Bankers Compliance Task Force Current News Archive - JUNE 2005
June 30, 2005 The Federal Financial Institutions Examination Council today released the Bank Secrecy Act/Anti-Money Laundering Examination Manual. The manual was developed by the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, and the Office of Thrift Supervision in collaboration with the Financial Crimes Enforcement Network, the delegated administrator of the Bank Secrecy Act. The manual's release marks an important step forward in the effort to ensure that consistent application of the Bank Secrecy Act to all banking organizations including commercial banks, savings associations, and credit unions. For more information or to access the new examination manual, visit: www.fincen.gov.
June 30, 2005 Effective January 1, 2006, for 2005 HMDA data collection, a complete resubmission is required for ALL CHANGES to the loan application register following an institution’s initial HMDA submission. Manual changes will no longer be accepted via e-mail, fax or telephone. All corrections or updates to the loan application register following the initial submission are to be completed by the institution. The institution must then RESUBMIT an entirely new file inclusive of all loans for the applicable reporting year. EXCEPTIONS: (1) 2005 HMDA submission is greater than 350,000 LARs. Less than 10 field corrections should be written on the edit report and faxed to 202-452-6497. Corrections exceeding 10 require resubmission. This exception is only applicable to institution’s who have submitted greater than 350,000 LAR. (2) 2005 HMDA submission contains 25 or fewer entries and is submitted in paper form. Less than 10 field corrections should be written on the edit report and faxed to 202-452-6497. This exception is only applicable for institution’s who submitted an initial paper copy LAR with 25 or fewer entries. Please see http://www.ffiec.gov/.
June 17, 2005 HOEPA July 2005 Reference Rates have been published. The Federal Reserve has posted the new reference rates which lenders must use to determine if loans for which applications are received in June 2005 will be subject to HOEPA under the APR trigger test. Use the FRB H.15 to find applicable release which lists the Treasury Security with the same maturity term as your loan. To make the calculation, use the yield in effect on the 15th of the month prior to the month the application was received. To access the rates, go to: http://www.federalreserve.gov/.
June 17, 2005 The OTS has announced the update of the Asset Quality section of it's Examination Handbook. This section has been substantially revised and a new section added. To view the handbook, go to: http://www.ots.treas.gov/.
June 14, 2005 After discussions with the Department of Defense, ABA's John Rasmus reports that the Defense Manpower Data Center (DMDC) can now be accessed by banks to verify the active duty status of individual servicemembers in order to confirm their eligibility for beneficial treatment under the Servicemembers Civil Relief Act. You can read John's memo at: http://www.aba.com/.
June 14, 2005 FinCEN issued its SAR Activity Review by the Numbers for year-end 2004. BSA/Structuring/Money Laundering continues to outstrip all other categories by a wide margin, constituting 56% of 2004's depository institution filings of over 381,000. Mortgage loan fraud SARs from banks in 2004 doubled 2003's numbers--exceeding ID theft and check kiting, but trailing check fraud and credit card fraud reports. A comparison of SARs by primary federal banking regulator reveals that Fed member banks had a 48% increase in 2004 over 2003 SAR filings, whereas the other three regulators' institutions increased between 33% and 37%. FinCEN's SAR Activity Review can be viewed at: http://www.fincen.gov/.
June 14, 2005 The Federal Reserve posted two recent CMPs for flood violations. Despite noting that the bank in question acted diligently and promptly to correct deficiencies, the bank was assessed $32,250 without any explanation about how that penalty was calculated, how the Fed's standards for flood CMPs were applied, or what mitigation, if any, the bank received for its diligence. You can read the orders on the ABA web site at: http://www.aba.com/.
June 13, 2005 The Federal Reserve Board recent published two consumer information brochures the subjects of mortgage lock-ins and mortgage settlement costs. The brochures can be accessed at http://www.federalreserve.gov/ and http://www.federalreserve.gov/.
June 10, 2005 The OCC has launched a new look for its web site. Take a look - http://www.occ.treas.gov/.
