By: Jeremy Clifton, CRCM, CAMS

On May 31, 2022, all five federal agencies issued a revised Q&A regarding flood insurance coverage. The Q&A is largely a context reorganization of the July 2020 Proposed Q&A and the March 2021 Proposed Q&A to make it easier for the compliance community to research topics regarding flood insurance requirements. The new Q&A supersedes the 2009 and 2011 Q&A responses which have been revised based on updated responses and recommendations from the compliance and banking community. For more information, please refer to the Federal Register entry at: https://www.federalregister.gov/documents/2022/05/31/2022-10414/loans-in-areas-having-special-flood-hazards-interagency-questions-and-answers-regarding-flood
 
The FDIC will be hosting an interagency webinar to discuss the 2022 Interagency Questions & Answers Regarding Flood Insurance on July 27, 2022. Registration is required and questions can be submitted for consideration before the presentation. For more information and registration see the FDIC’s bulletin: https://content.govdelivery.com/accounts/USFDIC/bulletins/31e467f

By: Steve Shepherd, CRCM

On July 7, 2022, the CFPB (Consumer Financial Protection Bureau) issued an advisory opinion on permissible purposes for obtaining and providing credit reports under section 604 of the FCRA (Fair Credit Reporting Act). The advisory opinion primarily focused on the information submitted to a credit reporting bureau by institutions requesting credit bureau information. The CFPB opinion made it clear that users and agencies have a responsibility to protect the privacy of consumer data.

Under the FCRA, users of consumer reports may request a consumer report only under the enumerated “permissible purposes” outlined within section 604 of the FCRA. That purpose is certified by section 607 of the FCRA through a general or specific purpose. Users of consumer reports submit certain information to the credit reporting bureau to ensure that the request pertains to the consumer of which the information is requested. The institution should ensure that the information identifiers being used contain sufficient information to conduct a search that would avoid obtaining a credit report on a different party or multiple parties. For example, if the institution obtains credit reports by inputting only the name of the party, the institution should develop stronger safeguards to ensure that the credit report belongs to the intended party. Some credit reporting agencies only use the name search options based on information placed in the request portal. The Bureau noted that such credit reports often contain a disclaimer indicating that the consumer report was obtained based on name only matching. The CFPB clarified that such disclaimers do not cure a permissible purpose issue.

Lastly, section 619 of the FCRA imposes criminal penalties on any person who knowingly and willfully obtains information from a consumer reporting agency under false pretenses. 

For more information, please visit the following link: https://www.consumerfinance.gov/rules-policy/final-rules/fair-credit-reporting-permissible-purposes-for-furnishing-using-and-obtaining-consumer-reports/

By: Hunter Brown, Financial Institution Specialist
 
On July 6, 2022, the FED, FDIC, FinCEN, NCUA, and OCC (collectively, the Agencies) released a joint statement clarifying their stance on the risk-based approach currently employed by financial institutions to satisfy customer due diligence requirements. The Agencies state that not all customers of a particular type present a uniform risk level. Instead, additional risk factors should be evaluated to generate a holistic risk-profile. The Agencies once again noted that financial institutions should consider risk at a customer level instead of declining to provide banking services to entire categories of customers (e.g. PATM, NRA, NGO, and MSB).
 
To read the full statement, please follow this link:
 
https://www.fincen.gov/sites/default/files/2022-07/Joint%20Statement%20on%20the%20Risk%20Based%20Approach%20to%20Assessing%20Customer%20Relationships%20and%20Conducting%20CDD%20FINAL.pdf