• FinCEN SAR Activity Review (5/13/08)
  FinCEN launched Issue 13 of The SAR Activity Review Trends Tips & Issues. Section two of this issue highlights three recent FinCEN SAR analytical reports related to the Insurance Industry, Mortgage Loan Fraud and Residential Real Estate.  “Overall, the quality of SAR reporting has been quite good, indicating that insurance companies are well positioned to report suspected illicit activities relating to money laundering” the report said.  Section three provides examples of how BSA data played a role in healthcare fraud, tax evasion, and drug gang investigations.
• OFAC Removes Limit on Personal Remittances to Burma (5/12/08)
  The Department of the Treasury’s Office of Foreign Assets Control (OFAC) removed the limit on funds that U.S. individuals can send to family and friends in Burma, a Treasury news release said on May 12th.  The action “authorizes U.S. financial institutions to process transfers of funds, unlimited in amount, for noncommercial, personal remittances to or from Burma, or for or on behalf of an individual ordinarily resident in Burma” the news release said.  “This action will speed the flow of aid to the Burmese people by allowing Americans to send an unlimited amount of funds to their relatives and friends who are in need” said OFAC Director Adam J. Szubin.
• Risk-Based Pricing Notices Proposed (5/8/08)
  Lenders would be required to inform consumers when they are being offered less-favorable terms based on poorer credit scores under a joint proposal the Federal Reserve and the Federal Trade Commission issued May 8th. The proposal — mandated by the 2003 Fair and Accurate Credit Transaction Act — would require a risk-based pricing notice to be provided to consumers when they receive more expensive credit terms than those offered to individuals with better credit histories. The notice generally would be provided “after terms of the credit have been set, but before the consumer becomes contractually obligated on the credit transaction,” the Fed and the FTC said in a statement. There will be a 90-day comment period after the proposal is published in the Federal Register. For more information, contact ABA’s Nessa Feddis.
• FinCEN Strategic Plan for FY 2008-2012 (5/8/08)
  The Financial Crimes Enforcement Network (FinCEN) released Strategic Plan for 2008-2012, outlining FinCEN’s goals for the next five years.  Among its goals include: financial systems resistant to abuse by money launderers, terrorists and their financial supporters; detection and deterrence of money laundering, terrorism financing and other illicit activity; and efficient management, safeguarding, and use of BSA information.
• Wolfsberg Group Updates FAQs on Politically Exposed Persons (5/7/08)
  The Wolfsberg Group updated its 2003 Frequently Asked Questions (FAQs) on Politically Exposed Persons (”PEPs”).  The revised edition reinforces the position that only individuals holding senior, prominent or important positions with substantial authority over policy, operations or the use or allocation of government-owned resources can be PEPs (and that “Close Associates” and “Close Family” of PEPs should be included in the control framework for PEPs).  The FAQs also include guidance on assessing whether an individual is a PEP; managing PEP relationships other than in a private banking context; dealing with PEP involvement in operating companies and state owned enterprises; and managing individuals and related entities once the reason for their PEP designation is no longer applicable.
• Federal Reserve Announces Partnership with NeighborWorks® America (5/7/08)
  Federal Reserve Governor Randall S. Kroszner spoke about the Fed’s commitment in addressing foreclosures at the NeighborWorks® America Symposium on May 7th. In his speech, Kroszner discussed what the Fed is doing to assist communities struggling with the impact of foreclosures. Through a partnership with NeighborWorks® America, the Fed will be able to focus on efforts to stabilize neighborhoods that have experienced high rates of foreclosures, Kroszner said.  “Together, the Federal Reserve and NeighborWorks® America will develop and deploy resources, tools, strategies, and best practices for mitigating the impact of foreclosures across the country.”
• ABA Offers Solutions to SSA Proposal on Garnishment (5/6/08)
  ABA on May 5th offered possible solutions to the Social Security Administration’s proposal regarding garnishments of federal benefits payments.  “A solution that minimizes the length of time during which funds are unavailable would help lessen the hardship currently experienced by some” ABA wrote.  In addition, public benefits payments that are potentially exempt from garnishment must provide depository institutions with a clear set of ACH codes and descriptors. “Distinctive ACH codes, rather than descriptors, would be more easily identified by bank deposit systems, but at a minimum there must be absolutely uniform descriptors to systemically identify possibly exempt benefit payments so that they can be identified without manual review.” ABA added that whatever solution is taken, it is important to have one consistent uniform federal standard.  For questions or comments, contact ABA’s Mark Tenhundfeld.
