Regulatory Compliance Update November 2016

Regulatory Compliance Update

By: Hickman Beckner, Vice President

Congress reconvened for a short session in advance of the fall elections but little business was completed. Regulatory activity has also slowed in advance of the election.

NACHA – The National Automated Clearing House Association (NACHA) has issued a rule amendment for funds availability requirements for same-day ACH Phase 3 credit entries. Phase 3 goes into effect on March 16, 2018 and addresses funds availability for same-day ACH transfers.

The amendment specified that if the receiving institution is in Puerto Rico or the US Virgin Islands (Atlantic Time Zone) funds must be available by 5:00 p.m. Eastern Time. If the receiving institution is in the Chamorro Time Zone (Guam, Northern Mariana Islands) the funds must be available by the opening of business on the banking day following the transfer.

IRS – The IRS has issued its 2016 specifications for 1042-S file. Form 1042-S is required as part of FACTA for a payment made to a foreign entity. For example, if a bank sells a participation to a foreign entity it must submit 1042-S for all payments made. The IRS changes are for the Withholding Agent record and the Recipient record.

Shaw Systems will release these changes to comply with year-end IRS electronic reporting.

Significant Dates:

October 3, 2016 – Mandatory compliance date for the Department of Defense final rule implementing the Military Lending Act for active duty service members and their dependents.

October 24, 2016 – Comments due on FinCEN’s proposal to implement anti-money laundering policies for non-federally regulated institutions.

Emerging Legislation:

There has been some legislation introduced in Congress ahead of the election.  There has not been any legislation that would have direct impacts on our solutions.  When Congress reconvenes after the election there will be a large number of bills submitted.  We will continue to monitor the legislative and regulatory agendas.