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Washington Archive

Washington

CFPB Issues CUNA-backed Credit Access Final Rule

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WASHINGTON (4/30/13)--Stay-at-home spouses and others should soon find it easier to secure new lines of credit following the Consumer Financial Protection Bureau's most recent regulatory action, which broadens credit-access rules.

Back in 2011, legislators contacted the CFPB noting that ability-to-repay regulations were limiting the ability of stay-at-home spouses to secure new lines of credit. Hearings on the topic were held, and the Credit Union National Association urged the CFPB to correct this issue.

The CFPB regulation, released Monday, will allow credit card applicants who are 21 years of age or older to list joint-account income as an asset on credit applications. The regulation applies to all applicants regardless of marital status, but the bureau expects that it will ease access to credit particularly for stay-at-home spouses or partners who have access to a working spouse or partner's income.

CFPB Director Richard Cordray said the release of the new rule "is an example of the bureau's commitment to working with consumers and financial institutions in order to ensure responsible access to credit for American families."

CUNA Associate General Counsel Jared Ihrig noted the final rule is effective upon publication in the Federal Register, which could be within a week or two. "The compliance date is six months after publication, but credit unions and other card issuers are free to comply ahead of that date," Ihrig added.

Before this CFPB change, Regulation Z's ability-to-repay rule did not specifically address joint accounts or even checking accounts. It merely advised card issuers to take into account assets such as savings accounts when it determines whether it will allow an applicant to open a new card account or increase the credit limit on an existing account. The regulation, as originally written, created unintended issues for many couples and families.

WOCCU: Tweaks To Int'l AML Guidance Would Ease CU Burden

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WASHINGTON (4/30/13)--Allowing more flexible prepaid card use and increasing the de minimis threshold for conducting customer due diligence on small value remittance transfers are two ways the Financial Action Task Force's (FATF) draft anti-money laundering guidance could help relieve credit union regulatory burden and promote financial inclusion, Michael Edwards, World Council of Credit Unions vice-president and chief counsel, wrote in a Monday comment letter.

The FATF is developing updated guidance on international anti-money laundering standards for politically exposed persons (PEPs) and new payment products and services (NPPS). The NPPS guidance could be released as early as this summer, and was one of many issues addressed when Edwards spoke on behalf of credit unions at a FATF meeting in London last week.

Updated guidance expanding the definition of PEPs to include domestic PEPs and international organization PEPs is also expected later this year. Under prior FATF definitions, only foreign politicians and foreign high-level bureaucrats were considered PEPs. WOCCU in the letter commenting on the draft NPPS anti-money laundering guidance supported the FATF's approach in general, but urged several technical changes to the NPPS guidance. The suggested changes address:
  • Emphasizing a weighing factor analysis for assessing the risk of money laundering and terrorist financing (ML/TF) for electronic payments;
  • Allowing simplified anti-money laundering consumer due diligence measures in order to promote financial inclusion of the unbanked; and
  • Not considering usage of prepaid cards as a bank account alternative to be a high ML/TF risk.
Many credit unions offer NPPS such as prepaid debit cards, mobile payments, workers' remittances and Internet-based payments to their members "in order to provide their members with useful and convenient payment services and to promote financial inclusion of unbanked individuals," Edwards wrote.

Specifically, he added, credit unions in countries such as Guatemala, Haiti, Kenya, Mexico and other countries in Latin America and Africa use NPPS such as mobile payments and money transfer organization systems "to provide their predominantly rural and poor members with payment services that they would not otherwise have access to." Small credit unions in Great Britain, the United States and other countries "offer their members prepaid cards as an alternative to a current account either because the credit unions do not have the economies of scale necessary to implement full-service current accounts cost effectively or because some members prefer to use prepaid cards as a money management tool," Edwards added.

While credit unions usually provide these services to credit union members that have undergone background checks, the services are, in some cases, provided to non-members. The services are provided to these non-members to help attract unbanked individuals to credit union membership and promote financial inclusion, Edwards wrote.

For the full WOCCU comment letter, and a release on the issue, use the resource link.

NEW: Oct 28 Is CFPB Remittance Rule Effective Date

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WASHINGTON (UPDATED: 4/30/13, 4:00 p.m. ET)--Oct. 28 will be the effective date for the Consumer Financial Protection Bureau's remittance regulations, the bureau said today.

Under the final rule published last February, remittance transfer providers will be required to provide prepayment and receipt disclosures to the consumer sender that include the exchange rate, certain fees and taxes associated with a transfer, and the amount of money that will be received on the other end of the transfer. Remittance transfer providers will also be required to investigate disputes and correct errors.

The CFPB has provided a safe harbor exemption from the rule for remittance providers that transact 100 or fewer remittances per year.

The Credit Union National Association's International Remittances Working Group has met with CFPB Director Richard Cordray and his senior staff and CUNA senior staff have had numerous meetings and telephone conversations with CFPB officials to advocate for credit unions on remittance issues.

