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NCUA fixed-asset proposal could apply to some state-chartered CUs

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ALEXANDRIA, Va. (8/13/14)--While the National Credit Union Administration's fixed-assets proposal is meant to apply to federal credit unions, it could also apply to state-chartered credit unions in certain states. A number of states have a statutory provision that allows state-chartered credit unions to exercise powers allowed for federal credit unions.
The NCUA's proposal would allow federal credit unions with assets of $1 million or more to exceed the limit on the purchase of fixed assets, currently 5% of shares and retained earnings, without receiving a waiver from the agency. This is provided the credit union maintains a fixed-assets management program.
Credit unions in Alabama, Arizona, Illinois, Iowa, Maine, Oklahoma, Rhode Island and Texas are permitted by their state credit union acts to exercise powers conferred on federal credit unions without seeking approval from the state's regulator.
In Illinois--one state with such a parity provision--members of the Illinois Credit Union League will discuss the possibilities with state regulators to see if state-chartered credit unions can benefit from the proposal.
"We look at statutory requirements on an annual basis, and I'm sure this will be one of the topics discussed," said Patrick Smith, league vice president of communications and regulatory affairs. "We're going to look very closely at the proposal and make sure that none of our state-chartered credit unions will be at a disadvantage just because they have a state charter."
State-chartered credit unions in states with a parity provision can also be affected by the NCUA's proposal on securitization of assets, if the state regulator determines a credit union has the resources and capacity to support securitization. The proposal would authorize federal credit unions to securitize loans it has originated, provided the transaction meets certain requirements.
The Credit Union National Association has issued a comment call for both proposals. Comments on asset securitization are due to the NCUA by Aug. 25. Comments on the fixed-assets proposal are due to CUNA by Oct. 1, and to the NCUA by Oct. 10.
Use the resource link below for information about the fixed-asset proposal.

N.Y. charges payday lenders for violating usury cap

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NEW YORK (8/13/14)--State prosecutors in New York have brought charges against 12 companies and their owner, alleging the businesses violate New York's law banning payday lending.
Prosecutors indicted Carey Vaughn Brown, Ronald Beaver and Joanna Temple and the 12 companies they own on 38 counts of criminal usury and one count of conspiracy.
New York defines a payday loan as "payday loan is a relatively small, high-cost loan, typically due in two weeks and made with a borrower's post-dated check or access to the borrower's bank account as collateral," according to the state's Department of Financial Services. It is illegal in New York to charge more than 25% interest per annum on any loan less than $2.5 million.
"Payday lending is a short-term fix that can result in a lifetime of debt and credit problems," said District Attorney Cyrus Vance in a statement. "The exploitative practices--including exorbitant interest rates and automatic payments from borrowers' bank accounts, as charged in the indictment--are sadly typical of this industry as a whole."
Brown is accused of using the Internet to creating multiple companies between 2001 and 2013. He is accused of establishing one such company,, Inc. as a website and offshore corporation to accept online applications for payday loans while avoiding compliance with laws in individual states.
Other companies created by Brown performed loan processing and underwriting, processed electronic transactions to extend the loans and move funds between companies, as well as provided support for the payday lending business, creating the impression of multiple independent companies.
The state alleges that the companies in fact functioned as a completely enclosed operation controlled by the defendants. 
Use the resource link below to read the complete announcement from the New York County District Attorney's office.

