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  • OFAC reaches $583,000 settlement to resolve Ukrainian sanctions violations

    Financial Crimes

    On September 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced two settlements totaling $583,100 with the U.S.-based subsidiary of a global financial institution for apparent violations of the Ukraine-Related Sanctions Regulations. According to OFAC, the financial institution allegedly agreed to process a funds transfer exceeding $28 million through the U.S. related to a series of purchases of fuel oil involving a property interest of an oil company in Cyprus that was previously designated by OFAC. OFAC alleged that at the time the payment was processed, the bank “had reason to know of the designated oil company’s potential interest, but did not conduct sufficient due diligence to determine whether the designated oil company’s interest in the payment had been extinguished.” The bank agreed to pay $157,500 to resolve the apparent violation.

    Additionally, OFAC stated the bank also agreed to separately remit $425,600 for apparent violations stemming from the processing of 61 transactions “destined for accounts at a designated financial institution.” The bank allegedly failed to stop these payments because its sanctions screening tool did not include a specific business identifier code assigned to the designated financial institution, OFAC claimed, and its screening tool “was calibrated so that only an exact match to a designated entity would trigger further manual review.”

    In arriving at the settlement amount, OFAC considered various mitigating factors, including that (i) the apparent violations were non-egregious; (ii) the bank had in place “an OFAC compliance program at the time of the apparent violations”; and (iii) the bank has undertaken remedial efforts to address the deficiencies, including reviewing the circumstances of the apparent violations with its U.S. sanctions compliance unit, and agreeing to conduct additional training and implement changes to internal procedures as necessary.

    OFAC also considered various aggravating factors, including that “several senior managers within the bank’s anti-financial crime division, as well as a representative from its counsel’s office, failed to exercise a minimal degree of caution or care in connection with the conduct that led to the apparent violation,” and had actual knowledge of the alleged conduct.

    Financial Crimes Department of Treasury OFAC Sanctions Of Interest to Non-US Persons Settlement Ukraine

  • OFAC sanctions Hizballah-associated former Lebanese ministers

    Financial Crimes

    On September 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13224 against two former Lebanese government ministers who allegedly “provided material support to Hizballah and engaged in corruption.” According to OFAC, the sanctions are part of Treasury’s continuing effort to “prioritize disruption of the full range of Hizballah’s illicit financial activity,” which has designated over 90 Hizballah-affiliated persons since 2017. As a result of the sanctions, all property and interests in property of the individuals, “and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons, are blocked and must be reported to OFAC.” OFAC noted that its regulations “generally prohibit” U.S. persons from participating in transactions with the designated individuals, including “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.” OFAC further warned that engaging in certain transactions with the designated individuals subjects persons to the risk of secondary sanctions pursuant to E.O. 13224 and the Hizballah Financial Sanctions Regulations, which implement the Hizballah International Financing Prevention Act of 2015. Furthermore, OFAC noted that it has the authority to “prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account by a foreign financial institution that knowingly facilitates a significant transaction for a terrorist group like Hizballah, or a person acting on behalf of or at the direction of, or owned or controlled by, [a Specially Designated Global Terrorist] such as Hizballah.”

    Financial Crimes Department of Treasury OFAC Sanctions Of Interest to Non-US Persons OFAC Designations

  • Georgia adds installment lender and branch approval licenses to NMLS

    On September 1, NMLS announced that it is now accepting installment lender and branch approval license applications and transition filings for Georgia licensees. New applicants and existing licensees may now make submissions for Georgia Department of Banking and Finance licenses directly through NMLS. According to the announcement, “[c]ompanies holding these license types are required to submit a license transition request through NMLS by filing a Company Form (MU1) and an Individual Form (MU2) for each of their control persons by October 15.” The transition follows the enactment of SB 462, which took effect June 30. The statute transferred all “duties, powers, responsibilities, and other authority relative to industrial loans from the Industrial Loan Commissioner to the Department of Banking and Finance,” which utilizes the NMLS to manage its licensees. Specific details on the licensing requirements in Georgia can be accessed here.

