Compliance Question of the Week

In today’s banking environment as soon as one big new regulation is implemented another pops up. Our compliance resources help your community bank stay one step ahead of the regulators.

Regulations and Guidance

Question: Do Reg O restrictions for executive officers extend to affiliates?

ANSWER: 

The additional restrictions of this section apply only to executive officers of the member bank and not to executive officers of its affiliates.

Reference: 12 CFR 215.5.

Q&A Archives

ANSWER:

The agencies regulations require employees to know their responsibilities and conduct during and after a robbery, burglary or larceny.

When determining the level of testing required, consider the following:     

  • Is the bank in a higher crime area (e.g., when was the last robbery to the bank or a neighboring establishment)? ·   
  • Does the bank have new personnel or part time personnel that have not been through more than one training session?
  • How does the bank measure how well each employee knows the responsibilities and conduct required?
  • Does the bank provide training more than once if the procedures are revised?

Reference: Bank Protection Act: OCC: 12 CFR 21 FED: 12 CFR 208.61 FDIC: 12 CFR 326

ANSWER:

Yes. An annual disclosure is required.

If private mortgage insurance is required in connection with a residential mortgage transaction, the servicer shall disclose to the mortgagor in each such transaction in an annual written statement—

(A)the rights of the mortgagor under this chapter to cancellation or termination of the private mortgage insurance requirement; and

(B)an address and telephone number that the mortgagor may use to contact the servicer to determine whether the mortgagor may cancel the private mortgage insurance.

Reference: Homeowners Protection Act: 12 USC 4903(a)(3)

ANSWER:

For the successor to receive communications, a successor must execute and return an 

acknowledgement form.

Under 1024.32, RESPA states that upon confirmation of a successor, a servicer may provide a confirmed successor who is not liable on the mortgage with a written notice together with a separate acknowledgement form that meets the requirements of 1024.32(c)(1)(iv).

The Official staff interpretation for this section states that: A servicer may identify in the acknowledgement form examples of the types of notices and communications such as periodic statements and mortgage servicing transfer notices. The examples provided should be the types of notices or communications that would be available to a confirmed successor in interest if the confirmed successor executed the acknowledgement and returned it to the servicer. 

If the successor fails to execute the acknowledgement form, a servicer is not required to provide to the confirmed successor any written disclosure required by 1025.17 “Escrow Accounts”, 1024.33  “Mortgage Servicing Transfers”, 1024.34 “Timely Escrow Payments and Treatment of Escrow Account Balances”, 1024.37 “Force-placed insurance”, 1024.39 “Early Intervention Requirements for Certain Borrowers” or comply with the live contact requirements until the successor either assumes the mortgage loan obligation or executes an acknowledgement and provides it to the servicer.

Reference: Rules Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z) Federal Register, October 19, 2016, page 72371, effective April 18, 2018. Real Estate Settlement Procedures Act 1024.32(c)(1) and (c)(2). Official Staff Interpretation 1024.32(c)(1) and (c)(2)

ANSWER:

IDIs are not required to take down physical FDIC official signs attached to ATMs.  For an IDI's ATM  or like device that receives deposits but does not offer access to non-deposit products, except as described below, the final rule provides flexibility to meet the signage requirement by either (1) displaying the FDIC official digital sign electronically on the ATM screens (consistent with the image as described in 12 CFR 328.5), or (2) displaying the physical official sign by attaching or positing it to the ATM.

However, IDI's ATMs, or like devices that accept deposits and are put into service after January 1, 2025, must display the official digital sign electronically (with no option to satisfy the requirement through display of the physical official sign.)

Reference: 12 CFR 328.4(e) FDIC Q&As Part 328 Final Rule Question II.D.1

ANSWER:

Under the E-Sign Act, if a financial institution is legally required to maintain copies of a contract or other records of a transaction, the institution may rely on an electronic record of the information that accurately reflects the information in the contract or other record, and that remains accessible to all persons who are legally entitled to access the information in a form that can later be reproduced.


Reference: Fed. Consumer Compliance Outlook, 4th Quarter 2009; 15 U.S.C. 7001(d)

ANSWER:

The bank is permitted to share information with affiliates that is controlled by or is under the common control with the bank.

In general, the bank’s privacy policy must describe the bank’s policies and practices with respect to collecting and disclosing nonpublic personal information about a consumer to affiliated parties.

Also, the notice must provide a consumer a reasonable opportunity to direct the institution generally not to share nonpublic personal information about the consumer (that is, to “opt out”) with nonaffiliated third parties other than as permitted by exceptions under the regulation (for example, sharing for everyday business purposes, such as processing transactions and maintaining customers’ accounts, and in response to properly executed governmental requests). The privacy notice must also provide, where applicable under the Fair Credit Reporting Act (FCRA), a notice and an opportunity for a consumer to opt out of certain information sharing among affiliates. The bank provides a clear and conspicuous notice to customers that accurately reflects the bank’s privacy policies and practices not less than annually during the continuation of the customer relationship.

Reference: Regulation P examination procedures, October 2016, page 2. Fair Credit Reporting Act

ANSWER:

No. A business engaged in marijuana related activity may not be treated as a non-listed business under 31 CFR 1020.315(e)(8), and is not eligible for exemption with respect to a bank’s CTR obligations.


Reference: BSA Expectations Regarding Marijuana-Related Businesses, FinCEN FIN-2014-G001, page 7. Bank Secrecy Act 31 CFR 1020.315.

ANSWER:

This may happen on a case-by-case basis. In order to waive the seven-business day waiting period, your customer must have a bona fide financial emergency such as an eminent foreclosure sale of their home.


Although there is no official waiver form, the borrower must submit a request for waiver in writing and signed by all parties on the note.

Reference: 12 CFR 1026.19(e)(1)(v)

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