CFPB Warns that Digital Marketing Providers Must Comply with Federal Consumer Finance Protections

Tech firms that use behavioral targeting of individual consumers regarding financial products are liable for Digital Marketing violations as per new interpretive ruling fy the CFPB. 

Read more in Digital Marketing in The Gold Book. 

FedNow Service Releases Guidance

In anticipation of the launch of FedNow, recently released is: Operating Circular 8 Funds Transfers through the FedNow Service, effective September 21, 2022. The circular also references another document, version 1.0 of the FedNow Service Operating Procedures.

National Banks Not Required to Comply with a New York State Law

A federal appeals court has ruled that national banks are not required to comply with a New York State law requiring mortgage lenders to pay a two per cent minimum annual interest rate on mortgage escrow accounts established for owner-occupied, one-to-six family residences.  The decision by the United States Court of Appeals for the Second Circuit in Cantero v. Bank of America, N.A., held that the New York law is preempted by the National Bank Act of 1864, which among other things grants national banks the power to establish and fund escrow accounts.  While the decision expressly applies only to national banks, it provides a strong basis for arguing that preemption would also apply to other federally-chartered financial institutions.  However, the Court’s ruling directly conflicts with a 2019 decision by a federal appeals court in California which reached the opposite conclusion, making the issue ripe for potential review and resolution by the Supreme Court should a further appeal be made

What's New? Crypto Currency and the FDIC

To address certain misrepresentations about FDIC deposit insurance by some crypto companies, the FDIC is issuing an Advisory to FDIC-insured institutions Regarding Deposit Insurance and Dealings with Crypto Companies (FDIC Crypto Advisory).  Additionally, a Fact Sheet on What the Public Needs to Know About FDIC Deposit Insurance and Crypto Companies (Deposit Insurance Fact Sheet) is available. Read more in The Gold Book under Crypto Currency.

Computer Security Final Rule and Information Webinar

On November 23, 2021, the Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (the Agencies) announced the approval of a final rule on computer-security incident notification to improve the sharing of information about cyber incidents that may affect the U.S. banking system. Compliance with the final rule is required by May 1, 2022. 

Read more about this rule in the Cybersecurity section of The Gold Book.

On Thursday, April 28, 2022, at 2:00 ET, the Agencies will jointly host an Ask the Regulators webinar regarding this rule. The program is intended for banking organizations and their bank service providers, as defined in the computer-security incident notification final rule. During the webinar, the Agencies will respond to questions submitted in advance from banking organizations and bank service providers. Please email questions in advance of the webinar to asktheregulators@stls.frb.org by April 20. 

Registration for the webinar is available at: https://www.webcaster4.com/Webcast/Page/584/44888 

NY Hero Act

On March 17, 2022, the designation of COVID-19 as an airborne infectious disease that presents a serious risk of harm to the public health under the HERO Act ended. Private sector employers are no longer required to implement their workforce safety plans.

NYS Remote Notary Guidance

Effective 2/25/22, remote notarization is now authorized in New York State, per section 135-c of the executive law. Visit Department of State website for details.

OSHA ETS Withdrawn

The Emergency Temporary Standard was withdrawn effective January 26, 2022. Although OSHA is withdrawing the vaccination and testing ETS as an enforceable emergency temporary standard, the agency is not withdrawing the ETS as a proposed rule. The agency is prioritizing its resources to focus on finalizing a permanent COVID-19 Healthcare Standard.

Proposed regulations update RMDs for SECURE Act changes

The IRS and Treasury released proposed regulations (REG-105954-20) that would update existing rules for required minimum distributions (RMDs) from qualified retirement plans.

Enacted in December 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act 

revised the starting date for required minimum distributions (RMDs) from a qualified plan, generally to April 1 of the calendar year following the later of the calendar year in which the employee either turns age 72 or retires (Sec. 401(a)(9)(C)). Before the SECURE Act's amendment, that age was 70½. The higher age was effective for distributions required to be made after Dec. 31, 2019 (with respect to individuals who turned age 70½ after that date) (SECURE Act Section 114(a)).

Also, the SECURE Act eliminated "stretch" individual retirement accounts (IRAs) or plan distributions by requiring distributions to nonspouse beneficiaries (other than eligible designated beneficiaries) to be completed within 10 years following a plan participant or IRA owner's death (the 10-year rule) rather than, as before, over the beneficiary's life or life expectancy. The SECURE Act defined eligible designated beneficiaries for purposes of the exception to the 10-year rule as the employee's surviving spouse, the employee's child under the age of majority, a disabled designated beneficiary, a chronically ill individual, or other individual no more than 10 years younger than the employee (Sec. 401(a)(9)(E)(i)).

