November 2022 Compliance Journal

Compliance Journal November 2022

Special Focus

FinCEN Issues Final Beneficial Ownership Information Reporting Requirements.

On September 30, 2022, the Financial Crimes Enforcement Network (FinCEN) published in the Federal Register a final rule which sets forth the requirements of certain entities to file with FinCEN reports which identify two categories of individuals: the beneficial owners of the entity, and individuals who have filed an application with specified governmental authorities to create the entity or register it to do business.

The rule implements Section 6403 of the Corporate Transparency Act (CTA), enacted into law as part of the National Defense Authorization Act (NDAA), and describes who must file a report, what information must be provided, and when a report is due. The requirements are intended to help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity, while minimizing the burden on entities doing business in the United States.

The final rule is the first of a series of rules FinCEN need release to implement CTA; a second rule regarding access to the database of reported information and yet another rule to revise the existing customer due diligence rule are forthcoming. How these information reporting rules will directly impact financial institutions is still playing out. The final rule is effective January 1, 2024. The following is a summary of the new rule.

1. Reports of Beneficial Ownership Information

The primary purpose of the final rule is to require reporting companies to file reports with FinCEN which contain information required by the final rule. There are three types of reports: an initial, updated, and a corrected report.

Initial Report

The new rule requires each reporting company to file an initial report in the form and manner as specified in the rule. Any domestic reporting company created on or after 01/01/2024, must file a report within thirty (30) calendar days of the earlier of (a) the date on which the entity receives actual notice that its creation has become effective or (b) the date on which a Secretary of State Office or similar office first provides public notice, such as through a publicly accessible registry, that the domestic reporting company has been created. In Wisconsin, the applicable office would be the Department of Financial Institutions (WDFI).

For any entity that becomes a foreign reporting company on or after 01/01/2024, the initial report must be filed within 30 calendar days of the earlier of (a) the date on which it receives actual notice that it has been registered to do business or (b) the date on which a Secretary of State Office or similar office (i.e., WDFI) first provides public notice, such as through a publicly accessible registry, that the foreign reporting company has been registered to do business.

Any domestic reporting company created before 01/01/2024, and any entity that became a foreign reporting company before 01/01/2024, must file a report not later than 01/01/2025. Any entity that no longer meets the criteria for any exemption under the rule must file an initial report within 30 calendar days after the date that it no longer meets the criteria for any exemption.

Content of Initial Report

The initial report must be filed with FinCEN in the form and manner that FinCEN has yet to prescribe, by following FinCEN instructions for the form. Each person filing such report must certify that the report is true, correct, and complete.

An initial report of a reporting company must include the following information:

For the reporting company:

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The full legal name of the reporting company;

• Any trade name or ‘‘doing business as’’ name of the reporting company;

• A complete current address consisting of:

o In the case of a reporting company with a principal place of business in the United States, the street address of such principal place of business; and

o In all other cases, the street address of the primary location in the United States where the reporting company conducts business;

November 2022 Volume 28, Number 6

Wisconsin Bankers Association 4721 South Biltmore Lane, P.O. Box 8880, Madison, Wisconsin, 53708-8880

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The State, Tribal, or foreign jurisdiction of formation of the reporting company;

For a foreign reporting company, the State or Tribal jurisdiction where such company first registers; and

The Internal Revenue Service (IRS) Taxpayer Identification Number (TIN) (including an Employer Identification Number (EIN)) of the reporting company, or where a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction and the name of such jurisdiction.

For every individual who is a beneficial owner of such reporting company, and every individual who is a company applicant with respect to such reporting company:

• The full legal name of the individual;

• The date of birth of the individual;

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A complete current address consisting of:

o In the case of a company applicant who forms or registers an entity in the course of such company applicant’s business, the street address of such business; or

o In any other case, the individual’s residential street address;

• A unique identifying number and the issuing jurisdiction from one of the following documents:

o A non-expired passport issued to the individual by the United States government;

o A non-expired identification document issued to the individual by a State, local government, or Indian tribe for the purpose of identifying the individual;

o A non-expired driver’s license issued to the individual by a State; or

o A non-expired passport issued by a foreign government to the individual, if the individual does not possess any of the documents described directly above in this section; and

Senior Writers Heather MacKinnon Scott Birrenkott Editor Katie Reiser Layout Sonja Vike

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An image of the document from which the unique identifying number was obtained.

There are special rules to also consider when filing the initial report for exempt entities who have an ownership interest in a reporting company, when a beneficial owner is a minor, and for a foreign pooled investment vehicle.

In particular, if one or more entities that are exempt under this rule has or will have a direct or indirect ownership interest in a reporting company and an individual is a beneficial owner of the reporting company exclusively by virtue of the individual’s ownership interest in such exempt entities, the report may include the names of the exempt entities in lieu of the information required with respect to such beneficial owner.

Copyright ©2022 Wisconsin Bankers Association. All rights reserved. Reproduction by any means of the entire contents or any portion of this publication without prior written permission is strictly prohibited. This publication is intended to provide accurate information in regard to the subject matter covered as of the date of publication; however, the information does not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent and professional person should be sought.

Special Focus

If a reporting company reports the information required in an initial report and the beneficial owner is a minor, then the report need indicate that such information relates to a parent or legal guardian. And, if an entity would be a reporting company but for the exemption in the final rule for a pooled investment vehicle and is formed under the laws of a foreign country, such entity shall be deemed a reporting company for purposes of filing an initial report, except the report shall include the information required with respect to an individual who exercises substantial control over the entity. If more than one individual exercises substantial control over the entity, the entity must report information with respect to the individual who has the greatest authority over the strategic management of the entity.

If a reporting company was created or registered before 01/01/2024, the reporting company must report that fact, but is not required to report information with respect to any company applicant.

Updated Report

If there is any change with respect to required information previously submitted to FinCEN concerning a reporting company or its beneficial owners, including any change with respect to who is a beneficial owner or information reported for any particular beneficial owner, the reporting company must file an updated report in the form and manner specified in the final rule within 30 calendar days after the date on which such change occurs.

The final rule provides specific activities which are considered the type of change which requires the filing of an updated report. Those activities include:

• If a reporting company meets the criteria for any exemption under the final rule subsequent to the filing of an initial report, this change is deemed a change which would require the entity to file an updated report.

• If an individual is a beneficial owner of a reporting company by virtue of property interests or other rights subject to transfer upon death, and such individual dies, once the estate of the deceased beneficial owner is settled, either through the operation of the intestacy laws of a jurisdiction within the United States or through a testamentary deposition, this event is deemed a change which would require an updated report to be filed. The updated report must, to the extent appropriate, identify any new beneficial owners.