BSA/AML compliance needs to be part of CU culture: FinCEN

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WASHINGTON (8/13/14)--Recent anti-money laundering (AML) enforcement actions have led the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) this week to issue an advisory identifying common compliance shortcomings.
The advisory is meant to highlight principles that can strengthen a financial institution's Bank Secrecy Act (BSA) compliance program.
The advisory lays out the following guidance for financial institutions:
  • Leadership, including board of directors, senior and executive management, owners and operators, should be engaged with the financial institution's BSA/AML compliance program. Leaders should receive training tailored to their roles and should remain informed of BSA/AML compliance practices within the institution;
  • Compliance, including submission of appropriate and accurate reports, should not be compromised by revenue interests. BSA/AML compliance should function independently within a financial institution, in order to be prepared to take action to address and mitigate risks from the business side of the institution;
  • BSA/AML compliance staff should have access to all relevant information. According to FinCEN, several recent enforcement actions noted that compliance staff was not given information, possibly due to the lack of an information-sharing mechanism. Fraud prevention and legal departments should be sharing information with compliance staff;
  • Adequate human and technological resources should always be accessible. An individual should be designated as the person responsible for coordinating and monitoring day-to-day compliance, and appropriate support staff should be assigned to a BSA/AML compliance program based on an organization's risk profile;
  • Compliance programs should be commensurate with an institution's risk level, and should always include a proper ongoing risk assessment, sound risk-based customer due diligence and appropriate detection and reporting of suspicious activity. This should also include independent program testing from an independent, qualified, unbiased and non-conflicting entity; and
  • Staff at all levels should understand the purpose of BSA reports. FinCEN considers the information provided among the most important information available for law enforcement and other security entities. Information provided can help initiate investigations, expand existing investigations, promote international information exchange and identify significant relationships, trends and patterns.
Use the resource link below to access to the full advisory from FinCEN.

IRS posts 'Taxpayer Bill of Rights' in 6 languages

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WASHINGTON (8/13/14)--The recently adopted "Taxpayer Bill of Rights" from the Internal Revenue Service (IRS) is now available in six languages.
"Your Rights as a Taxpayer" is posted on the IRS website in in English, Spanish, Chinese, Korean, Russian and Vietnamese
"We believe that these rights are critically important for people to know and understand, and translating them into additional languages helps us reach even more taxpayers," said IRS Commissioner John Koskinen.
In June, the IRS adopted the "Taxpayer Bill of rights" to help taxpayers understand items embedded in the tax code.
The 10 provisions are:
  1. The right to be informed;
  2. The right to quality service;
  3. The right to pay no more than the correct amount of tax;
  4. The right to challenge the IRS's position and be heard;
  5. The right to appeal an IRS decision in an independent forum;
  6. The right to finality;
  7. The right to privacy;
  8. The right to confidentiality;
  9. The right to retain representation; and
  10. The right to a fair and just tax system.

White paper calls for more small-biz loan data from CUs

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WASHINGTON (8/13/14)--A new white paper by the National Community Reinvestment Coalition (NCRC) calls for credit unions to be included in expanded small business lending data reporting. The paper is a series of recommendations to the Consumer Financial Protection Bureau, which is developing a regulation to implement Section 1071 of the Dodd-Frank Act.
Section 1071 of Dodd-Frank is meant to facilitate enforcement of fair lending laws, as well as enable the government and financial institutions to identify women-owned, minority-owned and small businesses. The white paper lists several recommendations meant to improve publicly available small business loan data.
According to the NCRC, most of the current publicly available data is submitted by large banks. The coalition recommends data disclosure be expanded to credit unions, as well as smaller banks and non-depository lenders. While credit unions are limited in their business lending to 12.25% of assets, the NCRC recognizes them as an "important source of small business loans."
The National Credit Union Administration's 2013 report states that member business loan balances grew to $45.9 billion in 2013, a 10.1% increase from the year before. 
The NCRC recommends the following data elements be required from lenders about small businesses:
  • Race and ethnicity. The NCRC believes disclosures of information such as Asian or Hispanic is not specific enough;
  • Revenue size of business. According to the NCRC, this would allow policymakers and the public to track loans to women- and minority-owned businesses. Currently, the Community Reinvestment Act (CRA) data serves as the largest currently available database, and it separates businesses into only two categories--above and below $1 million in revenue;
  • Whether a loan was approved or denied. CRA data contains only origination information, not applications or denials. This new data field is intended to provide information on demand for credit, and responsiveness of lenders to this demand; and
  • Loan type and purpose. This will track the multiple ways in which small businesses are able to address credit, creating another way to track credit demand and if lenders are responsibly meeting it.
In addition to the above required items, the NCRC also recommends several discretionary data elements, including pricing data, creditworthiness, number of employees and loan performance. According to the coalition, this additional data will help identify barriers to credit access.
The NCRC, a nonprofit association of more than 600 organizations with a mission to build and protect wealth in underserved communities, says better data on lending markets will improve access to credit, as well as hold lenders publicly accountable for meeting credit needs.
Use the resource link below to access the white paper.

