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Indiana governor renews public health disaster emergency and extends some executive orders issued
On January 28, the Indiana governor issued Executive Order 21-03, which renews the public health disaster emergency, originally set forth in Executive Order 20-02 (previously discussed here), for an additional 30-day period beyond January 30, 2021. As a result, all executive orders issued since March 6, 2020, that provide that they are supplements to Executive Order 20-02 are also renewed for the same 30-day period, except to the extent that they have been rescinded, superseded, or specify that they end or expire at another specific date.
North Carolina extends eviction protections through March 31
On January 27, the governor of North Carolina issued Executive Order No. 191 extending the limitations on residential evictions, consistent with the framework set forth in the federal CDC Order, through March 31.
OCC releases recent enforcement actions
On January 21, the OCC released a list of recent enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with such entities. Included is a civil money penalty order against a Texas-based bank, which requires the payment of $382,500 for an alleged pattern or practice of violations of the Flood Disaster Protection Act and its regulations.
OFAC issues counter terrorism general license
On January 25, the U.S. Treasury Department’s Office of Foreign Assets Control issued General License (GL) 13, “Authorizing Transactions Involving Ansarallah,” and a related amended frequently asked question. GL 13 authorizes certain transactions and activities ordinarily prohibited by the Global Terrorism Sanctions Regulations, the Foreign Terrorist Organizations Sanctions Regulations, or Executive Order 13224, through February 26. GL 13 does not, however, authorize the unblocking of any funds in accounts of Ansarallah that were blocked as of January 25. Additionally, FAQ 876 clarifies that non-U.S. persons “may engage in or facilitate transactions involving Ansarallah, or any entity in which Ansarallah owns, directly or indirectly, a 50 percent or greater interest, without exposure to sanctions under E.O. 13224, as amended, if such activity would be authorized under General Licenses (GLs) 9, 10, 11, 12, and 13 if engaged in by a U.S. person” (The issuance of the referenced licenses by OFAC is covered by InfoBytes here).
Court approves grocery store data breach settlement
On January 25, the U.S. District Court for the Central District of Illinois preliminarily approved a class action settlement, resolving allegations that a grocery chain was responsible for a data breach that exposed the credit card information of consumers. The preliminary settlement would allow class members to receive reimbursement of up to $225 for out-of-pocket expenses related to the breach, including (i) unreimbursed bank, overdraft, and late fees; (ii) long distance and cell phone charges; and (iii) costs related to credit monitoring and identity theft protection. Additionally, class members may be awarded up to $5,000 for “extraordinary unreimbursed monetary losses” resulting from the compromise of personal information. Moreover, the grocery chain agreed to “establish and maintain security enhancements that are estimated to cost more than $20 million.” Class members who do not agree to the settlement may keep their right to independently sue if they opt out by May 24.
Court permanently bans companies and officer from payment processing
On January 22, the U.S. District Court for the District of Arizona entered judgments (available here and here) prohibiting two companies and one officer from engaging in payment processing services, credit card laundering, and telemarketing as a result of their involvement in a credit card laundering scheme. As previously covered by InfoBytes, in July 2017, the FTC filed a complaint against 12 defendants, comprised of an independent sales organization (ISO), sales agents, payment processors, and identified principals, for allegedly violating the FTC Act and the Telemarketing Sales Rule by laundering credit card transactions on behalf of a “telemarketing scam” operation through fictitious merchant accounts. The defendants purportedly (i) underwrote and approved the operation’s fictitious companies; (ii) set up merchant accounts with its acquirer for the fictitious companies; (iii) used sales agents to market processing services to merchants; (iv) processed nearly $6 million through credit card networks; and (v) transferred sales revenue from the transactions to companies controlled by the defendants. In addition to the permanent injunctions, the court entered into an over $4.6 million suspended judgment against the companies and an over $460,000 suspended judgment against the officer. However, the judgments can be lifted should the court find that the officer failed to disclose material assets or the accurate value of material assets.
