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The Enforcement Blog

The Bureau of Consumer Financial Protection Proposes Revised No-Action Letter Policy and New Product Sandbox

Posted in CFPB, Regulatory Developments

On December 13, 2018, the Bureau of Consumer Financial Protection published in the Federal Register a proposed policy, which would modify its 2016 Policy on No-Action Letters and create a new “Product Sandbox” policy in an effort to encourage banks and financial services providers to test new financial products.

The alert discusses the Proposed Policy’s intention to fix several shortcomings of the 2016 Policy and encourage companies to test new financial products and services.

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Agencies Issue Further Guidance Regarding Emerging Approaches to BSA/AML Compliance

Posted in Regulatory Developments

On December 3, 2018, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Financial Crimes Enforcement Network, National Credit Union Administration, and Office of the Comptroller of the Currency (collectively, the “Agencies”) issued a joint statement regarding “innovative approaches” to Bank Secrecy Act/anti-money laundering compliance. This is the second joint statement issued this year by the Agencies addressing approaches to BSA/AML compliance.

This alert discusses those statements along with the broader effort by the Agencies to enhance the efficiency and effectiveness of the BSA, and continued Congressional interest in BSA-related legislative reform.

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Financial Services Report – Winter 2018

Posted in Arbitration, CFPB, Credit Cards, Credit Reports, Electronic Payments, Enforcement Actions, Fair Lending, Foreclosure, Investigations, Mobile Payments, Mortgage, Payday Lending, Preemption, Privacy, Regulatory Developments, State Regulators

In between holiday shopping and merriment, we here at the Financial Services Report are pondering what’s in a name. Not much, said Shakespeare. Isaac Asimov begged to differ in a mystery story about who killed one of the library twins (we won’t give away the twist that hinges on a name). So do companies that spend millions of dollars identifying names to reflect their brands, and parents-to-be who spend countless hours poring over baby-naming books in search of the perfect name.

While he was the acting Director of the agency originally called the Consumer Financial Protection Bureau, Mick Mulvaney waded into this debate when he announced in March that the agency name would change to the Bureau of Consumer Financial Protection. “We changed the name because it’s the name in the statute,” acting Director Mulvaney explained, in what he described as a “good, small way” to signal that the agency would “follow the statute.”

Since then, it’s been a bit of a mixed message from the Bureau — at least on branding — with a new seal reflecting the new name, but a website reflecting the old name. On substance, has the Bureau followed the statute under acting Director Mulvaney? And how will Kathy Kraninger put her mark on the agency as she becomes its second director?

To mark the change in command, we here at the Financial Services Report are adopting the new name for the Bureau with this issue.  Let us know if you feel strongly — about our branding or our substance! Either way, we hope you keep reading for all the updates on the Beltway, the Bureau (aka the BCFP), Privacy, Mortgage, Preemption, BSA/AML, TCPA, and more. We wish you Happy Holidays and all the best in the New Year!

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California Enacts a First-of-Its-Kind Commercial Financing Disclosure Law

Posted in Regulatory Developments, State Regulators

On September 30, 2018, California Governor Jerry Brown signed into law SB 1235, which requires disclosures of key terms in connection with certain commercial financing by non-banks and could impact bank/non-bank arrangements as well.

With the passage of the Act, California became the first state to require consumer-style disclosures for commercial financing. The Act is intended to facilitate comparisons of financing options by recipients of covered financing offers. It establishes a general framework for the disclosure requirements, but requires the California Department of Business Oversight to establish the details through the adoption of implementing regulations. The Act becomes effective once the DBO issues final regulations.

Read our client alert.

Federal Agencies Reaffirm that Supervisory Guidance Is Not Law – Who Knew?

Posted in CFPB, Regulatory Developments

Yesterday, five federal agencies – the Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Bureau of Consumer Financial Protection – issued a two-page, joint statement on the role of supervisory guidance for regulated institutions. Although brief, the joint statement is significant.

Read our client alert.

