What's New: US Savings Bond Rules

The US Treasury Department recently issued guidance for paying agents and presenting institutions who process savings bond transactions.

Financial institutions that are authorized to redeem and process savings bonds are required to redeem bonds for customers and non-customers as long as the owner and co-owner named on the bonds establish satisfactory proof of their ownership rights.

New chapter, Savings Bond Transactions has been added to The Gold Book.

 

Confidential Financial Institution Information

The FDIC has observed a limited number of instances in which directors and officers of troubled or failing institutions have made copies of financial institution and supervisory records, and removed those copies from the institution in anticipation of litigation or enforcement activity against them personally.

The FDIC's FIL-14-2012 of March 19, 2012 reminds directors and officers that this activity is a breach of their fiduciary duty to the institution and an unsafe and unsound banking practice, which may also violate applicable laws and regulations and contravene the financial institution's information security program. Attorneys who represent an insured depository institution are also reminded that their fiduciary duty, both legally and ethically, obligates them to act in the best interests of the institution. The FDIC will investigate any matter that appears to violate confidentiality and pursue enforcement actions, as appropriate.

What's New? FACTA Notice Requirement

The Fair and Accurate Credit Transactions Act created a new notice requirement for risk-based credit pricing programs effective January 1, 2011.

The Risk-Based  Credit sections of the Fair and Accurate Credit Transactions Act chapters of  The Gold Book have been updated accordingly.

What Do You Think?

The FDIC Board of Directors (FDIC Board) recently adopted a Notice of  Proposed Rulemaking and request for comment that would amend and clarify some definitions related to higher-risk assets as used in the deposit insurance pricing scorecards for large and highly complex insured depository institutions. The new rules would apply only to institutions with $10 billion or more in assets and would have no  impact on institutions with less than $10 million in assets.

What are your thoughts on this proposed action and how, if at all, will this impact your financial institution.

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BSA Forms Mandatory Electronic Filing

On February 24, 2012, FinCEN announced that it is adopting a requirement that all financial institutions subject to Bank Secrecy Act (BSA) reporting use electronic filing for certain reports beginning no later than July 1, 2012. Paper reports filed after that date will be rejected and institutions will be notified and required to re-file an electronic version.

FinCEN has also published notice providing an opportunity for financial institutions to apply for a limited duration hardship exemption that would delay the E-File requirement for certain reports until July 1, 2013.

Financial institutions must file exemption requests with FinCEN by March 26, 2012. FinCEN will consider exemptions for the following circumstances:

1. Institutions lacking internet connectivity,


2. Incompatible system capabilities, or


3. Other extraordinary circumstances.

Detailed information about the new filing requirements and exemption requests may be found here: FinCen Notice

Did You Know?

Mortgage Servicing and Foreclosure Abuses
According to the NYBA, the federal government and 49 state attorneys general announced a $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. The agreement is intended to provide substantial financial relief to homeowners and establish significant new homeowner protections for the future.

As part of the settlement, New York State Attorney General Eric T. Schneiderman announced that $136 million would be provided to New York in penalties, direct relief to victims of wrongful foreclosure conduct, loan modifications including principal reductions for struggling homeowners, and funds that can be used to support foreclosure legal assistance and housing counseling programs. The settlement also imposes national standards for mortgage servicing and permits state attorneys general to bring legal action over misconduct that has not yet been investigated.

What's New: NYS Mortgage Loans Prohibited Conduct

A new chapter, Mortgage Brokers and Contractors, has been added to the NYS Mortgage Loans, Prohibited Conduct section of The Gold Book.

A new law effective January 12, 2012 regulates the relationship between mortgage brokers and home improvement contractors.

What's New: MSB Registration Website

According to FinCEN, the MSB Registration Website replaces the MSB Registration List and is part of the Department of Treasury's initiative to go paperless.

MSB information has been transferred to FinCEN's main website, www.fincen.gov. The MSB Registration Website is: http://www.fincen.gov/financial_institutions/msb/.

For further information on Money Service Businesses, visit the Gold Book.

Did You Know?

IRS Proposed RMD Regulations
The IRS has issued a proposed regulation adding an annuity option to the Required Minimum Distribution (RMD) rules.  The proposed regs would allow traditional, SEP, and SIMPLE IRA owners to purchase Qualified Longevity Annuity Contracts (QLACs) as part of their retirement plan. A participant may want to purchase a QLAC with funds from a retirement plan, which would begin payments at an advanced age, typically 80 or 85.

Did You Know?

