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  • CFPB announces regulatory flexibility after remittance transfer rule exception expires

    Federal Issues

    On April 10, the CFPB announced the release of a policy statement “Supervisory and Enforcement Practices Regarding the Remittance Rule in Light of the COVID-19 Pandemic” addressing the implementation of the Electronic Fund Transfer Act (EFTA), and the Regulation E Remittance Rule (Rule). EFTA’s consumer protections, implemented by the Rule, require financial companies handling international money transfers, or remittance transfers, to disclose the exact exchange rate, fees, and amount delivered to the consumer making the transfer. However, it also provides a temporary exception, which allows institutions that provide remittance transfers to estimate these fees to consumers. (Covered by InfoBytes here.) The temporary exception is set to expire on July 1, and section 919 of the EFTA does not authorize the Bureau to extend it past that date. Accordingly, “[i]n order to minimize the impact of the pandemic on the remittances market…the Bureau will neither cite supervisory violations nor initiate enforcement actions against certain remittance transfer providers” for disclosing estimated fees and exchange rates from July 1 until January 21, 2021.

    Federal Issues CFPB Agency Rule-Making & Guidance EFTA Regulation E Remittance Transfer Rule Enforcement Supervision Covid-19

  • Virginia amends real estate settlement kickback provisions

    State Issues

    On April 6, the Virginia governor signed HB 819 to add additional sections to the state code related to real estate settlements and settlement agents. Among other things, the amendments discuss the prohibition against the “payment or receipt of settlement services kickbacks, rebates, commissions, and other payments”—whether directly or indirectly—pursuant to an agreement or understanding to refer business incident to a settlement. The amendments also allow for the imposition of penalties and liabilities if a person is found to have willfully engaged in an act or practice in violation of this chapter. Specifically, the state attorney general may recover civil penalties of not more than $5,000 per violation, as well as costs, reasonable expenses, and attorney’s fees. The amendments take effect July 1.

    State Issues State Legislation Real Estate Kickback

  • OFAC amends North Korea Sanctions Regulations

    Financial Crimes

    On April 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced amendments to the North Korea Sanctions Regulations. The final rule amends the sanctions regulations to incorporate “Treasury-administered provisions of the North Korea Sanctions and Policy Enhancement Act of 2016 [(NKSPEA)], as amended by the Countering America’s Adversaries Through Sanctions Act of 2017 [(CAATSA)] and the National Defense Authorization Act for Fiscal Year 2020 [(NDAA)].”

    Specifically, OFAC is incorporating into the amended regulations prohibitions with respect to the blocking, correspondent, or payable-through accounts sanctions contained within the NKSPEA, CAATSA, and NDAA. The final rule also adds a new section applicable to individuals and entities that are owned or controlled by a U.S. financial institution and established or maintained outside the U.S., which prohibits them from “knowingly engaging in any transaction, directly or indirectly, with the Government of North Korea or any person designated for the imposition of sanctions with respect to North Korea under NKSPEA. . ., an applicable Executive Order, or an applicable United Nations Security Council resolution.” In addition, the final rule amends the definition of luxury goods by creating “a regulatory exception to exclude items approved for import, export, or reexport to or into North Korea by the United Nations Security Council.” The final rule also incorporates new statutory exemptions, makes technical and conforming edits, revises an interpretive provision, and updates the authorities and delegation sections of the regulations, among other things. The amended North Korea Sanctions Regulations take effect April 10.

    Financial Crimes Department of Treasury OFAC Sanctions Of Interest to Non-US Persons North Korea

  • NYDFS strongly opposes OCC’s proposed CRA rulemaking

    State Issues

    On April 8, NYDFS Superintendent Linda Lacewell sent a letter to OCC Comptroller Joseph Otting expressing her “strong opposition” to the OCC’s notice of proposed rulemaking (NPR) issued last December to modernize the Community Reinvestment Act (CRA). (See Buckley Special Alert discussing the NPR). Lacewell urged the OCC to revise substantially or abandon the NPR, referring to the Department’s “extensive experience with the CRA” through its oversight of state-chartered banks’ compliance with the New York Community Reinvestment Act, which, according to Lacewell “largely mirrors the current federal CRA.”

    Lacewell addressed several concerns, including that the NPR’s proposed evaluation framework would “reduce CRA evaluations to a single, dollar value comparison of banks’ CRA-qualifying activities to deposits.” This single-metric CRA ratio, Lacewell, stated, would eliminate important qualitative aspects of CRA evaluations and “incentivize banks to focus on large-dollar CRA activities to the detriment of complex and innovative small-dollar projects.” Lacewell also expressed concerns with deposit data limitations, and cited the OCC’s separate request for bank-specific data (covered by InfoBytes here) as an indicator that the data to be relied upon for the CRA ratio may be questionable. Lacewell also asserted that the NPR detrimentally redefines CRA-qualifying activities that may not positively impact low- and moderate-income communities, and fails to evaluate properly assessment area changes. Furthermore, Lacewell argued that the NPR reduces the importance of bank branches in CRA evaluations, and imposes new burdens that disproportionately impact intermediate-small banks.

    Lacewell expressed support for an alternative approach suggested by Federal Reserve Governor Lael Brainard in January (covered by InfoBytes here), whose proposal would include, among other things, a set of thresholds calibrated for local conditions and two tests—a retail test and a community development test—that would tailor performance metrics for banks of different sizes and business models.

