Compliance & Security Updates

Compliance Update – December 2019

By December 1, 2019 June 17th, 2020 No Comments

Construction Loans & Aggregated Transactions

Question
How are inspection and handling fees for a construction loan shown on the disclosures?

Answer
Under Regulation Z, for a construction loan: If inspection and handling fees are collected at or before consummation, the total of such fees is disclosed in the loan costs table. If inspection and handling fees will be collected after consummation, the total of such fees is disclosed in a separate addendum and the fees are not counted for purposes of the calculating cash to close table.

Reference: Regulation DD; 1030.4(b)(1))

Question
Should the bank aggregated multiple currency transaction for separate business entities?

Answer
Transaction should be aggregated only if the financial institution, based on information obtained in the ordinary course of business, determines that the entities are not operating separately or independently of one another or their common owner. Examples include, businesses that are staffed by the same employees and are located at the same address, the bank accounts of one business are repeatedly used to pay the expenses of another business, or the business bank accounts are repeatedly used to pay the personal expenses of the owner. There are no universal rules applicable to any situation.

Reference: FIN-2012-G001

CRA Proposed Changes: OCC, FDIC Propose CRA Reforms

December 13, 2019

The OCC and FDIC issued a long-awaited proposed rule to modernize Community Reinvestment Act regulations. The agencies said the proposal is designed to address digital banking changes, expand the scope of what qualifies for CRA credit, and improve clarity by establishing more objective performance standards.

This includes provisions to modernize the definition of small-business loans, promote lending to family farms, and provide a list of pre-approved CRA activities. The proposal also includes an ICBA-advocated provision allowing community banks $500 million and under to opt into the revised framework.

Comments on the proposal will be accepted for 60 days after publication in the Federal Register.

Updated Business Continuity Management Booklet (BCM)

The Federal Financial Institutions Examination Council’s recent updates to the Business Continuity Management booklet. The booklet is part of the FFIEC’s Information Technology Examination Handbook, which is prepared for use by examiners but is also an essential resource for community banks.

The updated booklet replaces the Business Continuity Planning booklet and focuses on enterprise-wide approaches that address technology, business operations, testing, and communication strategies critical to the continuity of the business.

The updated booklet and ICBA summary can be found as an attachment to this month’s email.