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August 16, 2018

SDBA to Host Compliance Alliance Show-and-Tell Session

Based on the needs of community bankers, Compliance Alliance provides its members an all-inclusive set of bank compliance tools and services that help them stay up-to-date with consumer and regulatory requirements. Compliance Alliance is the only banking industry compliance resource that is owned, operated and managed by 30 state bankers associations, including the South Dakota Bankers Association.

The SDBA is hosting a Compliance Alliance show-and-tell session on Thursday, Aug. 23, for those banks interested in viewing the tools and services provided by Compliance Alliance. The session will be held from 1 to 2:30 p.m. at Doral Centre, 101 W. 69th Street in Sioux Falls.

Learn how compliance officers have become more efficient by allowing Compliance Alliance to do the research and writing for them. Compliance Alliances provides a database with more than 1,500 compliance documents including policies, procedures, cheat sheets, checklists and more. The program covers the entire bank, so the cost can be shared among all departments. In addition, members of Compliance Alliance receive access to a hotline for compliance-related concerns and reviews of company advertising or marketing campaigns, policies, procedures, disclosures and new products.

To RSVP to attend the session, call the SDBA at 605.224.1653 or email Jeanine Dyce.

Police Warn of Fake $100 Bills in Huron

Huron Police are warning businesses to be on the lookout for fake $100 bills. 

Several weeks ago, the Huron Police Department (HPD) received reports that counterfeit bills were being circulated at local businesses. HPD detectives spent several hours talking to witnesses, interrogating suspects and watching surveillance video, which resulted in an arrest in connection with those reported incidents. The HPD is once again receiving reports of counterfeit $100 bills being passed in town at local businesses.

"Please be extra careful when accepting any $100 bills at this time. Even be cautious of accepting these bills from friends and trusted associates, as they may have unknowingly come into possession of a counterfeit bill during a transaction," the Huron Police Department warned in a Facebook post on Tuesday.

Here are some things to look for that distinguish these counterfeit bills: 

  • Small red Chinese writing printed on back side of the bill.
  • Counterfeit Money Detector Pens will leave a brown mark.
  • Holding bill to the light you will not see Franklin’s face in the watermark portion.
  • View pictures of a counterfeit bill.

ABA, Farm Groups Urge Lawmakers to Quickly Reconcile House, Senate Farm Bills

As Congress prepares to reconcile the House and Senate versions of the farm bill, ABA joined a broad coalition of financial, agricultural and other trade associations in a letter to congressional leaders urging them to finalize the bill ahead of the current farm bill’s expiration on Sept. 30. 

“As you well know, the farm and rural economy is under significant financial stress,” the groups wrote. “Farmers and ranchers and the rural communities and agribusinesses that depend on agricultural production need a strong and predictable safety net that includes important risk management tools such as crop insurance to weather these difficult economic times. They cannot afford a short-term extension.” Read the letter.  

FCC Seeks Comment on Blocking of Presumptively Illegal Calls

The Federal Communications Commission is seeking comment on how it might further empower companies that provide telephone service to block fraudulent and other illegal calls. The FCC’s request comes after it authorized--but did not require--voice service providers last November to block calls from phone numbers that are invalid or unassigned to a specific user. In its ongoing effort to combat illegal calls, the FCC is seeking comment on additional criteria by which voice service providers may block calls that are “highly likely to be illegal.” 

The FCC is also seeking feedback on how best to implement a “white list” to protect legitimate calls made by banks and other businesses and to avoid enabling unlawful spoofing of numbers. 

In a comment letter filed last June, ABA expressed concern over the erroneous blocking of lawful bank calls and expressed support for the creation of a white list.

CFPB Final Rule Codifies Legal Exemption for Annual Privacy Notice Requirements

The Consumer Financial Protection Bureau on Friday issued its long-awaited final rule amending Regulation P to incorporate a new legal exception to the requirement for banks to send annual privacy notices to their customers. Under a law passed by Congress in 2015, banks are no longer required to send an annual privacy notice if they have not changed their policies and practices about how they share customer information since the previous notice was sent, provided they only share nonpublic personal information with third parties as permitted by one of the statutory or regulatory exceptions. 

While the statutory provisions took effect on enactment, the final rule formally codifies that change in regulation, clarifying lingering confusion about compliance. The final rule also establishes deadlines for resuming annual privacy notices in the event that an institution no longer qualifies for an exemption; under the rule, banks that change their privacy policies and procedures and lose the exemption have 100 days to provide customers with an updated copy of the notice. Additionally, the CFPB removed a provision of Reg P that allows for use of an alternative delivery method, noting that the alternative delivery method created by the bureau will likely no longer be necessary as a result of the annual notice exception. 

ABA has long advocated for changes that would streamline regulatory requirements around the timing and delivery of privacy notices and provided comments to the bureau throughout the rulemaking process.

