Did You Know?

FinCen Releases Guidance on Currency Transaction Report for Aggregation of Businesses with Common Ownership

On March 19, 2012, FinCEN released guidance on how institutions should report currency transactions regarding the aggregation of multiple transactions conducted by businesses with common ownership.

Although businesses may share a common ownership, there is a presumption that separate corporations are independent entities. Therefore, the currency transactions of separately incorporated businesses should not automatically be aggregated as being on behalf of any one person simply because those businesses are owned by the same person.

If a financial institution determines that these businesses (or one or more of the businesses and the private accounts of the owner) are not operating separately or independently of one another or their common owner - e.g., the businesses 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 - the financial institution may determine that aggregating the businesses' transactions is appropriate because the transactions were made on behalf of a single person.

When determining whether to aggregate transactions as being on behalf of the same person, a financial institution must use its knowledge of relevant facts and circumstances. There are no universal rules applicable to any situation.⁶ Once a financial institution determines that the businesses are independent, then it should not aggregate the separate transactions of these businesses. Alternatively, once a financial institution determines that the businesses are not independent of each other or their common owner, then the transactions of these businesses should be aggregated going forward.

FIN-2012-G001 for more information and examples.

What's New: HSA Adjustments

The IRS has released the 2013 inflation adjusted amounts for Health Savings Accounts. See the Health Savings Accounts chapter of the Gold Book for all annual contribution limitations and high deductible health plan annual deductibles.

What's New: Compliance Resources Updated

The Compliance Resources chapter of The Gold Book has been updated. Updated information includes Financial Institution Regulators, Useful Telephone Numbers, and Useful Web Sites.

 

What's New: Reporting Non-Resident Alien Interest

The United States has maintained a longstanding policy of not taxing interest on deposits of nonresident aliens as a way to encourage foreign investment in U.S. banks. Except with respect to nonresident aliens from Canada, the U.S. has not required the reporting of interest on deposits to the IRS. On April 19, 2012, however, the IRS reversed this policy of the non-reporting of interest on deposits. Interest on deposits will still not be taxed, but when paid to certain nonresident aliens, it must be reported to the IRS. The final regulations under Treasury Regulations § 1.6049-4(b)(5)(i) and § 1.6049-8 will require U.S. financial institutions to report interest aggregating $10 or more paid to nonresident aliens commencing on or after January 1, 2013. Read more in the Backup Withholding chapter of The Gold Book.

What's New: HMDA threshold exemption adjustments

The Bureau of Consumer Financial Protection has recently published a change in the asset-size exemption threshold for depository institutions based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The exemption threshold has been adjusted to increase to $41 million from $40 million. The adjustment is based on the 3.43 percent increase in the average of the CPI-W for the twelve-month period ending in November 2011. Therefore, depository institutions with assets of $41 million or less as of December 31, 2011 are exempt from collecting data in 2012. See the Home Mortgage Disclosure Act chapter of The Gold Book for more information about the act.

What's New: Final Remittance Rule (Amendment to Regulation E)

The Consumer Financial Protection Bureau is issuing rules to protect consumers who send money electronically to foreign countries. These transactions are called “remittance transfers.” The new rules take effect in February 2013. See The Gold Book, Foreign Remittances in the Regulation E and Compliance chapters.

What's New: NYS Exempt Funds Amendments

Both New York and federal law currently exempt certain income from debt collection or attachment. Beginning April 1, 2012, the Superintendent of the Department of Financial Services is required to update the current dollar amount of exemption from enforcement of judgments under New York Civil Practice Law and Rules Sections 5205(l), 5222(e), 5222(h), 5230(a) and 5232(e). The new dollar amount of exemption from enforcement of money judgments is $2625. This amount is effective on April 1, 2012 and shall not apply to cases commenced before April 1, 2012. The next adjustment is scheduled for April 1, 2015. The Gold Book updates may be found in the Legal Process chapter under the New York rules for Restraining Notices and Garnishments.

Overnight overdraft policy changes

Earlier this month, the Federal Reserve Board announced two modifications to its overnight overdraft policy that will take effect on July 12, 2012. These modifications are (1) a change in the reference rate for computing charges for overnight overdrafts from the effective federal funds rate to the primary credit rate and (2) a multi-day charge on overnight overdrafts incurred immediately before a weekend or holiday.

What's New: Americans with Disabilities Act

The Department of Justice published revised final regulations implementing the Americans with Disabilities Act (ADA) for Title III (public accommodations and commercial facilities) on September 15, 2010, in the Federal Register. These requirements clarify and refine issues that have arisen over the past 20 years and contain new, and updated, requirements, including the 2010 Standards for Accessible Design.

The Americans with Disabilities Act (ADA) sections in the Compliance chapter and the Electronic Banking chapter of The Gold Book have been updated accordingly.

What's New: US Savings Bond Rules

The US Treasury Department recently issued guidance for paying agents and presenting institutions who process savings bond transactions.

Financial institutions that are authorized to redeem and process savings bonds are required to redeem bonds for customers and non-customers as long as the owner and co-owner named on the bonds establish satisfactory proof of their ownership rights.

