2018 Compliance Update Reminders

By James M. Moore, CRCM
 
One more year has passed, and we are faced with the new challenges of 2018.  Anyone with a compliance background understands there is no such thing as a fresh start for a new year.  The following is a list of reminders and updates to make sure you are heading in the right direction for the New Year. 
 
Deposit Compliance:

• Regulation CC training should have been provided during 2017 and make plans to provide Reg. CC training during 2018.
• Annual privacy training should have been provided for 2017 to all bank personnel and make sure annual privacy training is scheduled for 2018.  Furthermore, ensure that the Board of Directors has received privacy training.
• Ensure annual privacy disclosures will be mailed during 2017 or verify the bank’s exemption status for 2017.   
• Determine the number of remittance transfers under Regulation E from the previous calendar year to ensure the institution has not exceeded the threshold for “normal course of business.”
• Ensure the ID Theft Program administrator has reported to the Board annually on the status of the ID Theft Program.
• NEW Regulation CC Rule: Effective July 1, 2018. Brings remotely deposited checks under the purview of Regulation CC and provides a restrictive indorsement feature to determine indemnity for mobile deposited checks.

 Loan Compliance:

• The 2017 HMDA LAR and CRA LAR for large institutions must be submitted by March 1, 2018.
• Check the historic examples for HELOC and/or ARM application disclosures to ensure the most recent 15 years are used in the examples.
• The CRA Public File should be updated by April 1, 2018.
• Check the accuracy of the affiliated business disclosures to ensure all affiliated businesses are disclosed along with the current range of fees and the current ownership interest of each affiliated business.
• The 2018 HOEPA points and fees test will use the following:
  • > 5% of loan amounts of $21,032 or more
  • > lesser of 8% of loan amounts under $21,032 or $1,052
• The 2018 QM points and fees test will use the following:
  • For a loan amount greater than or equal to $105,158: 3% of the total loan amount
  • For a loan amount greater than or equal to $63,095 but less than $105,158: $3,155
  • For a loan amount greater than or equal to $21,032 but less than $63,095: 5% of the total loan amount
  • For a loan amount greater than or equal to $13,145 but less than $21,032: $1,052
  • For a loan amount less than $13,145: 8% of the total loan amount
• The 2018 Truth In Lending threshold remains $55,800 for loans not secured by real property and private education loans.
• The 2018 “small creditor” threshold is $2.112 billion.
• The 2018 “small loan” exemption for HPML appraisal rules is $26,000.
• If the creditor allows borrowers to shop for any required services for TRID loans, it should update (as necessary) the written list provided with the Loan Estimate to identify at least one available provider for each settlement service for which the consumer is permitted to shop. 
• Ensure that bank personnel have received fair lending and CRA training for 2017.  Further, ensure that the Board of Directors has received annual fair lending and CRA training for 2017.  Training should be planned for 2018.
• CRA asset size thresholds for 2018 are under $313 million for small bank, at least $313 million up to $1.252 billion for intermediate small bank, and $1.252 billion and over for large bank (based on both of the last two calendar years).
• The HMDA asset size threshold for depository institutions for 2018 is $45 million.
• NEW REQUIREMENT for 2018 HMDA reporting:  In addition to meeting the above HMDA asset threshold, an institution must have in each of the two preceding calendar years, originated at least 25 or more covered closed-end dwelling-secured loans to report closed-end loans.  Dwelling secured open-end lines of credit must be reported in 2018 if a covered institution originated 500 or more covered dwelling secured open-end lines of credit in each of the previous two calendar years.  Ensure a review of 2016 and 2017 transaction data is conducted for 2018 reporting requirements. 
• Ensure procedures are in place for performing escrow account analyses and that the bank has implemented procedures for providing annual escrow account notices.
• Ensure loan officers completed S.A.F.E. Act license renewal procedures.
• Ensure an annual independent S.A.F.E. Act audit has been performed.
• Ensure lenders who receive compensation based on insurance sales (credit life/disability) complete license renewal procedures.
• Ensure the bank has documented whether or not they meet the definition of a small servicer and that documentation of the determination is retained for record retention.
• Ensure the bank has documented whether or not they meet the definition of a small creditor and that documentation of the determination is retained for record retention.
• Review the final list or rural or underserved counties for 2017, calculate rural or underserved status by address on the CFPB’s website for covered loans, and ensure the bank has documented whether or not it qualifies for the rural / underserved TILA exemption by originating at least one covered loan in a rural or underserved area and that documentation of the determination is retained for record retention.  Click here to see the rural and underserved list.

 BSA Compliance:

• Ensure annual training was conducted for all employees during 2017 and is scheduled for 2018.  Furthermore, the Board of Directors should also be receiving annual BSA training, which should be documented in the Board minutes.
• Annual reviews should be conducted of all exempt customers for suspicious activity and continued eligibility.
• Update procedures for monitoring high-risk customers and reevaluate the risk levels of each customer designated as high risk.
• Ensure annual due diligence is completed for MSBs, remote deposit capture, private ATM customers, and deposit brokers in accordance with the bank’s BSA/AML program.
• NEW Beneficial Ownership and Fifth Pillar Rule: Effective May 11, 2018. The new rule requires covered financial institutions to identify and verify the identity of the beneficial owners of all legal entity customers. It also codifies customer due diligence as a fifth pillar to the traditional four pillars of an effective anti-money laundering (AML) program. The BSA program should be updated for procedures to identify beneficial owners of legal entity customers.  Additionally, institutions should review their existing BSA program for adequate risk-based procedures for customer due diligence.