The New York Assembly recently passed a bill increasing from 8 to 12 the number of free withdrawals on basic banking accounts available to customers age 65 or older. This is not law until it passes the State Senate and is signed by the governor.

Read more about Basic Banking (Lifeline) Accounts.

What Do You Think?

The OCC plans to end paper distribution of news and issuances by June 1, 2012.

"Moving toward paperless delivery of our news, alerts, bulletins, and other publications helps ensure this important information reaches the banks and savings associations we regulate in a  more timely, efficient, and cost effective manner," said acting Comptroller of the Currency John Walsh. "Going paperless is a good business decision that makes sense for our environment."

Discontinuing the printing and distribution of news, issuances, and publications is part of the OCC's broader commitment to being "green". What steps is your institution taking to reduce the use of paper?

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What Do You Think?

Lease Security Accounts
A lease security account is a statutory creation intended to hold deposits of rent security in escrow for the protection of landlords and tenants.  In New York, the  rule pertains to property rentals in a building with six or more family dwelling units and  in New Jersey, the rule applies to landlords with 10 rental units or more.

In accordance with N.J.S.A. 46:8-19, a New Jersey landlord is no longer entitled to receive, as administration expenses, 1%  interest on the balance in the account. The interest paid on the deposit amount belongs to the tenant.

According to the New York General Obligations Law Section 7-103, a lease security deposit must be placed at a New York banking organization in an interest bearing account, with the first 1% of interest earned on the account remitted to the landlord.  The balance of the interest may be paid to the tenant or given as a credit against rent.  The law states that the lease security deposit (usually 1 or 2 months of rent on a residential lease) must be placed in a “prevailing rate” account.

• But what if your non-CD accounts are paying 1% or less?  Does this mean the landlord gets all the interest on the account?

WE WANT TO KNOW WHAT YOU THINK!
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Mortgage Loan Escrow Accounts

The General Obligations Law, the Banking Law and New York State Banking Board General Regulation Part 10 specifically requires a lender to pay 2% on mortgage loan escrow accounts.  Institutions are expected to pay 2% on these accounts even if they offer other interest bearing accounts at 2% or less. It is important to remember that for mortgage loan escrow accounts, the customer is not a depositor but a borrower.

Banks require an escrow balance for the payment of taxes and insurance and to protect the lien against a tax foreclosure.  The bank requires the deposit as an incident to the loan and the bank must pay the statutory rate (not the prevailing rate).

What's New: Bounce Protection Programs

The Gold Book has been updated with expanded definitions for overdraft services as well as a summary of guidance for FDIC supervised institutions.

FinCen Assesses Penalty for SAR Disclosure

The Financial Crimes Network (FinCEN) has assessed a $25,000 civil money penalty against a California bank employee for violating Bank Secrecy (BSA) prohibitions against disclosing suspicious activity reports ("SARs").

FinCEN determined that the employee violated the BSA by willfully disclosing the existence of a SAR to a person involved in the reported transaction.

Read more in the December 15, 2011 FinCEN announcement:  http://www.fincen.gov/news_room/nr/pdf/20111215.pdf

Internet Authentication: Enhanced Expectations

The FDIC, with the other FFIEC agencies, issued new guidance in June 2011, describing updated supervisory expectations regarding customer authentication, layered security, and other controls in an increasingly hostile online environment. Financial institutions are expected to comply with the guidance no later than January 1, 2012.

Read more here: Authentication for Internet Banking.

What's New: Bank Size Criteria

The Gold Book chapter Bank Size Criteria, has been updated to reflect the current regulations for the asset-size thresholds used to define “small bank” and “intermediate small bank” based on the annual percentage change in the Consumer Price Index.

For further information about how these revised asset-size thresholds are applied, see the CRA page on the Federal Financial Institutions Examination Council’s Web site at www.ffiec.gov/cra.

What's New: SAFE Act

The Gold Book has been updated to include information about the Secure and Fair Enforcement for Mortgage Licensing Act (S.A.F.E. Act). See Lending Compliance and Consumer Loan Regulation.

What's New: New IRS Form 1099-K

IRS Form 1099-K, Merchant Card and Third Party Network Payments has been added to the Reporting Compliance section in The Gold Book. This new form is required in 2012 for payment card and third-party network transactions that occurred in 2011.

What's New: ATM Design Standards

The Gold Book has been updated for the new regulations under the Americans with Disabilities Act which requires new accessibility standards. The new regulations became effective March 15, 2011 and March 15, 2012 mandatory compliance date. See Americans with Disabilities Act for further information.