National Credit Union Administration (NCUA)
NCUA Board Approves Final Rule for Fair Hiring in Banking
The NCUA Board approved a final rule to incorporate IRPS 19-1 and the Fair Hiring in Banking Act into its regulations. The Federal Credit Union Act (FCU Act) generally prohibits, except with the prior written consent of the NCUA Board, a person who has been convicted of or has a program entry for certain criminal offenses involving dishonesty or breach of trust from participating in the affairs of a credit union. The final rule addresses the individuals and types of offenses covered by Section 205(d) and the NCUA’s procedures for reviewing a consent application.
The final rule also:
Excludes minor offenses, including certain designated lesser offenses, from the scope of Section 205(d), and excludes most drug-possession offenses and older misdemeanors from the “dishonesty or breach of trust” category of covered crimes.
Amends regulations governing the conditions under which newly chartered or troubled federally insured credit unions must notify the NCUA of any proposed changes to its board of directors, committee members, or senior executive staff.
With the issuance of this final rule, IRPS 19-1 is rescinded. This final rule is effective 30 days following its publication in the Federal Register.
NCUA Board Approves Final Rule to Simply Share Insurance Regulations, Aligning with FDIC Coverage for Trust Accounts
The NCUA Board approved a final rule which will amend its regulations governing share insurance coverage. The final rule simplifies the share insurance regulations by establishing a “trust accounts” category that will provide for coverage of funds of both revocable trusts and irrevocable trusts deposited at federally insured credit unions (FICUs), provides consistent share insurance treatment for all mortgage servicing account balances held to satisfy principal and interest obligations to a lender, and increases flexibility for the NCUA to consider various records in determining share insurance coverage in liquidations. The changes also increase consistency between the FDIC’s federal deposit insurance rules and the NCUA’s share insurance rules.
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Consumer Financial Protection Bureau (CFPB)
CFPB Proposes Amendment to Remittance Transfer Rule
The CFPB issued a notice of proposed rulemaking which would make changes to the disclosure requirements for international remittance transfers. The proposed rule would require the remittance transfer disclosures to contain a statement that the sender can contact the State agency that licenses or charters the remittance transfer provider with respect to the remittance transfer and the Consumer Financial Protection Bureau if the sender has unresolved problems with respect to the remittance transfer or complaints about the remittance transfer provider. The revisions would be to model forms A-30(a)-(d), A-31, A32, A-33, A-34, A-35, A-37, A-38, A-39, and A-40.
If the rule is finalized, any credit union that meets the definition of a remittance transfer provider would want to work with their forms provider to update their disclosures as necessary. Reg E defines a remittance transfer provider as during the normal course of business providing more than 500 remittance transfers in both the current and previous calendar years. Credit unions that qualify as remittance transfer providers may wish to provide feedback to the GoWest Regulatory Advocacy Team. Gnelson@gowest.org or Jtrull@gowest.org.
CFPB Report Highlights Challenges Facing Servicemembers and Veterans with Student Loans
The CFPB released its annual report of the top financial concerns facing servicemembers, veterans, and military families. The report finds that active duty and veteran students are encountering many financial challenges, including difficulties getting help from student loan servicers and transcript withholding by colleges and universities as a means to collect a debt or disputed fees. The report also identifies problems experienced by the military community with other financial products, such as an increase in reports of scams targeting older veterans.
Specifically, the report finds:
Servicemembers, military families, and veterans report challenges when trying to contact or get help from their student loan servicer: Complaints suggest that servicemembers are spending hours trying to reach their student loan servicer and that those calls often fail to resolve their issue or the companies’ callback features do not work. This challenge is particularly acute for servicemembers stationed overseas because the time-zone differences may further limit servicemembers’ ability to reach their student loan servicer during regular call center hours.
Servicemembers reported servicing errors preventing enrollment in income-driven repayment (IDR) plans: Many servicemembers report that their loan servicers are not correctly calculating their monthly payment amounts under IDR plans. For example, because military service can require servicemembers to move every two or three years, their spouses are often forced to change jobs, which can drastically affect a total household income. If incorrect income is used to calculate a borrower’s monthly payment under an IDR plan, this can eventually lead to unnecessarily
higher payments or affect eligibility for the Public Service Loan Forgiveness (PSLF) program.
Withholding of transcripts by colleges and universities may prevent servicemembers and veterans from receiving promotions, securing employment, or completing their degrees: Servicemembers' work obligations often require frequent relocations, and these changes in duty stations may require multiple transfers of credits before servicemembers finish their degrees. Timely access to transcripts is essential to ensure that there is as little disruption as possible. Further, when colleges and universities withhold transcripts as a means to collect a debt or disputed fees,
servicemembers may be denied employment opportunities, including promotions within the military, and future higher education opportunities.
CFPB Requests Public Comment on the First Application for Open Banking Standard Setter Recognition
The CFPB has published the first application for the role of standard-setter as part of the final rule to implement the Dodd-Frank Act Personal Financial Data Rights rule.
