June 2016 Compliance Monthly
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Content
COMPLIANCE MONTHLY
June 2016
Compliance Monthly is intended to keep you informed of regulatory changes in advance of their effective
date so your institution can have the necessary policies, procedures and processes in place to be compliant
at the time of enactment.
Finalized Rules:
FINCEN ISSUES FINAL CUSTOMER DUE
DILIGENCE RULE
The final rule, published on May 11th, will require
banks to collect information on beneficial owners
when an account is opened, using the model
form included with the rule or taking other steps to
collect the same information. The bank can rely
on the information provided by the customer. A
beneficial owner is an individual who owns more
than 25% of the equity interests in a company or is
the single individual who exercises control. The bank
must perform CIP to verify the identity of beneficial
owners, although when documentation is used,
the bank can rely on copies. The rule also includes
a number of exceptions from coverage. The rule
will be effective July 11, 2016 with mandatory
compliance by May 11, 2018.
Proposed Rules:
CFPB PROPOSES LIMITS ON MANDATORY
ARBITRATION CLAUSES
The CFPB proposal contains regulations governing
two aspects of consumer finance dispute resolution.
First, the proposed rule would prohibit covered
providers of certain consumer financial products and
services from using an agreement with a consumer
that provides for arbitration of any future dispute
between the parties. The consumer also cannot
be barred from filing or participating in a class
action suit. Second, the proposal would require a
covered provider that is involved in an arbitration
pursuant to a pre-dispute arbitration agreement to
submit specified arbitral records to the CFPB. This
would allow the CFPB to monitor consumer finance
arbitrations to ensure that the arbitration process
is fair for consumers. The proposal would apply
to all extensions of credit under the Equal Credit
Opportunity Act, automobile leases, depository
services under the Truth in Savings Act, payments
products and services subject to the Electronic
Funds Transfer Act, debt settlements, credit reports
and debt collection. The proposal would cover
depository institutions, nonbank lenders and money
transmitters. Comments are due by August 22, 2016.
AGENCIES PROPOSE LIMITS ON INCENTIVEBASED COMPENSATION
A joint press release from six federal agencies (FDIC,
FHFA, FRB, NCUA, OCC, and SEC) invites public
comment on a proposed rule that would prohibit
incentive-based compensation arrangements that
encourage inappropriate risks at covered financial
institutions. The proposed rules would apply to
covered financial institutions with total assets of $1
billion or more. The requirements are tailored based
on assets. Comments are due by July 22, 2016.
accumepartners.com
Compliance Monthly
June 2016
Other Compliance News:
CFPB SPRING RULEMAKING AGENDA
RELEASED
The CFPB has posted an article on its Spring 2016
rulemaking agenda, a semi-annual status report
on the agency’s plans for adding or amending
consumer protection rules assigned to the agency for
implementation. The CFPB plans to address:
* Arbitration. The CFPB published a proposed rule
(see above) that would restrict the use of mandatory
arbitration agreements in contracts for consumer
financial products or services.
* Payday, auto title, and similar lending products.
The CFPB plans to release a Notice of Proposed
Rulemaking addressing consumer protections for
these small consumer loans, expected in early June.
* Prepaid accounts. The CFPB expects to issue a final
rule this summer to create a comprehensive set of
consumer protections for prepaid financial products.
A proposed rule was issued in November 2014.
* Mortgage servicing. The CFPB reports that a final
rule can be expected this summer to amend a
proposal published in December 2014. The proposal
addressed enhanced loss mitigation requirements
and compliance with certain servicing rules when a
successor in interest or bankruptcy may be involved.
* TRID Rule. Also expected this summer is a proposed
rule to “make small clarifications and provide further
regulatory guidance” on the TRID Rule.
* Pre-rule stage. The CFPB reports it is still in the “prerule stage” in any potential rulemaking related to
overdraft services on consumer checking accounts;
debt collection practices; and data gathering and
reporting for women-owned, minority-owned and
small business lending.
INTERAGENCY GUIDANCE ON DEPOSIT
RECONCILIATION PRACTICES
The federal banking agencies have issued
“Interagency Guidance Regarding Deposit
Reconciliation Practices.” The guidance ensures
that financial institutions are aware of supervisory
expectations regarding deposit reconciliation
practices for customer accounts. The guidance
reminds bankers that they either must adopt deposit
reconciliation policies and procedures designed
to avoid discrepancies or policies and procedures
that are designed to resolve discrepancies “such
that customers are not disadvantaged.” The
agencies also advised financial institutions to
ensure that deposit reconciliation is integrated into
compliance management systems, which include
appropriate policies, procedures, internal controls,
training, oversight, and review processes, to ensure
compliance with applicable laws and regulations and
fair treatment of customers.