• If a reporting company has reported information with respect to a parent or legal guardian of a minor child as required under the final rule, when the minor child attains the age of majority, this event is deemed a change which would require an updated report to be filed.

• With respect to an image of an identifying document required to be reported in the initial report, when the name, date of birth, address, or unique identifying number on such document changes, this change is deemed one that would require the entity to file an updated report.

In general, when an updated report is required to be filed, it must reflect any change with respect to the required information previously submitted to FinCEN concerning a reporting company or its beneficial owners.

FinCEN will prescribe the form and instructions for the updated report, and each person filing the updated report will be required to certify that the updated report is true, correct, and complete. If the requirement to file an updated report is due to the reporting company being a newly exempt entity, the updated report must indicate that the filing entity is no longer a reporting company.

Corrected Report

If any filed report was inaccurate when filed and remains inaccurate, the final rule requires the reporting company to file a corrected report 30 calendar days after the date on which such reporting company becomes aware or has reason to know of the inaccuracy. A corrected report filed within the 30-day period is deemed to satisfy the requirements under CTA at 31 U.S.C. 5336(h)(3)(C)(i)(I)(bb) if filed within 90 calendar days after the date on which the inaccurate report was filed.

Special Focus

Similar to the other reports, FinCEN will prescribe a form and instructions for the corrected report, and each person filing the updated report will be required to certify that the updated report is true, correct, and complete. The corrected report must correct all inaccuracies in the information previously reported to FinCEN.

2. FinCEN Identifier

A FinCEN Identifier is a unique identifying number that FinCEN will issue to individuals or reporting companies upon request, subject to certain conditions. For individuals, FinCEN will issue a FinCEN Identifier if an individual submits to FinCEN the same four pieces of identifying information as would be required in an Initial Report. A reporting company may obtain a FinCEN Identifier by submitting to FinCEN an application at or after the time that the entity submits an initial report. Each FinCEN Identifier shall be specific to each such individual or reporting company, and each such individual or reporting company (including any successor reporting company) may obtain only one FinCEN Identifier.

If an individual has obtained a FinCEN Identifier and has provided such FinCEN Identifier to a reporting company, the reporting company may include the FinCEN Identifier in its report in lieu of the information otherwise required in the initial report with respect to such individual.

Any individual that has obtained a FinCEN Identifier is required to update or correct any information previously submitted to FinCEN in an application for the FinCEN Identifier. The updated application need be filed within 30 calendar days after the date on which such change occurs. A corrected application need be filed within 30 calendar days after the date on which the individual becomes aware or has reason to know of the inaccuracy. Same requirements and timings apply to a reporting company that has obtained a FinCEN Identifier and previously filed information need be updated or corrected.

3. Select Definitions

The rule defines the term “Reporting Company” as either a domestic reporting company or a foreign reporting company. A domestic reporting company means any entity that is: a corporation; a limited liability company; or created by the filing of a document with a Secretary of State or any similar office under the law of a State or Indian tribe. A foreign reporting company is any entity that is: (1) a corporation, limited liability company, or other entity; (2) formed under the law of a foreign country; and (3) registered to do business in any State or Tribal jurisdiction by the filing of a document with a Secretary of State or any similar office under the law of a State or Indian tribe.

The rule provides over twenty exemptions from the definition of “reporting company” including: (1) a governmental authority; (2) banks; (3) credit unions; (4) bank holding company; (5) an MSB registered with FinCEN; (6) broker or dealer in securities; (7) investment company or investment advisor, (8) insurance company; (9) accounting firm, (10) tax-exempt entity; (11) public utility; and (12) a large operating company.

The rule defines “large operating company” as an entity that: (1) employs more than 20 full-time employees in the United States; (2) has an operating presence at a physical office within the United States; and (3) filed a Federal income tax or information return in the United States for the previous year demonstrating more than $5,000,000 in gross receipts or sales, as reported as gross receipts or sales (net of returns and allowances) on the entity’s IRS Form 1120, consolidated IRS Form 1120, IRS Form 1120–S, IRS Form 1065, or other applicable IRS form, excluding gross receipts or sales from sources outside the United States, as determined under Federal income tax principles.

The term ‘‘beneficial owner,’’ with respect to a reporting company, means any individual who, directly or indirectly, either exercises substantial control over such reporting company or owns or controls at least 25 percent of the ownership interests of such reporting company.

The term ‘‘beneficial owner’’ does not include:

• A minor child, as defined under the law of the State or Indian tribe in which a domestic reporting company is created or a foreign reporting company is first registered, provided the reporting company reports the required information of a parent or legal guardian of the minor child as required by the rule;

• An individual acting as a nominee, intermediary, custodian, or agent on behalf of another individual;

• An employee of a reporting company, acting solely as an employee, whose substantial control over or economic benefits from such entity are derived solely from the employment status of the employee, provided that such person is not a senior officer as defined in the rule;

Special Focus

• An individual whose only interest in a reporting company is a future interest through a right of inheritance;

• A creditor of a reporting company as defined in the rule.

An individual “exercises substantial control” over a reporting company if the individual:

• Serves as a senior officer of the reporting company;

• Has authority over the appointment or removal of any senior officer or a majority of the board of directors (or similar body);

• Directs, determines, or has substantial influence over important decisions made by the reporting company, including decisions regarding:

o The nature, scope, and attributes of the business of the reporting company, including the sale, lease, mortgage, or other transfer of any principal assets of the reporting company;

o The reorganization, dissolution, or merger of the reporting company;

o Major expenditures or investments, issuances of any equity, incurrence of any significant debt, or approval of the operating budget of the reporting company;

o The selection or termination of business lines or ventures, or geographic focus, of the reporting company;

o Compensation schemes and incentive programs for senior officers;

o The entry into or termination, or the fulfillment or non-fulfillment, of significant contracts;

o Amendments of any substantial governance documents of the reporting company, including the articles of incorporation or similar formation documents, bylaws, and significant policies or procedures; or

• Has any other form of substantial control over the reporting company.

An individual may directly or indirectly, including as a trustee of a trust or similar arrangement, exercise substantial control over a reporting company through:

• Board representation;

• Ownership or control of a majority of the voting power or voting rights of the reporting company;

• Rights associated with any financing arrangement or interest in a company;

• Control over one or more intermediary entities that separately or collectively exercise substantial control over a reporting company;

• Arrangements or financial or business relationships, whether formal or informal, with other individuals or entities acting as nominees; or

• Any other contract, arrangement, understanding, relationship, or otherwise.

