ABA, associations: Electronic transfer fraud reimbursement bill would harm financial inclusion

August 28, 2024 

In a joint letter today, the American Bankers Association and three banking associations said they opposed legislation to require financial institutions to reimburse customers for electronic fund transfers that took place because the customer was scammed into sending the payment.

The Protecting Consumers from Payment Scams Act, which has been introduced in the House [H.R. 9303] and Senate [S. 4943], would amend the Electronic Fund Transfer Act to mandate that reimbursements be evenly split between a customer’s financial institution and the institution that received the fraudulent transfer. In their letter to the bill’s sponsors, the associations said the policy change would do nothing to stop criminals and instead encourage them to continue committing crimes. It also would put many financial institutions—particularly smaller, community institutions—in the untenable position of having to restrict access to deposit accounts.

“To offset expensive scam losses, financial institutions may have to be more selective about who qualifies for an account and charge more for basic banking services,” they said. “This could have a negative effect on financial inclusion, at a time when we have been making significant progress in reducing the number of unbanked in this country.”

The associations added that banks work tirelessly to identify and report suspicious activity to law enforcement. “However, the activities of these criminals touch more than just the banking industry, and the efforts to thwart scams must similarly be cross-industry and include,” they said. The groups also called for a comprehensive national scam and fraud prevention strategy to develop and implement a coordinated federal approach to stopping scams and assisting consumers affected by scams.

Full Article.

Lingo Telecom agrees to $1 million fine over AI-generated Biden robocalls

August 21, 2024 | David Shepardson

Lingo Telecom agreed to pay a $1 million fine after the agency said it transmitted fake robocalls imitating President Joe Biden seeking to dissuade people from voting for him in New Hampshire's Democratic primary election, a U.S. government regulator said on Wednesday.

The Federal Communications Commission said Lingo transmitted spoofed robocalls that used generative artificial intelligence voice-cloning technology "to spread disinformation." The calls were directed by political consultant Steve Kramer, who has been charged by the New Hampshire state attorney general's office.
The FCC earlier proposed fining Lingo $2 million for allegedly transmitting the robocalls in January. The FCC said Lingo under the settlement will implement a compliance plan requiring strict adherence to FCC caller ID authentication rules.
Lingo did not immediately respond to a request for comment.
"This settlement sends a strong message that communications service providers are the first line of defense against these threats and will be held accountable to ensure they do their part to protect the American public," FCC Enforcement Bureau Chief Loyaan Egal said.
Kramer faces charges after thousands of New Hampshire residents received a robocall message asking them not to vote until November.
Kramer told media outlets in February he paid $500 to have the calls sent to voters to call attention to the issue, after the calls were discovered in January. He had worked for Biden's challenger for the Democratic presidential nomination, U.S. Representative Dean Phillips, who denounced the calls.
The FCC has separately proposed fining Kramer $6 million over the robocalls.
The commission last month voted to propose requiring broadcast radio and television political advertisements to disclose whether content is generated by AI.
There is growing concern in Washington that AI-generated content could mislead voters in the Nov. 5 presidential and congressional elections. The FCC has said AI will likely play a substantial role in 2024 political ads.
The proposed rule would require on-air and written disclosures and cover cable operators, satellite TV and radio providers. The FCC does not have the authority to regulate internet or social media ads or streaming services.

Full Article.

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ABA: FinCEN underestimates the compliance burden of customer identification program rule

August 12, 2024

A recent proposal by the Financial Crimes Enforcement Network to renew its customer identification program requirements dramatically underestimates the number of new bank accounts opened each year and, as a result, underestimates the compliance burden of the rule on banks, the American Bankers Association said today in a letter to the agency.

FinCEN in June proposed to renew without changes its Bank Secrecy Act information reporting requirements. As part of the renewal, the agency estimates that roughly four million new bank accounts are open each year. However, that estimate is based on low-cost Bank On deposit accounts for the unbanked and underbanked, as reported by just 35 financial institutions. FinCEN also estimates that CIP collection takes two minutes per new account.

