Last week, on December 28, 2016, the OCC announced the release of its final rule to prohibit national banks and federal savings associations from dealing or investing in industrial or commercial metals. Under the new restrictions, banks will no longer be permitted to deal or invest in metals and alloys in forms primarily suited for industrial or commercial purposes, such as copper cathodes, aluminum T-bars and gold jewelry. The final rule is effective as of April 1, 2017, and includes a divestiture period, which provides for institutions that previously acquired industrial or commercial metal through dealing or investing to unwind their investments as soon as practicable, but not later than April 1, 2018. The OCC may also—on a case-by-case basis—grant up to four separate one-year extensions of the divestiture period if the bank has made a good faith effort to dispose of its existing investments and the bank’s retention of the metal is not inconsistent with safe and sound operation.
On January 11, the OCC reported that it has ordered a large London-based bank to pay $32.5 million to settle claims that the bank failed to properly follow the regulator’s orders to improve mortgage foreclosure practices that led to borrowers being harmed after the 2008 credit crisis. Specifically, the OCC had accused the bank in 2015 of failing to meet the demands it had agreed to, and the agency imposed certain additional restrictions on the company’s mortgage-servicing abilities until it fixed the alleged shortcomings. The regulator also noted that the bank had failed to properly file documents in certain bankruptcy cases after the orders (for which it was ordered to pay $3.5 million in remediation to borrowers). The OCC confirmed, however, that the bank is now in compliance with all OCC orders related to the alleged foreclosure practices.
In a press release on November 18, the Fed announced revised post-employment restrictions that more than double the number of senior staff examiners barred from leaving a Federal Reserve Bank and going right to work for a bank they had supervised. By law, senior bank examiners are prohibited for one year from accepting paid work from a financial institution that they had primary responsibility for examining in their last year of Reserve Bank employment. This post-employment restriction has previously applied only to central points of contacts (CPCs) at firms with more than $10 billion in assets. The revised policy expands this post-employment restriction to deputy CPCs, senior supervisory officers (SSOs), deputy SSOs, enterprise risk officers, and supervisory team leaders, which has the effect of more than doubling the number of senior examiners covered. The policy—which takes effect January 2, 2017—does not apply to senior examiners responsible for multiple unaffiliated banks.
In addition, another new Fed policy prohibits former Fed Bank officers from representing financial institutions and other third parties in matters before the Fed for one year after leaving their Federal Reserve position. This policy takes effect on December 5.
On March 11, FinCEN issued FIN-2016-G001 to provide clarity to money services business (MSB) principals regarding the risks associated with foreign agents’ AML compliance. FinCEN’s guidance, which complements recently issued state guidance, encourages coordination among Federal and state regulators on issues related to MSBs’ AML program obligations. FinCEN emphasizes that an MSB “remains independently and wholly responsible for implementing adequate AML program requirements,” noting, therefore, that “neither the agent nor the principal can avoid liability for failing to establish and maintain an effective AML program by pointing to a contract assigning this responsibility to another party (whether the agent or principal).” Read more…
On February 29, the OCC released Bulletin 2016-6, supplementing information in Bulletin 2007-36, “BSA Enforcement Policy,” and rescinding Bulletin 205-45, “Process for Taking Administrative Enforcement Actions Against Banks Based on BSA Violations.” Applicable to OCC-supervised institutions, the bulletin describes the OCC’s enforcement process for banks’ noncompliance with BSA requirements and dealing with repeated or uncorrected BSA compliance problems. As outlined in the bulletin, this administrative enforcement process is comprised of four distinct parts: (i) notice and opportunity to respond, during which bank management has 15 days to respond to the OCC’s written notice regarding potential noncompliance; (ii) consideration of enforcement actions, when the OCC’s supervisory office and legal department reviews relevant materials and makes a recommendation to the OCC Supervision Review Committee, which then determines whether the OCC should pursue an enforcement action or if the determination should instead be delegated to the Senior Deputy Comptroller; (iii) initiation of BSA enforcement actions, at which point the bank receives the final letter or report of examination, a proposed cease-and-desist order, and notice regarding potential civil money penalties upon approval of the action; and (iv) coordination with other agencies, when the OCC notifies FinCEN of any informal and formal actions taken against the alleged perpetrator, and when the OCC ensures that all suspicious activity reports are filed and coordinated with other appropriate law enforcement agencies.