March 12, 2019
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Three Anti-Money-Laundering Trends Financial Institutions Should Know In 2019

As criminals become more sophisticated at performing money laundering activities, regulators are increasing their commitment to anti-money-laundering (AML) compliance. For banks, this means they must work diligently to maintain AML compliance amid a sea of growing regulation. It is now more important than ever to remain on top of AML compliance measures within institutions. In this article, we will explore three of the key anti-money-laundering trends and challenges for 2019.

1. AML Compliance For Cryptocurrency Becomes Standard

Global cryptocurrency adoption will continue to expand in 2019. This is causing regulatory bodies to work diligently to create AML standards for cryptocurrency companies. In 2018 we saw the release of the Fifth AML Directive in the EU, which created regulatory obligations for crypto exchanges. The Financial Action Task Force (FATF) will also be releasing specific international AML standards for crypto companies in mid-2019. As more governments acknowledge the role of cryptocurrencies in the financial system throughout the year, crypto companies will need to become serious about maintaining AML compliance. Read more at FORBES


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Seven Highlights from Kraninger, Weltman, and Frotman Testimony at House Financial Services Committee Hearing

Yesterday, the U.S. House Financial Services Committee held a hearing to discuss the Consumer Financial Protection Bureau (CFPB or Bureau) and the newly-introduced Consumers First Act. The hearing opened with a sometimes contentious four hours of testimony from the Bureau's new Director, Kathy Kraninger. This was followed by testimony from a panel of consumer advocates and one industry representative.

The industry representative was Scott Weltman, of Weltman, Weinberg & Reis Co., LTD, a collection firm which recently prevailed in a lawsuit filed against it by the CFPB. Scott Frotman, the Bureau's former student loan ombudsman who resigned and launched a student loan borrower protection center, also testified. Other panelists included Hilary Shelton from the NAACP, Linda Jun from Americans for Financial Reform, and Jennifer Davis from National Military Family Association.

Kathy Kraninger's full prepared statement can be downloaded here.

Both parts of the hearing covered seven main topics extensively. Each is discussed in detail below. Read more at INSIDEARM

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Move To Pull Consumer Protection Rule Heightens Debate Over Payday Lending

During a recent lunch hour in Springfield, Va., a medical assistant named Angela walked into a branch of Advance America at a strip mall and asked for a loan. She'd borrow $300 and promise to pay it back within 30 days, with an additional $73 in interest and fees.

This loan would help cover a family trip to New York, said Angela, who asked NPR not to use her last name for privacy reasons. She says she prefers payday loans because she doesn't trust herself with credit cards and she would rather not approach her family for help.

"Everyone's struggling. So, no need to ask," she says.

It was convenient and quick. All Angela had to do was show her ID and write a check dated for the day the loan was due. To get her first loan, she brought in a bank statement and pay stub, but she has taken out a few more loans since that first loan - about two a year.

Angela is an unusual payday borrower. In a 2014 report, the Consumer Financial Protection Bureau found that half of payday loans are in a sequence that's at least 10 loans long, and the costs spiral. Read more at NATIONAL PUBLIC RADIO

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25% of US households are either unbanked or underbanked

After two fires in her homes in the Mississippi Delta, Farrah Appleberry and her four daughters were left destitute and in bankruptcy.

But there was hope - literally.

Hope Credit Union, focused on economically distressed areas in the South, brings basic banking services to the nation's poorest.

Twenty-five percent of U.S. households are unbanked or underbanked, according to a 2017 survey by the Federal Deposit Insurance Corp. Those are people who either don't have a bank account, or have an account, but still use financial services outside the banking system like payday loans to make ends meet.

Why are the numbers so high?

More than half of unbanked households cited not having enough money to keep in an account, 30 percent said they don't trust banks and 9 percent reported banks are in an inconvenient location, according to the survey. Read more at CNBC

National Debt Holdings is a professional Receivables Management Company that partners with creditors to purchase and/or manage receivables at all stages of the account life cycle.

