Russian Related Money Laundering Concern

Primary Money Laundering Concern - FinCEN issued an order identifying the virtual currency exchange Bitzlato Limited as a “primary money laundering concern” in connection with Russian illicit finance pursuant to section 9714(a) of the Combatting Russian Money Laundering Act. This type of action, a rarely used so-called death-knell sanction that cuts off the entity from the U.S. financial system, has been used mainly in the past against banks and other financial institutions and in most cases has forced the institution to close. 

CFPB Comments on Negative Subscription Services

Negative Option Subscription Services - The CFPB issued a new circular affirming that companies offering “negative option” subscription services must comply with federal consumer financial protection law. Negative option programs include subscription services that automatically renew unless the consumer affirmatively cancels, and trial marketing programs that charge a reduced fee for an initial period and then automatically begin charging a higher fee.

Updated Mortgage Servicing Exam Procedures

Mortgage Servicing – The CFPB updated its Mortgage Servicing Examination Procedures for forbearances and other tools that mortgage servicers have used during the COVID-19 national emergency. The updated Procedures also integrate focus areas from the CFPB’s Supervisory Highlights findings, including questions about the fees servicers charge borrowers, such as phone pay fees, and misrepresentations related to foreclosure. Additionally, it advises examiners to seek information on how the servicers communicate with borrowers about homeowner assistance programs.

CFPB Proposes Nonbank Registration

Prohibition Orders – The OCC issued a prohibition order against an ex-bank employee. When working for the bank, the OCC reports the Respondent acted as a mortgage loan consultant/loan officer. The Respondent signed a plea agreement on January 26, 2021, that stated he engaged in a widespread conspiracy to engage in a sophisticated bank and wire fraud scheme centering on the Bank’s Advantage Loan Program. The plea agreement stated that between at least approximately 2015 and 2019, Respondent “(a) falsified Form 1003s [Uniform Residential Loan Applications]; (b) created false and fictitious supporting documents, including verification of employment letters, gift letters, face-to-face interview narratives, and letters of explanation; and (c) falsified borrowers’ income and debt-to-income ratios in order to make it appear that borrowers qualified for residential loans.” The plea agreement stated Respondent earned approximately $2,519,488.98 in commissions, which consisted primarily of commissions earned through the origination of the fraudulent loans.

Washington DCU Bulletin B-23-02 - This Bulletin includes several initiatives that the DCU is working on in 2023 and what our examination focus will be during exams in 2023. Included in their exam focus are liquidity risk; credit risk; fraud risk; CECL; IS&T, third-party services providers; and consumer compliance – BSA/AML, TILA-RESPA, Regulation E, and Regulation Z.