Risk & Regulation Report – April 19

Federal Court Issues Last-Minute Stay on CRA Rewrite

A Texas federal judge has halted the enforcement of the revised Community Reinvestment Act (“CRA”) regulations, delaying their implementation which was scheduled for April 1, 2024. The ruling by Judge Matthew J. Kacsmaryk asserts that the Federal Reserve, FDIC, and OCC exceeded their authority with the October final rules, challenging the 1977 CRA's framework. This decision comes in response to a lawsuit filed by the ABA, the U.S. Chamber of Commerce, and other associations, effectively pausing all related regulatory changes until the lawsuit's conclusion.

For more information visit: https://news.bloomberglaw.com/us-law-week/anti-redlining-overhaul-for-banks-paused-by-texas-federal-judge

CFPB Issues Consumer Response Annual Report

The CFPB's 2023 Consumer Response Annual Report reveals that over 1.3 million complaints were forwarded to more than 3,400 companies for resolution last year. A significant portion of these complaints, exceeding one million, targeted the three major consumer reporting agencies: Equifax, Experian, and TransUnion, highlighting ongoing concerns with credit or consumer reporting. Additionally, the report notes a rise in complaints across various product categories, including fraudulent activities related to debt collection, banking, and credit cards.

For more information visit: https://files.consumerfinance.gov/f/documents/cfpb_cr-annual-report_2023-03.pdf

FinCEN Requests Comments on the Customer Identification Program (“CIP”) Rule's TIN Collection Requirement

FinCEN is seeking public input on the CIP Rule's requirement for banks to collect a taxpayer identification number (“TIN”) from U.S. persons before account opening. This inquiry, published in the Federal Register, focuses on the feasibility and implications of allowing banks to collect partial Social Security numbers (“SSNs”) from U.S. individuals, then using third-party sources to complete the SSN information. The aim is to understand the potential risks and benefits of modifying the TIN collection process under the CIP Rule. Comments will be accepted for 60 days, through May 28, 2024.

For more information visit: https://www.federalregister.gov/documents/2024/03/29/2024-06763/request-for-information-and-comment-on-customer-identification-program-rule-taxpayer-identification

FDIC Releases Spring 2024 Supervisory Highlights

The FDIC has published its Spring 2024 Consumer Compliance Supervisory Highlights, detailing consumer compliance issues observed in 2023 among state non-member banks and thrifts. The report outlines the most common violations, regulatory developments, available compliance resources, and consumer complaint trends. Key findings include frequent violations related to TILA, FDPA, EFTA, TISA, and the FTC Act, with a notable shift in the frequency of FTC Act violations compared to the previous year.

For more information visit: https://www.fdic.gov/news/financial-institution-letters/2024/fil24016.html

FDIC Advisory on Customer Identification Program (“CIP”) Rule

The FDIC has issued an advisory through Financial Institution Letter FIL-15-2024, in conjunction with FinCEN's request for comments, to underscore the longstanding requirements of the CIP Rule. This rule mandates banks to collect specific identifying information from customers before opening an account, aiming to verify the customer's true identity. The advisory reiterates the necessity of gathering a customer's name, date of birth, address, and identification number, including a taxpayer identification number (“TIN”) for U.S. persons, as part of the bank's risk-based verification procedures.

For more information visit: https://www.fdic.gov/news/financial-institution-letters/2024/fil24015.html

FDIC Updates Consumer Compliance Examination Manual

The FDIC has updated the following sections of its Consumer Compliance Examination Manual (CEM):

• Communicating Findings (II-6.1): Updated to clarify when the self-identification of violations is considered a strength of a bank’s Compliance Management System
• Expedited Funds Availability Act (VI-1.1): Updated with technical changes related to regulatory dollar-amount thresholds and large deposit hold times
• FTC Rule - Preservation of Claims and Defenses (VII-2.1): Removed an invalid exception in a chart

For more information visit: https://www.fdic.gov/resources/supervision-and-examinations/consumer-compliance-examination-manual/index.html

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