    State Issues State Regulators NYDFS CRA OCC Federal Reserve

  • 2nd Circuit joins 9th Circuit in broadening the definition of an autodialer under TCPA

    Courts

    On April 7, the U.S. Court of Appeals for the Second Circuit vacated a district court’s order granting summary judgment in favor of a defendant in a TCPA action. The decision results from a lawsuit filed by a plaintiff who claimed to have received more than 300 unsolicited text messages from the defendant through the use of an autodialer after the plaintiff texted a code to receive free admission to a party. The defendant countered that the programs used to send the text messages were not autodialers because they “required too much human intervention when dialing,” and therefore did not fall under the TCPA. The district court granted the defendant’s motion for summary judgment, agreeing that the defendant’s programs were not autodialers because a human being determined when the text messages are sent.

    On appeal, the 2nd Circuit concluded that while human beings do play some role in the defendant’s systems, “[c]licking ‘send’ does not require enough human intervention to turn an automatic dialing system into an non-automatic one.” According to the appellate court, “[a]s the FCC additionally clarified in 2012, the statutory definition of an [autodialer] ‘covers any equipment that has the specified capacity to generate numbers and dial them without human intervention regardless of whether the numbers called are randomly or sequentially generated or come from calling lists.’” (Emphasis in the original.) “The FCC’s interpretation of the statute is consistent with our own, for only an interpretation that permits an [autodialer] to store numbers—no matter how produced—will also allow for the [autodialer] to dial from non-random, non-sequential ‘calling lists.’ . . . What matters is that the system can store those numbers and make calls using them.”

    The 2nd Circuit’s opinion is consistent with the 9th Circuit’s holding in Marks v. Crunch San Diego, LLC (covered by InfoBytes here). However, these two opinions conflict with holdings by the 3rd, 7th, and 11th Circuits, which have held that autodialers require the use of randomly or sequentially generated phone numbers, consistent with the D.C. Circuit’s holding that struck down the FCC’s definition of an autodialer in ACA International v. FCC (covered by a Buckley Special Alert).

    Courts Appellate Second Circuit TCPA Autodialer FCC ACA International

  • District of Columbia prohibits certain debt collection activity

    State Issues

    The District of Columbia has enacted the Covid-19 Response Supplemental Emergency Amendment Act of 2020. Under the Act, among other things, for the duration of the public health emergency and 60 days after its conclusion, debt collectors are prohibited from, among other things: (i) initiating, filing, or threatening a new collection lawsuit, garnishment, seizure, attachment, or repossession; or (ii) initiating any communication with debtors via written or electronic communication, such as text, email, or telephone, subject to certain exceptions.

    State Issues District of Columbia Debt Collection Covid-19

  • Louisiana Office of Financial Institutions declares emergency for repossession and escrow agents

    State Issues

    On April 9, Louisiana Office of Financial Institutions Commissioner John Ducrest declared a state of emergency and issued guidance for repossession agents and bond for deed escrow agents due to the Covid-19 crisis. The order: (i) granted authority to temporarily close or relocate operations, services, and products; (ii) waived the 30-day notification requirement pertaining to closures or relocations of operations, services, and products; and (iii) provided guidance for reporting operational changes and temporary relocations. The declaration expires April 30, unless otherwise extended or renewed.

    State Issues Covid-19 Louisiana Repossession Escrow

  • Louisiana Office of Financial Institutions declares emergency for residential mortgage entities

    State Issues

    On April 9, Louisiana Office of Financial Institutions (OFI) Commissioner John Ducrest declared a state of emergency and issued guidance for Louisiana-licensed residential mortgage brokers, lenders, and originators in response to the Covid-19 crisis. The order: (i) granted the authority to temporarily close or relocate operations, services, and products; (ii) permitted mortgage loan originators to work remotely from home, even if their home isn’t registered with OFI; (iii) waived the standard prior notification requirements pertaining to closures or relocations of operations, services, and products; and (iv) provided guidance for reporting operational changes and temporary relocations. The declaration expires April 30, unless otherwise extended or renewed.

    State Issues Covid-19 Louisiana Mortgages Broker-Dealer Mortgage Origination

  • Louisiana Office of Financial Institutions declares emergency for state-licensed lenders and brokers

    State Issues

    On April 9, Louisiana Office of Financial Institutions Commissioner John Ducrest declared a state of emergency and issued guidance for Louisiana-licensed lenders and brokers in response to the Covid-19 crisis. The order: (i) provided guidance for temporarily closing or relocating operations, services, and products; (ii) waived the 30-day notification requirement pertaining to closures or relocations of operations, services, and products; and (iii) provided guidance for reporting operational changes and temporary relocations. The declaration expires April 30, unless otherwise extended or renewed.

    State Issues Covid-19 Louisiana Licensing Broker-Dealer

  • Louisiana Office of Financial Institutions declares emergency for check-cashing entities

    State Issues

    On April 9, Louisiana Office of Financial Institutions Commissioner John Ducrest declared a state of emergency and issued guidance for Louisiana-based check-cashing entities in response to the Covid-19 crisis. The order: (i) granted check cashers the authority to temporarily relocate and close operations, services, or products; (ii) waived the 30-day notification requirement pertaining to closures or relocations of services, operations, and products; and (iii) provided guidance for reporting operational changes and temporary relocations. The declaration expires April 30, unless otherwise extended or renewed.

    State Issues Covid-19 Louisiana Check Cashing

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