Remittance rule revisions addressing fees and foreign tax disclosures and how financial institutions will cope with account or routing number errors were also released on Tuesday.

For more on the revisions, see News Now on Wednesday.

FTC Issues 'Complying With COPPA' FAQ

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WASHINGTON (4/30/13)--The Federal Trade Commission (FTC) has released a list of frequently asked questions (FAQ) to help the public prepare for changes to the Children's Online Privacy Protection Act (COPPA) requirements that are scheduled to go into effect July 1.

COPPA addresses the collection, use, and/or disclosure of personal information for children under 13 years old by websites and other online services, including credit unions that have websites and/or mobile banking applications.

The FAQs are intended for all website operators, mobile application developers, plug-ins and advertising networks operating on child-directed websites and online services, the FTC said. The document, "Complying With COPPA: Frequently Asked Questions," addresses the basics of the COPPA rule. More specific details are also provided.

The COPPA changes aim to strengthen children's privacy protections and give parents greater control over the personal information that websites and online services may collect from children under 13. The FTC said the changes are an attempt to keep up with an ever-changing technological landscape.

The changes would:

  • Modify the list of "personal information" that cannot be collected without parental notice and consent, clarifying that this category includes geo-location information, photographs, and videos;
  • Offer companies a streamlined, voluntary and transparent approval process for new ways of getting parental consent;
  • Close a loophole that allowed kid-directed apps and websites to permit third parties to collect personal information from children through plug-ins without parental notice and consent;
  • Extend coverage in some of those cases so that the third parties doing the additional collection also have to comply with COPPA;
  • Extend the COPPA Rule to cover persistent identifiers that can recognize users over time and across different websites or online services, such as IP addresses and mobile device IDs;
  • Strengthen data security protections by requiring that covered website operators and online service providers take reasonable steps to release children's personal information only to companies that are capable of keeping it secure and confidential;
  • Require that covered website operators adopt reasonable procedures for data retention and deletion; and
  • Strengthen the FTC's oversight of self-regulatory safe harbor programs.
For more on the FTC FAQ, use the resource link.

Accounting Regulators Unveil New Look

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WASHINGTON (4/30/13)--Redesigned websites and sleek new logos have been unveiled as the Financial Accounting Foundation (FAF), the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB) commemorate 40 years of financial accounting oversight.

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The 40th anniversary provides the ideal opportunity for all three groups to refresh their brand "in a way that reinforces the organizations' missions and highlights their contributions from the past while looking ahead to the future," FAF President/CEO Teresa Polley said.

"As standard-setters for the world's most robust and dynamic economy, the FAF, the FASB, and the GASB are responsible for ensuring that financial reporting meets the needs of investors who keep our economy thriving...The new branding associated with this responsibility reflects that significance, with each component designed to reflect our shared commitment to working on behalf of U.S. investors and global capital markets."

The redesigned websites will include "plain English" sections explaining major agency projects, and are designed to be more friendly, intuitive, and educational, the FAF said. An interactive timeline covering the history of all three regulators is also featured on the FASB site.

For more on the logos and new websites, use the resource link.

The FAF is responsible for the oversight, administration, and finances of its standard-setting boards, FASB and GASB, and their Advisory Councils.

CFPB Hearing, Priorities Featured In Reg Advocacy Report

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WASHINGTON (4/30/13)--Consumer Financial Protection Bureau Director Richard Cordray last week told a Senate hearing that the Credit Union National Association's advocacy efforts have had an impact at the agency. CUNA covers this and other details of the hearing, including congressional concerns regarding the CFPB's consumer data collection practices, in this week's Regulatory Advocacy Report.

The CFPB has worked closely with CUNA and others as "plain English" small-entity compliance guides are developed, Cordray said during the April 23 Senate Banking Committee hearing on the CFPB's semiannual report. Senators also asked Cordray pointed questions on the types of consumer data the CFPB collects and where the agency obtains such data.

Cordray said the agency is collecting anonymous data from credit reporting agencies and requesting records from financial institutions. The data will help the agency write new rules, litigate enforcement actions and promote financial literacy, among other priorities, he added.

Cordray in his testimony also addressed:

  • Mortgage servicing and credit card issues;
  • Error correction for credit reporting; and
  • Indirect auto lending.
CUNA Deputy General Counsel Mary Dunn said in the Report that CUNA will continue to monitor CFPB's actions and advocate for credit unions.

Other items addressed in this week's Regulatory Advocacy Report include:

  • The CFPB's civil penalty fund proposal;
  • A recent CFPB payday lending white paper;
  • Proposed CFPB mortgage rule amendments;
  • Details of an upcoming CUNA Technology Council webinar entitled "Mitigating and Responding to a Distributed Denial of Service (DDoS) Attack;" and
  • CFPB staff updates.
Employees or volunteers of CUNA and state credit union league member credit unions can sign up below to receive the Regulatory Advocacy Report.

The Regulatory Advocacy Report is archived on cuna.org. Also, use the second resource link to access Cordray's Senate testimony.