The proposed regulations provide general rules for RMDs, including application of the 10-year rule where the retirement plan owner dies, then the designated beneficiary also dies. If the owner died before Sec. 401(a)(9)(H)'s effective date for the plan and the owner had only one designated beneficiary who also died before that effective date, the beneficiary of the designated beneficiary is subject to the 10-year rule. If the owner's designated beneficiary died on or after that effective date, the 10-year rule does not apply to the beneficiary of the designated beneficiary. If the owner dying before the Sec. 401(a)(9)(H) effective date for the plan had more than one designated beneficiary, whether the SECURE Act amendments apply depends on when the oldest beneficiary dies.

The proposed regulations also address the SECURE Act RMD starting age of beneficiaries of an owner who died before reaching age 70½ but would have reached that age on or after Jan. 1, 2020. In that case, the beneficiary may wait until the calendar year in which the employee would have reached age 72 to begin RMDs.

The proposed regulations clarify the eligible designation beneficiary definition, age of majority, applicability of disability to young beneficiaries, and more. The proposed regulations would generally apply for purposes of determining RMDs for calendar years beginning on or after Jan. 1, 2022, or to distributions on or after that date. For the 2021 distribution calendar year, taxpayers must apply the existing regulations but take into account a reasonable, good-faith interpretation of the SECURE Act amendments, which compliance with the proposed regulations will satisfy.

NJ Mortgage Assistance

This week, the New Jersey Housing and Mortgage Finance Agency (NJHMFA) opened the application portal for the Emergency Rescue Mortgage Assistance program (ERMA).

To help protect homeowners from foreclosure, this program will provide assistance to cover mortgage arrearages, delinquent property taxes, and other housing costs for eligible homeowners negatively impacted by the COVID-19 pandemic. If eligible, you could receive up to $35,000 in the form of a three-year forgivable loan, with no interest or payments due.

NJHMFA will also provide free housing counseling services to help New Jersey homeowners apply for this program, guide them through all available options, and even work with their loan servicers to achieve the best outcome available for their families. These counselors will also ensure that the process is accessible to those without access to internet or anyone needing assistance with the application.

Visit NJHMFA to learn more and access the application.

FedNow Pricing Approach

The Federal Reserve released its anticipated pricing approach for its FedNow instant payments service ahead of next year’s launch.

Pricing: The Fed said it expects the FedNow Service fee schedule to be published later this year with the following pricing information:

• A $25 monthly FedNow Service participation fee for each routing transit number that enrolls in the service to receive credit transfers.
• A fee of $0.045 per transaction to be paid by its sender, including returns.
• A fee of $0.01 for a request for payment message to be paid by the requestor, including both requests for a new payment or funds to be returned.
• Participating financial institutions can send RFPs through FedNow to other participating FIs to request payment of a bill, invoice, or other amount owed by the receiving FI’s customer.
• Standard fees will apply for FIs accessing the FedNow Service via FedLine Solutions.
• FedNow’s initial credit transfer transaction value limit will be a maximum of $500,000, though the default limit is set at $100,000 and FIs will be able to adjust it based on their needs.

What's New? NYC Wage Posting Requirements

Beginning May 15, employers in New York City will have to include in job postings the minimum and maximum salaries that the firm believes, in good faith, that it will pay. Read more under Posting Requirements for Labor Laws in the Human Resources chapter of The Gold Book.

What's New? FDIC Simplification Rules

The FDIC approved a final rule to amend the deposit insurance regulations for trust accounts and mortgage servicing accounts. The final rule will take effect on April 1, 2024, providing depositors and insured depository institutions two years to prepare for the changes in coverage. Read more about Trust Accounts in the Federal Deposit Insurance chapter of The Gold Book. 

Climate Related Financial Risk

The Office of the Comptroller of the Currency released draft principles designed to support the identification and management of climate-related financial risks by banks with more than $100 billion in assets. The draft outlines the types of climate-related risks banks should be monitoring and call for firms’ managers to develop a framework to analyze their exposure to those risks through hypothetical scenarios. Earlier today, the Financial Stability Oversight Council voted to establish the Climate-related Financial Risk Committee (CFRC), which will identify priority areas for assessing and mitigating climate-related risks to the financial system, coordinate information sharing, aid in the development of common approaches and standards, and facilitate communication across FSOC members and interested parties.