    Licensing State Issues Installment Loans NMLS

  • House hearing addresses diversity and inclusion accountability

    Federal Issues

    On September 8, the House Financial Services Subcommittee on Diversity and Inclusion held a hearing entitled “Holding Financial Regulators Accountable for Diversity and Inclusion: Perspectives from the Offices of Minority and Women Inclusion.” Two panels consisting of Office of Minority and Women Inclusion directors and acting directors from the OCC, Federal Reserve Board, Federal Reserve Bank of New York, FDIC, NCUA, Treasury Department, SEC, FHFA, and CFPB answered questions posed by subcommittee members on strategies taken to promote diversity and inclusion (D&I) in the industries they regulate as well as within the agencies themselves. Panelists discussed in-house D&I areas of focus, such as improving minority recruitment and retention in the workforce and increasing diversity in leadership teams, vendor and contractor relationships, and hiring panels. Panelists also discussed efforts for mitigating unconscious bias. While the majority of the hearing focused on in-house strategies, some panelists also touched upon key steps their agencies are taking to promote D&I at regulated entities. For example, NCUA’s representative stated that it is committed to improving workforce diversity in the broader financial services sector and ensuring credit unions are offering products and services that reflect the communities they serve. FDIC’s representative noted that the agency is trying to get capital into the hands of minority small businesses, while Treasury’s representative discussed efforts taken during the Covid-19 pandemic to ensure minority depository institutions’ participation in the Paycheck Protection Program. Some of the panelists raised concerns about the low number of diversity self-assessments that lenders voluntarily provide to regulators, however they noted that there has been an increase in submissions over the past few years and that providing more information to the institutions has been beneficial. Subcommittee members also discussed proposed legislation to address D&I problems—including H.R 8160, the “Promoting Diversity and Inclusion in Banking Act,” which would require regulators to examine D&I at regulated entities to promote equality under the law.

    Federal Issues U.S. House Diversity Hearing Prudential Regulators

  • CFPB alleges debt collection, debt buying companies violated 2015 consent order

    Federal Issues

    On September 8, the CFPB filed a complaint against the largest U.S. debt collector and debt buyer and its subsidiaries (collectively, “defendants”) for allegedly violating the terms of a 2015 consent order related to their debt collection practices. As previously covered by InfoBytes, the defendants allegedly engaged in robo-signing, sued (or threatened to sue) on stale debt, made inaccurate statements to consumers, and engaged in other illegal collection practices in violation of the Consumer Financial Protection Act (CFPA), FDCPA, and FCRA. According to the complaint, filed in the U.S. District Court for the Southern District of California, the defendants have collected more than $300 million from consumers using practices that did not comply with the 2015 consent order. Among other things, the complaint alleges that the defendants violated the terms of the consent order—and again violated the FDCPA and CFPA—by (i) filing lawsuits without possessing certain original account-level documentation (OALD) or first providing required disclosures; (ii) failing to provide consumers with OALD within 30 days of the consumer’s request; (iii) filing lawsuits to collect on time-barred debt; and (iv) failing to disclose that consumers may incur international-transaction fees when making payments to foreign countries, which “effectively den[ied] consumers the opportunity to make informed choices of their preferred payment methods.” The Bureau seeks injunctive relief, damages, consumer redress, disgorgement, and civil money penalties. In addition, the Bureau asks the court to permanently enjoin the defendants from committing future violations of the CFPA or FDCPA.

    Federal Issues CFPB Enforcement Debt Collection Debt Buying CFPA FDCPA

  • VA encourages mortgage relief after Hurricane Laura

    Federal Issues

    On September 4, the Department of Veterans Affairs (VA) issued Circular 26-20-34 to encourage mortgagees to provide relief for VA borrowers affected by Hurricane Laura. The Circular encourages loan holders and servicers to (i) extend forbearance to distressed borrowers and to members of the National Guard assisting in the recovery efforts; (ii) establish a 90-day moratorium on initiating new foreclosures; (iii) waive late charges; and (iv) suspend credit reporting on affected loans. The Circular will be rescinded October 1, 2021. Mortgage servicers and veteran borrowers are also encouraged to review the VA’s Guidance on Natural Disasters.