The term ‘‘ownership interest’’ means:

• Any equity, stock, or similar instrument; preorganization certificate or subscription; or transferable share of, or voting trust certificate or certificate of deposit for, an equity security, interest in a joint venture, or certificate of interest in a business trust; in each such case, without regard to whether any such instrument is transferable, is classified as stock or anything similar, or confers voting power or voting rights;

• Any capital or profit interest in an entity;

• Any instrument convertible, with or without consideration, into any share or instrument described in the rule; or

• Any other instrument, contract, arrangement, understanding, relationship, or mechanism used to establish ownership.

An individual may directly or indirectly own or control an ownership interest of a reporting company through any contract, arrangement, understanding, relationship, or otherwise, including:

• Joint ownership with one or more other persons of an undivided interest in such ownership interest;

• Through another individual acting as a nominee, intermediary, custodian, or agent on behalf of such individual;

• With regard to a trust or similar arrangement that holds such ownership interest:

o As a trustee of the trust or other individual (if any) with the authority to dispose of trust assets;

o As a beneficiary who:

 Is the sole permissible recipient of income and principal from the trust; or  Has the right to demand a distribution of or withdraw substantially all of the assets from the trust; or  As a grantor or settlor who has the right to revoke the trust or otherwise withdraw the assets of the trust; or

 Through ownership or control of one or more intermediary entities, or ownership or control of the ownership interests of any such entities, that separately or collectively own or control ownership interests of the reporting company.

Special Focus

In determining whether an individual owns or controls at least 25 percent of the ownership interests of a reporting company, the total ownership interests that an individual owns or controls, directly or indirectly, must be calculated as a percentage of the total outstanding ownership interests of the reporting company as follows:

• Ownership interests of the individual shall be calculated at the present time, and any options or similar interests of the individual shall be treated as exercised;

• For reporting companies that issue capital or profit interests (including entities treated as partnerships for federal income tax purposes), the individual’s ownership interests are the individual’s capital and profit interests in the entity, calculated as a percentage of the total outstanding capital and profit interests of the entity;

• For corporations, entities treated as corporations for federal income tax purposes, and other reporting companies that issue shares of stock, the applicable percentage shall be the greater of: o the total combined voting power of all classes of ownership interests of the individual as a percentage of total outstanding voting power of all classes of ownership interests entitled to vote, or o the total combined value of the ownership interests of the individual as a percentage of the total outstanding value of all classes of ownership interests; and

• If the facts and circumstances do not permit the calculations described above with reasonable certainty, any individual who owns or controls 25 percent or more of any class or type of ownership interest of a reporting company shall be deemed to own or control 25 percent or more of the ownership interests of the reporting company.

The term ‘‘company applicant’’ for a domestic reporting company is the individual who directly files the document that creates the domestic reporting company. For a foreign reporting company, the company applicant is the individual who directly files the document that first registers the foreign reporting company. Whether for a domestic or a foreign reporting company, a company applicant is the individual who is primarily responsible for directing or controlling such filing if more than one individual is involved in the filing of the document.

Summary

FinCEN has issued a final rule, effective 01/01/2024, which sets forth the requirements of certain entities to file with FinCEN reports that identify the beneficial owners of the entity and individuals who have filed an application with specified governmental authorities to create the entity or register it to do business.

The reporting requirements are intended to help prevent and combat money laundering, terrorist financing, corruption, tax fraud, and other illicit activity, while minimizing the burden on entities doing business in the United States.

The final rule is the first of a series of rules FinCEN need release to implement CTA; a second rule regarding access to the database of reported information and yet another rule to revise the existing customer due diligence rule are forthcoming. How these information reporting rules will directly impact financial institutions is still playing out.

The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-09-30/pdf/2022-21020.pdf

Recent CFPB Releases Address Certain Deposit Account Fees and Consumer Report Activities.

The Bureau of Consumer Financial Protection (CFPB) has released several forms of guidance over the past several weeks. The items focus on overdraft charges, return deposit fees, the duties of consumer reporting agencies to establish policy and procedures to ensure information within consumer reports is accurate, and reasonable investigation of consumer reporting duties.

While the information is “guidance” and not law, it is important that financial institutions be aware of the guidance in the event other prudential regulators attempt to adopt the same position as CFPB regarding the activities addressed in the releases. The following is a recap of the recently released CFPB guidance.

Unanticipated Overdraft Fee Assessment Practices

On October 26, 2022, CFPB issued Consumer Financial Protection Circular, 2022-06: Unanticipated Overdraft Fee

Special Focus

As a reminder, an overdraft fee is a charge distinct from a non-sufficient fee (NSF). An overdraft occurs when the customer has insufficient funds in an account to cover a transaction, but the financial institution still pays the item. Alternatively, an NSF is assessed when the account balance is not sufficient to pay the item and the item is returned unpaid.

CFPB responded affirmatively to the above question stating, yes—overdraft fee practices need comply with applicable regulations and the prohibition against unfair, deceptive, and abusive acts or practices in Section 1036 of the CFPA. In particular, CFPB stated that overdraft fees assessed by financial institutions on transactions that a consumer would not reasonably anticipate are likely unfair and believes the charges likely impose substantial injury on consumers that they cannot reasonably avoid and that is not outweighed by countervailing benefits to consumers or competition.

CFPB further stated that unanticipated overdraft fees may arise in a variety of circumstances and focused the discussion within the circular on transactions CFPB referred to as “authorized positive, settle negative” (APSN).

CFPB explained that unanticipated overdraft fees can occur on APSN transactions, when a financial institution assesses an overdraft fee for a debit card transaction where the consumer had sufficient available balance in their account to cover the transaction at the time the consumer initiated the transaction and the financial institution authorized it, but due to intervening authorizations, settlement of other transactions (including the ordering in which transactions are settled), or other complex processes, the financial institution determined that the consumer’s balance was insufficient at the time of settlement. These overdraft fees are assessed on consumers who are opted in to overdraft coverage for one-time debit card and ATM transactions, but they likely did not expect overdraft fees for these transactions and therefore are considered “unanticipated” by CFPB.

CFPB provides two examples as illustrations. The first is meant to be an example of overdraft fees involving a debt card transaction with an intervening debit transaction. The consumer is charged an overdraft fee even though the consumer’s available balance was positive at the time the consumer entered into the debit card transaction.

The second example is meant to illustrate how financial institutions may process overdraft fees on two transactions. In this example the consumer is charged an additional overdraft fee when the financial institution assesses fees based upon available balance versus if the financial institution had used the account’s ledger balance for fee assessment.

