Risk & Regulation Report - February 9, 2024
Risk Management Solutions Group
RMSG provides risk, regulatory compliance, data analytics, and credit consulting services to financial institutions.
Greetings, readers. In the February 9th edition of the Risk & Regulation Report, we summarize the most important recent developments in risk management, regulatory compliance, and cybersecurity that affect financial institutions.
Here are the latest happenings:
Agencies Publish CRA Regulations Update
On February 1, 2024, the Federal Reserve Board, OCC, and FDIC published [89 FR 6574] the previously announced joint final rule updating their Community Reinvestment Act regulations.?
On October 24, 2023, the Board of Governors of the Federal Reserve System (FRB), OCC, and FDIC approved revisions to the CRA regulations. The changes update the criteria for CRA activities' qualification, evaluation, and location. The rule tailors the CRA framework based on bank size and business model, classifying banks as large, intermediate, small, or limited purpose. Asset size thresholds will adjust annually for inflation. Key regulation objectives include:
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The rule takes effect on April 1, 2024, with some provisions having specific applicability dates in 2026 and 2027. Banks will follow current CRA regulations until the new ones apply.
For more information, visit: https://www.federalregister.gov/documents/2024/02/01/2023-25797/community-reinvestment-act
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CFPB Agrees to Pay $6M to Settle Discrimination Claims
On January 25, 2024, Ballard Spahr, LLC, in its Consumer Finance Monitor, reported that the U.S. District Court for the District of Columbia had approved a $6.0 million settlement by the CFPB in a class action lawsuit alleging discrimination against 85 Black and Hispanic employees. The lawsuit, filed in 2018 against former Acting Director Mick Mulvaney, claimed that these employees faced consistent underpayment, unfair denial of promotions since 2011, and retaliation for raising discrimination complaints. The settlement, which includes a $1.5 million award for attorney's fees, will be distributed among the class members, defined as minority employees and women who worked as Consumer Response Specialists and were subjected to discriminatory and retaliatory practices by the Bureau.
For more information, visit:?
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CFPB Proposes Rule to Prohibit Potential New Nonsufficient Funds (NSF)?Fees
On January 24, 2024, CFPB proposed a new rule to prevent NSF fees on transactions declined in real-time, such as debit card purchases, ATM withdrawals, and some peer-to-peer payments. This rule covers banks, credit unions, and certain peer-to-peer payment companies. The CFPB is taking this step in anticipation of potential new NSF fees due to technological advancements enabling financial institutions to decline transactions instantly. The proposed rule, adding new Part 1042, "Nonsufficient Funds Fees," to Chapter X of Title 12 of the Code of Federal Regulations, deems such fees for real-time declined transactions abusive and unlawful under the Consumer Financial Protection Act.
Public comments are invited until March 25, 2024. The rule was published in the Federal Register [89 FR 6031] on January 31, 2024.
For more information, visit:?https://www.consumerfinance.gov/about-us/newsroom/cfpb-proposes-rule-to-stop-new-junk-fees-on-bank-accounts/
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Latest Consumer Compliance Outlook Available
On February 01, 2024, the Federal Reserve announced the availability of the latest issue of "Consumer Compliance Outlook." The fourth issue of 2023 includes the following articles and features:
For more information, visit:?https://t.e2ma.net/click/c4doqg/cgvld/80ci1t
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FRB Financial Services Adds ACH Risk Management Service
On January 25, 2024, the Federal Reserve Financial Services introduced FedDetect Anomaly Notification for FedACH Services, a novel risk management service designed to assist financial institutions in detecting unusual activities. This service enhances fraud detection capabilities by providing secure email notifications when anomalous FedACH activity is identified. It aids financial institutions in identifying potential fraud attempts through account verification processes, including micro-entry return and forward-entry monitoring. Additionally, the service supports originating financial institutions in complying with Nacha rules regarding change notifications, thereby helping to prevent future rule violations.
For more information, visit:?https://www.frbservices.org/news/press-releases/012524-new-ach-risk-management-service
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FinCEN Seeks Comment on Info to Be Collected for BOI Data Response
?On January 30, 2024, FinCEN issued a Notice and Request for Comments in the Federal Register [89 FR 5995] regarding the proposed information collection for beneficial ownership information requests. This aligns with the Beneficial Ownership Information Access and Safeguards final rule. The notice includes FinCEN's burden estimates for state, local, and tribal law enforcement agencies and financial institutions. The proposed data fields for authorized recipients include the reporting company's name, Tax Identification Number (TIN) type, TIN, and compliance certification.
Comments on this proposal are open until April 1, 2024.
For more information, visit:
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?FinCEN Adjusts CMP Caps
?On January 25, 2024, FinCEN published a final rule [89 FR 4820] in the Federal Register detailing inflation adjustments to its civil monetary penalties. This adjustment is in accordance with the mandates of the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended. The rule revises the maximum civil monetary penalties within FinCEN's jurisdiction to align with the required amounts specified by the Act, ensuring that penalty values remain effective as deterrents and maintain their real value over time.
For more information, visit:?
As always, we're committed to keeping you informed of the latest developments that could impact your institution. Thank you for subscribing, and please reach out if you have any questions or if you'd like to discuss how RMSG can help your financial institution. Use the link to book time with one of our experts: https://bit.ly/3ulOHue