    Federal Issues Disaster Relief Department of Veterans Affairs Mortgages

  • CFPB and New York AG take action against debt collection operation

    Federal Issues

    On September 8, the CFPB and the New York attorney general jointly filed a lawsuit against a debt collection operation based near Buffalo, New York. The defendants include five companies, two of their owners, and two of their managers (collectively, “defendants”). According to the complaint, filed in the U.S. District Court for the Western District of New York, the defendants violated the Consumer Financial Protection Act, FDCPA, and various New York laws by using illegal tactics to induce consumer payments, such as (i) threatening arrest and imprisonment; (ii) claiming consumers owed more debt than they actually did; (iii) threatening to contact employers about the existence of the debt; (iv) harassing consumers and third parties by using “intimidating, menacing, or belittling language”; and (v) failing to provide debt verification notices.

    The lawsuit seeks consumer redress, disgorgement, civil money penalties, and injunctive relief against the defendants.

    Federal Issues CFPB State Issues State Attorney General Debt Collection FDCPA CFPA

  • Kansas extends orders relating to the Covid-19 pandemic

    State Issues

    On September 10, the Kansas governor issued another executive order delaying the sunset date of several existing executive orders relating to Covid-19 to January 26, 2021, or until the statewide state of disaster emergency relating to Covid-19 expires, whichever is earlier, with some exceptions (previously covered here). Among others, the executive order delays the sunset date for the order halting certain foreclosures and evictions (previously covered here), the order extending professional and occupational licenses (previously covered here and here), as well as the order temporarily allowing remote notarizations (previously covered here).

    State Issues Covid-19 Kansas Mortgages Foreclosure Evictions Licensing Fintech

  • Treasury, Delaware sign MOU to strengthen sanctions-related information sharing

    Financial Crimes

    On September 2, the U.S. Treasury Department and the State of Delaware announced a Memorandum of Understanding (MOU) intended to foster cooperative efforts to “shut down or otherwise disrupt the illicit activities of entities that should not be operating in the United States.” Under the MOU, Treasury’s Office of Foreign Assets Control (OFAC) and Delaware’s Department of Justice will communicate frequently and meet as needed to identify and shut down entities on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List) or that are otherwise blocked. The MOU is intended, among other things, to (i) promote certain U.S. economic sanctions-related information sharing and facilitate coordinated investigations; (ii) foster cooperative efforts to “heighten awareness of U.S. economic sanctions within both the Delaware business community and the general public” and “protect national security by promoting compliance with U.S. trade and economic sanctions laws”; (iii) support litigation against entities identified on the SDN List; (iv) “[i]mprove transparency into corporate structures used to disguise illicit business dealings”; and (v) “[p]revent abuse of U.S. companies by criminal and terrorist organizations, corrupt individuals, and other blocked persons through cancellation of entities or imposition of OFAC penalties.”

    Financial Crimes Delaware Of Interest to Non-US Persons Sanctions OFAC Department of Treasury

  • OFAC sanctions officials for supporting Maduro regime

    Financial Crimes

    On September 4, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13692 against four current or former Venezuelan government officials for allegedly facilitating “the illegitimate Maduro regime’s efforts to undermine the independence and democratic order of Venezuela,” and for engaging in a scheme to, among other things, “control[ ] the state’s wealth and assets for regime purposes.” As a result, all property and interests in property belonging to the identified individuals subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by the designated individuals are also blocked.” OFAC further noted that U.S. persons are generally prohibited from dealing with any property or interests in property of blocked or designated persons.

    Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons Sanctions Venezuela OFAC Designations

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