Unfair Returned Deposited Item Fee

Also on October 26th, CFPB issued Compliance Bulletin, 2022-06: Unfair Returned Deposited Item Fee Assessment Practice. CFPB issued the bulletin to notify regulated entities how it intends to exercise its enforcement and supervisory authorities on the issue.

A returned deposited item is a check that a customer deposits into their account that is returned to the customer because the check could not be processed against the check originator’s account. It is CFPB’s position that blanket policies of charging returned deposited item fees to consumers for all returned transactions irrespective of the circumstances or patterns of behavior on the account are likely unfair under the CFPA.

CFPB has identified that there are many reasons deposited items can be returned unprocessed. For example, the check originator may not have sufficient funds available in their account to pay the amount stated on the check; the check originator may have directed the issuing depository institution to stop payment; the account referenced on the check may be closed or located in a foreign country; or there may be questionable, erroneous, or missing information on the check, including with respect to the signature, date, account number, or payee name. However, because the consumer cannot reasonably avoid the charge, avoid the “injury,” despite the charge being fully disclosed under the requirements of the Truth in Savings Act and Regulation DD, CPFB considers the charge to likely be unfair under CFPA.

Assessment Practices, in which CFPB presented the question: Can the assessment of overdraft fees constitute an unfair act or practice under the Consumer Financial Protection Act (CFPA), even if the entity complies with the Truth in Lending Act (TILA) and Regulation Z, and the Electronic Fund Transfer Act (EFTA) and Regulation E?

Special Focus

CFPB attempts to distinguish between circumstances between blanketed returned deposited item polices which CFPB believes are not targeted to address patterns of behavior indicative of fraud or other circumstances where the consumer reasonably should have anticipated that the check would be returned.

So, under CFPB’s theory if the financial institution believes the consumer reasonably should have anticipated that the check would have been returned, charging a returned deposited item fee in that instance is likely not unfair under the CFPA.

Fair Credit Reporting; Facially False Data

CFPB issued an Advisory Opinion to highlight that a consumer reporting agency (CRA) that does not implement reasonable internal controls to prevent the inclusion of facially false data, including logically inconsistent information, in consumer reports it prepares is not using reasonable procedures to assure maximum possible accuracy under section 607(b) of the Fair Credit Reporting Act (FCRA).

Consumer report accuracy depends on the various parties to the consumer reporting system, including: the three nationwide CRAs (Equifax, Experian, and TransUnion); other CRAs, such as background screening companies; entities such as creditors who furnish information to CRAs (i.e., furnishers); and public record repositories. CFPB believes a CRA is uniquely positioned to identify certain obvious inaccuracies and implement policies, procedures, and systems to keep inaccuracies off of consumer reports. In some cases, such as when certain account or other information fields on consumer reports are logically inconsistent with other fields of information, a CRA can detect the logical inconsistencies and prevent the inaccurate information from being included in consumer reports it generates, thereby avoiding the consumer harm to individual consumers that can result from reporting such inaccurate information.

CFPB also shared in the advisory opinion that it continues to see accuracy issues at furnishers and CRAs through supervisory activities. For example, CFPB noted in its Spring 2022 Supervisory Highlights that many furnishers lacked “reasonable written policies and procedures regarding the accuracy and integrity of the information relating to consumers.” In its Summer 2021 Supervisory Highlights, CFPB explained that some CRAs lacked adequate procedures for assuring maximum possible accuracy of consumer reports when they “continued to include information in consumer reports that was provided by unreliable furnishers.”

CFPB stated it also continues to find accuracy issues in the consumer reporting context through its enforcement activities. For example, CFPB has brought enforcement actions against CRAs whose inadequate “name-only matching” led to reports with inaccurate derogatory criminal and public records information on consumers. CFPB has also brought enforcement actions against furnishers who furnish information with inherent logical inconsistencies, such as furnishing an increasing “original loan amount” over time, where that field should not change.

Reasonable Investigation of Consumer Reporting Duties

On November 10, 2022, CFPB released Consumer Financial Protection Circular, 2022-07: Reasonable Investigation of Consumer Reporting Duties. In the release CFPB answered two questions: (1) are CRAs and the entities that furnish information to them (furnishers) permitted under FCRA to impose obstacles that deter submission of disputes; and (2) do CRAs need to forward to furnishers consumer-provided documents attached to a dispute?

CFPB answered the questions by responding that no, CRAs and furnishers can be liable under FCRA if they fail to investigate any dispute that meets the statutory and regulatory requirements, as described in more detail in the circular. Enforcers may bring claims if CRAs and furnishers limit consumers’ dispute rights by requiring any specific format or requiring any specific attachment such as a copy of a police report or consumer report beyond what the statute and regulations permit.

As to the second question, CFPB’s response is that it depends. CFPB stated that enforcers may bring a claim if a CRA fails to promptly provide to the furnisher “all relevant information” regarding the dispute that the CRA receives from the consumer. While there is not an affirmative requirement to specifically provide original copies of documentation submitted by consumers, it would be difficult for a CRA to prove they provided all relevant information if they fail to forward even an electronic image of documents that constitute a primary source of evidence.

Special Focus

Summary

CFPB has recently released guidance documents regarding deposit account fees, information within consumer reports, and investigation into disputes of information within consumer reports. While the information is “guidance” and not law, it is important that financial institutions be aware of the guidance.

In recent panel discussions with other federal prudential regulators (Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve System, and Office of the Comptroller of the Currency), the agencies did not affirmatively state they have adopted the positions as outlined in the CFPB documents. However, financial institutions are reminded that the regulators have previously warned against charging overdraft fees in an APSN setting.

The federal prudential regulators have previously identified APSN as an area of concern and financial institutions are cautioned to track such transactions to avoid charging an overdraft fee on transactions which were authorized when an account balance was positive despite a negative balance upon settlement. Prior regulator instruction regarding APSN transactions can be viewed at the following two links: www.federalreserve.gov/publications/2018-july-consumercompliance-supervision-bulletin.htm and www.fdic.gov/regulations/examinations/consumer-compliance-supervisory-highlights/documents/ccs-highlightsjune2019.pdf

CFPB’s guidance documents may be viewed at:

Unanticipated Overdraft Fee Assessment Practices https://www.govinfo.gov/content/pkg/FR-2022-11-07/pdf/2022-23982.pdf

Unfair Returned Deposited Item Fee

https://www.govinfo.gov/content/pkg/FR-2022-11-07/pdf/2022-23933.pdf

Fair Credit Reporting; Facially False Data

https://www.govinfo.gov/content/pkg/FR-2022-10-26/pdf/2022-23264.pdf

Reasonable Investigation of Consumer Reporting Duties

https://www.consumerfinance.gov/compliance/circulars/consumer-financial-protection-circular-2022-07-reasonableinvestigation-of-consumer-reporting-disputes/

Regulatory Spotlight

Agencies Establish 2023 Exemption Threshold for HPML Appraisals.

