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  • Michigan regulator urges institutions to protect stimulus payments from overdrafts, fees

    State Issues

    On March 15, the Michigan Department of Insurance and Financial Services issued a bulletin “strongly” encouraging financial institutions to protect payments made to customers under the American Rescue Plan from overdrafts and fees. The bulletin further instructs that if a financial institution’s system automatically applies such a payment to a preexisting overdraft, the institution should reverse the application of the direct payment as promptly as possible.

    State Issues Covid-19 Michigan Bank Compliance Overdraft Financial Institutions

  • OCC delays fair access rule

    Agency Rule-Making & Guidance

    On January 28, the OCC announced it has paused publication of a final rule that would ensure covered national banks, federal savings associations, and federal branches and agencies of foreign bank organizations provide all customers fair access to financial services. Delaying publication in the Federal Register “will allow the next confirmed Comptroller of the Currency to review the final rule and the public comments the OCC received, as part of an orderly transition,” the agency explained. Under the final rule (covered by InfoBytes here), banks would be required to grant fair access to financial services, capital, and credit based on the risk assessment of individual customers, rather than broad-based decisions affecting whole categories or classes of customers. The OCC confirmed, however, that its “long-standing supervisory guidance stating that banks should avoid termination of broad categories of customers without assessing individual customer risk remains in effect.”

    As previously covered by InfoBytes, on January 20, the Biden administration broadly directed the heads of executive departments and agencies across the federal government (without specifying which departments or agencies are covered) to “immediately withdraw” or delay action on any pending regulations not yet published in the Federal Register.

    Agency Rule-Making & Guidance OCC Dodd-Frank Bank Compliance Of Interest to Non-US Persons Bank Regulatory

  • Agencies release SARs/AML consideration FAQs

    Agency Rule-Making & Guidance

    On January 19, the Financial Crimes Enforcement Network (FinCEN), Federal Reserve Board, FDIC, NCUA, and the OCC, in consultation with staff at certain other federal functional regulators, published answers to frequently asked questions concerning suspicious activity reporting (SAR) and other anti-money laundering (AML) considerations. The answers clarify financial institutions’ commonly asked questions about SARs/AML regulatory requirements and are provided to assist financial institutions with their Bank Secrecy Act (BSA)/AML compliance obligations in order to enable them “to focus resources on activities that produce the greatest value to law enforcement agencies and other government users of [BSA] reporting.” Topics discussed include (i) law enforcement requests for financial institutions to maintain accounts; (ii) receipt of grand jury subpoenas and law enforcement inquiries and SAR filings; (iii) maintaining customer relationships following the filing of SARs; (iv) filing SARs based on negative news identified in media searches; (v) information provided in SAR data and narrative fields; and (vi) SAR character limits. The agencies note that the FAQs do not alter existing BSA/AML requirements or establish new supervisory expectations, but have been developed in response to recent recommendations as described more thoroughly in FinCEN’s Advance Notice or Proposed Rulemaking issued last September on AML program effectiveness (covered by InfoBytes here).

    Agency Rule-Making & Guidance FinCEN FDIC Federal Reserve NCUA OCC Of Interest to Non-US Persons SARs Anti-Money Laundering Bank Compliance Bank Regulatory

  • OCC releases final rule to ensure fair access to financial services

    Agency Rule-Making & Guidance

    On January 14, the OCC released a final rule to ensure that covered national banks, federal savings associations, and federal branches and agencies of foreign bank organizations provide fair access to financial services. The final rule is largely unchanged from the notice of proposed rulemaking (NPRM) issued last November (covered by InfoBytes here). Among other things, the final rule codifies more than a decade of OCC guidance stating that fair access to financial services, capital, and credit should be based on the risk assessment of individual customers, rather than broad-based decisions affecting whole categories or classes of customers. Building upon the principle of nondiscrimination and implementing language included in Title III of Dodd-Frank—“which charged the OCC with ‘assuring the safety and soundness of, and compliance with laws and regulations, fair access to financial services, and fair treatment of customers by, the institutions and other persons subject to its jurisdiction’”—the OCC stressed that the final rule establishes that “a covered bank’s decision to deny services based on an objective assessment would not violate the bank’s obligation to provide fair access.” While banks are still free to make “legitimate business decisions about what and whom to serve” and may still determine their product lines and geographic markets, they are required to make the “products and services they choose to offer available to all customers in the communities they serve, based on consideration of quantitative, impartial, risk-based standards established by the bank.”

    In finalizing the rule, the OCC considered stakeholder comments received in response to the NPRM. In response, the OCC stated that the final rule will not prevent banks from denying or limiting services in an effort to (i) prevent a person from entering or competing in a particular market; or (ii) disadvantage a person in order to benefit another person in which the bank has a financial interest. According to the OCC, this requirement would have created a regulatory burden outside of the primary objectives of the final rule. The final rule affects banks with more than $100 billion in assets and will take effect April 1.

    Separately, the OCC announced the departure of Acting Comptroller of the Currency Brian P. Brooks. Brooks stepped down on January 14, and was replaced by Chief Operating Officer Blake Paulson.

    Agency Rule-Making & Guidance OCC Dodd-Frank Bank Compliance Of Interest to Non-US Persons Bank Regulatory

  • Virginia issues modified stay at home order identifying banks and financial institution as essential retail businesses

    State Issues

    On December 10, the governor of Virginia issued a modified stay at home order limiting travel and gatherings for Virginia residents and operations for certain businesses. However, banks and other financial institutions with retail functions are considered essential retail businesses and may continue to remain open during normal business hours. All businesses, including essential retail businesses, are advised to adhere to the Guidelines for All Business Sectors.