FinCEN: 105 FIs involved with marijuana-based businesses

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WASHINGTON (8/13/14)--There are currently 105 banks and credit unions serving legal, marijuana-based businesses, according to suspicious activity reports (SARs) received by the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN).
FinCEN Director Jennifer Shasky Calvery addressed the topic during the Atlantic Anti-Money Laundering Conference Tuesday in Washington, D.C.
"Since FinCEN's (marijuana-based business) guidance went into effect in February of this year, we have received more than 1,000 SARs that indicate banks are using our guidance and providing much needed transparency into their dealings with marijuana-related businesses," she said.
FinCEN released marijuana-based business guidance Feb. 14 to assist financial institutions in determining when and how to file a SAR based on eight law enforcement priorities identified by the U.S. Department of Justice.
"Our overarching goal in issuing this guidance was to promote financial transparency, ensuring law enforcement receives the reporting from financial institutions that it needs to police this activity and making it less likely that the financial operations move underground and become more difficult to track," she said.
Financial institutions dealing with marijuana businesses can use three different designations for marijuana-related business SARs:
  • "Marijuana Limited," for financial institutions providing services to a marijuana-related business that can be reasonably believed is not violating one of the eight priorities or state law. FinCEN has received 502 SARs marked as Marijuana Limited;
  • "Marijuana Priority," for financial institutions that believe, based on its customer due diligence, a marijuana-related business is violating one of the eight priorities or state law. To date, FinCEN has received 123 SARs indicating Marijuana Priority; and
  • "Marijuana Termination," used if a financial institution deems it necessary to terminate a relationship with a marijuana-related business in order to maintain an effective AML compliance program. Just over 475 SARs filed to date have indicated "Marijuana Termination."
The numbers are based on SARs received by FinCEN from Feb. 14 and Aug. 8. Calvery said the number of marijuana-related SARs FinCEN has received is the "intended effect" of the guidance.
"It is facilitating access to financial services, while ensuring that this activity is transparent and the funds are going into regulated financial institutions responsible for implementing appropriate AML safeguards," she said.
Use the resource link below to access Calvery's full remarks.

CFPB slaps $19.3M penalty on Amerisave for mortgage tactics

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WASHINGTON (8/13/14)--The Consumer Financial Protection Bureau (CFPB) has ordered Atlanta-based online mortgage lender Amerisave Mortgage Corp. and its affiliate to pay $19.3 million for "deceptive bait-and-switch" lending practices.
Amerisave and Novo Appraisal Management Co. will pay $14.8 million to affected consumers and a $4.5 million penalty. The companies' owner, Patrick Markert, was fined an additional $1.5 million. Fines will go to the CFPB's Civil Penalty Fund.
"Amerisave lured consumers in with deceptive advertising, trapped them with costly upfront fees, and then illegally overcharged them for services from an undisclosed affiliate," said CFPB Director Richard Cordray. "By the time consumers could have discovered the advertised low rates were too good to be true, they had already committed to pay hundreds of dollars to Amerisave."
Amerisave drew in consumers nationwide with online ads that teased rates that did not match the consumers' credit scores or did not exist. "Through use of these inaccurate rates and terms, Amerisave lured consumers into pursuing a mortgage with the company," the CFPB said, which found this practice deceptive under the Consumer Financial Protection Act and the Mortgage Acts and Practices Rule.
The CFPB also alleged that Amerisave required consumers to schedule appraisals that cost between $375 and $500 before obtaining an official estimate of mortgage costs, in violation of the Truth in Lending Act and the Real Estate Settlement Procedures Act.
The company also referred customers to Novo without disclosing its affiliate relationship with the appraisal company.
The CFPB order also requires Amerisave, Novo and Markert to stop advertising unavailable mortgage rates and stop charging illegal fees.