow Electronic Filings

    Consumer Finance

    On May 2, the CFPB announced that it is amending implementing Regulations J and L of the Interstate Land Sales Full Disclosure Act (ILSA) to permit electronic filings. Pursuant to ILSA, certain land developers must register their subdivisions and provide prospective lot purchasers with a disclosure statement known as a Property Report. In light of the amendments, the CFPB simultaneously released electronic filing and payment instructions for submitting the requisite registration and filing fees under ILSA.

    CFPB Agency Rule-Making & Guidance

  • CFPB Publishes Final Rule Adopting December 2011 Interim Final Rules

    Consumer Finance

    On April 28, the CFPB published a final rule to adopt interim final rules issued in December 2011. Pursuant to the Dodd-Frank Act, the CFPB has rulemaking authority for various consumer financial protection laws, as transferred from seven other federal agencies. Effective immediately, the final rule adopts without change (subject to any intervening final rules published by the CFPB) the 2011 versions of various rules, including but not limited to ECOA, TILA, the SAFE Act, FCRA, FDCPA, RESPA, GLBA, and HMDA.

    CFPB Agency Rule-Making & Guidance

  • FinCEN Prohibits U.S. Financial Institutions from Holding Correspondent Accounts for FBME Bank Ltd.

    Consumer Finance

    On March 31, FinCEN published a final rule imposing the fifth special measure against FBME Bank Ltd. (FBME). Pursuant Section 311 of the USA PATRIOT Act, the fifth special measure prohibits U.S. financial institutions from opening or maintaining a correspondent account for, or on behalf of, FBME. As previously covered in InfoBytes, on July 29, 2015, FinCEN published a similar final rule, which did not take effect as, one day before its effective date, a U.S. district court granted FBME’s motion for a preliminary injunction to stop the rule from taking effect. In November 2015, FinCEN subsequently re-opened its comment period for the final rule, soliciting additional comments “particularly with respect to the unclassified, non-protected documents that support the rulemaking and whether any alternatives to the prohibition of the opening or maintaining of correspondent accounts with FBME would effectively mitigate the risk to domestic financial institutions.” According to FinCEN, its recently issued final rule will “guard against the international money laundering and terrorist financing risks that FBME poses to the U.S. financial system.” The Final Rule is effective July 29, 2016.

    Anti-Money Laundering FinCEN Patriot Act Agency Rule-Making & Guidance

  • Department of Labor Publishes Final Rule to Define Fiduciary of an Employee Benefit Plan

    Consumer Finance

    On April 7, the Department of Labor issued a final rule defining who is a fiduciary investment advisor of an employee benefit plan under the Employee Retirement Income Security Act of 1974. The Final Rule requires financial advisors and brokers handling 401(k) accounts, as well as Individual Retirement Accounts and Annuities (IRAs), to “put their clients’ best interest before their own profits.” The final rule is scheduled to be published in the Federal Register on April 8. Compliance with the rule is not required until April 10, 2017, providing “adequate time” for financial services and other services providers affected by the rule to adjust their statuses from non-fiduciary to fiduciary.

    Broker-Dealer Agency Rule-Making & Guidance

  • OCC Publishes Proposed Regulatory Relief Rule

    Consumer Finance

    On March 14, the OCC published a proposed rule to provide regulatory relief to national banks and federal savings associations. Specifically, the proposed rule would, among other things, (i) revise certain licensing rules for business combinations involving Federal mutual savings associations; (ii) remove certain notice and approval requirements for changes in permanent capital involving national banks; (iii) clarify national bank director oath requirements; (iv) revise national banks’ and Federal savings associations’ fiduciary activity requirements; (v) remove certain requirements in the electronic activities rule for Federal savings associations; (vi) update recordkeeping and confirmation requirements for national banks’ and Federal savings associations’ securities transactions; and (vii) remove certain fidelity bond rules for Federal savings associations. Comments on the proposed rule, which is part of the OCC’s regulatory review under the Economic Growth and Regulatory Paperwork Reduction Act, are due by May 13, 2016.

    OCC Agency Rule-Making & Guidance

  • OFAC Updates Cuban Assets Control Regulations

    Federal Issues

    On March 15, OFAC issued a final rule updating the Cuban Assets Control Regulations (CACR), 31 C.F.R. Part 515. The amendments advance policy changes announced by the Obama administration in 2014 by further facilitating travel to Cuba for authorized purposes, expanding the range of authorized financial transactions, and authorizing business and physical presence in Cuba. Regarding financial transactions, the final rule (i) amends section 515.584(d) to authorize certain U-turn payments through the U.S. financial system; (ii) adds new section 515.584(g) to allow U.S. banking institutions to process U.S. dollar monetary instruments presented indirectly by Cuban financial institutions; and (iii) adds new section 515.584(h) to “authorize banking institutions to open and maintain accounts solely in the name of a Cuban national located in Cuba for the purposes only of receiving payments in the United States in connection with transactions authorized pursuant to or exempt from the prohibitions of this part and remitting such payments to Cuba.”

    OFAC’s amendments to the CACR were published in the Federal Register on March 16, 2016 and are effective immediately. OFAC simultaneously released a revised set of FAQs and a fact sheet regarding the changes set forth in the CACR.