The Bureau of Consumer Financial Protection (CFPB), Board of Governors of the Federal Reserve System (FRB), and Office of the Comptroller of the Currency, (OCC) finalized amendments to the official interpretations for their regulations which implement section 129H of the Truth in Lending Act (TILA). Section 129H of TILA establishes special appraisal requirements for “higher-risk mortgages,” termed higher-priced mortgage loans (HPMLs) in the agencies’ regulations.

The CFPB, FRB, OCC, Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA) (collectively, the agencies) jointly issued final rules implementing the requirements, effective 01/18/2014. The agencies’ rules exempted, among other loan types, transactions of $25,000 or less, and required that the loan amount be adjusted annually based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual percentage increase in the CPI-W, CFPB, FRB, and OCC would not adjust the exemption threshold from the prior year. Additionally, in years following a year in which the exemption threshold was not adjusted because the CPI-W decreased, the threshold is calculated by applying the annual percentage increase in the CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been taken into account. Based on the CPI-W in effect as of 06/01/2022, the exemption threshold will increase from $28,500 to $31,000, effective 01/01/2023. The final rule is effective 01/01/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-20/ pdf/2022-22820.pdf Federal Register, Vol. 87, No. 202, 10/20/2022, 63663-63666.

Agencies Establish 2023 Exemption Thresholds for Regulations M and Z.

The Bureau of Consumer Financial Protection (CFPB) and Board of Governors of the Federal Reserve System (FRB) (collectively, the agencies) finalized amendments to the official interpretations and commentary for the agencies’ regulations which implement the Consumer Leasing Act (CLA), Regulation M. The Dodd-Frank Act amended CLA by requiring that the dollar threshold for exempt consumer leases be adjusted annually by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Based on the annual percentage increase in the CPI-W as of 06/01/2022, the exemption threshold will increase from $61,000 to $66,400 effective 01/01/2023. The final rule is effective 01/01/2023. The final rule may be viewed at: https://www.govinfo.gov/content/ pkg/FR-2022-10-20/pdf/2022-22818.pdf Federal Register, Vol. 87, No. 202, 10/20/2022, 63666-63671.

The Bureau of Consumer Financial Protection (CFPB) and Board of Governors of the Federal Reserve System (FRB) (collectively, the agencies) published final rules to amend the official interpretations and commentary for the agencies’ regulations which implement the Truth in Lending Act (TILA), Regulation Z. The Dodd-Frank Act amended TILA by requiring that the dollar threshold for exempt consumer credit transactions be adjusted annually by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Based on the annual percentage increase in the CPI-W as of 01/01/2022, the exemption threshold will increase from $61,000 to $66,400 effective 01/01/2023. The final rule is effective 01/01/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-20/pdf/2022-22819.pdf Federal Register, Vol. 87, No. 202, 10/20/2022, 63671-63677.

Agencies Issue ANPR on Resolution-Related Resource Requirements for Large Banking Organizations.

The Board of Governors of the Federal Reserve System (FRB) and Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies) seek comment regarding an advance notice of a proposed rulemaking (ANPR) about whether an extra layer of loss-absorbing capacity could improve optionality in resolving a large banking organization or its insured depository institution, and the costs and benefits of such a requirement. The proposal, among other things, may address financial stability by limiting contagion risk through the reduction in the likelihood of uninsured depositors suffering loss, and keep various resolution options open for FDIC to resolve a firm in a way that minimizes the long term risk to financial stability and preserves optionality. Comments are due 12/23/2022. The ANPR may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2022-10-24/pdf/2022-23003.pdf Federal Register, Vol. 87, No. 204, 10/24/2022, 64170-64175.

Regulatory Spotlight

CFPB Corrects Fair Debt Collection Practices Rule.

The Bureau of Consumer Financial Protection (CFPB) issued a final rule to correct Regulation F which implements the Fair Debt Collection Practices Act. On 01/19/2021, CFPB published a final rule in the Federal Register which contained omissions of certain paragraphs in the Official Interpretations (Commentary) that were not incorporated into the Code of Federal Regulations (CFR). The final rule corrects the Official Interpretations to Regulation F by adding the missing paragraphs to the CFR. The corrections are effective 11/01/2022. The final rule may be viewed at: https://www.govinfo. gov/content/pkg/FR-2022-11-01/pdf/2022-23559.pdf Federal Register, Vol. 87, No. 210, 11/01/2022, 65668-65670.

CFPB Seeks Comment Regarding Survey Screening Question List.

CFPB seeks comment regarding an information collection titled, Survey Screening Question List. CFPB conducts a variety of research efforts to ascertain financial issues consumers may be experiencing. CFPB developed a list of potential screener questions formulated to allow CFPB’s research efforts to focus on the appropriate consumers for each study and strengthen CFPB’s ability to address financial needs and concerns of consumers and to improve the delivery of services and programs. Usage of questions included and approved within the collection will reduce administrative burden on CFPB and grant greater expediency in conducting research on emergent financial issues. Comments are due 11/28/2022. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-27/pdf/2022-23350.pdf Federal Register, Vol. 87, No. 207, 10/27/2022, 65041-65042.

CFPB Re-Opens Comment Period for Big Tech Payment Platforms Information Collection.

CFPB re-opened the comment period for an information collection regarding big tech payment platforms. On 10/21/2021, CFPB ordered six large technology companies operating payments systems in the United States to provide information about certain of their business practices. Accompanying the orders, CFPB issued a statement and requested comments. CFPB has determined that it is appropriate to re-open the docket for 30 days from Federal Register publication and added two questions. Comments are due 12/07/2022. The notice may be viewed at: https://www.govinfo.gov/content/ pkg/FR-2022-11-07/pdf/2022-24214.pdf Federal Register, Vol. 87, No. 214, 11/07/2022, 67023-67024.

FRB Announces New Message Format for Fedwire® Funds Service.

The Board of Governors of the Federal Reserve System (FRB) announced that the Federal Reserve Banks (Reserve Banks) will adopt the ISO® 20022 message format for the Fedwire® Funds Service on a single day, 03/10/2025. FRB also announced a revised testing strategy, backout strategy, and other details concerning the implementation of the new format. The implementation date is 03/10/2025. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR2022-10-24/pdf/2022-23002.pdf. Federal Register, Vol. 87, No. 204, 10/24/2022, 64217-64223.

