U.S. House of Representatives
House Approves SJ Res. 32
The U.S. House of Representatives passed Senate Joint Resolution 32 which uses the Congressional Review Act powers of Congress to block the CFPB’s final rule on Small Business Lending Data Collection and Reporting. The Senate passed SRJ 32 in October. The Resolution now moves to President Biden. The White House had previously threatened to veto the measure.
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National Credit Union Administration (NCUA)
NCUA Reinstates Civil Money Penalties for Late Call Report Filing
The NCUA announced that it will reinstate assessing civil money penalties for credit unions failing to submit NCUA Form 5300 Call Report on time, effective January 1, 2024.
The December 2023 Call Report will be the first reporting cycle under the reinstated program and will be due by 11:59:59 p.m. Eastern time, January 30, 2024.
To assist credit unions in avoiding a penalty, the NCUA will send a reminder to credit unions with outstanding Call Reports one week before the due date.
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Consumer Financial Protection Bureau (CFPB)
CFPB Orders Bank of America to Pay $12 Million for Reporting False Mortgage Data
The CFPB ordered Bank of America to pay a $12 million penalty for submitting incomplete mortgage lending information to the federal government required by the Home Mortgage Disclosure Act (HMDA). For at least four years, numerous Bank of America loan officers failed to ask mortgage applicants demographic information required by HMDA, and then falsely reported that the applicants had chosen not to respond. This conduct violated HMDA and its implementing regulation, Regulation C, as well as the Consumer Financial Protection Act. Specifically, the CFPB found that Bank of America:
Falsely reported that applicants declined to provide information: Hundreds of Bank of America loan officers reported that 100% of mortgage applicants chose not to provide their demographic data over at least a three month period. In fact, these loan officers were not asking applicants for demographic data, but instead were falsely recording that the applicants chose not to provide the information.
Failed to adequately oversee accurate data collection: Bank of America did not ensure that its mortgage loan officers accurately collected and reported the demographic data required under HMDA. For example, the bank identified that many loan officers receiving applications by phone were failing to collect the required data as early as 2013, but the bank turned a blind eye for years despite knowledge of the problem.
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Financial Crimes Enforcement Network (FinCEN)
FinCEN Updates BOI FAQs for Reporting Companies
FinCEN added and updated the Beneficial Ownership Information (BOI) Reporting FAQs as part of a redesign of the BOI information page. In 2021 Congress enacted the Corporate Transparency Act. This law creates a beneficial ownership information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit their ill-gotten gains through shell companies or other opaque ownership structures.
Starting on January 1, 2024, many business entities will be required to report to FinCEN BOI information on two categories of individuals: (1) individuals with equity ownership interest of 25% or more in the business; and (2) one individual with significant responsibility to control the business.
FinCEN Alert on COVID-19 Employee Retention Credit Fraud
FinCEN, along with the IRS has issued an alert to financial institutions on fraud schemes related to the COVID-19 Employee Retention Credit (ERC) and is urging vigilance in identifying and reporting related suspicious activity. The ERC was authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act as a tax credit to encourage businesses to keep employees on payroll during the COVID-19 pandemic and was subsequently extended and amended three times.
The IRS has identified ongoing fraud and scams related to the ERC that, to date, have resulted in 323 investigations involving more than $2.8 billion of potentially fraudulent ERC claims throughout tax years 2020, 2021, 2022, and 2023. Now that the IRS has cleared the backlog of ERC claims, the IRS has shifted its attention to investigating questionable ERC claims and has placed a moratorium on the filing of any new claims.
The alert provides an overview of typologies associated with ERC fraud and scams, highlights select red flags to assist financial institutions in identifying and reporting suspicious activity and reminds financial institutions of their reporting requirements under the Bank Secrecy Act (BSA).
The ERC has become a popular target for such fraud as identified by CI and other law enforcement agencies. Individuals have been known to file fraudulent ERC claims using shell companies or existing but ineligible businesses and, in some cases, have abused the taxpayer-funded program to pay for lavish purchases and personal expenses upon receipt of the credit.
FinCEN Extends Deadline for Companies Created or Registered in 2024 to File Beneficial
Ownership Information Reports
FinCEN issued a final rule which extends the deadline for reporting companies created or registered in 2024. Those reporting companies will have 90 calendar days from the date of receiving actual or public notice of their creation or registration becoming effective to file their initial reports. FinCEN will not accept BOI reports from reporting companies until January 1, 2024—no reports should be submitted to FinCEN before that date.
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