Compliance Question of the Week

In today’s banking environment as soon as one big new regulation is implemented another pops up. Our compliance resources help your community bank stay one step ahead of the regulators.

Regulations and Guidance

Question: Where can information on handling letters of credit be found?


ANSWER:

The FDIC addresses letters of credit in its Risk Management manual of examination polices.

Letters of Credit are also addressed under 12 CFR 337.

Also see FFIEC call report instructions.

Reference: Off-Balance Sheet Activities (12-04) 3.8-2 DSC Risk Management Manual of Examination Policies Federal Deposit Insurance Corporation FDIC 12 CFR 337.
 

 

 


 

Q&A Archives

 

A Web site or online service that is directed to children under the criteria set forth in paragraph (1) of this definition, but that does not target children as its primary audience, shall not be deemed directed to children if it:

(i) Does not collect personal information from any visitor prior to collecting age information; and

(ii) Prevents the collection, use, or disclosure of personal information from visitors who identify themselves as under age 13 without first complying with the notice and parental consent provisions of this part.

Reference: 16 CFR 312.2 Definitions


 

 

 

 

ANSWER:

No. The expeditious return and notice of nonpayment, and same day settlement requirements do no apply to a check drawn on the US Treasury, to a US Postal Service money order or a check drawn on a state or unit of a general local government that is not payable through or at a bank.

Reference: 12 CFR 229.42 


 

 

 

 

ANSWER:

CAN-SPAM applies when the primary purpose of an e-mail is commercial. For example, if the message is an advertisement or promotion for a product or service – it is deemed commercial. If the e-mail contains both commercial advertisement or promotion and transactional information (as determined by 316(3)(c)), then the message is deemed to be commercial if:

(1) If an electronic mail message consists exclusively of the commercial advertisement or promotion of a commercial product or service, then the “primary purpose” of the message shall be deemed to be commercial.

(2) (i) A recipient reasonably interpreting the subject line of the electronic mail message would likely conclude that the message contains the commercial advertisement or promotion of a commercial product or service; or (ii) The electronic mail message's transactional or relationship content as set forth in paragraph (c) of this section does not appear, in whole or in substantial part, at the beginning of the body of the message.

Similarly, section 316.3(a)(3) also provides how primary purpose is determined when an e-mail message contains commercial and non-transactional information:

If an electronic mail message contains both the commercial advertisement or promotion of a commercial product or service as well as other content that is not transactional or relationship content as set forth in paragraph (c) of this section, then the “primary purpose” of the message shall be deemed to be commercial if:

(i) A recipient reasonably interpreting the subject line of the electronic mail message would likely conclude that the message contains the commercial advertisement or promotion of a commercial product or service; or

(ii) A recipient reasonably interpreting the body of the message would likely conclude that the primary purpose of the message is the commercial advertisement or promotion of a commercial product or service. Factors illustrative of those relevant to this interpretation include the placement of content that is the commercial advertisement or promotion of a commercial product or service, in whole or in substantial part, at the beginning of the body of the message; the proportion of the message dedicated to such content; and how color, graphics, type size, and style are used to highlight commercial content.

Reference: CAN-SPAM 16 CFR 316.3



 

 

 

 

ANSWER:

The creditor who reduces the interest rate on the obligations must forgive interest in excess of 6%.

Reference: Section 207; 50 USC 527.



 

 

 

 

ANSWER:

In general, FinCEN regulations require certain MSB principals to register with FinCEN. Many MSBs, including many in the US, operate through a system of agents. An agent may not be required to register with FinCEN. FinCEN states that a money services business that is an agent of a principal money services business will generally have contracts and agreements with the principal money services business and agents should be expected to provide these agreements to the bank upon request. Additionally, many large money services businesses list information about their agents on their public web sites.

Reference: FinCEN: FAQs in Interagency Interpretive guidance on Providing Banking Services to Money Services Businesses Operating in the United States, April 2005.



 

 

 

 

ANSWER:

Regulation B defines a self-test as any program, practice, or study that:

  • Is designed and used specifically to determine the extent or effectiveness of a creditor's compliance with the Act or this regulation; and
  • Creates data or factual information that is not available and cannot be derived from loan or application files or other records related to credit transactions.
Certain types of information are privileged. The privilege under this section applies to the report or results of the self-test, data or factual information created by the self-test, and any analysis, opinions, and conclusions pertaining to the self-test report or results. The privilege covers workpapers or draft documents as well as final documents.

Some types of information are not privileged. The privilege under this section does not apply to:

  • Information about whether a creditor conducted a self-test, the methodology used or the scope of the self-test, the time period covered by the self-test, or the dates it was conducted; or
  • Loan and application files or other business records related to credit transactions, and information derived from such files and records, even if the information has been aggregated, summarized, or reorganized to facilitate analysis.

Reference: 12 CFR 1002.15.



 

 

 

 

ANSWER:

The Filing Instructions Guide (FIG) at the Bureau's website contains the file specifications, edit specifications, and additional resources to help you file HMDA data.

Reference: HMDA Filing FAQs - https://hmdahelp.consumerfinance.gov/knowledgebase/s/



 

 

 

 

ANSWER:

In general, compliance with Regulation E (12 CFR Part 1005) is deemed to satisfy the disclosure requirements of Regulation DD 1030.3, such as when:

  • An institution changes a term that triggers a notice under Regulation E, and uses the timing and disclosure rules of Regulation E for sending change-in-term notices.
  • Consumers add an ATM access feature to an account, and the institution provides disclosures pursuant to Regulation E, including disclosure of fees (see 12 CFR 1005.7.)
  • An institution complying with the timing rules of Regulation E discloses at the same time fees for electronic services (such as for balance inquiry fees at ATMs) required to be disclosed by this part but not by Regulation E.
  • An institution relies on Regulation E's rules regarding disclosure of limitations on the frequency and amount of electronic fund transfers, including security-related exceptions.
But any limitations on “intra-institutional transfers” to or from the consumer's other accounts during a given time period must be disclosed, even though intra-institutional transfers are exempt from Regulation E.

Reference: Official Staff Interpretation 1030.3(c).



 

 

 

 

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