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Compliance Update with Amy K by Amy Kleinschmit, Chief Compliance Officer CFPB Rescinds more Policy Statements As we brought to your attention in the March 19 Memo article, the CFPB rescinded a policy statement issued January 24, 2020 relating to how the agency was exercising its supervisory and enforcement authority to address abusive acts or practices. This week the CFPB rescinded seven more policy statements issued between March 26 through June 3, 2020, that provided temporary flexibilities to financial institutions in consumer financial markets including mortgages, credit reporting, credit cards and prepaid cards. The press release and links to all the rescinded policy statements can be found here. The CFPB announces its intent to exercise its supervisory and enforcement authority consistent with the Dodd-Frank Act and with the full authority afforded by Congress consistent with the statutory purpose and objectives of the Bureau. March 26, 2020 Policy statement RESCINDED – this statement related to quarterly HMDA reporting. The CFPB instructs all financial institutions required to file quarterly to do so beginning with their 2021 first quarter data, due on or before May 31, 2021, for all covered loans and applications with a final action taken date between January 1 and March 31, 2021. The Bureau does not intend to cite in an examination or initiate an enforcement action against any entity that did not make the quarterly filing for data collected in 2020. March 26, 2020 Policy Statement RESCINDED – the statement related to information collection requirements for credit card and prepaid card accounts. The CPFB now provides the following directions: Annual submission concerning agreements between credit card issuers and institutions of higher education - The CFPB now directs that credit card issuers required to submit information under Regulation Z relating to agreements in effect in calendar year 2020 should do so by March 31, 2021. Issuers should also submit all delayed submissions for agreements in effect in calendar year 2019. The Bureau does not intend to cite in an examination or initiate an enforcement action against any entity who submits requisite information relating to agreements in effect in calendar year 2019 and 2020 by April 30, 2021. Quarterly submission of consumer credit card agreements - Credit card issuers required to submit information should do so by April 30, 2021 beginning with the submission relating to the first calendar quarter of 2021 and also include all delayed submissions from all cycles during which the Statement was in effect (i.e., all four quarters of 2020). The Bureau does not intend to cite in an examination or initiate an enforcement action against any entity who makes any requisite delayed submissions by April 30, 2021. Submission of prepaid account agreements and related information required by Regulation E - Prepaid account issuers required by Regulation E to submit agreements and related information should ensure, by April 30, 2021, that any such information on file with the Bureau is current and complete through March 31, 2021. Thereafter, issuers must resume making submissions on a rolling basis in accordance with the regulation. The Bureau does not intend to cite in an examination or initiate an enforcement action against any entity who makes any requisite submissions by April 30, 2021. March 26, 2020 Policy statement RESCINDED - the Statement had provided that the Bureau would take into account staffing and related resource challenges confronting financial institutions as it relates to supervisory activities and enforcement actions. April 7, 2020 Policy Statement RESCINDED with respect to the CFPB. This was an interagency statement on loan modifications and reporting for financial institutions working with customers affected by COVID. April 14, 2020 Policy Statement RESCINDED with respect to the CFPB. This was also an interagency statement relating to appraisals and evaluations for real estate related financial transactions affected by COVID. April 1, 2020 Policy Statement portion RESCINDED – this statement related to Fair Credit Reporting Act/Regulation V enforcement practices. CFPB rescinds the portion of the Statement that sets forth the Bureau’s flexible supervisory and enforcement approach during the pandemic regarding compliance with FCRA and Regulation V and announces its intent to exercise its supervisory and enforcement authority consistent with the Dodd-Frank Act and FCRA and with the full authority afforded by Congress consistent with the statutory purpose and objectives of the Bureau. April 27, 2020 Policy statement RESCINDED – related to annual reports of activity and financial statements by land developers who are subject to the Interstate Land Sales Full Disclosure Act. May 13, 2020 Policy statement RESCINDED – related to compliance with the maximum timeframe for billing error resolution set forth in Regulation Z. June 3, 2020 Policy Statement RESCINDED – in regard to a credit card issuer that during a phone call does not obtain a consumer’s E-Sign consent to electronic provision of certain written disclosures required by Regulation Z (12 CFR part 1026), so long as the issuer during the phone call obtains both the