Democrats hammer CFPB head for being soft on lenders

Democrats grilled Director Kathy Kraninger and GOP lawmakers for supporting recent agency changes

House Democrats sharply criticized on Thursday the head of America's consumer finance watchdog for decisions Republicans say are entirely under her purview.

In the first Consumer Financial Protection Bureau oversight hearing, Financial Services Democrats repeatedly hammered Director Kathy Kraninger and GOP lawmakers for supporting recent changes at the agency.

"Congressional Republicans have done everything they can to stymie the bureau's work, and the Trump administration has undertaken a sustained effort to destroy the agency," Committee Chairwoman Maxine Waters of California said. "I'm deeply concerned about the damage they have done."

Democrats on the committee have identified CFPB as a top oversight target. The agency, a brainchild of presidential candidate Sen. Elizabeth Warren of Massachusetts, was created as part of the Dodd-Frank Act in response to the 2008 financial crisis. Read more at ROLL CALL

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Philadelphia is first city to ban cashless stores and restaurants

Philadelphia has passed a law requiring most retail establishments to accept cash, making it the first U.S. city to ban a practice critics say is discriminatory.

Mayor Jim Kenney last week signed the law, passed by the city council in February, banning stores and restaurants from implementing cashless policies. It will take effect July 1, and business owners who don't comply will face fines of up to $2,000.

Cashless policies are gaining currency in a number of cities, with some business owners saying that handling cash is inefficient and invites theft. But opponents say cashless establishments exclude people who are "unbanked," or those lacking checking or savings accounts. In 2017, 8.4 million U.S. households were unbanked, according to the Federal Deposit Insurance Corporation.

Philadelphia city councilman Bill Greenlee, a co-sponsor of the bill, said the new law restores the right of everyone with money to do business in stores.

"I can go into a coffee shop across from City Hall that's cashless and get my coffee and muffin, but the person behind me that has United States currency can't get the same cup of coffee. It's a fairness issue; it creates an us-and-them kind of situation," he said.
Read more at CBS NEWS

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Dreher Tomkies LLP is a law firm concentrating in the areas of Banking and Financial Services law.

Financial Education Content Can Enhance Customer Loyalty

A 2018 Everfi report indicates that financial education plays a significant role in customer loyalty. As described by CUInsight, the report shows that two-thirds of what it calls "relationship consumers" say financial education is "an important factor when considering what institution to bank with." Although these "relationship consumers" represent only a subset of a financial institution's customer base, they are extremely valuable to banks and credit unions, as they "tend to be more confident, more satisfied, and more engaged with the products and services from their financial institution."

In describing the consumer profile of those that are likely to remain loyal to an FI, Everfi concludes that "high-quality financial education increases customer loyalty." And here's how the education technology company says it works:

"Financial education correlates to consumer loyalty and satisfaction. Helpful educational tools can be linked to positive feelings among consumers, including financial empowerment and confidence. Further, the more products a consumer uses at their primary financial institution, the less likely they are to switch institutions. In becoming more interconnected with their bank, they become more loyal." Read more at BUSINESS2COMMUNITY

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Consumers lost more than $1.4 billion to fraud last year, the FTC reports. This was the No. 1 scam

BALTIMORE - Out of the 3 million consumer complaints submitted to the Federal Trade Commission in 2018, imposter scams took the top spot.

Consumers reported losing $488 million to all types of imposter scams, with a reported median loss of $500.

Unfortunately, Susan Mayorga's mother lost way more. Last year, she sent $15,000 to someone in Baltimore claiming to be her granddaughter and needing money to get out of jail.

"Saying, 'Grandma help me, I'm in trouble,' " Mayorga said. "[She] ran to the bank, ran to UPS and sent overnight $10,000." That was one of two payments. Mayorga tried to call UPS to stop the delivery but was too late.

While the "grandparent scam" is popular, government scams made up nearly half of the 535,417 imposter scams reported to the FTC in 2018. These include fraudsters posing as the IRS or Social Security Administration demanding money or deceiving people into revealing their social security numbers by saying their number has been deactivated. The FTC said social security numbers are never suspended and the Social Security Administration will never require you to pay to obtain one. The FTC's advice is to ignore these calls and then let them know.
Read more at FOX47

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Banks could increase loan fees under N.C. Senate bill

A bipartisan bill working its way through the N.C. Senate would allow origination and late fees on bank loans to increase for the first time in 28 years.

