On June 30, New York’s Department of Financial Services (DFS) adopted a risk-based anti-terrorism and anti-money laundering regulation that requires regulated institutions to maintain programs to monitor and filter transactions for potential Bank Secrecy Act (BSA) and anti-money laundering (AML) violations and prevent transactions with sanctioned entities. The regulation will be effective January 1, 2017, and, beginning April 15, 2018, regulated institutions will be required to certify compliance with the regulation annually.
The Consumer Financial Protection Bureau (CFPB) issued a proposed amendment to Regulation P to conform its regulations to recent changes to the law that provide an exception to the requirement that banks provide annual privacy notices in certain circumstances. In December 2015, Congress passed a law which stated that financial institutions do not need to mail annual notices to customers if the policies and practices of the financial institutions have not changed since the previous notice was sent.
On June 30, the Federal Deposit Insurance Corporation (FDIC) issued a Financial Institution Letter (FIL-42-2016) updating its Frequently Asked Questions (FAQs) regarding identifying, accepting, and reporting brokered deposits. The Federal Deposit Insurance Act prohibits insured depository institutions from accepting deposits by or through a deposit broker unless the institution is well capitalized. The FDIC may grant a waiver to an adequately capitalized institution, but not to an undercapitalized one. The FAQs also address such waivers and other limitations, such as interest rate restrictions. The 18-page FAQs are intended to serve as a plain language summary of prior guidance and apply to all FDIC-insured institutions using brokered deposits. This Financial Institution Letter supersedes FIL-2-2015 and FIL-51-2015.
On June 30 FINRA issued Regulatory Notice 16-22 announcing SEC approval of FINRA’s proposal to adopt a consolidated FINRA Rule 3210, describing the responsibilities of associated persons of a member firm (employer) who maintain brokerage accounts at broker-dealers or financial institutions other than the firm with which they are registered, and the responsibilities of non-employer member firms executing transactions for those associated persons. New FINRA Rule 3210 replaces NASD Rule 3050, Incorporated NYSE Rules 407 and 407A and Incorporated NYSE Rule Interpretations 407/01 and 407/02. The rule change becomes effective on April 3, 2017.
Enforcement & Litigation
On June 29, the CFPB and Department of Justice (DOJ) announced a joint enforcement action against BancorpSouth, a regional bank headquartered in Tupelo, Mississippi, for alleged discriminatory mortgage lending in violation of the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA), filed in the District Court for the Northern District of Mississippi. The ECOA and FHA both prohibit creditors from discriminating on the basis of race in mortgage lending practices. If the proposed consent order filed by the parties is approved, the bank will be required to create a $2.78 million settlement fund to redress affected consumers harmed by the bank’s alleged discrimination; pay a civil penalty of approximately $3 million to the CFPB; invest $4 million in a program to extend mortgage loans to qualified applicants in minority neighborhoods in Memphis on a more affordable basis than would otherwise be available; spend at least $100,000 annually during each year that the order is in effect (a minimum of three years) on targeted advertising and outreach and spend $500,000 on community outreach programs; and expand its physical presence in minority neighborhoods and offer African American borrowers who were denied mortgage loans during the relevant time period a new opportunity to apply for a loan at a subsidized rate.
Bill Weintraub, partner in Goodwin's Financial Institutions Group and co-chair of its Financial Restructuring Practice, will be speaking at the 23rd Annual ABI Northeast Bankruptcy Conference, July 14-16 in Bretton Woods, NH, on a panel to discuss “Cutting Edge Chapter 11 Plan Issues.”
On July 26, ACI will host its 20th National Forum on Directors & Officers and Management Liability, a premier event for leading brokers, underwriters, claims professionals and attorneys to benchmark coverage, underwriting and claims strategies. The event will offer practical and detailed analysis of the entire D&O and Management Liability landscape, including the impact of litigation, regulatory action, and market conditions in today’s tumultuous environment. Business Litigation partner Carl Metzger, head of the firm's Insurance & Risk Management Practice, will be moderating a panel titled, “Identifying, Acquiring and Evaluating D&O Policies.” For more information, click here.
On July 28, ACI will host the 13th installment of its Cyber & Data Risk Insurance conference. Hear from high-level faculty about advancements in technology, products, pricing, coverage options, prevention strategies and more. Learn from and network with industry leaders about the right coverage options for your company and how you can protect data from financial and reputational loss. Business Litigation partner Carl Metzger, head of the firm’s Insurance & Risk Management Practice, will be a featured speaker on a panel titled, “Identifying, Acquiring and Evaluating Cyberliability Insurance.” For more information, click here.