consumer’s oral consent to electronic delivery of the written disclosures and oral affirmation of his or her ability to access and review the electronic written disclosures. FINCEN – Beneficial Ownership Rule ANPR The Financial Crimes Enforcement Network (FinCEN) has issued an advanced notice of proposed rulemaking (ANPR) regarding implementation of the Corporate Transparency Act (Act). The ANPR can be found here and comments are due May 5. Section 6403 of the Act requires reporting companies (corporations, limited liability companies (LLCs), and similar entities, subject to certain statutory exemptions) to submit to FinCEN specified information on their beneficial owners—the individual natural persons who own or control them—as well as specified information about the persons who form or register those reporting companies. The Act further requires FinCEN to maintain this information in a confidential, secure, and non-public database, and it authorizes FinCEN to disclose the information to certain government agencies for certain purposes specified in the CTA, and to financial institutions to assist in meeting their customer due diligence obligations. A final rule on customer due diligence requirements for financial institutions will be revised via a separate rulemaking. BSA Webinar The NCUA will be hosting a BSA webinar on April 14 at 1:00 p.m. (CT). Registration can be found here. Staff from the NCUA’s Office of Examination and Insurance will be joined by Cathryn Martin, BSA compliance officer at Tower Federal Credit Union in Laurel, Maryland, to cover topics that include: Updates on recently issued BSA statements; Actions for managing high-risk accounts; and Highlights of the Anti-Money Laundering Act of 2020. Participants can submit questions during the presentation or in advance: email WebinarQuestions@ncua.gov with subject line “BSA Update.” EIP3 The IRS recently issued additional FAQs relating to the third economic impact payments (EIP) which can be found here. Some highlights include: Deceased individuals - A payment won’t be issued for someone who has died before January 1, 2021. If you filed a joint return in 2020 and your spouse died before January 1, 2021, the decedent will not be included in the calculation of the third payment. You as the surviving spouse, if eligible, will be issued up to $1,400 for you and $1,400 for any qualifying dependents. Incarcerated individuals - Individuals will not be denied Economic Impact Payments solely because they are incarcerated. An incarcerated individual may be issued a payment if all eligibility requirements are met and the individual filed a 2020 or 2019 tax return that was processed by the IRS. Transferring money from EIP Card to bank/credit union account - The limit on ACH transfers to a bank account is $2,500 per transaction. You can easily transfer the money from your EIP Card to an existing bank account online at EIPcard.com or by using the Money Network Mobile App. You will need the routing and account number for your bank account. To transfer funds: Call 800-240-8100 (TTY: 800-241-9100) to activate your card. Register for online or mobile app access by going to EIPCard.com or the Money Network Mobile App and click on “Register.” Follow the steps to create your user ID and password. Be sure to have your EIP Card handy. Select “Move Money Out” and follow the steps to set up your ACH transfer. Transfers should post to your bank account in 1-2 business days. Directions for returning a paper check or debit card can be found here. Remember - The IRS doesn't initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information - even related to the economic impact payments. Watch out for websites and social media attempts that request money or personal information and for schemes tied to Economic Impact Payments. The IRS urges taxpayers to visit IRS.gov – the official IRS website – to protect against scam artists. The IRS has issued a warning about coronavirus-related scams. Request for Information – AI The National Credit Union Administration (NCUA) along with several other regulatory agencies recently issued a Request for Information (RFI) regarding financial institutions’ use of ratification intelligence (AI), including machine learning. This RFI is open for a 60 day comment period and can be found here. The RFI summarizes some benefits and risks of AI. The agencies recognize that AI has the potential to offer improved efficiency, enhanced performance, and cost reduction for financial institutions, as well as benefits to consumers and businesses. In this RFI, the agencies are seeking information on credit unions’ risk management practices related to the use of AI; barriers or challenges facing credit unions when developing, adopting, and managing AI and its risks; and benefits to financial institutions and their customers from the use of AI. The RFI also solicits respondents’ views on the use of AI in financial services, which will help the agencies determine whether any clarification would be helpful for financial institutions’ use of AI in a safe and sound manner and in compliance with applicable laws and regulations, including those related to consumer protection. As always, DakCU members may contact Amy Kleinschmit with any compliance related questions at akleinschmit@dakcu.org.