Among the co-primary sponsors of Senate Bill 162 are state Sens. Joyce Krawiec, R-Forsyth, and Paul Lowe, D-Forsyth.

The bill was recommended Thursday by the Senate Commerce and Insurance committee and has been sent to the Senate Rules and Operations committee.

State law currently prevents banks from charging origination fees higher than 0.25 percent of the loan amount, or $50, whichever is greater, according to The Insider media outlet.

SB162 would set a range of fees from $100 (for loans up to $1,499.99) to $250 (for loans from $50,000 to $99,999.99).

Loans of more than $100,000 would have a maximum origination fee of 0.25 percent of the principal amount. Read more at JOURNAL NOW

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'People are drowning': CFPB official who resigned calls out Trump administration in Congressional testimony

A top student loan official who resigned from the Consumer Finance Protection Bureau (CFPB) last year delivered a scathing rebuke against the Trump administration to the House on Thursday.

"The last 15 months at the bureau have been plagued with inaction and incompetence," former CFPB student loan ombudsman Seth Frotman told the Committee on Financial Services on Capitol Hill. "All under the guise of some supposed ideology. They have prioritized the wishes of the most powerful companies in America over the needs of the very people they were tasked by Congress to protect."

Frotman emphasized the student loan issue further in his written testimony, highlighting that the "trillion-dollar black hole in our financial market," has left people "drowning under the weight of this unprecedented burden."

He added that "the student debt crisis is more than a higher education policy issue. It is a significant - perhaps the most significant - consumer finance issue threatening our nation at this time."
Read more at YAHOO FINANCE

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Merchant Boost Announces Name Change to ValidiFI

Sunrise, FL. March 4th, 2019 - Oscar DiVeroli, the CEO for Merchant Boost, a provider of live data solutions and payment technologies, announced today that the company will be officially changing its' name to ValidiFI as of March 4th, 2019.

DiVeroli explained that "the new name was in response to changes in the business framework, Merchant Boost has changed its name to ValidiFI, launched a new company website, renamed product offerings, and introduced a new corporate identity. Changing our name to ValidiFI reflects the company's growth into a leading provider of data and technology and its increasingly diversified business relationships in the financial services industry."

Originally launched as a payment solution provider, the company began combining technological innovation with its strategic partnerships to create better ways to meet compliance requirements, obtain customer insights, manage and facilitate payments. ValidiFI's platform now services many of the largest national financial service providers, expanding their ability to accept new customers and more successfully process payments.

"I am proud of the work we have done so far. We have established key relationships and firmly positioned the company in several niche markets. Looking forward, we will begin pursuing larger market opportunities and expanding our platform's capabilities. Our core mission, to help our customers increase sales and facilitate payments, will remain our focus, as it is a necessity for every company, big and small, new and old," said DiVeroli, CEO of ValidiFI.
Read more at VALIDIFI

We are a revolutionary merchant service and technology firm servicing the debt repayment industry.

A Restriction on Payday Lenders Was Just Delayed. Democrats Want to Know Why

The Consumer Financial Protection Bureau was created in 2010 to help protect American consumers against bad corporate practices. But Democratic lawmakers believe the agency has taken a turn under President Donald Trump.

This week, House Democrats began looking into a recent decision by the agency to delay a rule on payday lending.

"This committee will not tolerate the Trump Administration's anti-consumer actions," Rep. Maxine Waters said at a hearing that looked into the issue, among others, on Thursday.

Payday lenders typically offer small loans to borrowers who are required to pay them back in a short amount of time. The loans can come with annual interest rates of 300% or more, according to the CFPB's own data. More than 80% of payday loans are rolled over into another loan within two weeks, meaning the borrower is adding to their debt before they've paid off the initial loan.
Read more at TIME

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