    Department of Treasury OFAC Agency Rule-Making & Guidance

  • FCC Releases Broadband Consumer Privacy Proposal Fact Sheet

    Privacy, Cyber Risk & Data Security

    On March 10, the FCC released a fact sheet regarding consumers’ rights in relation to broadband internet services. Significantly, the fact sheet highlights FCC Chairman Tom Wheeler’s proposed rule, which was recently circulated to the Commission for consideration, to ensure consumers have the tools necessary “to make informed choices about how and whether their data is used and shared by their broadband providers.” According to the fact sheet, Chairman Wheeler’s proposed rule “separates the use and sharing of information into three categories, and proposes adoption of clear guidance for both ISPs and customers about transparency, choice and security requirements for that information.” The Commission will vote on the proposal on March 31; if adopted, a period of public comment will follow the Commission’s approval.

    FCC Agency Rule-Making & Guidance

  • FinCEN Announces Proposed Rule to Amend FBAR Regulations

    Federal Issues

    On March 1, FinCEN announced a Notice of Proposed Rulemaking to revise certain provisions in the rules related to the filing of Reports of Foreign Bank and Financial Accounts (FBAR). The proposed rule would, among other things, (i) remove provisions allowing limited account information to be reported when a filer has at least 25 foreign financial accounts; (ii) clarify and expand exemptions for officers and employees of institutions maintaining signature or other authority over accounts, but have no financial interest in such accounts; (iii) require institutions to maintain a list of the officers and employees with signature authority over accounts; (iv) amend the filing date for FBAR reports due in 2016; and (v) revise the FinCEN Form 114 instructions, which outline the BSA electronic filing requirements. Due to potential regulatory changes, FinCEN previously issued temporary notices to extend reporting deadlines for certain filers submitting FBARs.

    FinCEN Bank Secrecy Act Agency Rule-Making & Guidance

  • California AG Harris: Department of Education Should Revise Regulations to Protect Students Defrauded by For-Profit Colleges

    Consumer Finance

    Last week, California AG Kamala Harris requested that the Department of Education revise its proposed regulations regarding debt relief for students allegedly misled by “predatory” and for-profit colleges that advertise inflated job placement rates and asked that the Department “do more” to protect the students affected. Defrauded students have a right under Federal law to have loans discharged when their schools engage in misrepresentations and other unlawful conduct. According to AG Harris, the process for asserting this right is unclear. While the Department has emphasized that it intends to enforce an effective and streamlined loan discharge process to provide students’ relief, in the second of three negotiated rulemaking sessions, the Department “unveiled proposed language that contradicts the intent of previous discussions by narrowing, limiting, and delaying student relief.” In response to the Department’s proposal, Harris called on the Department to revise its regulations in a manner that ensures “fair and effective defense-to-repayment procedures.” Specifically, AG Harris commented that the procedures must (i) refer to state law for a basis to assert a defense; (ii) not include a statute of limitations for borrowers to assert a defense to repayment; (iii) provide procedures for broad and instantaneous relief to student borrowers affected by schools’ deceptive practices; and (iv) ban schools from making the discharge process burdensome and expensive.

    State Attorney General Student Lending Department of Education Agency Rule-Making & Guidance

  • CFPB Releases Fact Sheet: Policy Priorities over the Next Two Years

    Consumer Finance

    On February 25, the CFPB released a fact sheet outlining its policy priorities over the next two years. The document lists the following nine near-term priority goals: (i) arbitration; (ii) consumer reporting; (iii) debt collection; (iv) demand side consumer behavior; (v) household balance sheets; (vi) mortgages; (vii) open-use credit; (viii) small business lending; and (ix) student lending. Regarding arbitration, the CFPB noted that it “will continue the rulemaking process and propose a rule consistent with its study that will further enable consumers to effectuate their rights and hold institutions accountable for unlawful conduct.” With respect to consumer reporting, the CFPB will focus on issues surrounding the accuracy of consumer reporting and institutions’ dispute resolution processes. In the debt collection space, the CFPB plans to initiate rulemakings on debt collector conduct (including issues relating to the substantiation of consumer debt and the disclosure of information to consumers) while simultaneously pursuing rigorous supervision and enforcement activity to ensure industry compliance. Regarding demand side consumer behavior, the CFPB will focus on financial education for consumers. With respect to household balance sheets, the CFPB will conduct research and data analysis on household financial health and decision making. For mortgages, the CFPB will focus on the implementation of existing rules as well as the supervision and enforcement of issues relating to equal and fair access to credit. In the open-use credit space, the CFPB plans to conduct small-dollar, installment lending, and overdraft market rulemakings while conducting complementary supervision and enforcement work to support its new rules. Regarding small business lending, the CFPB will (i) build a small lending team that will begin conducting research and outreach for a small business lending rulemaking; (ii) employ its consumer response team to build infrastructure to analyze small business complaints; and (iii)  examine small business lenders for fair lending compliance. Finally, with respect to student lending, the CFPB will work on servicer alignment as well as supervision and enforcement of servicers’ legal obligations. In addition to these nine priority areas, the CFPB also indicated that it plans to continue to focus on well-established and ongoing work streams, such as fair lending oversight of indirect auto lenders and its rulemaking on prepaid cards.

    CFPB Arbitration Student Lending Debt Collection Agency Rule-Making & Guidance


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