FFIEC 2016 CRA INFORMATIONAL GUIDE
LETTER
The FFIEC has released a 2016 Informational Guide
Letter as a reminder of previously announced
information on Community Reinvestment Act data
collection and updated geographic designations
for calendar year 2016 data that will be reported by
March 1, 2017.
OCC ISSUES NEW HANDBOOK ON PRIVATE
STUDENT LENDING
The OCC added a new booklet on private student
lending to its Comptroller’s Handbook. The booklet
provides examples of acceptable practices and
policies for banks engaging in private educational
lending, including in-school deferment; providing
a six-month grace and extended grace periods
immediately after graduation or withdrawal from
school; and loan modifications for long-term
hardships. The booklet highlights the differences
between federal and private student loans and
includes guidance for examiners on assessing the risks
associated with private student lending.
Copyright 2016 Accume Partners, All rights reserved.
Information contained in Compliance Monthly is not intended to
provide specific advice and guidance. You should consult your own
professional services provider in connection with matters affecting
your own interests.
accumepartners.com
Compliance Monthly
June 2016
ABOUT ACCUME PARTNERS
Accume Partners provides the financial industry with regulatory compliance, internal audit, technology
and enterprise risk management services. Through these key areas of focus, Accume is able to remain at
the forefront of changing needs and regulations of its clients, bring balanced perspectives and the specialized
knowledge necessary to serve today’s banks and financial institutions.
To learn more, please visit our website at accumepartners.com.
For more information, please call or e-mail any of these Accume Partners’ contacts:
David Smith
Director, Compliance
570.606.7423
[email protected]
Paul Nobbs
Managing Director, NJ Banking
and Financial Services
609.332.7132
[email protected]
Glenn Hoffman
Managing Director, Technology
Risk Management
203.803.7345
[email protected]
Mark Lindig
Chief Executive Officer
646.476.1961
[email protected]
Nicole Lloyd
Managing Director, Mid-Atlantic
717.903.3142
[email protected]
K.D. Mehra
Managing Director, NY Banking
347.576.5652
[email protected]
Michael Barrack
Managing Director, Risk Director
and Cybersecurity Services
702.461.8682
[email protected]
accumepartners.com
June 2016
Compliance Monthly is intended to keep you informed of regulatory changes in advance of their effective
date so your institution can have the necessary policies, procedures and processes in place to be compliant
at the time of enactment.
Finalized Rules:
FINCEN ISSUES FINAL CUSTOMER DUE
DILIGENCE RULE
The final rule, published on May 11th, will require
banks to collect information on beneficial owners
when an account is opened, using the model
form included with the rule or taking other steps to
collect the same information. The bank can rely
on the information provided by the customer. A
beneficial owner is an individual who owns more
than 25% of the equity interests in a company or is
the single individual who exercises control. The bank
must perform CIP to verify the identity of beneficial
owners, although when documentation is used,
the bank can rely on copies. The rule also includes
a number of exceptions from coverage. The rule
will be effective July 11, 2016 with mandatory
compliance by May 11, 2018.
Proposed Rules:
CFPB PROPOSES LIMITS ON MANDATORY
ARBITRATION CLAUSES
The CFPB proposal contains regulations governing
two aspects of consumer finance dispute resolution.
First, the proposed rule would prohibit covered
providers of certain consumer financial products and
services from using an agreement with a consumer
that provides for arbitration of any future dispute
between the parties. The consumer also cannot
be barred from filing or participating in a class
action suit. Second, the proposal would require a
covered provider that is involved in an arbitration
pursuant to a pre-dispute arbitration agreement to
submit specified arbitral records to the CFPB. This
would allow the CFPB to monitor consumer finance
arbitrations to ensure that the arbitration process
is fair for consumers. The proposal would apply
to all extensions of credit under the Equal Credit
Opportunity Act, automobile leases, depository
services under the Truth in Savings Act, payments
products and services subject to the Electronic
Funds Transfer Act, debt settlements, credit reports
and debt collection. The proposal would cover
depository institutions, nonbank lenders and money
transmitters. Comments are due by August 22, 2016.
