Risk & Regulation Report - February 16th edition

Greetings, readers!

The February 16th edition of the Risk & Regulation Report summarizes the most significant developments in risk management, regulatory compliance, and cybersecurity affecting financial institutions.

Here are the latest happenings:

Banking Groups File Lawsuit Against CRA Reforms

On February 5, 2024, several banking associations, including the ABA and U.S. Chamber of Commerce, sued the OCC, Federal Reserve, and FDIC to block the new CRA regulations, arguing the agencies exceeded their authority with the October 2023 amendments. The lawsuit, filed in the Northern District of Texas, seeks to pause the implementation of these rules, claiming they unlawfully alter a system that has supported lending in underserved areas for decades.

For more information, visit:?https://www.americanbanker.com/news/banking-groups-sue-regulators-to-block-cra-revamp

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Agencies Publish Economic Growth and Regulatory Paperwork Reduction?Act of 1996 (EGRPRA) Reg Review Schedule

On February 6, 2024, the OCC, FDIC, and Federal Reserve Board announced a regulatory review schedule [89 FR 8084] under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), aiming to identify and eliminate outdated or unnecessary regulations affecting insured depository institutions and their holding companies. The review is organized into 12 categories, with plans to request public comments on these categories through four Federal Register notices over two years.

The first notice, seeking feedback on Applications and Reporting, Powers and Activities, and International Operations, is open for comments until May 6, 2024.

For more information, visit:?https://www.federalregister.gov/documents/2024/02/06/2024-02016/regulatory-publication-and-review-under-the-economic-growth-and-regulatory-paperwork-reduction-act

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FEMA Updates Homeowner Flood Insurance

On February 6, 2024, FEMA proposed to update the Standard Flood Insurance Policy with a new Homeowner Flood Form and five endorsements to improve coverage and user comprehension for one-to-four-family residences. The update aims for closer alignment with standard homeowners insurance.

Public comments are welcome until April 8, 2024.

For more information, visit:?https://www.federalregister.gov/documents/2024/02/06/2024-02204/national-flood-insurance-program-standard-flood-insurance-policy-homeowner-flood-form

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January 2024 Senior Loan Officer Opinion Survey (SLOOS) Highlights

On February 5, 2024, The Federal Reserve's January Senior Loan Officer Opinion Survey (SLOOS) for Q4 2023 shows a tightening in bank lending standards and reduced demand across commercial, industrial, and real estate loans. While residential real estate lending standards remained stable for government and GSE-eligible mortgages, demand fell in all residential categories, including home equity lines of credit and consumer loans. Despite an overall tightening, the extent was less than in the previous

quarter. Looking ahead to 2024, banks expect lending standards to stay the same for commercial and residential loans but to tighten for commercial real estate, credit card, and auto loans. Demand is anticipated to rise across all loan types, with a forecasted decline in loan quality.

For more information, visit:?https://www.federalreserve.gov/data/sloos/sloos-202401.htm

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FinCEN Proposes AML Rules for Real Estate

?On February 7, 2024, FinCEN announces a proposed rule to combat money laundering in the U.S. residential real estate sector, targeting non-financed property transfers to legal entities and trusts. Set for publication on February 16, 2024, the rule outlines reporting and record-keeping requirements for real estate closings and settlements, excluding direct transfers to individuals. Aimed at closing illicit finance gaps, the rule supports Treasury and law enforcement efforts against money laundering through property purchases. Public feedback is invited until April 16, 2024.

For more information, visit:?https://public-inspection.federalregister.gov/2024-02565.pdf

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FinCEN Requests Comments on Currency Transaction Reports (CTR) Renewal

On February 5, 2024, FinCEN announced a request for comments on renewing Currency Transaction Reports ("CTRs") requirements without changes [89 FR 7767]. Public feedback is invited until April 5, 2024.

For more information, visit:?https://www.federalregister.gov/documents/2024/02/05/2024-02186/agency-information-collection-activities-proposed-renewal-comment-request-renewal-without-change-of

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