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Compliance Alert Update (2)



April 10, 2015


Regulatory Overview (Violations and Items of Interest)


Overdrafts Fees on ATM and one time POS Transactions

If the depositor has not signed an Opt In form; make certain your system is not charging those depositors an overdraft charge for these type of transactions.


Overdraft Programs (other than a loan product or transfer from a savings account).  Make sure you are delivering a notice when the depositor incurs an overdraft and that you deliver a letter to those who abuse the service and close the account if the abuse continues.


Regulation Z

Loan Officer/Originator Compensation under Regulation Z - It is a violation if a lender pays a loan originator a fee for origination of a covered mortgage loan if any fee is based on the rates or terms offered.  If the loan originator is compensated based on the institution or branch office’s profitability, this could be considered a violation.


Advertising Under TILA – If the institution’s website contains loan or deposit rates, that is considered advertising and must include the required verbiage “annual percentage rate” and “annual percentage yield” at least once on the page.  Also if social media contains triggering terms it also must state advertising terms.  Check your use of social media by officers and employees.  Anything published should be reviewed by your compliance officer/department.


Inaccurate Finance Charge – Disclosed finance charge is considered accurate if the finance charge is either understated by no more than $100, or is greater than the amount required to be disclosed. There have been inaccuracies discovered without re-disclosures delivered.


Policies and Procedures – Failing to establish and maintain written policies and procedures required by Section 1026.36(j).


Early Disclosures – Not providing the early Truth-in-Lending disclosure in a timely manner (within 3 business days of the application date).



Escrow – Taxes and Insurance including Flood Hazard Insurance if required and unless your institution is located within a Rural and Underserved Area, you are required to establish an escrow account.


Regulation B

This regulation also covers Commercial Loans when it involves the following:

  • Joint applications must include the joint applicant’s signature or initials.
  • Appraisal notice (Your Right to Receive a Copy of the Appraisal) is required and must be delivered within 3 days after the application date and a copy of the appraisal delivered 3 days prior to the loan funding date.


S.A.F.E. Act

Failing to include the institution’s Mortgage Loan Officer (MLO) name and NMLSR ID number to a consumer prior to that loan officer acting as an MLO (Business card, desk signage, website, mortgage loan application).



BSA violations in connection with fraud, money laundering, and sanctions violations are at the forefront of the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which implements the Bank Secrecy Act (BSA), recently issued a Culture of Compliance Advisory reminding financial institutions that their compliance obligations are not solely about policies, procedures, and personnel, but they also have to do with the culture of their organization.  Financial institution must not let their guard down or become lethargic in their BSA/AML compliance.  Recent examinations have placed an emphasis on the following areas:

  • The decision not to file a Suspicious Activity Report (the no file, file).  Documentation on the institution’s reason not to file a SAR when circumstances appear to warrant filling a report.
  • The institution not performing due diligence when doing business with a Money Service Business (MSB), which include:
    • Educating the MSB on the responsibilities of conducting business as a MSB including tracking monetary instruments over $3,000.
    • Possible filing a Suspicious Activity Report if warranted.
    • Monitoring cash deposits to determine any instances of money laundering with the most common being depositing amounts of cash less than $10,000.01 every day or every other day (structuring).  If providing accounts for an MSB, you must maintain constant vigilance and monitoring that should include on site visits. 


Just in from the CFPB

The Consumer Financial Protection Bureau (CFPB) issued an outline of its proposed rule on payday lending that would require lenders to take steps to make sure consumers can repay their loans and restrict collectors from trying to collect payment from consumers’ bank accounts in ways that result in the accumulation of fees.

“The proposals under consideration cover both short-term and longer-term credit products that are often marketed heavily to financially vulnerable consumers,” the CFPB stated.

In his opening remarks at the March 26, 2015 field hearing in Richmond, Va., CFPB Director Richard Cordray stated that the CFPB is proposing to issue rules that will address consumers’ ability to repay, prevent rollovers – such as repeated attempts to access fees which normally result in multiple overdraft fees – and incorporate a cooling-off period for loans.