What's New? Environmental Crimes

The Financial Crimes Enforcement Network (FinCEN) has issued Notice (FIN-2021-NTC4) to call attention to an upward trend in environmental crimes and associated illicit financial activity. Environmental crimes frequently involve transnational organized crime and corruption and are often associated with a variety of other crimes including money laundering, bribery, theft, forgery, tax evasion, fraud, human trafficking, and drug trafficking. Financial institutions’ SAR fillings, in conjunction with effective implementation of their Bank Secrecy Act (BSA) compliance requirements, are crucial to identifying and stopping environmental crimes and related money laundering. Read more about Environmental Crimes and SAR Reporting in The Gold Book.

Crypto-Assets

Federal bank regulatory agencies recently issued a statement summarizing their interagency “policy sprints” focused on crypto-assets and providing a roadmap of future work related to crypto-assets.

In particular, the statement describes the focus of the preliminary work conducted through the sprints undertaken by the agencies. It summarizes the agencies’ plan to provide greater clarity throughout 2022 on whether certain crypto-related activities conducted by banking organizations are legally permissible, and related expectations for safety and soundness, consumer protection, and compliance with existing law and regulations.

The emerging crypto-asset sector presents potential opportunities and risks to banking organizations, their customers, and the overall financial system. The interagency sprints quickly advanced and built on agencies’ combined knowledge, which helped identify and assess key issues related to potential crypto-asset activities conducted by banking organizations.

What's New? Cybersecurity

Cybersecurity is a major concern of financial institutions and federal financial regulators. Computer-security incidents can result from destructive malware or malicious software (cyberattacks), as well as nonmalicious failure of hardware and software, personnel errors, and other causes. Cyberattacks targeting the financial services industry have increased in frequency and severity in recent years. These cyberattacks can adversely affect a bank’s networks, data, and systems and, ultimately, its ability to resume normal operations.

Read more in the Digital Banking Chapter of The Gold Book under Cybersecurity.

What's New? NYS 2022 Minimum Wage Increase

The statewide $15 minimum wage was enacted as part of the 2016-17 State Budget. The plan takes the needs of workers and businesses alike into account. As of December 31, 2016, the first in a series of wage increases went into effect. Rates differ based on region and industry because the increases are calibrated to provide businesses ample time to adjust. Read more here in the Human Resources chapter of The Gold Book. 

Excluded Workers Fund (EWF) Prepaid Cards ATM Withdrawals Suspended

The NYS Division Of Labor has made a change to the implementation of the Excluded Workers Fund (EWF) prepaid cards, effective December 28, 2021. The DOL has suspended the option to withdraw cash from ATMs for cardholders with a remaining balance on their cards.

EWF cardholders have been notified that NYS DOL is committed to ensuring that the funds on  prepaid cards remain protected from fraudulent activity. And, out of an abundance of caution, effective December 28, 2021, the option to withdraw cash from an ATM for cardholders with a remaining balance on their prepaid card was suspended. Prepaid card may continue to be used to make purchases in-store and online where Visa debit is accepted. The only change is the ability to withdraw cash from an ATM.

If you have a remaining balance on your prepaid card and would like access to your funds in cash, you will have the option to make a free withdrawal in-person at most banks and credit unions accepting Visa debit. (See list of banks and credit unions: County List | City List)  Please note that you will need to present a photo ID and your Excluded Workers Fund prepaid card at the time of withdrawal to complete the transaction. The name on your identification must match the registered name on your Excluded Workers Fund prepaid card. Withdrawals are limited to one (1) transaction between $20 – $500 per 24-hour period and subject to the bank or credit union’s terms and conditions (which may include a smaller withdrawal limit or other requirements).

While we acknowledge that this is not an ideal situation, our top priority is protecting your funds. If you have any questions, please contact customer service at (833) 458-4262.

What's New? Updated Life Expectancy Tables for IRA Distributions

The IRS has released new life expectancy tables for calculating required minimum distributions (RMDs). The most commonly used tables are the Uniform Lifetime and the Single Life Expectancy Tables.  The Uniform Lifetime Table is used by most IRA owners who need to take 2022 lifetime RMDs. The Single Life Expectancy Table is used by IRA beneficiaries who must take an annual RMD for 2022. 

For details on the new tables and where to find them, see the Pension section on Mandatory Distributions in The Gold Book.