Compliance Update with Amy K
by Amy Kleinschmit, Chief Compliance Officer
CFPB Rescinds more Policy Statements
As we brought to your attention in the March 19 Memo article, the CFPB rescinded a policy statement issued January 24, 2020 relating to how the agency was exercising its supervisory and enforcement authority to address abusive acts or practices.
This week the CFPB rescinded seven more policy statements issued between March 26 through June 3, 2020, that provided temporary flexibilities to financial institutions in consumer financial markets including mortgages, credit reporting, credit cards and prepaid cards. The press release and links to all the rescinded policy statements can be found here.
The CFPB announces its intent to exercise its supervisory and enforcement authority consistent with the Dodd-Frank Act and with the full authority afforded by Congress consistent with the statutory purpose and objectives of the Bureau.
March 26, 2020 Policy statement RESCINDED – this statement related to quarterly HMDA reporting. The CFPB instructs all financial institutions required to file quarterly to do so beginning with their 2021 first quarter data, due on or before May 31, 2021, for all covered loans and applications with a final action taken date between January 1 and March 31, 2021. The Bureau does not intend to cite in an examination or initiate an enforcement action against any entity that did not make the quarterly filing for data collected in 2020.
March 26, 2020 Policy Statement RESCINDED – the statement related to information collection requirements for credit card and prepaid card accounts. The CPFB now provides the following directions:
Annual submission concerning agreements between credit card issuers and institutions of higher education - The CFPB now directs that credit card issuers required to submit information under Regulation Z relating to agreements in effect in calendar year 2020 should do so by March 31, 2021. Issuers should also submit all delayed submissions for agreements in effect in calendar year 2019. The Bureau does not intend to cite in an examination or initiate an enforcement action against any entity who submits requisite information relating to agreements in effect in calendar year 2019 and 2020 by April 30, 2021.
Quarterly submission of consumer credit card agreements - Credit card issuers required to submit information should do so by April 30, 2021 beginning with the submission relating to the first calendar quarter of 2021 and also include all delayed submissions from all cycles during which the Statement was in effect (i.e., all four quarters of 2020). The Bureau does not intend to cite in an examination or initiate an enforcement action against any entity who makes any requisite delayed submissions by April 30, 2021.
Submission of prepaid account agreements and related information required by Regulation E - Prepaid account issuers required by Regulation E to submit agreements and related information should ensure, by April 30, 2021, that any such information on file with the Bureau is current and complete through March 31, 2021. Thereafter, issuers must resume making submissions on a rolling basis in accordance with the regulation. The Bureau does not intend to cite in an examination or initiate an enforcement action against any entity who makes any requisite submissions by April 30, 2021.
March 26, 2020 Policy statement RESCINDED - the Statement had provided that the Bureau would take into account staffing and related resource challenges confronting financial institutions as it relates to supervisory activities and enforcement actions.
April 7, 2020 Policy Statement RESCINDED with respect to the CFPB. This was an interagency statement on loan modifications and reporting for financial institutions working with customers affected by COVID.
April 14, 2020 Policy Statement RESCINDED with respect to the CFPB. This was also an interagency statement relating to appraisals and evaluations for real estate related financial transactions affected by COVID.
April 1, 2020 Policy Statement portion RESCINDED – this statement related to Fair Credit Reporting Act/Regulation V enforcement practices. CFPB rescinds the portion of the Statement that sets forth the Bureau’s flexible supervisory and enforcement approach during the pandemic regarding compliance with FCRA and Regulation V and announces its intent to exercise its supervisory and enforcement authority consistent with the Dodd-Frank Act and FCRA and with the full authority afforded by Congress consistent with the statutory purpose and objectives of the Bureau.
April 27, 2020 Policy statement RESCINDED – related to annual reports of activity and financial statements by land developers who are subject to the Interstate Land Sales Full Disclosure Act.
May 13, 2020 Policy statement RESCINDED – related to compliance with the maximum timeframe for billing error resolution set forth in Regulation Z.
June 3, 2020 Policy Statement RESCINDED – in regard to a credit card issuer that during a phone call does not obtain a consumer’s E-Sign consent to electronic provision of certain written disclosures required by Regulation Z (12 CFR part 1026), so long as the issuer during the phone call obtains both the consumer’s oral consent to electronic delivery of the written disclosures and oral affirmation of his or her ability to access and review the electronic written disclosures.