Standard-setters can develop standards that will help ensure a safe, secure, reliable and competitive open banking framework. In June 2024, the CFPB finalized a rule outlining five key qualifications for becoming a recognized standard-setting body in connection with the CFPB’s forthcoming final Personal Financial Data Rights rule:
Due process and appeals: The body must use documented, publicly available policies and procedures, including adequate notice of meetings, time for review, and an impartial appeals process.
The first application published for comment is from the Financial Data Exchange. Input is crucial in evaluating whether FDX is equipped to develop fair and effective open banking standards that serve the interests of all stakeholders, especially consumers.
Comments are due by Oct. 16, 2024.
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U.S. Department of Labor (DOL)
U.S. DOL Announces Framework to Help Employers Promote Inclusive Hiring as AI-Powered Recruitment Tools’ Use Grows
The DOL announced the publication of the AI & Inclusive Hiring Framework, a new tool designed to support the inclusive use of artificial intelligence in employers’ hiring technology and increase benefits to disabled job seekers.
Published by the Partnership on Employment & Accessible Technology, the framework will help employers reduce the risks of creating unintentional forms of discrimination and barriers to accessibility as they implement AI hiring technology. Funded by the department’s Office of Disability Employment Policy, the initiative will also help workers and job seekers navigate the potential benefits and
challenges they may face when encountering AI-enabled technologies.
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NACHA
New NACHA Rule Takes Effect Oct. 1
Starting on Oct. 1, 2024, NACHA will implement new rules aimed at helping financial institutions improve funds recovery. These rules provide ODFIs and RDFIs with more tools to handle questionable entries.
Codification of Expanded Use of Return Reason Code R17:
Under the new rule, RDFIs will be allowed, but not required, to use Return Reason Code R17 to return entries they believe to be suspicious or questionable. The use of R17 remains optional and should be accompanied by the descriptor QUESTIONABLE in the return addenda record when used for this purpose. This rule is designed to enhance the recovery of funds in cases of fraud.
Expanded Use of ODFI Request for Return/R06:
This new rule will allow an ODFI to request a return from the RDFI for any reason. Beginning April 1, 2025, RDFIs will be required to respond to the request within 10 banking days. Financial institutions can use the newly launched Secure Exchange feature in the Risk Management Portal to send notifications to comply with the response requirement.
Additional Funds Availability Exceptions:
This rule will give RDFIs an additional exemption from funds availability requirements for credit entries suspected of being originated under false pretenses. This new rule provides an essential tool for RDFIs to delay funds availability when their fraud detection processes flag an entry as questionable. RDFIs can utilize the newly launched Secure Exchange feature in Nacha’s Risk Management Portal to meet the notification requirement to inform ODFIs about the delay of funds.
Timing of Written Statement of Unauthorized Debit (WSUD):
This rule provides RDFIs the ability to obtain a WSUD signed by the Receiver on or after the date the entry is presented, even if the debit has not yet posted to the account. This amendment is intended to better protect consumers and streamline the process for handling unauthorized debits.
Requirement for RDFIs to Promptly Return Unauthorized Debits:
This rule requires RDFIs to return unauthorized consumer debits within six banking days following the completion of their review of the WSUD. This prompt action is crucial for reducing fraud risks and ensuring a rapid response to unauthorized transactions.
This new rule does not alter the extended return timeframe. Consumer unauthorized/improper debit returns must be transmitted within 60 calendar days of the settlement date.
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Financial Crimes Enforcement Network (FinCEN)
Treasury Takes Coordinated Actions Against Illicit Russian Virtual Currency Exchanges and Cybercrime Facilitator
The U.S. Department of Treasury is undertaking actions as part of a coordinated international effort to disrupt Russian cybercrime services. Treasury’s Financial Crimes Enforcement Network (FinCEN) is issuing an order that identifies PM2BTC—a Russian virtual currency exchanger associated with Russian individual Sergey Sergeevich Ivanov (Ivanov)—as being of “primary money laundering concern” in connection with Russian illicit finance. Concurrently, the Office of Foreign Assets Control (OFAC) is sanctioning Ivanov and Cryptex—a virtual currency exchange registered in St. Vincent and the Grenadines and operating in Russia. The FinCEN and OFAC actions are being issued in conjunction with actions by other U.S. government agencies and international law enforcement partners to
hold accountable Ivanov and the associated virtual currency services.
In coordination with OFAC and FinCEN’s actions, other U.S. government agencies and foreign law enforcement partners are also taking related actions. The U.S. Secret Service’s Cyber Investigative Section, the Netherlands Police, and the Dutch Fiscal Intelligence and Investigation Service (FIOD) have seized web domains and/or infrastructure associated with PM2BTC, UAPS, and Cryptex. The U.S. Department of State has issued a reward offer up to $10 million through its Transnational Organized Crime Rewards Program for information leading to the arrest and/or conviction of Ivanov. Lastly, the U.S. Secret Service and the U.S. Attorney’s Office for the Eastern District of Virginia are unsealing an indictment of Ivanov and another Russian national, Timur Shakhmametov. These actions by
U.S. and Dutch agencies were taken in partnership with Operation Endgame, a multinational coordinated cyber operation with European partners, to dismantle financial enablers of transnational organized cybercrime.
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