FDIC Increases Base Deposit Insurance Assessment Rate Schedules.

The Federal Deposit Insurance Corporation (FDIC) issued a final rule to increase the initial base deposit insurance assessment rate schedules by 2 basis points, beginning the first quarterly assessment period of 2023. The increase in the assessment rate schedules will increase the likelihood that the reserve ratio will reach the statutory minimum of 1.35 percent by the statutory deadline of 09/30/2028, consistent with FDIC’s Amended Restoration Plan. The increase is intended to support growth in the Deposit Insurance Fund in progressing toward FDIC’s long-term goal of a 2 percent Designated Reserve Ratio. The final rule is effective 01/01/2023. The final rule may be viewed at: https://www.govinfo. gov/content/pkg/FR-2022-10-24/pdf/2022-22985.pdf Federal Register, Vol. 87, No. 204, 10/24/2022, 64314-64343.

FDIC Issues Final Rule to Incorporate Updated TDR Accounting Standards.

FDIC issued a final rule to incorporate updated accounting standards in the risk-based deposit insurance assessment system applicable to all large insured depository institutions (IDIs), including highly complex IDIs. FDIC calculates deposit insurance assessment rates for large and highly complex IDIs based on supervisory ratings and financial

Regulatory Spotlight

measures, including the underperforming assets ratio and the higher-risk assets ratio, both of which are determined, in part, using restructured loans or troubled debt restructurings (TDRs). The final rule includes modifications to borrowers experiencing financial difficulty, an accounting term recently introduced by the Financial Accounting Standards Board (FASB) to replace TDRs, in the underperforming assets ratio and higher-risk assets ratio for purposes of deposit insurance assessments. The final rule is effective 01/01/2023. The final rule may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2022-10-24/pdf/2022-22986.pdf. Federal Register, Vol. 87, No. 204, 10/24/2022, 64348-64356.

FDIC Establishes 2023 Designated Reserve Ratio.

FDIC established the 2023 Designated Reserve Ratio (DRR). Pursuant to the Federal Deposit Insurance Act, FDIC has designated that the DRR for the Deposit Insurance Fund shall remain at 2 percent for 2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-24/pdf/2022-22987.pdf Federal Register, Vol. 87, No. 204, 10/24/2022, 64346.

FDIC Issues Notice of Termination of Receiverships.

FDIC, as Receiver for each of the insured depository institutions listed in the notice, was charged with the duty of winding up the affairs of the former institutions and liquidating all related assets. The Receiver has fulfilled its obligations and made all dividend distributions required by law. The Receiver has further irrevocably authorized and appointed FDIC-Corporate as its attorney-in-fact to execute and file any and all documents that may be required to be executed by the Receiver which FDIC-Corporate, in its sole discretion, deems necessary, including but not limited to releases, discharges, satisfactions, endorsements, assignments, and deeds. Effective on the termination dates listed in the notice, the Receiverships have been terminated, the Receiver has been discharged, and the Receiverships have ceased to exist as legal entities. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-11-04/ pdf/2022-24095.pdf. Federal Register, Vol. 87, No. 213, 11/04/2022, 66698.

FDIC Proposes Amendments to Guidelines for Appeals of Material Supervisory Determinations.

FDIC seeks comment on proposed amendments to its Guidelines for Appeals of Material Supervisory Determinations, meant to expand and clarify the role of FDIC’s Ombudsman. The proposal also would require that materials considered by the Supervision Appeals Review Committee be shared with both parties to the appeal, subject to applicable legal limitations on disclosure, and would allow insured depository institutions to request a stay of a material supervisory determination while an appeal is pending. Comments are due 11/21/2022. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-21/pdf/2022-22946.pdf Federal Register, Vol. 87, No. 203, 10/21/2022, 64034-64042.

FDIC Seeks Comment on Revisions to Systems of Records.

FDIC seeks comment on proposed modifications to a system of records titled, FDIC-013, Insured Financial Institution Liquidation Records. FDIC proposes to: update the name to more closely reflect the records processed by the system of records; add a new routine use to allow the public to locate and understand the status of their accounts; and revise the policies and practices for retention and disposal of records to describe the records retention schedules for the records included in the system of records. Additionally, the notice includes non-substantive changes to simplify the formatting and text of the previously published notice. Comments are due 12/02/2022. The notice may be viewed at: https://www. govinfo.gov/content/pkg/FR-2022-11-02/pdf/2022-23805.pdf. Federal Register, Vol. 87, No. 211, 11/02/2022, 66178-66181.

FDIC seeks comment on proposed modifications to a system of records titled, Unclaimed Deposit Account Records, FDIC-024. FDIC is updating the system of records by adding a new routine use to allow the public to locate and understand the status of their accounts. Additionally, the notice includes non-substantive changes to simplify the formatting and text of the previously published notice. Comments are due 12/02/2022. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-11-02/pdf/2022-23804.pdf. Federal Register, Vol. 87, No. 211, 11/02/2022, 66181-66183.

Regulatory Spotlight

OCC Seeks Comment Regarding Information Collections.

The Office of the Comptroller of the Currency (OCC) seeks comment regarding an information collection titled, General Reporting and Recordkeeping Requirements by Savings Associations. Federal savings associations must comply with the following regulations, which require them to establish prudent internal controls, so that examiners will have an accurate picture of the savings associations’ performance and condition: 12 CFR 144.8 (communications between members of a federal mutual savings association); 12 CFR 163.47(e) (pension plans, records); and 12 CFR 163.76(c) (offers and sales of securities at an office of a federal savings association, form of certification). Federal savings associations use the required reports and records for internal management control purposes, and examiners use them to determine whether savings associations are being operated safely, soundly, and in compliance with regulations. Comments are due 11/25/2022. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-25/pdf/2022-23116.pdf Federal Register, Vol. 87, No. 205, 10/25/2022, 64540-64541.

OCC seeks comment regarding an information collection titled, Regulation E, Electronic Fund Transfer Act; Prepaid Card Provisions. The Electronic Fund Transfer Act (EFTA) and Regulation E require disclosure of basic terms, costs, and rights relating to electronic fund transfer services debiting or crediting a consumer’s account. The prepaid accounts final rule issued by the Bureau of Consumer Financial Protection (CFPB) requires financial institutions to make disclosures available to consumers before a consumer acquires a prepaid account. The information collection is used in connection with requirements under Regulation E. Comments are due 11/25/2022. The notice may be viewed at: https://www.gov info.gov/content/pkg/FR-2022-10-25/pdf/2022-23114.pdf. Federal Register, Vol. 87, No. 205, 10/25/2022, 64541-64543.

