Financial Services Spotlight

November 2016 Developments

Posted by Roy Andersen on Dec 12, 2016 12:00:00 PM

Overview

The CFPB issued another mega-rule on prepaid accounts—subjecting the industry to hundreds of pages of new rules.  Flood insurance rules were changed to accept private flood insurance coverage.  North Korea was named as a country of primary money laundering concern and this triggers certain actions for banks.

Prepaid Accounts

On November 22, 2016, the CFPB published a final rule to provide consumer protections on prepaid accounts.   The rule is only 450 pages long in the Federal Register (triple columns).  It covers compliance with Regs E, Z, and mandates disclosures, liability error resolution, overdrafts and more.  The final rule’s definition of prepaid accounts specifically includes payroll card accounts and government benefit accounts that are currently subject to Regulation E. In addition, it covers accounts that are marketed or labeled as ‘‘prepaid’’ that are redeemable upon presentation at multiple, unaffiliated merchants for goods or services, or that are usable at automated teller machines (ATMs). It also covers accounts that are issued on a prepaid basis or capable of being loaded with funds, whose primary function is to conduct transactions with multiple, unaffiliated merchants for goods or services, or at ATMs, or to conduct person-to-person (P2P) transfers, and that are not checking accounts, share draft accounts, or negotiable order of withdrawal (NOW) accounts. See the final rule at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-22/pdf/2016-24503.pdf

FDIC Removal of Duplicative OTS Rules on Security

On November 1, 2016, the FDIC published a proposed rule to remove the OTS rules on security measures that had been mandated by Dodd Frank and made savings associations subject to the basically identical Interagency Guidelines on Minimum Security Procedures.  See the proposed rule at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-01/html/2016-26062.htm

Continuation of National Emergency in Sudan

On November 2, 2016, the President published a Notice that the national emergency with Sudan that started in 2006 would be continued for another year.  See the notice at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-02/html/2016-26659.htm

FinCEN bids Goodbye to Microfilm

On November 4, 2016, FinCEN published final technical changes to its rules to remove incorrect or obsolete references and outdated storage media.

Liberian Sanctions Removed

On November 4, 2016, OFAC published a final rule to remove the Charles Taylor Sanctions based on the removal of the national emergency that prompted the regulations.  These sanctions started in 2004.  Charles Taylor is 4 years in to his 50-year prison sentence. See the notice at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-04/html/2016-26717.htm

Private Flood Insurance

On November 7, 2016, the banking agencies published proposed rules to implement the private flood insurance provisions of the Biggert-Waters Flood Insurance Reform Act of 2012. The proposed rule would require regulated lending institutions to accept policies that meet the statutory definition of private flood insurance in the Biggert-Waters Act and permit regulated lending institutions to accept flood insurance provided by private insurers that does not meet the statutory definition of ``private flood insurance'' on a discretionary basis, subject to certain restrictions. See the proposed rules at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-07/html/2016-26411.htm

Continuation of National Emergency in Iran

On November 7, 2016, the President published a Notice that the emergency regarding Iran would be continued for another year.  This started in 1979.  Despite the recent changes, the emergency continued but the notice did not render any criticisms of Iran or explanations, as is usually the case in these notices.   See the notice at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-07/html/2016-27033.htm

North Korea as a Country of Primary Money Laundering Concern

On November 9, 2016, FinCEN published a final rule that U.S. banks could no longer open correspondent accounts for North Korea.  On June 2, 2016, FinCEN found that reasonable grounds exist for concluding that the Democratic People's Republic of Korea (DPRK or North Korea) is a jurisdiction of primary money laundering concern. The prohibition on the opening or maintaining of correspondent accounts imposed by the fifth special measure will help guard against the money laundering and WMD proliferation finance risks to the U.S. financial system posed by North Korean financial institutions and their front companies.  See the final rule at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-09/html/2016-27049.htm

Credit Union Membership

On November 9, 2016, the NCUA published a proposed rule to liberalize the community description and field on membership for community credit unions.  See the proposed rule at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-09/html/2016-26921.htm

FFIEC Consumer Compliance Rating System

On November 14, 2016, the FFIEC published a notice that it was revising its consumer compliance rating system for banks.  See the notice at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-14/html/2016-27226.htm

CFTC Chief Compliance Officer Annual Report

On November 16, 2016, the CFTC published a final rule regarding when a FCM CCO must provide the annual compliance report.  See the final rule at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-16/html/2016-27525.htm

FDIC Removal of Duplicative OTS Rules on Consumer Insurance Sale

On November 21, 2016, the FDIC published a proposed rule to remove the OTS rules on consumer protection in sales of insurance that had been mandated by Dodd Frank and made savings associations subject to the basically identical consumer protections.   See the proposed rule at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-21/html/2016-27898.htm

Federal Reserve Bank Stock Dividends

On November 23, 2016, the Fed published a final amending its Regulation I on the payment of dividends by Federal Reserve Banks.  See the final rule at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-23/html/2016-28231.htm

Truth in Lending and High Price Mortgage Loans

On November 30, 2016, the banking agencies and the CFPB published final interpretations in the Truth in Lending requirements for high priced mortgages.  In general these changes relate to calculating the threshold on when the minimum mortgage amount would be triggered.  See the final rule at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-30/pdf/2016-28699.pdf

Consumer Leasing

On November 30, 2016, the banking agencies and the CFPB published final rules and interpretations under the consumer leasing rules.  In general these changes relate to calculating the threshold on the minimum size of a lease that would be exempt from reporting requirements.  See the final rule at:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-30/pdf/2016-28710.pdf

Automated Trading of Commodities

On November 25, 2016, the CFTC published additional proposed rules to a proposal made in 2015 regarding automated trading.  See the additional proposals at the following site:
https://www.gpo.gov/fdsys/pkg/FR-2016-11-25/html/2016-27250.htm

Topics: Sudan, North Korea, Iran, CFTC, Liberia, Regulation I, Consumer Compliance Rating System

About the Spotlight


The Financial Services Spotlight examines the regulatory and technology developments impacting banks, asset managers and other financial services providers—where challenges meet opportunities.

 

Meet the Authors


Roy C. Andersen, of counsel in Sullivan & Worcester's New York office, is a member of the Corporate Department. Mr. Andersen focuses on bank regulatory and compliance matters, including international banks and their branches and agencies in New York.

Joel Telpner, partner in the firm's New York office, is a seasoned advisor, strategist and problem solver. Mr. Telpner brings more than 30 years of legal experience in a career that includes time as an AmLaw 100 partner, the former U.S. general counsel of a global financial institution, and a venture capitalist. He is recognized for his ability to deftly manage complex financial transactions, especially those involving sophisticated structured finance and derivatives matters and has an extensive and unique combination of transactional and regulatory experience.

Subscribe to the Spotlight

Posts by Topic

see all