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  • FDIC releases October enforcement actions, includes BSA and TILA violations

    Federal Issues

    On November 30, the FDIC announced a list of administrative enforcement actions taken against banks and individuals in October. Included among the actions is an order to pay a civil money penalty of $9,600 issued against a Louisiana-based bank for alleged violations of the Flood Disaster Protection Act in connection with alleged failures to obtain flood insurance coverage on loans at or before origination or renewal.

    Consent orders were also issued against three separate banks related to alleged weaknesses in their Bank Secrecy Act (BSA) and/or BSA/anti-money laundering (BSA/AML) compliance programs. (See orders here, here, and here.) Among other things, the banks are ordered to: (i) implement comprehensive written BSA/AML compliance programs, which include revising BSA risk assessment policies, developing a system of BSA internal controls, and enhancing suspicious activity monitoring and reporting and customer due diligence procedures; (ii) conduct independent testing; and (iii) implement effective BSA training programs. The FDIC further requires the Florida and New Jersey-based banks to conduct suspicious activity reporting look-back reviews.

    In addition, a Kentucky-based bank was ordered to pay a civil money of $300,000 for allegedly violating TILA by “failing to clearly and conspicuously disclose required information related to the [b]ank’s Elastic line of credit product” and Section 5 of the FTC ACT by “using a processing order for certain deposit account transactions contrary to the processing orders disclosed in the [b]ank’s deposit account disclosures.”

    There are no administrative hearings scheduled for December 2018. The FDIC database containing all 17 enforcement decisions and orders may be accessed here.

    Federal Issues FDIC Enforcement Flood Insurance Flood Disaster Protection Act Bank Secrecy Act Anti-Money Laundering Bank Compliance TILA SARs

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  • FDIC releases July enforcement actions

    Federal Issues

    On August 31, the FDIC announced a list of administrative enforcement actions taken against banks and individuals in July. The 15 orders include “three Section 19 orders; four removal and prohibition orders; one civil money penalty; three terminations of consent orders; and four adjudicated decisions.” The FDIC assessed a $10,800 civil money penalty against a New Mexico-based bank for alleged violations of the Flood Disaster Protection Act in connection with alleged failures to (i) obtain flood insurance coverage on loans at or before origination or renewal; (ii) maintain flood insurance; (iii) notify borrowers that they were required to obtain flood insurance; and (iv) obtain flood insurance on a borrower’s behalf when the borrower did not obtain insurance within 45 days after receiving such notification. There are no administrative hearings scheduled for September 2018. The FDIC database containing all 15 enforcement decisions and orders may be accessed here.

    Federal Issues FDIC Enforcement Civil Money Penalties Flood Disaster Protection Act Flood Insurance

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  • FDIC releases June enforcement actions

    Federal Issues

    On July 27, the FDIC announced a list of orders of administrative enforcement actions taken against banks and individuals in June. The 12 orders include “four Section 19 orders; one civil money penalty; one removal and prohibition order; one prompt corrective action directive; three terminations of consent orders; one termination of prompt corrective action directive; and one modification of removal and prohibition order.” The civil money penalty order relates to violations of the Flood Disaster Protection Act by a Mississippi-based bank for allegedly failing to obtain flood insurance coverage on seven loans secured by buildings located, or to be located, in a special flood area at or before loan origination or renewal. There are no administrative hearings scheduled for August 2018. The FDIC database containing all 12 enforcement decisions and orders may be accessed here.

    Federal Issues FDIC Enforcement Flood Disaster Protection Act

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  • FDIC releases April enforcement actions, including flood insurance and BSA/AML violations

    Federal Issues

    On May 25, the FDIC released a list of 35 administrative enforcement actions taken against banks and individuals in April. Civil money penalties were assessed against several individuals and one bank. The FDIC assessed a $5,000 civil money penalty against a New Jersey-based bank, citing violations of the Flood Disaster Protection Act for allegedly failing to ensure 20 properties were adequately covered by flood insurance for the term of the loan. Additionally, the FDIC issued two consent orders, one against a South Dakota-based bank for unsafe or unsound banking practices or violations of law or regulation. The FDIC ordered the bank to, among other things, (i) retain qualified management; (ii) develop an independent external loan review program; and (iii) develop a plan to address the weaknesses in the bank’s audit and internal controls. The second consent order alleges violations of the Bank Secrecy Act and anti-money laundering (BSA/AML) rules by a Maryland-based bank. The bank is ordered to, among other things, (i) perform an enhanced risk assessment of the bank’s operations; (ii) revise and implement internal controls for BSA/AML compliance; and (iii) take necessary steps to correct or eliminate all cited violations.

    Also on the list are 11 Section 19 orders, which allow applicants to participate in the affairs of an insured depository institution after having demonstrated “satisfactory evidence of rehabilitation,” and four terminations of consent orders.