OCC seeks comment regarding an information collection titled, Retail Foreign Exchange Transactions. OCC’s rule pertaining to retail foreign exchange transactions (12 CFR part 48) allows national banks and federal savings associations to offer or enter into retail foreign exchange transactions. In order to engage in the transactions, institutions must comply with various reporting, disclosure, and recordkeeping requirements included in that rule. The information collection is used in connection with the requirements under the retail foreign exchange transaction regulation. Comments are due 12/27/2022. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-25/ pdf/2022-23166.pdf Federal Register, Vol. 87, No. 205, 10/25/2022, 64543-64545.

OCC seeks comment regarding an information collection titled, Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery. The information collection provides OCC with a means to solicit qualitative user feedback in an efficient, timely manner, in accordance with the federal government’s commitment to improving service delivery. OCC solicitations for feedback targets areas such as timeliness, appropriateness, accuracy of information, courtesy, efficiency of service delivery, and resolution of issues related to service delivery. OCC uses the responses to inform efforts to improve or maintain the quality of service offered to the public. Comments are due 11/25/2022. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-25/pdf/2022-23099.pdf Federal Register, Vol. 87, No. 205, 10/25/2022, 64545-64546.

OCC seeks comment regarding an information collection titled, Annual Stress Test Rule. OCC uses the information to assess the reasonableness of the stress test results and provide forward-looking information to OCC regarding a covered institution’s capital adequacy. OCC also may use stress test results to determine whether additional analytical techniques and exercises could be appropriate to identify, measure, and monitor risks at the covered institution. The stress test results support ongoing improvement in a covered institution’s stress testing practices with respect to its internal assessments of capital adequacy and overall capital planning. Comments are due 11/25/2022. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-26/pdf/2022-23246.pdf. Federal Register, Vol. 87, No. 206, 10/26/2022, 64841-64842.

OCC seeks comment regarding the renewal of an information collection titled, Licensing Manual. The Licensing Manual sets forth OCC’s policies and procedures for the formation of a national bank or federal branch or agency, entry into the federal banking system by other institutions, and corporate expansion and structural changes by existing banks. The manual includes sample documents to assist the applicant in understanding the types of information OCC needs in order to process a filing. An applicant may use the format of the sample documents or any other format that provides sufficient information for OCC to act on a particular filing. Comments are due 12/09/2022. The notice may be viewed at: https:// www.govinfo.gov/content/pkg/FR-2022-11-09/pdf/2022-24455.pdf Federal Register, Vol. 87, No. 216, 11/09/2022, 67749-67750.

Regulatory Spotlight

HUD Issues Proposed Rule to Establish Indexing Methodology for Title I Manufactured Home Loan Limits.

The Department of Housing and Urban Development (HUD) issued a proposed rule regarding the indexing methodology for Title I Manufactured Home Loan limits. Section 2145 of the Housing and Economic Recovery Act amended the maximum loan limits for manufactured home loans insured under Title I of the National Housing Act and required regulations to implement future indexing of the loan limit amounts for manufactured homes originated under the Manufactured Home Loan Program and the Property Improvement Loan Program. The proposed rule would establish indexing methodologies using data from the United States Census Bureau to annually calculate the loan limits for Manufactured Home Loans, Manufactured Home Lot Loans, and Manufactured Home and Lot Combination Loans insured under Title I of the National Housing Act for the Manufactured Home Loan Program. Comments are due 12/19/2022 The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-18/pdf/2022-22535.pdf. Federal Register, Vol. 87, No. 200, 10/18/2022, 63018-63022.

HUD Issues Proposed Rule to Transition From LIBOR to Alternate Indices.

HUD issued a proposed rule to remove the London Interbank Offered Rate (LIBOR) as an approved index for adjustable interest rate mortgages (ARMs) and replace LIBOR with the Secured Overnight Financing Rate (SOFR) as a HUD Secretary-approved index for newly originated forward ARMs. HUD has also proposed to codify its removal of LIBOR and approval of SOFR as an index for newly-originated Home Equity Conversion Mortgage (HECM) ARMs. In addition, HUD has proposed to establish a spread-adjusted SOFR index as the HUD Secretary-approved replacement index to transition existing forward and HECM ARMs off LIBOR. HUD has also proposed to make clarifying changes to its HECM Monthly ARM regulation and establish a lifetime five percent interest rate cap for monthly adjustable rate HECMs. Comments are due 11/18/2022. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-202210-19/pdf/2022-22538.pdf. Federal Register, Vol. 87, No. 201, 10/19/2022, 63458-63464.

HUD Seeks Comment on FHA Lender Related Information Collection.

HUD seeks comment regarding revisions to an information collection titled, Federal Housing Administration (FHA) Lender Approval, Annual Renewal, Periodic Updates, and Required Reports by FHA-Approved Lenders. The revisions incorporate the requirements of 2 CFR 25 and 2 CFR 170, requiring all entities currently conducting or seeking to do business with the federal government to have a Unique Entity Identifier (UEI) registered in General Services Administration’s System of Award Management. Collection of the UEI is vital to HUD’s compliance with the Federal Funding Accountability and Transparency Act (FFATA) and Digital Accountability and Transparency Act. Comments are due 11/28/2022. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-28/pdf/2022-23509. pdf. Federal Register, Vol. 87, No. 208, 10/28/2022, 65230-56231.

FEMA Issues Final Flood Hazard Determinations.

The Federal Emergency Management Agency (FEMA) issued a notice which identifies communities in the states of Indiana, Michigan, and Wisconsin, where flood hazard determinations, which may include additions or modifications of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or regulatory floodways on the Flood Insurance Rate Maps (FIRMs) and where applicable, in the supporting Flood Insurance Study (FIS) reports have been made final. The FIRM and FIS report are the basis of the floodplain management measures that a community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in FEMA’s National Flood Insurance Program (NFIP). The date of 02/23/2023, has been established for the FIRM and, where applicable, the supporting FIS report showing the new or modified flood hazard information for each community. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-12/ pdf/2022-22130.pdf. Federal Register, Vol. 87, No. 196, 10/12/2022, 61610-61612.

FEMA issued a notice which identifies communities in the state of Michigan, where flood hazard determinations, which may include additions or modifications of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or regulatory floodways on the Flood Insurance Rate Maps (FIRMs) and where applicable, in the supporting Flood Insurance Study (FIS) reports have been made final. The FIRM and FIS report are the

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basis of the floodplain management measures that a community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in FEMA’s National Flood Insurance Program (NFIP). The date of 03/07/2023, has been established for the FIRM and, where applicable, the supporting FIS report showing the new or modified flood hazard information for each community. The notice may be viewed at: https://www.govinfo. gov/content/pkg/FR-2022-10-12/pdf/2022-22135.pdf Federal Register, Vol. 87, No. 196, 10/12/2022, 61612-61613.

