CSBS and MTRA Issue Report on State Supervision of Money Services Businesses

On May 24, the Conference of State Bank Supervisors (CSBS) and the Money Transmitter Regulators Association (MTRA) published a report titled “The State of State Money Services Businesses Regulation and Supervision.” According to the report, money services businesses (MSBs) are losing access to traditional banking services, with many banks “indiscriminately terminating the accounts of MSBs, or refusing to open accounts for any MSBs, thereby eliminating them as a category of customers.” Evidence suggests that banks are terminating or refusing to open MSB accounts partially because of the regulatory scrutiny surrounding the industry and the concern of BSA/AML risks. However, the report recognizes that MSBs are an important part of the financial system at large: “[MSBs], and specifically money transmitters, play a vital role in providing financial services to consumers and small businesses across the country. Countless Americans use MSBs every day to pay bills, purchase items online or send funds to family members and friends domestically and abroad.” Acknowledging the significant role MSBs play in providing financial services to U.S. households, the CSBS’ and MTRA’s report is intended to provide an outline of the states’ system of supervision of MSBs, highlighting that “state regulatory requirements are focused on consumer protection, safety and soundness and adherence to BSA/AML requirements and enforcement through state supervisory programs.”

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CSBS and Multi-State Mortgage Committee Report on 2015 Supervisory Efforts

The Conference of State Bank Supervisors (CSBS) and the Multi-State Mortgage Committee (MMC) issued a report to state regulators regarding its 2015 review of the supervisory structure around examination and risk assessment of non-bank mortgage loan servicers. Notable servicing examination findings outlined in the report include: (i) violations and deficiencies related to loan transfer activity, noting that a “significant portion of servicing examination findings are tied to the mortgage servicing requirements implemented into the [RESPA] and [TILA] in January of 2014”; (ii) ineffective oversight of sub-servicer activity and insufficient third party vendor management; and (iii) ineffective examination management procedures on the part of mortgage servicers, leading to delayed examination processes, as well as impeded regulatory oversight. The report further outlines origination examination findings, emphasizing RESPA violations related to Mortgage Servicing Agreements (MSAs) which typically include payments for promotional advertising services performed on behalf of the mortgage company. Read more…

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Illinois to Host Cyber Risk and Security Conferences; CSBS to Co-host

On October 14, the Illinois Division of Banking announced that it would host two Cyber Risk and Security Conferences on November 9 and November 16. With the growing number of threats to financial data systems, cyber and data security has become a top concern for regulators in the financial industry. Topics to be addressed at the conferences include: (i) current cyber threats; (ii) bank and credit unions’ cyber preparedness and response to threats; and (iii) existing trends and the globalization of cyber crimes. The CSBS will co-host the conferences.

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CSBS and Federal Reserve Provide Insight on Opportunities and Challenges for Community Banks

On October 6, the CSBS released a summary of research presented and discussions had at the third annual Community Banking Research and Policy Conference, held September 30 through October 1. At the conference, community bankers, academics, and federal and state policymakers discussed trends in community banking, with a particular focus on small business and farm lending, community bank performance, and community banks pre- and post-financial crisis. 27 state regulators attended the conference and held a roundtable to address first-hand the challenges – such as increased regulatory burden and evolving technology – and opportunities community bankers face.

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POSTED IN: Banking, State Issues

CSBS’ Multi-State Mortgage Committee: Mortgage Companies Must Comply with Technology-Based Examination Process

On September 29, the Conference of State Bank Supervisors (CSBS) and the Multi-state Mortgage Committee (MMC) released a bulletin titled, “Supervisory Expectations Regarding the Use of Electronic Examination Tools.” The bulletin explains the MMC’s use of electronic examination tools and the supervisory expectations for mortgage companies undergoing the state examination process. As a result of a 2008 initiative by the MMC, state regulators have been using technology to review loan transaction data for years, originally setting the expectation that companies fully participate with the process by 2011. According to the bulletin, however, “the mortgage industry has regularly failed to provide clean data in a format acceptable to the regulators’ technology platform.” As a result of this non-compliance, the MMC recommended that, going forward, state regulators take enforcement action against companies that are unable to provide accurate data in a timely fashion, so as to ensure a “more efficient and timely regulatory process.”

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POSTED IN: Mortgages, State Issues