Financial Services Report – Fall 2018

Posted in Arbitration, Auto Lending, CFPB, Credit Cards, Credit Reports, Electronic Payments, Enforcement Actions, Fair Lending, Investigations, Mobile Payments, Mortgage, Payday Lending, Preemption, Privacy, Regulatory Developments, State Regulators, Student Lending, UDAAP

So much for the lazy days of summer. It’s been a busy couple of months on both coasts. In a case of déjà vu all over again, a New York federal court found that the CFPB structure is unconstitutional and that the defects infected Title X of the Dodd-Frank Act as a whole. The Judge rejected the D.C. Circuit’s conclusion otherwise in PHH Corp. v. CFPB, and granted the CFPB’s request to enter final judgment so it can appeal the ruling to the Second Circuit. Another round of appellate court watching and reading of tea leaves anyone?

Meanwhile, on the Left Coast, the California Legislature is at it again. The Legislature broke all speed records by passing the California Consumer Privacy Act only one week after the proposed legislation was introduced. The landmark law creates significant privacy rights for California residents and enormous operational and compliance challenges for impacted businesses. Not surprisingly given the speedy work, amendments are already on the Governor’s desk for signature.

Taking its time in the spotlight, the Senate Banking Committee narrowly approved Kathy Kraninger’s nomination to head the CFPB. The nomination now moves on to the full Senate for a vote.

If you missed these or any of the other developments during your well-deserved vacation, read on for news on the Beltway, the Bureau, mortgage, privacy, TCPA, and more.

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The CFPB Catches Up to the FAST Act: Implements GLBA Annual Notice Exception

Posted in CFPB, Privacy, Regulatory Developments

On August 17, 2018, the Bureau of Consumer Financial Protection published a final rule amending its Regulation P to include an exception to the Gramm-Leach-Bliley Act annual privacy notice obligation. Nearly three years ago, the Fixing America’s Surface Transportation Act (FAST Act) amended the GLBA to provide for such an exception. The CFPB has now caught up in order to ensure that Regulation P is consistent with the GLBA as amended. Although the final rule will take effect on September 17, 2018, the FAST Act’s statutory amendment has been effective for several years. That is, notwithstanding the fact that Regulation P fell behind the statute, financial institutions have been able to rely on the GLBA’s statutory exception to the annual notice obligation.

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Treasury and the OCC Make Significant Fintech Announcements

Posted in Electronic Payments, Mobile Payments, Regulatory Developments

Two key federal government announcements were made on July 31, 2018 related to fintech issues. First, the U.S. Department of the Treasury issued a press release announcing a report entitled “Nonbank Financials, Fintech, and Innovation.” The Report is the fourth and final in a series of reports prepared by Treasury in response to President Trump’s February 2017 Executive Order 13772. In addition, the Office of the Comptroller of the Currency announced that it would begin accepting applications for special purpose national bank charters from fintech companies that are engaged in the business of banking, but do not take deposits. This alert reviews these important developments.

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Are You a Money Transmitter in California?

Posted in Electronic Payments, Regulatory Developments, State Regulators

One of the most important questions facing non-bank providers of payments services is whether they are subject to regulation under U.S. state money transmission laws. Though almost all U.S. states regulate money transmitters, there are a number of states that provide exemptions for entities that act as an agent of the payee. While a small handful of states have had long-standing agent of the payee exemptions, California more recently addressed the applicability of a money transmission licensing law to payments services, and a number of other states followed suit. However, recent California developments suggest that the scope of what constitutes exempt payee-agency activity may be subject to greater scrutiny. In addition, the California Department of Business Oversight, which regulates money transmission in California, has indicated that it is commencing a rulemaking on the “agent of the payee” exemption and its limitations.

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The 2018 California Consumer Privacy Act: California Scraps Ballot Initiative and Passes Sweeping Data Privacy Regulation

Posted in Privacy, Regulatory Developments, State Regulators

With the passage of the California Consumer Privacy Act of 2018 (AB 375), the United States now has its first truly sweeping privacy regime. On Thursday, June 28, 2018, California Governor Jerry Brown signed into law what is arguably the most expansive privacy legislation in U.S. history. The Act is the product of backroom wrangling between legislators, industry, and the primary sponsor of a ballot initiative by the same name. Proposed just last week as an alternative to the initiative, the bill has now become law, and the initiative is history, having been formally withdrawn.

Read our client alert.