AGENCIES PROPOSE LIMITS ON INCENTIVEBASED COMPENSATION
A joint press release from six federal agencies (FDIC,
FHFA, FRB, NCUA, OCC, and SEC) invites public
comment on a proposed rule that would prohibit
incentive-based compensation arrangements that
encourage inappropriate risks at covered financial
institutions. The proposed rules would apply to
covered financial institutions with total assets of $1
billion or more. The requirements are tailored based
on assets. Comments are due by July 22, 2016.
accumepartners.com
Compliance Monthly
June 2016
Other Compliance News:
CFPB SPRING RULEMAKING AGENDA
RELEASED
The CFPB has posted an article on its Spring 2016
rulemaking agenda, a semi-annual status report
on the agency’s plans for adding or amending
consumer protection rules assigned to the agency for
implementation. The CFPB plans to address:
* Arbitration. The CFPB published a proposed rule
(see above) that would restrict the use of mandatory
arbitration agreements in contracts for consumer
financial products or services.
* Payday, auto title, and similar lending products.
The CFPB plans to release a Notice of Proposed
Rulemaking addressing consumer protections for
these small consumer loans, expected in early June.
* Prepaid accounts. The CFPB expects to issue a final
rule this summer to create a comprehensive set of
consumer protections for prepaid financial products.
A proposed rule was issued in November 2014.
* Mortgage servicing. The CFPB reports that a final
rule can be expected this summer to amend a
proposal published in December 2014. The proposal
addressed enhanced loss mitigation requirements
and compliance with certain servicing rules when a
successor in interest or bankruptcy may be involved.
* TRID Rule. Also expected this summer is a proposed
rule to “make small clarifications and provide further
regulatory guidance” on the TRID Rule.
* Pre-rule stage. The CFPB reports it is still in the “prerule stage” in any potential rulemaking related to
overdraft services on consumer checking accounts;
debt collection practices; and data gathering and
reporting for women-owned, minority-owned and
small business lending.
INTERAGENCY GUIDANCE ON DEPOSIT
RECONCILIATION PRACTICES
The federal banking agencies have issued
“Interagency Guidance Regarding Deposit
Reconciliation Practices.” The guidance ensures
that financial institutions are aware of supervisory
expectations regarding deposit reconciliation
practices for customer accounts. The guidance
reminds bankers that they either must adopt deposit
reconciliation policies and procedures designed
to avoid discrepancies or policies and procedures
that are designed to resolve discrepancies “such
that customers are not disadvantaged.” The
agencies also advised financial institutions to
ensure that deposit reconciliation is integrated into
compliance management systems, which include
appropriate policies, procedures, internal controls,
training, oversight, and review processes, to ensure
compliance with applicable laws and regulations and
fair treatment of customers.
FFIEC 2016 CRA INFORMATIONAL GUIDE
LETTER
The FFIEC has released a 2016 Informational Guide
Letter as a reminder of previously announced
information on Community Reinvestment Act data
collection and updated geographic designations
for calendar year 2016 data that will be reported by
March 1, 2017.
OCC ISSUES NEW HANDBOOK ON PRIVATE
STUDENT LENDING
The OCC added a new booklet on private student
lending to its Comptroller’s Handbook. The booklet
provides examples of acceptable practices and
policies for banks engaging in private educational
lending, including in-school deferment; providing
a six-month grace and extended grace periods
immediately after graduation or withdrawal from
school; and loan modifications for long-term
hardships. The booklet highlights the differences
between federal and private student loans and
includes guidance for examiners on assessing the risks
associated with private student lending.
Copyright 2016 Accume Partners, All rights reserved.
Information contained in Compliance Monthly is not intended to
provide specific advice and guidance. You should consult your own
professional services provider in connection with matters affecting
your own interests.
accumepartners.com
Compliance Monthly
June 2016
ABOUT ACCUME PARTNERS
Accume Partners provides the financial industry with regulatory compliance, internal audit, technology
and enterprise risk management services. Through these key areas of focus, Accume is able to remain at
the forefront of changing needs and regulations of its clients, bring balanced perspectives and the specialized
knowledge necessary to serve today’s banks and financial institutions.
To learn more, please visit our website at accumepartners.com.
For more information, please call or e-mail any of these Accume Partners’ contacts:
David Smith
Director, Compliance
570.606.7423
[email protected]
Paul Nobbs
Managing Director, NJ Banking
and Financial Services
609.332.7132
[email protected]
Glenn Hoffman
Managing Director, Technology
Risk Management
203.803.7345
[email protected]
Mark Lindig
Chief Executive Officer
646.476.1961
[email protected]
Nicole Lloyd
Managing Director, Mid-Atlantic
717.903.3142
[email protected]
K.D. Mehra
Managing Director, NY Banking
347.576.5652
[email protected]
Michael Barrack
Managing Director, Risk Director
and Cybersecurity Services
702.461.8682
[email protected]
accumepartners.com