Podcast: New Tools to Fight Synthetic ID Fraud

Synthetic identity theft is a fast-emerging vector of financial fraud, reaching $8 billion and accounting for the majority of fraud on payment cards, according to expert estimates. Projected to double between 2014 and 2018, this form of fraud is “difficult to spot and it’s rapidly growing--and that’s not a coincidence,” says Rob McKenna, former attorney general of Washington state, on the latest episode of the ABA Banking Journal Podcast.

Synthetic ID fraud “can go for years without being detected,” adds McKenna, who is a partner at the Orrick law firm. It relies on fake identities cobbled together with unused Social Security numbers or those of children or recent immigrants--individuals unlikely to notice fraud on their credit report right away. On the podcast, McKenna joins ABA VP Brian Murphy to discuss:

  • How synthetic ID fraud differs from traditional identity theft and why it’s harder to root out.
  • Strategies and technologies banks are using to prevent and stop synthetic ID theft, including neural networks and machine learning.
  • How community banks can apply resources to tackle this problem.
  • A key provision in S. 2155, the bipartisan regulatory reform bill, that helps by requiring the Social Security Administration to create a registry that banks can use to verify the validity of SSNs.

Listen to this episode. Do you use podcast apps to listen? You can find the ABA Banking Journal Podcast on Apple Podcasts, Google Play, Pocket Casts, Stitcher and Spotify, as well as in the Daily Newsbytes email every Friday. 

Farmer Mac to Hold Road Show 2018

Farmer Mac's popular Road Shows are coming to a town near you.

Come meet the Farmer Mac underwriting and business development teams, have lunch and network with other local lenders. Join the conversations on secondary market options for capital, liquidity and credit risk management; national agricultural credit snapshot; fixed rates and other popular loan products, current pricing options and trends; competing for loans: a review of recent local Farmer Mac transactions; meet your underwriter and helpful tips to improve your loan submissions; and "Scorecard"--a new option for quick loan approvals.

Farmer Mac will hold its Road Show in Sioux Falls on Sept. 17, as well as several stops in surrounding states. The event will held from 9:30 a.m. to 1:30 p.m., with lunch provided. Space is limited, so sign up today. 

SBS Institute to Offer Certified Banking Vendor Management Training

SBS Institute will offer its onsite Certified Banking Vendor Management on Oct. 10-11 in Watertown. The two-day certification will provide an opportunity to work closely with a security expert and network with peers. 

Attendees will learn about vendor breaches, laws and regulations; information security program and risk management; selection of vendors; ongoing vendor management; creating a dynamic vendor management program; contract structuring; and IT audit and exam preparation. 

The event is co-sponsored by the South Dakota Bankers Association and Independent Community Bankers of South Dakota. 

Learn more and register to attend.

Compliance Alliance

Question of the Week

Question: Is a volunteer fire department fully exempt from obtaining beneficial ownership or would it require just the Control prong?

Answer: It depends on whether the fire department is a government entity or a non-profit. Governmental units are entities set up by federal, state, or local law.

If the fire department is a government entity, then it would be exempt under 31 CFR 1010.230(e)(2).

"(2) Legal entity customer does not include: (i) A financial institution regulated by a Federal functional regulator or a bank regulated by a State bank regulator; (ii) A person described in §1020.315(b)(2) through (5) of this chapter;" https://ecfr.io/Title-31/se31.3.1010_1230

And 1020.315(b)(2) states: "b) Exempt person. For purposes of this section, an exempt person is: (1) A bank, to the extent of such bank's domestic operations; (2) A department or agency of the United States, of any State, or of any political subdivision of any State; (3) Any entity established under the laws of the United States, of any State, or of any political subdivision of any State, or under an interstate compact between two or more States, that exercises governmental authority on behalf of the United States or any such State or political subdivision;" https://ecfr.io/Title-31/se31.3.1020_1315  

If instead, the fire department is a non-profit, then it would be subject to only the control prong under 31 CFR 1010.230(e)(3). (3) The following legal entity customers are subject only to the control prong of the beneficial ownership requirement: (i) A pooled investment vehicle that is operated or advised by a financial institution not excluded under paragraph (e)(2) of this section; and (ii) Any legal entity that is established as a nonprofit corporation or similar entity and has filed its organizational documents with the appropriate State authority as necessary." https://ecfr.io/Title-31/se31.3.1010_1230

Not a Compliance Alliance member? Learn more about membership with Compliance Alliance by attending one of our live demos:

Compliance rules and regulations change quickly. For timely compliance updates, subscribe to Compliance Alliance’s email newsletters.

Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call 888.353.3933 or email.

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Questions/Comments
Contact Alisa DeMers, SDBA, at 800.726.7322 or via email.