    There are no administrative hearings scheduled for June 2018. The FDIC database containing all 35 enforcement decisions and orders may be accessed here.

    Federal Issues FDIC Enforcement Bank Secrecy Act Anti-Money Laundering Flood Insurance Civil Money Penalties Flood Disaster Protection Act

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  • FDIC releases March enforcement actions, fines banks for flood insurance violations

    Federal Issues

    On April 27, the FDIC released a list of 20 administrative enforcement actions taken against banks and individuals in March. Civil money penalties were assessed against several banks including one against a Michigan-based bank citing violations of the Flood Disaster Protection Act (FDPA) for allegedly: (i) failing twice “to obtain flood insurance on a building securing a designated loan at the time of origination”; (ii) failing to obtain flood insurance on a borrower’s behalf in multiple instances, in addition to twice failing to maintain adequate flood insurance; and (ii) failing to follow force placed flood insurance procedures for several loans. A second civil money penalty was assessed against a New Jersey-based bank for allegedly engaging in a pattern of violating requirements under the FDPA and the National Flood Insurance Act, which included (i) failing to notify borrowers that they were required to purchase flood insurance; and (ii) failing to obtain flood insurance on a borrower’s behalf in a timely fashion for those borrowers who failed to obtain insurance within 45 days after receiving notification.

    Also on the list are seven Section 19 orders, which allow applicants to participate in the affairs of an insured depository institution after having demonstrated “satisfactory evidence of rehabilitation,” and six terminations of consent orders, among others.

    There are no administrative hearings scheduled for May 2018. The FDIC database containing all 20 enforcement decisions and orders may be accessed here.

    Federal Issues FDIC Enforcement Flood Disaster Protection Act National Flood Insurance Act Flood Insurance

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  • FDIC fines banks for flood insurance violations, releases January enforcement actions

    Federal Issues

    On February 23, the FDIC released a list of 12 administrative enforcement action orders taken against banks and individuals in January. Civil money penalties were assessed against two banks, including one against a Michigan-based bank citing violations of the Flood Disaster Protection Act (FDPA) and the National Flood Insurance Act (NFIA) for allegedly: (i) failing to obtain flood insurance on a borrower’s behalf at origination in multiple instances, and twice failing to maintain adequate flood insurance; (ii) failing twice to follow force placed flood insurance procedures; and (iii) failing to notify borrowers in multiple instances that the “collateral for the loan was in a designated special flood hazard area.” The other civil money penalty was assessed against a Wisconsin-based bank for allegedly engaging in a pattern of violating requirements under the FDPA and the NFIA, which included failing to provide borrowers with a “Notice of Special Flood Hazard and Availability of Federal Disaster Relief Assistance” in a timely fashion.

    Also on the list are four Section 19 orders, which allow applicants to participate in the affairs of an insured depository institution after having demonstrated “satisfactory evidence of rehabilitation,” and three terminations of consent orders, among others.

    There are no administrative hearings scheduled for March 2018. The FDIC database containing all 12 enforcement decisions and orders may be accessed here.

    Federal Issues FDIC Enforcement Flood Insurance Flood Disaster Protection Act National Flood Insurance Act

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  • FDIC Fines Puerto Rican Bank for Flood Insurance Violations, Releases November Enforcement Actions

    Federal Issues

    On December 29, the FDIC released a list of 29 administrative enforcement action orders taken against banks and individuals in November, as well as one termination order issued in October. The FDIC assessed a $153,000 civil money penalty against a Puerto Rican bank, citing 321 violations of the Flood Disaster Protection Act (FDPA) and the National Flood Insurance Act (NFIA) for (i) failing to notify borrowers that they were required to purchase flood insurance; and (ii) failing to obtain flood insurance on a borrower’s behalf in a timely fashion for those borrowers who failed to obtain insurance within 45 days after receiving notification. A second civil money penalty was issued against an Ohio-based bank for allegedly engaging in a pattern of violating requirements under the FDPA and NFIA, including by failing to obtain flood insurance at the time of origination.

    Also on the list are consent orders issued against two banks related to unsafe or unsound banking practices, four Section 19 orders allowing applicants to participate in the affairs of an insured depository institution after having demonstrated “satisfactory evidence of rehabilitation,” five terminations of consent orders, and two adjudicated decisions, among others.

    There are no administrative hearings scheduled for January 2018. The FDIC database containing all 30 enforcement decisions and orders may be accessed here.

    Federal Issues Flood Insurance FDIC Enforcement Flood Disaster Protection Act National Flood Insurance Act

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  • OCC Recent Enforcement Actions Target BSA/AML Compliance Programs and National Flood Insurance Act Violations

    Federal Issues

    On December 14, the OCC released a list of recent enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with such parties. The new enforcement actions include cease and desist orders, civil money penalty orders, removal/prohibition orders, and restitution orders. The list also includes recently terminated enforcement actions.