OCC addresses permissible activities for chartered national banks
On January 11, the OCC published an interpretive letter #1176 addressing the OCC’s authority to charter national banks within the scope of 12 U.S.C. § 27(a) of the National Bank Act. As described by the OCC, the statute “recognizes the authority of the OCC to charter a bank that limits its operations to those of a trust company and activities related thereto.” Trust company activities include those “permissible for a state trust bank or company even if those state authorized activities are not necessarily considered fiduciary in nature under 12 U.S.C. § 92a and 12 CFR Part 9.” Accordingly, the letter explains that a national bank chartered under 12 U.S.C. § 27(a) is not limited to fiduciary activities as defined for purposes of 12 C.F.R. Part 9 and may engage in any permissible activities of a trust company. The letter also discusses (i) standards the OCC considers when assessing whether an activity is conducted in a fiduciary capacity; (ii) implications for chartering de novo institutions that limit activities to those of a trust company; (iii) permissible activities of converting state-chartered institutions and the handling of nonconforming assets; and (iv) permissible activities for national banks that do not have fiduciary powers.
OCC addresses qualifying activities for CRA final rule
On January 4, the OCC issued interpretive letter #1177, which addresses qualifying activities of the affiliates and subsidiaries of national banks and savings associations under the OCC’s 2020 final rule to modernize the regulatory framework implementing the Community Reinvestment Act (CRA). As previously covered by a Buckley Special Alert here, the 2020 final rule, among other things (i) updated deposit-based assessment areas; (ii) mandated the inclusion of consumer loans in CRA evaluations; and (iii) included a non-exhaustive illustrative list of activities that qualify for CRA consideration. The interpretive letter states that qualifying activities under the 2020 final rule may include the CRA qualifying activities of the consolidated subsidiaries of a bank, but that a bank’s qualifying activities generally do not include the activities of the bank’s nonbank affiliates. The OCC notes that the “very factors demonstrating the tight link between a bank and its consolidated subsidiary…suggest that activities conducted by a bank’s parent and sister companies should generally not receive CRA credit.” Thus, banks will not be given credit for qualifying activities conducted by such affiliates unless the bank “directly financed or otherwise supported such activities.”
HUD issues Mortgagee Letter regarding temporary statutory authority to insure operating loss loans under Section 223(d)
On January 15, the U.S. Department of Housing and Urban Development issued Mortgagee Letter 2021-1 to implement its temporary statutory authority to insure operating loss loans under Section 223(d) of the National Housing Act in order to mitigate the Covid-related temporary reduction of revenue of healthcare facilities. The Mortgagee Letter sets forth requirements for the supplemental loans for hospitals and residential care facilities. The Mortgagee Letter is effective for applications for insurance submitted for which firm commitments are issued no later than September 30, 2021. HUD also is imposing an application receipt deadline of Monday, August 30, 2021 to account for statutory time constraints and processing times. HUD noted that additional guidance is forthcoming.
NYDFS virtual currency techsprint set for March
On January 21, NYDFS announced the details of its first-of-its-kind techsprint focusing on virtual currency that will open on March 1 and culminate on March 12. As previously covered by InfoBytes, the techsprint is a collaboration with the Conference of State Bank Supervisors and the Alliance for Innovative Regulation, and the objective is “to achieve creative and collaborative prototyping as a step toward smarter regulatory reporting in virtual currency.” NYDFS notes that the virtual format will allow flexibility for the techsprint to include a combination of full-day facilitated exercises and self-paced, team-managed efforts. The teams will work to address one of several problem statements, including (i) “[h]ow can DFS achieve real-time or more frequent access to company financial data from virtual currency licensees and receive early warning signs of financial risks to the companies or their customers?” (i) “[h]ow can DFS obtain real-time transaction data from its licensees and automatically analyze the data to safeguard against illicit financing risks?” and (iii) “[h]ow can DFS use tools such as natural language processing, machine learning, and artificial intelligence to identify risks by processing and analyzing supervisory reports that are submitted by licensees in a wide range of formats?”