SDBA eNews: July 6, 2017

In This Issue

ABA to Work with Regulators on BSA, AML Exam Manual Updates

The ABA in July will work to provide feedback and recommendations to the federal regulatory agencies as they consider updates to the 2014 FFIEC BSA/AML Examination Manual. The updates are expected to address the new customer due diligence requirements, trade finance, non-governmental and nonprofit organizations and charities. ABA is seeking input from bankers on these topics and other emerging BSA/AML trends that should be addressed in the manual. To provide feedback or to learn more, contact ABA’s Rob Rowe.

OCC Issues Revised Guidance on Filing Requirements

The OCC yesterday issued a new version of the General Policies and Procedures Booklet in the Comptroller's Handbook. The revised version covers how to file applications and notices with the OCC, general filing requirements and the OCC's review process for licensing filings. Download the booklet.


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DOL Seeks Feedback on Fiduciary Rule

The Department of Labor last week issued a request for information on the fiduciary rule as part of its ongoing review of the rule in response to an executive order by President Trump. The rule, which greatly expanded the definition of who counts as a “fiduciary” under the Employee Retirement Income Security Act and the Internal Revenue Code, took effect June 9.

DOL is seeking input that could form the basis of new exemptions or other revisions to the rule, as well as input on the advisability of extending the Jan. 1, 2018, compliance deadline for certain provisions of the rule. Comments on the compliance deadline extension will be due 15 days after the notice is published in the Federal Register; all other issues in the RFI have a 30-day comment period.

ABA has strongly advocated for significant revisions to the fiduciary rule to achieve functionality, facilitate compliance, and ensure it does not negatively affect retirement products and services available to bank customers. Read the request for information. For more information, contact ABA's Tim Keehan.

ABA Invites Survey Participants on Fiduciary Rule

As part of its ongoing advocacy for revisions to the Department of Labor’s fiduciary rule, ABA is surveying its members to determine precisely the fiduciary rule’s impact on banks and their customers, including the rule’s functionality, the availability of retirement advice and services to customers, bank compliance challenges and liability risk.

This survey comprises nine questions and provides an opportunity to comment on the specific experiences of the bank and its customers. Banks are strongly encouraged to complete this brief survey, which will serve as new and comprehensive data as part of ABA’s response to the Labor Department’s latest request for information about the rule's impact. For instructions and a link to the ABA survey, please contact ABA's Tim Keehan.

FBI and US-CERT Release Alerts on Petya Ransomware

On June 27, the U.S. Computer Emergency Readiness Team (CERT) at the Department of Homeland Security released an alert following the global attack of Petya ransomware. According to the alert, the ransomware exploited a vulnerability found in Microsoft computers that was made public by the software company in March of this year. Petya ransomware encrypts the victim’s files and uses a modified version of the Mimikatz tool to steal the victim’s credentials in order to access other computer systems on the network.

US-CERT reported that Petya has targeted several sectors including finance, transportation, energy, commercial facilities and health care. In the alert, the National Cybersecurity and Communications Integration Center advised victims against paying the ransom and urged users to patch their systems. NCCIC, as a part of DHS, shares information among public and private sector partners to build awareness of vulnerabilities, incidents and mitigations. Banks also receive alerts through the Financial Services Information Sharing and Analysis Center, which is free for all banks to join.

The FBI released a flash alert on Monday that included the indicators associated with the Petya ransomware attack. The alert noted that the primary countries affected by the attack were the U.S., France, India, Russia, Spain, Ukraine and Great Britain. The alert also includes recommended steps for prevention and remediation. Read the US-CERT alert. Read the FBI alert. For more information, contact ABA's Heather Wyson-Constantine.

FOMC Debates Balance Sheet Reduction Plan

At its recent June 13-14 meeting, the Federal Open Market Committee debated the timing of how it plans to reduce the Fed’s balance sheet, which is swollen with $4.5 trillion in securities purchased as part of the quantitative easing programs between 2008 and 2014.

According to minutes from the meeting released yesterday, some committee members said the process should start “within a couple of months,” while others recommended evaluating economic activity for the rest of 2017. Though no schedule was released, the committee agreed to publicly communicate the plan once it has been agreed upon.

FOMC members decided at the same meeting to raise the target federal funds rate to 1 to 1.25 percent, citing continued job growth and stable inflation. Committee members also mostly expect the target rate at the end of the year to be between 1.25 and 1.5 percent, signaling one more expected rate increase in 2017. Read the minutes.

ABA Requests Meeting with Justice Department on Fair Lending

To ensure that fair housing and fair lending are being enforced appropriately and effectively, ABA and four other banking trade associations wrote last week to Attorney General Jeff Sessions requesting a meeting to discuss the Department of Justice’s approach to enforcement of fair lending laws and to urge it to align its fair lending policy with Supreme Court precedent.

The groups raised concerns that DOJ attorneys are continuing to apply legal positions of the previous administration--which they described as “novel and overreaching”--and that certain court deadlines are fast approaching that will require DOJ to have a policy position that is consistent with the law as interpreted by the Supreme Court. Read the letter.

NCUA, Credit Union Trades File Briefs in Field of Membership Case

The National Credit Union Administration last week filed a brief in ABA v. NCUA challenging ABA’s view that NCUA’s field of membership rule for community-based credit unions far exceeds the limitations imposed by Congress. In the lawsuit, ABA specifically challenged the inclusion of Combined Statistical Areas--which encompass multiple Metropolitan Statistical Areas--as “local communities”; the ability of credit unions to serve Core-Based Statistical Areas without serving the urban core that defines the area; the ability to add “adjacent areas” to existing community fields of membership; and the dramatic expansion of what constitutes a rural district.

ABA argued that this expansion of taxpayer-subsidized financial institutions is inconsistent with the limited scope of credit union operations envisioned by Congress, that it authorizes fields of membership that federal courts have previously rejected and that it undermines the ability of taxpaying banks to serve their communities. The association is seeking a declaration that the rule exceeded the agency’s statutory authority and is arbitrary and capricious, as well as an injunction prohibiting any community charter expansions under the challenged portions of the rule. ABA in May filed for summary judgment in the case.

In its brief, NCUA defended its actions in finalizing the rule, arguing that it made a reasonable interpretation of its statutory authority. The Credit Union National Association and the National Association of Federally-Insured Credit Unions also filed an amicus brief yesterday in support of NCUA’s claim.