Regulatory Compliance Update October 2018

Regulatory Compliance Update

By: Hickman Beckner, Senior Vice President

I have reviewed the Compliance News for September 2018.  The IRS has issued new specifications for electronic filing and the CFPB has issued some new rules.

IRS – Published updates to the specifications for electronic filing of information returns. The following changes apply to the files produced by the Shaw Systems.

Transmitter “T” Record and Payer “A” Record – Payment year has been incremented to 2018

Payee “B” Record – Payment Year has been incremented to 2018

Form 1098 – Property Address Securing the Mortgage now uses the combined field positions 553 – 630.  This eliminates the Description of Property field.  Field positions 631 – 669 are now undefined positions.

Other records for other financial products have also been changed.  Please consult the IRS web site for additional information.

CFPB – Published the final rules for Regulation Z – Credit Card Fees.  The 2019 safe harbor maximum fees which apply to:

  • Late Payments
  • Returned Checks / ACH Drafts
  • Over Limit
  • Declined Transactions
  • Inactivity
  • Account Closing

Effective January 1, 2019 the safe harbor amounts will be: $28 for the first violation and $39 for subsequent violations of the same type within the next 6 billing cycles.

  • Published adjustments to the dollar amounts that are used in the “points and fees” triggers for coverage under the Home Ownership and Equity Protection Act (HOEPA).
  • Published adjustments to the dollar amounts that are used in the “points and fees” test to determine if a loan is a Qualifying Mortgage (QM).

Significant Dates:

September 17, 2018 – Effective date for new Regulation P (privacy notices) rules discussed in earlier emails.

November 27, 2018 – Comments due on FFIEC’s proposed changes to the Call Report that will reflect the revised accounting for credit losses under FASB Accounting Standards Update No. 2016-13.

January 1, 2019 – Effective date of IRS final regulations that remove automatic extension of time to file W-2 forms and Forms 1099-MISC that report non-employee compensation.

April 1, 2019 – Effective date for CFPB rules for Prepaid Accounts which implement changes to Regulation Z and Regulation E.

August 19, 2019 – Published Compliance date for CFPB’s final rule for payday loans.

Emerging Legislation:

Financial Technology Protection Act – this act would:

  • Establish an independent Financial Technology Task Force with the goal of improving coordination between the private and public sectors to decrease the risk of terrorist attacks and illicit use of new financial services technologies including digital currencies.
  • Direct the federal government to prioritize investigation of terrorist and illicit use of new financial services technologies including digital currencies.
  • Establish a fund to reward any person who provides information leading to conviction of an individual involved with terrorist use of digital currencies; and a program to provide grants for the development of tools and programs to detect terrorist and illicit use of new financial services technologies.

Consumer Information Notification Requirements Act – Would establish a national standard for financial institution data security and breach notification.  This Act would preempt state data breach and notification laws making the requirements uniform across the country.

Interior, Environmental, Financial Services and General Government Appropriations Act would:

  • Make the CFPB subject to Congressional appropriations beginning with fiscal year 2020. Currently the CFPB is funded from the Federal Reserve and is not subject to the Congressional appropriation process.
  • Strike the Dodd-Frank provision for a 5-year term for the Director of the CFPB and would have the Director serve at the will of the President.
  • Provide that no major CFPB rule could take effect without the approval of Congress.
  • Allow Congress to block any non-major rule by enacting a joint resolution.
  • Would require that any new CFPB rule identify a rule or rules to be amended or repealed to offset the annual cost of the new rule.
  • Would require that the CFPB publish in the Federal Register a list of information on which a rule was based and identify how the public can access the information online and submit a report to Congress and the General Accounting Office containing the rules and other information that includes the classification of the rule as major or non-major.

This Act has passed the House of Representatives but has not been taken up by the Senate.

Bank Service Company Examination Coordination – Would allow state and federal regulatory agencies to coordinate their examinations and share information on third-party service providers to banks.  The Act also allows a state or federal banking agency or federal agency with authority over a bank service company’s principal investor to supervise the examination and regulate the activities of the bank service company.

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