    Cease and Desist Order. On November 9, the OCC issued a consent order (2017 Order) two days after converting a Japanese bank’s two New York branches under the supervision of the New York Department of Financial Services (NYDFS) to federally licensed branches under the supervision of the OCC. As part of the OCC’s approval process, the bank’s federal branches and New York branches agreed to the issuance of the 2017 Order, which requires adherence to “remedial provisions . . . substantively the same as those” in consent orders entered into in 2013 and 2014 with NYDFS. The previously issued consent orders addressed deficiencies related to the bank’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) sanctions compliance programs, specifically concerning the removal of key warnings to regulators on transactions with sanctioned countries.

    The 2017 Order, among other things, requires the bank to: (i) submit an action plan on enhancing internal controls and updating policies and procedures to correct BSA/AML deficiencies, address provisions applicable under the Office of Foreign Assets Control’s requirements, and implement requirements outlined in the 2013 and 2014 consent orders; (ii) ensure adherence to the action plan and 2017 Order under the direction of the bank’s general manager; (iii) submit a management oversight plan designed to improve and enhance the bank’s sanctions compliance programs; and (iv) prevent the retention or future engagement of any individual identified and “barred by the 2014 Consent Order from engaging, directly or indirectly, in any duties, responsibilities, or activities at or on behalf of the [b]ank or the [b]ank’s affiliates that involve their banking business in the [U.S.].” The 2017 Order does not require the bank to pay a civil monetary penalty.

    Civil Monetary Penalty. On October 10, the OCC assessed a $452,000 civil monetary penalty against a national bank lender for alleged violations of the National Flood Insurance Act and/or the Flood Disaster Protection Act. The bank agreed to pay the penalty without admitting or denying any wrongdoing. 

    Federal Issues OCC Enforcement Compliance Bank Secrecy Act Anti-Money Laundering OFAC NYDFS Financial Crimes Flood Insurance Sanctions National Flood Insurance Act Flood Disaster Protection Act

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  • FDIC Releases List of Enforcement Actions Taken Against Banks and Individuals in September 2017

    Federal Issues

    On October 27, the FDIC released a list of 23 orders of administrative enforcement actions that it has taken against banks and individuals in September, as well as one consent order termination issued in August. Civil money penalties were assessed against two banks, including one citing violations of the Flood Disaster Protection Act and the National Flood Insurance Act for (i) failing to obtain flood insurance during loan origination or to obtain “adequate” flood insurance, and (ii) failing to provide written notice in a timely fashion—or at all—to borrowers that the property securing the loan was in a special flood hazard area.

    Consent orders were issued against eight institution-affiliated parties related to unsafe or unsound banking practices and breaches of fiduciary duty concerning their actions when supervising a Pennsylvania bank’s mortgage division. Also on the list are five Section 19 orders, which allow applicants to participate in the affairs of an insured depository institution after having demonstrated “satisfactory evidence of rehabilitation,” and three terminations of consent orders, among others.

    There are no administrative hearings scheduled for November 2017. The FDIC database containing all 24 enforcement decisions and orders may be accessed here.

    Federal Issues FDIC Enforcement Flood Insurance Flood Disaster Protection Act National Flood Insurance Act

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  • FDIC Releases August 2017 Enforcement Actions

    Federal Issues

    On September 29, the FDIC released its list of 27 orders of administrative enforcement actions taken against banks and individuals in August. The FDIC assessed civil money penalties against three banks, including one citing violations of the National Flood Insurance Act (NFIA) and the Flood Disaster Protection Act for (i) failing to obtain flood insurance before loan origination; (ii) failing to provide flood insurance coverage for the full term of the loan; (iii) failing to ensure the amount of flood insurance coverage was “at least equal to the outstanding principal balance of the loan or the maximum limit of coverage” under the NFIA, including numerous instances where coverage options were not provided to borrowers; and (iv) failing to provide written notice in a timely fashion—or at all—to borrowers that the property securing the loan was in a special flood hazard area.

    Also on the list are six removal and prohibition orders against institution-affiliated parties related to unsafe or unsound banking practices and breaches of fiduciary duty leading to financial loss. One of these orders fines an individual $200,000 for expense account-related misconduct, concealing the ownership of certain stock from the FDIC, and causing dividends on this stock to be placed into his personal account. The list also contains seven Section 19 orders allowing applicants to participate in the affairs of an insured depository institution after having demonstrated “satisfactory evidence of rehabilitation,” and eight terminations of consent orders.

    There are no administrative hearings scheduled for October 2017. The FDIC database containing all 27 of its enforcement decisions and orders may be accessed here.

    Federal Issues FDIC Enforcement Flood Insurance Flood Disaster Protection Act National Flood Insurance Act

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