ABA estimates that U.S. banks open on average 140 million to 160 million accounts every year, which include deposit accounts and other asset accounts such as credit cards, loans, safety deposit boxes and certificates of deposit, just to name a few. And while ABA believes the two-minute estimate for CIP collection is too low, using that figure still yields an annual estimated compliance burden of around five million hours for banks.

“It is wholly inconsistent with a risk-based approach to BSA compliance to require banks to repetitively collect and document redundant information on large numbers of low-risk accounts,” ABA said. “Sensible reforms to the CIP rule would eliminate duplicative and unnecessary paperwork while preserving banks’ ability to know their customers and free more compliance resources to monitor for high priority suspicious activity, as part of an overall risk-based approach.”

Full Article.

Order Your 2025 South Dakota Bank Directory

The South Dakota Bank Directory provides detailed information on all South Dakota banks including addresses, telephone numbers, important contact names and additional pertinent information. The directory also contains information on the SDBA, banking associations, regulatory agencies, endorsed vendors, associate members and South Dakota officials.

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All member banks, associate members, and endorsed vendors receive one complimentary copy.

South Dakota Land and Lending Conference 2024

October 15, 2024 | 9am-3pm | Denny Sanford Premier Center, Sioux Falls, SD

2024 SDBA NEXT STEP: Emerging Leaders Summit

Tuesday, October 29, 2024
Holiday Inn City Centre| Downtown Sioux Falls, SD

Plan to attend the 2024 SDBA NEXT STEP: Emerging Leaders Summit in downtown Sioux Falls, South Dakota, on Tuesday, October 29, 2024. This year's agenda is another good one, with guest speaker and emcee kicking things off, Jack Stahlmann, the Don't Flinch Guy. Jack’s presentation, The Intangible It, examines the "it" quality movie stars possess that you can't quite put your finger on… or can you? Also on the agenda: former South Dakota Governor and Lt. Governor, Dennis Daugaard and Matt Michels; Marissa Brinkman; Sioux Falls Mayor, Paul Ten Haken; Janet Kittams with The Helpline Center; and South Dakota native, Andrew Kightlinger, film director and writer. Register for last year's registration rate through September 1st!

A small block of rooms has been held at the Holiday Inn, available through September 28. Make your reservation now!

EARLY BIRD RATE ENDS SEPTEMBER 1!

Information & Registration

2024 Lead Strong: Women in Banking

September 25-26 | Sioux Falls Convention Center

Lead Strong: Women in Banking is an annual gathering that celebrates and empowers women in the financial industry. Join us for an engaging and enlightening event that focuses on the achievements, challenges, and opportunities for women in the world of banking. This conference provides a unique platform for networking, knowledge sharing and fostering meaningful connections among leading professionals in the field.

REGISTER TODAY!

2024 IRA School

September 17-19, 2024 | Ramkota Hotel, Sioux Falls

IRAs are one of the most complicated areas of bank personnel responsibility. Working with them is a process and must begin with a strong foundation. This IRA school can provide such a foundation through an extensive curriculum, covering both new and current IRA material, along with previous topics covered at the school that will be expanded on. This program is the quickest, easiest, and most comprehensive coverage of IRAs and HSAs.

Information and Registration 

Question of the Week

Q: Do we have to “CIP” the bank accounts of the company we just merged with?

A: Under the Bank Secrecy Act, the CIP rule will generally apply to a "customer," which – broadly – is a person that opens a new account. An important component of the definition of "customer" is the opening of an "account," which - in its own definition - does not include those accounts that were acquired via merger, acquisition, or purchase of assets, as seen in the following: "Account does not include:[...] (ii) An account that the bank acquires through an acquisition, merger, purchase of assets, or assumption of liabilities;" [31 CFR 1020.100(a)(2)(ii)] As with all BSA principles, this decision will ultimately come down to the bank’s own BSA / AML, CIP and CDD policies and procedures, but under the federal scope, such accounts aren’t necessarily subject to the CIP requirements.

Learn how to put compliance management solutions from Compliance Alliance to work for your bank, by contacting (888) 353-3933 or [email protected] and ask for our Membership Team.

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