    State Issues Covid-19 Virginia Financial Institutions Retail Banking Bank Compliance

  • OCC finalizes regulatory requirements for covered institutions

    Agency Rule-Making & Guidance

    On November 23, the OCC announced a final rule that updates and eliminates outdated regulatory requirements for national bank and federal savings association activities and operations. The final rule, originally proposed in June (covered by InfoBytes here), amends 12 CFR 7 to clarify and codify recent OCC interpretations related to the modern financial system. Among other things, the changes will (i) incorporate and streamline interpretations concerning permissible derivatives activities; (ii) codify interpretations which permit covered institutions to engage in certain tax equity finance transactions; (iii) “codify[] interpretations regarding national bank membership in payment systems and clarify[] that federal savings associations are subject to the same requirements as national banks; (iv) “expand[] the ability of national banks and federal savings associations to choose corporate governance provisions under state law; (v) clarify anti-takeover provisions; and (vi) codify National Bank Act interpretations concerning capital stock issuances and repurchases. The final rule takes effect April 1, 2021.

    Agency Rule-Making & Guidance OCC Bank Compliance

  • OCC’s proposed rule would ensure fair access to financial services

    Agency Rule-Making & Guidance

    On November 20, the OCC announced a notice of proposed rulemaking (NPRM), which seeks to ensure that national banks, federal savings associations, and federal branches and agencies of foreign bank organizations offer and provide fair access to financial services “based on the risk assessment of individual customers, rather than broad-based decisions affecting whole categories or classes of customers.” The NPRM implements language included in Title III of Dodd-Frank—“which charged the OCC with ‘assuring the safety and soundness of, and compliance with laws and regulations, fair access to financial services, and fair treatment of customers by, the institutions and other persons subject to its jurisdiction’”—and builds upon the principle of nondiscrimination. The NPRM would apply to the largest banks in the country and would prevent such banks from denying or limiting services in an effort to (i) prevent a person from entering or competing in a particular market; or (ii) disadvantage a person in order to benefit another person in which the bank has a financial interest. The OCC emphasizes in its press release that “a covered bank’s decision to deny services based on an objective assessment of the person’s creditworthiness, ability to pay, or other quantitative, impartial, risk-based reasons would not violate the bank’s obligation to provide fair access.” Comments on the NPRM are due by January 4, 2021.

    Agency Rule-Making & Guidance OCC Dodd-Frank Of Interest to Non-US Persons Bank Compliance

  • OCC updates Comptroller’s Licensing Manual

    Federal Issues

    On November 23, the OCC announced a new Comptroller’s Licensing Manual booklet, “Mutual to Stock Conversions,” which incorporates provisions of revised regulation 12 CFR Part 192. The new booklet, among other things, “provides an overview of policy considerations and decision criteria that the OCC considers when reviewing applications by federal savings associations to convert from a mutual to stock form of ownership under 12 CFR 192.” The new booklet also outlines requirements for covered institutions when filing conversion applications, as well as references and information resources for prospective filers.

    Federal Issues OCC Comptroller's Licensing Manual Bank Compliance

  • OCC addresses CRA provisions and FAQs

    Agency Rule-Making & Guidance

    On November 9, the OCC released Bulletin 2020-99, which discusses key provisions of the June 2020 Community Reinvestment Act (CRA) Rule and includes FAQs. As previously covered by a Buckley Special Alert, on May 20, the OCC announced the final rule to modernize the regulatory framework implementing the CRA. The final rule was technically effective on October 1, but the final rule provides for at least a 27-month transition period for compliance based on a bank’s size and business model. Large banks and wholesale and limited purpose banks will have until January 1, 2023 to comply, and small and intermediate banks that opt-in to the final rule’s performance standards will have until January 1, 2024. The Bulletin details the key provisions of the final rule, including the (i) new criteria for designating bank assessment areas, and (ii) varying performance standards by bank type. The Bulletin’s FAQs cover a range of topics including (i) the transition period; (ii) qualifying activities; (iii) activities outside bank assessment areas; (iv) examination administration; and (v) data collection and reporting.

    The Bulletin notes that the OCC is conducting outreach to provide banks with more information regarding how the agency will administer the transition to the final rule. Additionally, the Bulletin notes the OCC will issue guidance addressing how the July 2016 Interagency Questions and Answers Regarding Community Reinvestment will apply to activities conducted under the final rule.

    Lastly, the Bulletin rescinds OCC Bulletin 2020-3, “Community Reinvestment Act: Notice of Proposed Rulemaking,” and OCC Bulletin 2020-4, “Community Reinvestment Act: Request for Public Input.”

    Agency Rule-Making & Guidance OCC CRA Bank Compliance

  • Federal Reserve Board extends measures to ensure high level of resilience among large banks

    Federal Issues

    On September 30, the Federal Reserve Board announced it would extend measures previously instituted to ensure that large banks maintain a high level of capital resilience in light of uncertainty introduced by the Covid-19 outbreak. The measures were extended for an additional quarter. Large banks (i.e. banks with more than $100 billion in total assets) will be prohibited from making share repurchases. Additionally, dividend payments will be capped and tied to a formula based on recent income. The announcement notes that the Board will conduct a second stress test later this year to further test the resiliency of large banks.

    Federal Issues Covid-19 Federal Reserve FRB Bank Compliance

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