By: Kyle Tucker, Financial Institution Specialist

An interagency statement has been issued to remind creditors of the ability under the Equal Credit Opportunity Act (ECOA) and Regulation B to establish special purpose credit programs to meet the credit needs of specified classes of persons. This applies to all FDIC-supervised financial institutions.
 
On December 21, 2020, an Advisory Opinion was issued by the CFPB to clarify what type of research and data that may be appropriate to inform a for-profit organization’s determination to establish a special purpose credit program to benefit a specified class of persons.
 
The U.S. Department of Housing and Urban Development released guidance on December 7, 2021 concluding that special purpose credit programs instituted in conformity with the ECOA and Regulation B generally do not violate the FHA. The agencies do not determine whether a program qualifies for special purpose credit status, but creditors may consult their regulatory agencies for questions about any aspect of ECOA and Regulation B’s special purpose credit provisions.
 
For more information on this topic, please follow the link below:
https://www.fdic.gov/news/financial-institution-letters/2022/fil22008a.pdf
​

By: Brian Taylor, Financial Institution Specialist

On December 8, 2021, a proposal was published to the Federal Register concerning the implementation of beneficial ownership information reporting provisions, Section 6403, under the Corporate Transparency Act (CTA). Anyone who has been involved in the account opening process over the past few years has probably heard their fill concerning Beneficial Ownership. This proposed rulemaking may be a sign of good news to come. The proposed rulemaking calls for the beneficial ownership information to be submitted at the time the entity is created by the “company applicant”, or the individual filing for the creation of the entity. It also calls for a centralized database to be created in order to house this information. These proposed actions could lead to the burden of obtaining beneficial ownership information at account opening being removed from the financial institution.

Before we celebrate, we also need to understand that FinCEN is responsible for maintaining the information obtained via section 6403, and under 6403, financial institutions are required to assist FinCEN in meeting their customer due diligence requirements. Thankfully, FinCEN is also required to revise its current CDD requirements which include the beneficial ownership rule. This will be done in three sets of rulemaking. The first will cover beneficial ownership reporting requirements, the second will cover access protocols and disclosure for beneficial ownership information maintained, and the last will be the steps taken to revise the existing CDD rule.

As things currently stand, there will be no changes related to the CDD Rule, processes involved, and how it affects community banking, but there are possible changes on the horizon that you should be aware of. Additional information can be found at the link below.

Beneficial Ownership Information Reporting Notice of Proposed Rulemaking

By: R. Matthew Waters, Financial Institution Specialist

On December 13, 2021, the Consumer Financial Protection Bureau posted an update to its Compliance Aid, “Electronic Fund Transfers FAQs”.  The update covered new or updated frequently asked questions for EFT disputes regarding coverage for transactions and financial institutions as well as additional guidance on error resolution. 

The updates for transaction coverage largely pertained to person-to-person (“P2P”) payments and when they are considered EFTs.  Similarly, the updates for financial institution coverage chiefly centered on non-bank P2P payment providers.  The FAQs responses for error resolution reinforced financial institution obligations for handling EFT disputes.  Further error resolution guidance was provided on topics including unauthorized EFTs, consumer liability, P2Ps, consumer negligence, and multiple EFT dispute scenarios. 
​
To see the full update, click the following link: Electronic Fund Transfers FAQs.

By: Steve Shepherd, CRCM

On October 22nd, 2021, the Justice Department announced new initiatives to help combat redlining.  The new initiatives will be led by the Civil Rights Division’s Housing and Civil Enforcement Section in partnership with the U.S. Attorney’s Office.  According to the press release, the actions will:

• Utilize U.S. Attorneys’ Offices as force multipliers to ensure that fair lending enforcement is informed by local expertise on housing markets and the credit needs of local communities of color.
• Expand the department’s analyses of potential redlining to both depository and non-depository institutions. Non-depository lenders are not traditional banks and do not provide typical banking services but engage in mortgage lending and now make the majority of mortgages in this country. 
• Strengthen their partnership with financial regulatory agencies to ensure the identification and referrals of fair lending violations to the Department of Justice.
• Increase coordination with State Attorneys General on potential fair lending violations.

The following link provides more information: 
https://www.justice.gov/opa/pr/justice-department-announces-new-initiative-combat-redlining

By: ​Kyle Tucker, Financial Institution Specialist

On December 14, 2021, the OCC announced that is has rescinded its June 2020 CRA rule.  The OCC is requiring institutions to revert to the rule adopted jointly by the Federal banking agencies in 1995, as amended. This is effective January 1, 2022 and is intended to promote consistency for all national banks, federal banks, and state savings associations (including community banks) covered by the CRA. The final rule states:

• The OCC will provide newly designated large banks (banks that were small banks before the June 2020 CRA rule but are large banks under the final rule) with one year to comply with the final rule’s data collection, record-keeping, and reporting requirements;
• With respect to the qualifying activities criteria or retail or community development definitions, banks will receive consideration in their CRA examinations for activities in effect at the time the banks conducted the activities or entered into legally binding commitments to conduct the activities, including under the June 2020 rule;
• Bank strategic plans approved before January 1, 2022, remain in effect except for any provisions that are inconsistent with the final rule; and
• Banks are not required to comply with the final rule’s public file and public notice provisions until April 1, 2022.

Follow the link for additional information:
https://www.occ.gov/news-issuances/bulletins/2021/bulletin-2021-61.html