• Fed Survey Finds Tightening Lending Standards (5/6/08)
  The percentage of banks tightening lending standards during the past three months was near historic highs in nearly all loan categories, according to the Federal Reserve’s April survey of senior loan officers released on May 5th. Some 80 percent of U.S. banks said they tightened standards for making commercial real estate loans, and about 60 percent said they tightened lending standards on prime mortgages. Those tougher standards also extended to other types of consumer debt. For example, 70 percent of U.S. banks stiffened standards for approving home equity lines of credit, the survey found. About 40 percent of banks that make student loans said they expect their commitments to provide such loans this fall will decrease compared with last year. 
• Bernanke: Action Needed to Avert Foreclosure Crisis (5/6/08)
  The nearly unprecedented decline in home prices that is a key factor in the current wave of foreclosures will require a concerted government and private-sector response, Federal Reserve Chairman Ben Bernanke said at a Columbia Business School dinner in New York on May 5th. “Realistic public- and private-sector policies must take into account the fact that traditional foreclosure avoidance strategies may not always work well in the current environment,” Bernanke said. He added that Congress can take an important step by moving quickly to reconcile and enact legislation permitting the Federal Housing Administration “to increase its scale and improve its management of risks.” “Doing what we can to avoid preventable foreclosures is not just in the interest of lenders and borrowers. It’s in everybody’s interest,” Bernanke said.
• Basel Committee’s Joint Forum Releases Report on Customer Suitability (5/5/08)
  The Basel Committee on Banking Supervision’s Joint Forum released a report April 30th on “Customer suitability in the retail sale of financial products and services.” The report surveyed 90 financial firms around the world to study how the banking, securities and insurance sectors deal with customer suitability, and manage the risks posed by mis-selling. (The term “mis-selling” generally refers to the situation where the firm sells a product to a client that is not suitable for that client, whether or not a recommendation is made.) The report focuses exclusively on requirements related to retail customers and products with a significant investment component. The report found that in most countries, liability for mis-selling of products will fall to the sales agent, rather than the creator of the product. Another finding is that when looking at the range of information provided to investors when making a sale or recommendation, the range of information provided to customers was generally more limited in the insurance sector. “As regulators, our concern is to make sure that investors are properly protected, and that the institutions we supervise don’t suffer damage to their reputation. This report will help greatly in that regard” said Comptroller of the Currency John C. Dugan, who is also Chairman of the Joint Forum.
• Fed Issues Proposed Rules to Reform Credit Card, Overdraft Practices (5/5/08)
  The Federal Reserve Board on May 2nd, along with the Office of Thrift Supervision and National Credit Union Administration, proposed rules intended to prohibit unfair credit card and overdraft protection practices. The proposed rules, among other things, would prohibit double-cycle billing; restrict a bank’s ability to raise interest rates on pre-existing balances; and prohibit the use of certain payment allocation methods. The proposal also requires institutions to provide consumers with notice and an opportunity to opt out of the payment of overdrafts, before any overdraft fees or charges are imposed on consumers’ accounts. “The proposed rules are not the right policy response to concerns over the ability of consumers to understand the terms of their credit cards,” ABA President and CEO Ed Yingling said in a news release. Yingling added that the proposal could end zero- or low- interest balance transfer options. There will a 75-day comment period on the Fed’s proposal to amend Regulation AA and a 60-day comment period on complementary proposals to amend Reg Z and Reg DD. For more information, contact ABA’s Nessa Feddis or Ken Clayton.
• Teach Children to Save Day Coverage Reaches 26 Million People (5/5/08)
• OTS Releases Outline of Proposed Rule on Credit Card, Overdraft Practices (5/2/08)
• OCC Publication Looks at Preserving Affordable Rental Housing (5/2/08)
• ABA Urges Fannie, Freddie to Reconsider Implementing Code of Conduct (5/2/08)
• Trade Groups: OFHEO Should Withdraw Assent to Agreement (5/2/08)
• FinCEN Report on Residential Real Estate Money Laundering (5/1/08)

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April 2008 News

• ABAWorks on ID Theft Red Flag Regulation Now Online  (4/30/08)
• ABA says FDIC Should Withdraw Information Collection Request (4/29/08) 
• Loans Exceeding Reg O Limits Before Officer Is Appointed Are Grandfathered