Regulatory Compliance Update September 2018

Regulatory Compliance Update

By: Hickman Beckner, Senior Vice President

I have reviewed the Compliance News for August 2018.  The Financial Crimes Enforcement Network (FinCEN), the IRS and the CFPB have issued new rules.

FinCEN – Published an administrative ruling that extends the deadline for enforcement of the customer due diligence rule (Know Your Customer) to obtain identification documentation for customers who have automatically renewing CD’s.  Loan systems are not impacted by this rule.

IRS – Published updates to forms 1099-DIV (dividend payments), 1099-R (distributions for tax sheltered accounts), and 5498 (IRA Contributions). The changes to the IRS forms do not impact Shaw Systems.

CFPB – Published the final rules for Regulation P – Annual Privacy Notices.  The Privacy notice will now only be required when the institution changes their policies. This is an internal process change and does not impact Shaw Systems

Significant Dates:

August 3, 2018 – Comments due on NCUA’s proposal to provide credit unions with additional options for payday alternative loans.

September 17, 2018 – Effective date for Regulation P rules discussed above.

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:

Mortgage Fairness Act – Revises the definition of “points and fees” to determine if a loan qualifies as a high cost mortgage and should be subject to additional regulations.

Military Lending Improvement Act – This is a comprehensive bill that addresses a variety of loan servicing subjects.  The bill would:

  • Lower the rate cap to 24%.
  • Extend Military Lending Act protections to include auto loans and other secured loans.
  • Extend protections to veterans for up to one year following discharge from active duty.
  • Prohibit creditors from requiring GPS trackers or starter interrupt devices as a condition for obtaining a loan.

This legislation has not been acted upon by either House of Congress.

Credit Access Act – Would allow landlords (including HUD), utilities and phone companies to report a consumer’s performance to credit bureaus.  The goal is to make credit more accessible to consumers who have little credit experience.  If these account types are reported, credit scoring models will be impacted.

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