Tennessee Bankers

This Week Newsletter

October 11, 2016 - Issue No. 1641

CFPB Issues Final Rule on Prepaid Accounts

The CFPB last Wednesday, Oct. 5, issued final rules on prepaid financial products, including prepaid cards and digital wallets that store and transfer funds. The final rule includes many elements formalizing consumer protections already offered by banks that provide these products, such as those related to unauthorized transactions.

The final rule allows prepaid issuers to give account information online in lieu of periodic statements. After a customer registers a card, issuers would be required to resolve account errors promptly and protect customers against unauthorized or fraudulent transactions. The rule also includes a standard set of two disclosures detailing key account information and fees, plus online posting of account terms.

The rule includes several small tweaks intended by the bureau to reduce unnecessary compliance burdens associated with the disclosure requirements, such as requiring disclosure of two fees rather than three and extending the time period after which disclosures must be updated.
The CFPB also changed the requirement for public posting of prepaid agreements to cover only agreements offered to the general public. While the final rule takes effect on Oct. 1, 2017, issuers will not be required to submit their agreements until Oct. 1, 2018. Read the final rule.

CFPB Issues Exam Procedures for Military Lending Act Changes

The CFPB on Sept. 30 issued examination procedures for the amendments to the Military Lending Act rule that took effect on Oct. 3. The procedures are based on those developed jointly by other banking agencies.

The bureau's early MLA compliance examinations will focus on financial institutions' compliance management systems and overall efforts to comply, including implementation plans, actions to update policies and procedures, staff training, and handling of early implementation hurdles. The MLA amendments extend MLA restrictions to cover credit cards, lines of credit, installment loans, and deposit advances offered to service members and their dependents, effective Oct. 3. Credit cards have a later compliance deadline of October 2017). View the exam procedures.

OCC Issues Guidance on AML/BSA Risk Management

The OCC last Wednesday, Oct. 5, released guidance articulating its expectations for banks with respect to terminating foreign correspondent relationships. The guidance addresses the recent "derisking" trend in anti-money laundering and Bank Secrecy Act compliance.

The guidance directs banks to establish and implement procedures for periodically reevaluating the risk posed by foreign correspondent relationships. Re-evaluations should be performed periodically for all foreign correspondent accounts, and banks making decisions to terminate foreign correspondent relationships should base their determinations on these re-evaluations.

Along with the guidance, the OCC covered "best practices" for banks when conducting risk re-evaluations, which include establishing a governance function to review and monitor recommendations about foreign account termination; ensuring that decisions are properly communicated to both senior management and the foreign financial institution in question (if permitted by law); and protecting proper documentation of the decision-making process before taking any steps to terminate a foreign correspondent accounts. Read the guidance.

OCC Report: Mortgage Performance Improves Year-on-Year

The share of current and performing first-lien mortgages rose to 94.7 percent for the second quarter of 2016, up from 93.8 percent a year earlier, according to the Mortgage Metrics Report released Sept. 30 by the OCC. The report is generated from data gleaned from seven large national banks representing 38 percent of all outstanding residential mortgages.

Foreclosure activity continued to fall, with 48,732 foreclosures initiated in the second quarter—a decrease of 31.1 percent from a year earlier. Mortgages considered seriously delinquent held steady at 2.3 percent, while loans 30 to 59 days delinquent increased to 2.1 percent, up from 1.9 percent the previous quarter. Read the report.

TBA Conducting Survey for 2017 Legislative Suggestions

As TBA begins identifying possible issues for state legislation in 2017, TBA members are encouraged to make suggestions and provide feedback on current issues their banks face and legislation they would like to see during next year's legislative session. The TBA Government Relations team will use member comments to develop an initial list of legislation. To participate, bankers should complete the 2017 TBA Legislative Survey.

TBA staff will preview an initial list of possible legislation at the annual Government Relations meeting, scheduled for November 15, 2016, at the TBA office in Nashville. For more information on the Government Relations Committee, contact Amy Heaslet.

Leadership Luncheons in Photos

Over the last two weeks the Young Bankers Division held their regional Leadership Luncheons in seven locations around the state. View the photo recap here.

Compliance Conference in Photos

Last Tuesday and Wednesday, more than 140 compliance professionals from banks across Tennessee gathered in Nashville for professional development. View the photo recap here.

TBA On the Road

  • Baker Donelson hosts TBA's annual Titans tailgate for Sunday's matchup versus the Browns. Click here to find us before kickoff!
  • Nashville welcomes bankers and industry partners from across the country for the 2016 ABA Annual Convention.
  • TBA's Stacey Langford will visit members in the Chattanooga region.
  • Bankers from Tennessee and Mississippi meet in Lake Tahoe for the annual Executive Management Conference

See where TBA goes while "on the road" by following  @TNBankers.