FINCEN – Beneficial Ownership Rule ANPR
The Financial Crimes Enforcement Network (FinCEN) has issued an advanced notice of proposed rulemaking (ANPR) regarding implementation of the Corporate Transparency Act (Act). The ANPR can be found here and comments are due May 5. Section 6403 of the Act requires reporting companies (corporations, limited liability companies (LLCs), and similar entities, subject to certain statutory exemptions) to submit to FinCEN specified information on their beneficial owners—the individual natural persons who own or control them—as well as specified information about the persons who form or register those reporting companies.
The Act further requires FinCEN to maintain this information in a confidential, secure, and non-public database, and it authorizes FinCEN to disclose the information to certain government agencies for certain purposes specified in the CTA, and to financial institutions to assist in meeting their customer due diligence obligations.
A final rule on customer due diligence requirements for financial institutions will be revised via a separate rulemaking.
BSA Webinar
The NCUA will be hosting a BSA webinar on April 14 at 1:00 p.m. (CT). Registration can be found here. Staff from the NCUA’s Office of Examination and Insurance will be joined by Cathryn Martin, BSA compliance officer at Tower Federal Credit Union in Laurel, Maryland, to cover topics that include: Updates on recently issued BSA statements; Actions for managing high-risk accounts; and Highlights of the Anti-Money Laundering Act of 2020. Participants can submit questions during the presentation or in advance: email WebinarQuestions@ncua.gov with subject line “BSA Update.”
EIP3
The IRS recently issued additional FAQs relating to the third economic impact payments (EIP) which can be found here. Some highlights include:
Deceased individuals - A payment won’t be issued for someone who has died before January 1, 2021. If you filed a joint return in 2020 and your spouse died before January 1, 2021, the decedent will not be included in the calculation of the third payment. You as the surviving spouse, if eligible, will be issued up to $1,400 for you and $1,400 for any qualifying dependents.
Incarcerated individuals - Individuals will not be denied Economic Impact Payments solely because they are incarcerated. An incarcerated individual may be issued a payment if all eligibility requirements are met and the individual filed a 2020 or 2019 tax return that was processed by the IRS.
Transferring money from EIP Card to bank/credit union account - The limit on ACH transfers to a bank account is $2,500 per transaction. You can easily transfer the money from your EIP Card to an existing bank account online at EIPcard.com or by using the Money Network Mobile App. You will need the routing and account number for your bank account. To transfer funds: Call 800-240-8100 (TTY: 800-241-9100) to activate your card. Register for online or mobile app access by going to EIPCard.com or the Money Network Mobile App and click on “Register.” Follow the steps to create your user ID and password. Be sure to have your EIP Card handy. Select “Move Money Out” and follow the steps to set up your ACH transfer. Transfers should post to your bank account in 1-2 business days.
Directions for returning a paper check or debit card can be found here.
Remember - The IRS doesn't initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information - even related to the economic impact payments. Watch out for websites and social media attempts that request money or personal information and for schemes tied to Economic Impact Payments.
The IRS urges taxpayers to visit IRS.gov – the official IRS website – to protect against scam artists. The IRS has issued a warning about coronavirus-related scams.
Request for Information – AI
The National Credit Union Administration (NCUA) along with several other regulatory agencies recently issued a Request for Information (RFI) regarding financial institutions’ use of ratification intelligence (AI), including machine learning. This RFI is open for a 60 day comment period and can be found here.
The RFI summarizes some benefits and risks of AI. The agencies recognize that AI has the potential to offer improved efficiency, enhanced performance, and cost reduction for financial institutions, as well as benefits to consumers and businesses. In this RFI, the agencies are seeking information on credit unions’ risk management practices related to the use of AI; barriers or challenges facing credit unions when developing, adopting, and managing AI and its risks; and benefits to financial institutions and their customers from the use of AI. The RFI also solicits respondents’ views on the use of AI in financial services, which will help the agencies determine whether any clarification would be helpful for financial institutions’ use of AI in a safe and sound manner and in compliance with applicable laws and regulations, including those related to consumer protection.
As always, DakCU members may contact Amy Kleinschmit with any compliance related questions at akleinschmit@dakcu.org.