June 10, 2005 New HMDA data alone cannot support charges of discrimination, Federal Reserve Board Governor Edward Gramlich told the National Association of Real Estate Editors. He noted that while HMDA loan-cost information may point to areas of the mortgage industry that warrant closer attention, it lacks details about credit scores or consumer debt that may also play into loan price decisions. "The new HMDA data are clearly limited: They do not include credit scores, loan-to-value ratio, or consumer debt-to-income ratio – all factors relevant to the cost of credit. Because these important determinants of price are missing, one cannot draw definitive conclusions about whether particular lenders discriminate unlawfully or take unfair advantage of consumers based solely on a review of the HMDA data," Gramlich said. To read Governor Gramlich's remarks, visit: http://www.federalreserve.gov/.
June 10, 2005 The Treasury Department recent issued an alert regarding a scam involving forged OFAC documents. This scam involved a contract that was made to look like it originated from OFAC. The document contained the forged signatures of Director of OFAC, Robert Werner and former Assistant Secretary for Terrorist Financing and Financial Crime, Juan Zarate. Victims of this scam would allegedly receive a substantial sum of money in exchange for a small initial investment paid to the con artists perpetrating the fraud. As with most mail and Internet fraud, the victims of the scam would have their “small initial investment” stolen, and would often be asked to supply greater sums of money over time. This matter is now being handled by appropriate officials. For more information, visit: http://www.treas.gov/.
June 9, 2005 The FDIC has revised its insurance regulations for accounts of qualified tuition savings programs under section 529 of the Internal Revenue Code. For more information, visit: http://frwebgate3.access.gpo.gov/.
June 6, 2005 FinCEN Rules Now Cover Precious Metal Dealers. An interim Final Rule and a FAQ have been issued by FinCEN that requires dealers in precious metals, stones or jewels to establish AML programs. For more information go to:http://www.fincen.gov/.
June 6, 2005 Agencies Issue FACT Act Interim Final Rules on Medical Information. The federal bank, thrift, and credit union regulatory agencies today issued interim final rules under the Fair Credit Reporting Act (FCRA) that create exceptions to the statutory prohibition against obtaining or using medical information in connection with credit eligibility determinations. The interim final rules also address the sharing of medically related information among affiliates. The effective date for these rules is nine months after the date of publication in the Federal Register, which is expected on or about June 9, 2005. For more information go to: http://www.federalreserve.gov/.
June 2, 2005 A hot real estate market has prompted record home equity borrowing and growth in adjustable rate mortgages and interest-only loans, but bankers say that these products are not for everyone. "Buying a home is an individual's biggest financial investment," said James Ballentine, director, Grassroots and Community Outreach for the American Bankers Association. "We want to make sure consumers are well educated about the mortgage process so they can choose a loan that's right for them." Expanding upon that idea--and in recognition of June as National Homeownership Month, the ABA is providing information on the mortgage process – including information on the role credit scores play in loan decisions, tips on choosing a mortgage, when to take out a home equity loan, and how to avoid predatory lending scams. For more information on the ABA's Consumer Tip Sheets on Housing Finance, visit: http://www.aba.com/.
June 2, 2005 The law firm of Traiger & Hinckley, LLP recently conducted a study of 2004 Home Mortgage Disclosure Act (HMDA) data from ten leading national mortgage lenders. The study focused on the reported rate spreads by borrower race and sex. The findings of this study show no meaningful differences in the pricing of first lien loans with reported rate spreads to homebuyers of different race and sex. On average, African American and white borrowers paid essentially the same rate spread, and Hispanic borrowers paid less than whites. The rate spreads for men and women were almost identical. To read the full study, visit http://www.traigerlaw.com/.
June 2, 2005 FinCEN has announced the signing of Memoranda of Understanding (MOU) setting forth information sharing agreements between FinCEN and more than half of the State banking agencies in the country. For more information, see: http://www.fincen.gov/.
June 1, 2005 The FDIC has issued guidance on developing an effective pre-employment background screening process. This process can be an effective risk-management tool by providing management with a degree of certainty that the information provided is accurate and that the applicant does not have a criminal background. The guidance may be accessed through the following link: http://www.fdic.gov/.
June 1, 2005 The Federal Trade Commission recently issued a Business Alert addressing the disposal of consumer report information. The new disposal rule is a requirement of the Fair and Accurate Credit Transactions Act (FACT Act), which was enacted in 2003. The rule requires disposal policies and procedures that are reasonable and appropriate to prevent the unauthorized access to, or use of, information in a consumer credit report. The FTC's disposal rule became effective June 1, 2005. The Business Alert may be accessed at http://www.ftc.gov/.
