Treasury Issues Joint AML/BSA Fact Sheet

On August 30, the Department of the Treasury, along with the OCC, FDIC, Federal Reserve and NCUA, issued a joint fact sheet on foreign correspondent banking. The fact sheet provides a summary of the agencies’ (i) expectations for BSA/AML and OFAC risk management at U.S. depository institutions; (ii) risk-based approach to the supervisory examination process; and (iii) use of enforcement as an “extension of the supervisory process.” As highlighted in a corresponding blog post, the fact sheet explains that about “95% of BSA/OFAC compliance deficiencies identified by the [Federal Banking Agencies], FinCEN, and OFAC are corrected by the institution’s management without the need for any enforcement action or penalty.” The fact sheet notes that, under existing regulations there is no general requirement for depository institutions to conduct due diligence on an individual customer of a foreign financial institution (FFI). But it also notes that “[i]n determining the appropriate level of due diligence necessary for an FFI relationship, U.S. depository institutions should consider the extent to which information related to the FFI’s markets and types of customers is necessary to assess the risks posed by the relationship, satisfy the institution’s obligations to detect and report suspicious activity, and comply with U.S. economic sanctions. This may require U.S. depository institutions to request additional information concerning the activity underlying the FFI’s transactions in accordance with the suspicious activity reporting rules and sanctions compliance obligations.”

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Federal Banking Agencies Seek Comment on Call Report Proposal for Small Financial Institutions

On August 5, the FFIEC announced that the OCC, the FDIC, and the Federal Reserve are seeking public comment on a proposal for a new Consolidated Reports of Condition and Income for Eligible Small Institutions (FFIEC 051/Call Report). The proposed Call Report is a streamlined version of the Consolidated Reports of Condition and Income for a Bank with Domestic Offices Only (FFIEC 041), and would be applicable to financial institutions with domestic offices only and total assets of less than $1 billion. Intended to ease the reporting requirements for smaller institutions, the proposed Call Report would remove approximately 40% of about 2,400 data items in FFIEC 041. FFIEC 041 would remain applicable to institutions with domestic offices only that do not file the proposed Call Report. The banking agencies are also seeking public comment on proposed revisions to the FFIEC 041 and the Consolidated Reports of Condition and Income for a Bank with Domestic and Foreign Offices (FFIEC 031). Comments are due 60 days after Federal Register publication, which has not yet occurred.

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Federal Banking Agencies Urge Financial Institutions to Conduct Diversity Self-Assessments

On August 2, the Federal Reserve, OCC, and FDIC released FAQs regarding their standards for assessing the diversity policies and practices of regulated entities. Following the June 10, 2015 Federal Register publication titled “Final Interagency Policy Statement Establishing Joint Standards for Assessing the Diversity Policies and Practices of Entities Regulated by the Agencies” (Policy Statement), the FAQs seek to clarify the agencies’ standards for entities conducting self-assessments of their diversity policies. Although self-assessments are voluntary, the banking agencies strongly encourage financial institutions to disclose their diversity policies, diversity practices, and self-assessment information on their websites and provide the same to their primary federal financial regulator.

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CSBS Announces Dates for Community Banking Research Conference

On August 2, the CSBS announced that it will co-host with the Federal Reserve System the fourth annual “Community Banking in the 21st Century” research and policy conference on September 28 and 29. The two-day event will take place in St. Louis and will feature, among other things, the release of the 2016 Community Banking in the 21st Century national survey and a panel discussion of its findings. Federal Reserve Governor Jerome Powell and Federal Reserve Bank of Chicago President Charles Evans are among the speakers scheduled to deliver keynote speeches.

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Federal Reserve and CFPB Propose Method for Adjusting TILA and Consumer Leasing Act Exemption Thresholds

On July 22, the CFPB and the Federal Reserve released  proposed rules detailing the method for adjusting the dollar thresholds in Regulation Z (TILA) and Regulation M (Consumer Leasing Act/CLA) for exempt consumer credit and lease transactions. Pursuant to the Dodd-Frank Act, the exemption thresholds in TILA and the CLA are adjusted annually based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The recently released proposals seek to clarify, among other things, that in the years following a year in which there is no annual percentage increase in the CPI-W, the CFPB and Federal Reserve will not adjust the exemption thresholds. Comments on the proposals are due within 30 days of publication in the Federal Register.

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