January 10, 2018
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Agencies Finalize Additional Call Report Revisions
 
The federal banking agencies finalized a new set of call report revisions for institutions with domestic offices only and less than $1 billion in total assets. The agencies said their plan would remove, raise the reporting threshold for, or reduce the reporting frequency of approximately 7 percent of call report data items, effective June 30.

Regulators already last year implemented reforms that cut the call report from 85 to 61 pages for roughly 5,200 institutions with less than $1 billion in assets. And they subsequently issued an additional proposal in November to remove or consolidate data items and raise certain reporting thresholds.

Community bankers continue calling on policymakers to go further to enact meaningful relief, such as by implementing a short-form call report for the first and third quarters of each year. Robert Fisher, president and CEO of Tioga State Bank in Spencer, N.Y., is slated to testify before Congress on behalf of ICBA in favor of call report and other regulatory relief legislation.
 
The Justice Department rescinded guidance on marijuana enforcement that directed federal officials not to interfere with states that have legalized the substance.

Attorney General Jeff Sessions directed all U.S. attorneys to enforce the laws enacted by Congress that generally prohibit the cultivation, distribution and possession of marijuana.

The Financial Crimes Enforcement Network's 2014 guidance on Bank Secrecy Act expectations for servicing marijuana-related businesses remains in place for now, though questions remain about what the move will mean for the growing commercial marijuana industry.     
 
DOJ Memo  >>>>
 
FinCen Guidance  >>>>  

In the wake of a trail of consumer data breaches, a multi-industry coalition representing the financial, retail, insurance, telecom and technology industries urged the House Energy and Commerce Committee to advance substantive data security legislation that protects consumers.
 
The coalition called for a "flexible, scalable standard" for data protection that is tailored to the size and complexity of the organization as well as the sensitivity of the data the organization holds. It also urged a standard policy of timely notice to consumers and law enforcement after a breach that would preempt a conflicting patchwork of state laws. It called for consistent enforcement of the new national standards by the Federal Trade Commission and state attorneys general, unless the organization is already regulated under a data security regime such as the Gramm-Leach-Bliley Act (for financial institutions) or HIPAA (for health insurers).
 
"Data security impacts every sector of the economy," the coalition said. "We therefore look forward to working with you and your colleagues to ensure that all sectors employ sound data security and alert consumers when a breach may result in identity theft or other financial harm." 
 
The Letter >>>> 
 
Th ICBA issued frequently asked questions on its lawsuit against Equifax as community banks continue to file cases against the credit bureau for its 2017 data breach.

Citing Equifax's failure to heed warnings about the security of its U.S. website, these lawsuits seek monetary relief for community banks affected by the breach of at least 145.5 million consumer records and 209,000 payment cards.

The community bank suits seek to recoup costs affiliated with: protective measures to deter customer identity theft, deposit and loan account fraud, customer notification, fraudulent transactions, payment card cancellation and replacement, and other expenses.

They also call on the court to direct Equifax to employ adequate security protocols consistent with legal and regulatory requirements and industry standards.

Community banks interested in filing a complaint against Equifax can learn more by visiting ICBA's Data Breach Information Center or contacting
gary@garylynch.com.  
 
Equifax FAQs  >>>>  
 
Support for Anti-Money Laundering Modernization   
 
Several financial groups thanked Reps. Steve Pearce (R-N.M.) and Blaine Luetkemeyer (R-Mo.) for introducing an anti-money laundering and coun ter-  terrorist financing modernization bill that will help prevent criminals from using shell companies to hide illicit activity.
 
The bill would impose a beneficial ownership reporting requirement on closely held, non-public legal entities and provide financial institutions with access to reported information to help them with their customer due diligence compliance efforts. "Financial institutions should be able to rely on the information reported by businesses to FinCEN, which would, in turn, reduce the reporting burden on those businesses," the groups said. 
 
The Letter  >>>>   
Proposed Capital Rules Don't Go Far Enough    
 
In late December, CSBS told federal regulators that proposed changes t o simplify regulatory capital rules do not go far enough to help community banks.In a  comment letter to the FDIC, OCC and Federal Reserve Board, CSBS asked for more substantial changes to the rules that would result in a simpler method for calculating risk-weighted assets for community banks.
 
The problem stems from Basel III, a global framework regulating bank adequacy that in 2013 created a standardized methodology for all banks, but in doing so creates a significant compliance burden for community banks. For example, the adoption of Basel III added the number of risk weighted assets for banks from 11 to 16 and the instructions from 32 pages to 102 pages.
 
The proposed changes are small and would not change the standardized methodology. CSBS instead wants a common definition for community banks - building on the FDIC's existing research definition - that would allow regulators to exempt smaller institutions that do not pose system risk from rules and regulations aimed at larger, more complex financial institutions.
 
In a press release last week, John Ryan, CSBS President and CEO said state regulators support simplification, but only if it's real and meaningful. He added: "Federal regulators need to keep in mind that a community bank is often the only local source of credit and banking services in hundreds of U.S. counties. And regulatory compliance has a disproportionate impact on their cost structure."
 
 
 
 
 
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