New chapter, Savings Bond Transactions has been added to The Gold Book.

 

Confidential Financial Institution Information

The FDIC has observed a limited number of instances in which directors and officers of troubled or failing institutions have made copies of financial institution and supervisory records, and removed those copies from the institution in anticipation of litigation or enforcement activity against them personally.

The FDIC's FIL-14-2012 of March 19, 2012 reminds directors and officers that this activity is a breach of their fiduciary duty to the institution and an unsafe and unsound banking practice, which may also violate applicable laws and regulations and contravene the financial institution's information security program. Attorneys who represent an insured depository institution are also reminded that their fiduciary duty, both legally and ethically, obligates them to act in the best interests of the institution. The FDIC will investigate any matter that appears to violate confidentiality and pursue enforcement actions, as appropriate.

What's New? FACTA Notice Requirement

The Fair and Accurate Credit Transactions Act created a new notice requirement for risk-based credit pricing programs effective January 1, 2011.

The Risk-Based  Credit sections of the Fair and Accurate Credit Transactions Act chapters of  The Gold Book have been updated accordingly.

What Do You Think?

The FDIC Board of Directors (FDIC Board) recently adopted a Notice of  Proposed Rulemaking and request for comment that would amend and clarify some definitions related to higher-risk assets as used in the deposit insurance pricing scorecards for large and highly complex insured depository institutions. The new rules would apply only to institutions with $10 billion or more in assets and would have no  impact on institutions with less than $10 million in assets.

What are your thoughts on this proposed action and how, if at all, will this impact your financial institution.

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BSA Forms Mandatory Electronic Filing

On February 24, 2012, FinCEN announced that it is adopting a requirement that all financial institutions subject to Bank Secrecy Act (BSA) reporting use electronic filing for certain reports beginning no later than July 1, 2012. Paper reports filed after that date will be rejected and institutions will be notified and required to re-file an electronic version.

FinCEN has also published notice providing an opportunity for financial institutions to apply for a limited duration hardship exemption that would delay the E-File requirement for certain reports until July 1, 2013.

Financial institutions must file exemption requests with FinCEN by March 26, 2012. FinCEN will consider exemptions for the following circumstances:

1. Institutions lacking internet connectivity,


2. Incompatible system capabilities, or


3. Other extraordinary circumstances.

Detailed information about the new filing requirements and exemption requests may be found here: FinCen Notice

Did You Know?

Mortgage Servicing and Foreclosure Abuses
According to the NYBA, the federal government and 49 state attorneys general announced a $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. The agreement is intended to provide substantial financial relief to homeowners and establish significant new homeowner protections for the future.

As part of the settlement, New York State Attorney General Eric T. Schneiderman announced that $136 million would be provided to New York in penalties, direct relief to victims of wrongful foreclosure conduct, loan modifications including principal reductions for struggling homeowners, and funds that can be used to support foreclosure legal assistance and housing counseling programs. The settlement also imposes national standards for mortgage servicing and permits state attorneys general to bring legal action over misconduct that has not yet been investigated.

What's New: NYS Mortgage Loans Prohibited Conduct

A new chapter, Mortgage Brokers and Contractors, has been added to the NYS Mortgage Loans, Prohibited Conduct section of The Gold Book.

A new law effective January 12, 2012 regulates the relationship between mortgage brokers and home improvement contractors.

What's New: MSB Registration Website

According to FinCEN, the MSB Registration Website replaces the MSB Registration List and is part of the Department of Treasury's initiative to go paperless.

MSB information has been transferred to FinCEN's main website, www.fincen.gov. The MSB Registration Website is: http://www.fincen.gov/financial_institutions/msb/.

For further information on Money Service Businesses, visit the Gold Book.

Did You Know?

IRS Proposed RMD Regulations
The IRS has issued a proposed regulation adding an annuity option to the Required Minimum Distribution (RMD) rules.  The proposed regs would allow traditional, SEP, and SIMPLE IRA owners to purchase Qualified Longevity Annuity Contracts (QLACs) as part of their retirement plan. A participant may want to purchase a QLAC with funds from a retirement plan, which would begin payments at an advanced age, typically 80 or 85.

Did You Know?

The New York Assembly recently passed a bill increasing from 8 to 12 the number of free withdrawals on basic banking accounts available to customers age 65 or older. This is not law until it passes the State Senate and is signed by the governor.

Read more about Basic Banking (Lifeline) Accounts.

What Do You Think?

The OCC plans to end paper distribution of news and issuances by June 1, 2012.

"Moving toward paperless delivery of our news, alerts, bulletins, and other publications helps ensure this important information reaches the banks and savings associations we regulate in a  more timely, efficient, and cost effective manner," said acting Comptroller of the Currency John Walsh. "Going paperless is a good business decision that makes sense for our environment."

Discontinuing the printing and distribution of news, issuances, and publications is part of the OCC's broader commitment to being "green". What steps is your institution taking to reduce the use of paper?

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