Compliance Briefing for Wednesday, April 1, 2020

To access specific issuances, go to our Top Stories section, where you'll find links to all the relevant documents.
NO FALSE NEGATIVES
The Minimum BSA/AML Compliance Standard
PATRIOT OFFICER

Neither behavior-based systems nor rule-based systems can meet the minimum BSA/AML Compliance standard of NO FALSE NEGATIVES. PATRIOT OFFICER is the only Risk-Based solution that uses the Artificial Intelligence and Machine Learning technologies to establish the most advanced Risk Model that has NO FALSE NEGATIVES.

Don't waste time and resources on obsolete tools. Join the United AI Network™ today to protect your financial institutions with PATRIOT OFFICER, GUARDIAN OFFICER, ENQUIRER OFFICER, and CHAMPION OFFICER. — AI OASIS
— GlobalVision Systems, Inc.


Treasury and SBA announce CARES PPP funds process
SBA Administrator Jovita Carranza and Treasury Secretary Steven T. Mnuchin yesterday announced that the SBA and Treasury Department have initiated a robust mobilization effort of banks and other lending institutions to provide small businesses with the capital they need. The CARES Act establishes a new $349 billion Paycheck Protection Program (PPP). The PPP will provide much-needed relief to millions of small businesses so they can sustain their businesses and keep their workers employed. PPP loans can be applied for beginning April 3, at any SBA-approved lender. Lenders that are not already SBA-approved can apply for an expedited approval to participate. More ...

Blog — Fraud Risks in Turbulent Times:
FinCEN encourages FIs to remain diligent during COVID-19 crisis
As the COVID-19 pandemic continues to spread throughout the world, fraudsters, who are fervent opportunists, are using this global health emergency as a means of victimizing your customers for their own financial gain. Read our latest blog post to learn about emerging trends and fraud risks prevalent during times of crisis, and how you can protect your customers from financial loss.
— Verafin

FEMA to suspend communities in CT, MD, NJ and RI
FEMA has published a notice in today's Federal Register listing communities in Connecticut, Maryland, New Jersey, and Rhode Island that are scheduled for suspension on April 3, 2020, from the National Flood Insurance Program due to noncompliance with the floodplain management requirements of the program. The affected communities are:
  • CT: North Stonington, Stonington, and Voluntown
  • MD: Barton, Cumberland, Frostburg, Lonaconing, Midland, and Westernport
  • NJ: Belleville, Bloomfield, Caldwell, Cedar Grove, East Orange, Essex Fells, Glen Ridge, Newark, North Caldwell, Nutley, Orange Township, Roseland, and Verona
  • RI: Charlestown, Coventry, Exeter, Hopkinton, Narragansett, Narragansett Indian Tribe, North Kingstown, Richmond, South Kingstown, West Greenwich, and Westerly
If FEMA receives documentation that a listed community has adopted the required floodplain management measures before April 3, the community won't be suspended. Information on the current participation status of a community can be found in FEMA's Community Status Book.

New Survey: Pandemic Risk Benchmarking for Mid-Size U.S. Banks
Learn how other banks are managing pandemic risk
Mid-size banks are currently in uncharted territories - how are banks adjusting to operational pandemic risk? Participate and receive valuable insights into the challenges other banks are experiencing, what actions they are taking to address changes to their business environment, and some ideas on what to watch out for and/or where to take action before something creates a further risk to your organization.
— 360factors

Employee Retention Credit program launched
Treasury and the IRS have launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50 percent of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

Qualifying employers must fall into one of two categories:
  • The employer's business is fully or partially suspended by government order due to COVID-19 during the calendar quarter
  • The employer's gross receipts are below 50 percent of the comparable quarter in 2019. Once the employer's gross receipts go above 80 percent of a comparable quarter in 2019 they no longer qualify after the end of that quarter.
These measures are calculated each calendar quarter.

Updates on the implementation of the credit, a fact sheet and other information can be found on the IRS Coronavirus Tax Relief page.

Regulation E Error Resolutions and Disputes
Free Webinar — April 16 — 12:30 CT
We will list the steps in Regulation E Dispute Resolution and highlight various missteps that lead to penalties and regulatory deficiencies. Growth in electronic payments and identity theft are increasing the effort needed to stay compliant with Regulation E. We will break the error resolution process into simple steps and provide best practices you can implement at your institution to avoid penalties and stay compliant.
— FINBOA

Fannie and Freddie expand loan accommodations
The Federal Housing Finance Agency has announced several loan processing flexibilities from Fannie Mae and Freddie Mac designed to help lenders process loans, including:
  • Allowing desktop appraisals on new construction loans;
  • Allowing flexibility on demonstrating construction has been completed (alternative to the Completion Report);
  • Allowing flexibility for borrowers to provide documentation (rather than requiring an inspection) to allow renovation disbursements (draws); and
  • Expanding the use of power of attorney and remote online notarizations.
These accommodations only apply to loans being originated for sale to Fannie or Freddie.

Regulators clarify five year-transition rule and CECL Rule
FDIC FIL-32-2020, issued yesterday, delivered a joint statement by the Fed, FDIC, and OCC to clarify the interaction between the interim final rule that provides a five-year transition period for the impact of the current expected credit loss methodology (CECL) on regulatory capital and the temporary CECL relief provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

On March 27, the agencies issued an interim final rule that provides banking organizations that were required (as of January 1, 2020) to adopt CECL during the 2020 calendar year an option to delay an estimate of CECL's impact on regulatory capital. Also on March 27, the CARES Act was signed into law. The CARES Act provides banking organizations optional temporary relief from complying with CECL. The joint statement clarifies the interaction between the CECL IFR and the CARES Act for purposes of regulatory capital requirements.

Fed sets up temp FIMA Repo Facility
The Federal Reserve Board announced on Tuesday it is establishing a temporary repurchase agreement facility for foreign and international monetary authorities (FIMA Repo Facility) to help support the smooth functioning of financial markets, including the U.S. Treasury market, and thus maintain the supply of credit to U.S. households and businesses. The FIMA Repo Facility will allow FIMA account holders, which consist of central banks and other international monetary authorities with accounts at the Federal Reserve Bank of New York, to enter into repurchase agreements with the Federal Reserve. In these transactions, FIMA account holders temporarily exchange their U.S. Treasury securities held with the Federal Reserve for U.S. dollars, which can then be made available to institutions in their jurisdictions. More ...

FATF reports on U.S. progress in tackling ML
The Financial Action Task Force has issued a report on the United States' progress in strengthening measures to tackle money laundering and terrorist financing.

The U.S. has been in an enhanced follow-up process following the adoption of its mutual evaluation in 2016. In line with the FATF Procedures for mutual evaluations, the U.S. has reported back to the FATF on the actions it has taken since then. To reflect the United States' progress, the FATF has changed its rating of the country on Recommendation 10 (Customer Due Diligence) from Partially Compliant to Largely Compliant. More ...

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