FEMA issued a notice which identifies communities in the state of Michigan, where flood hazard determinations, which may include additions or modifications of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or regulatory floodways on the Flood Insurance Rate Maps (FIRMs) and where applicable, in the supporting Flood Insurance Study (FIS) reports have been made final. The FIRM and FIS report are the basis of the floodplain management measures that a community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in FEMA’s National Flood Insurance Program (NFIP). The date of 04/19/2023, has been established for the FIRM and, where applicable, the supporting FIS report showing the new or modified flood hazard information for each community. The notice may be viewed at: https://www. govinfo.gov/content/pkg/FR-2022-11-03/pdf/2022-23882.pdf Federal Register, Vol. 87, No. 212, 11/03/2022, 66320.

FEMA Issues Final Notice of Changes in Flood Hazard Determinations.

FEMA made final new or modified Base (1-percent annual chance) Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, and/or regulatory floodways (hereinafter referred to as flood hazard determinations) as shown on the indicated Letter of Map Revision (LOMR) for communities in the states of Illinois, Indiana, Michigan, Ohio, and Wisconsin. Each LOMR revises the Flood Insurance Rate Maps (FIRMs), and in some cases the Flood Insurance Study (FIS) reports, currently in effect for the listed communities. The effective date for each LOMR is indicated in the table in the notice. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR2022-10-28/pdf/2022-23545.pdf Federal Register, Vol. 87, No. 208, 10/28/2022, 65224-65228.

FEMA Announces Countywide and Statewide Per Capita Impact Indicators.

FEMA announced that the countywide per capita impact indicator under the Public Assistance Program for disasters declared on or after 10/01/2022, will increase. The adjustment applies to major disasters declared on or after 10/01/2022. In assessing damages for area designations under 44 CFR 206.40(b), FEMA uses a countywide per capita indicator to evaluate the impact of the disaster at the county level. FEMA will adjust the countywide per capita impact indicator under the Public Assistance Program to reflect annual changes in the Consumer Price Index for All Urban Consumers published by the Department of Labor. FEMA gives notice of an increase in the countywide per capita impact indicator to $4.44 for all disasters declared on or after 10/01/2022. The adjustment applies to major disasters declared on or after 10/01/2022. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-25/pdf/202223160.pdf. Federal Register, Vol. 87, No. 205, 10/25/2022, 64501.

FEMA announced that the statewide per capita impact indicator under the Public Assistance Program for disasters declared on or after 10/01/2022, will increase. The adjustment applies to major disasters declared on or after 10/01/2022. 44 CFR 206.48 provides that FEMA will adjust the statewide per capita impact indicator under the Public Assistance Program to reflect changes in the Consumer Price Index for All Urban Consumers published by the Department of Labor. FEMA gives notice that the statewide per capita impact indicator will be increased to $1.77 for all disasters declared on or after 10/01/2022. The adjustment applies to major disasters declared on or after 10/01/2022 The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-25/pdf/2022-23159.pdf Federal Register, Vol. 87, No. 205, 10/25/2022, 64508-64509.

FEMA Adjusts Minimum Project Worksheet Amount.

FEMA announced the minimum Project Worksheet Amount under the Public Assistance Program for disasters and emergencies declared on or after 10/01/2022, will be increased to $3,800. 44 CFR 206.202(d)(2) provides that FEMA will annually adjust the minimum Project Worksheet amount under the Public Assistance Program to reflect changes in the Consumer Price Index for All Urban Consumers published by the Department of Labor. The adjustment applies to major disasters and emergencies declared on or after 10/01/2022. The notice may be viewed at: https://www.govinfo. gov/content/pkg/FR-2022-10-25/pdf/2022-23161.pdf. Federal Register, Vol. 87, No. 205, 10/25/2022, 64511.

Regulatory Spotlight

FEMA Issues Notice of Changes in Flood Hazard Determinations.

FEMA issued a notice which lists communities in the state of Wisconsin, where the addition or modification of Base Flood Elevations (BFEs), base flood depths, Special Flood Hazard Area (SFHA) boundaries or zone designations, or the regulatory floodway (hereinafter referred to as flood hazard determinations), as shown on the Flood Insurance Rate Maps (FIRMs), and where applicable, in the supporting Flood Insurance Study (FIS) reports, prepared by FEMA for each community, is appropriate because of new scientific or technical data. The FIRM, and where applicable, portions of the FIS report, have been revised to reflect the flood hazard determinations through issuance of a Letter of Map Revision (LOMR), in accordance with federal regulations. The flood hazard determinations will be finalized on the dates listed in the table in the notice and revise the FIRM panels and FIS report in effect prior to the determination for the listed communities. From the date of the second publication of notification of the changes in a newspaper of local circulation, any person has 90 days in which to request through the community that the Deputy Associate Administrator for Insurance and Mitigation reconsider the changes. The flood hazard determination information may be changed during the 90-day period. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-12/pdf/2022-22131.pdf. Federal Register, Vol. 87, No. 196, 10/12/2022, 61615-61617.

FEMA Issues Proposed Flood Hazard Determinations.

FEMA seeks comment regarding proposed flood hazard determinations, which may include additions or modifications of any Base Flood Elevation (BFE), base flood depth, Special Flood Hazard Area (SFHA) boundary or zone designation, or regulatory floodway on the Flood Insurance Rate Maps (FIRMs), and where applicable, in the supporting Flood Insurance Study (FIS) reports for communities in the state of Iowa, as listed in the table in the notice. The FIRM and FIS report are the basis of the floodplain management measures that the community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in the National Flood Insurance Program (NFIP). Comments are due 01/12/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-14/ pdf/2022-22316.pdf. Federal Register, Vol. 87, No. 198, 10/14/2022, 62434-62435.

FEMA seeks comment regarding proposed flood hazard determinations, which may include additions or modifications of any Base Flood Elevation (BFE), base flood depth, Special Flood Hazard Area (SFHA) boundary or zone designation, or regulatory floodway on the Flood Insurance Rate Maps (FIRMs), and where applicable, in the supporting Flood Insurance Study (FIS) reports for communities in the states of Ohio and Wisconsin, as listed in the table in the notice. The FIRM and FIS report are the basis of the floodplain management measures that the community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in the National Flood Insurance Program (NFIP). Comments are due 01/19/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR2022-10-21/pdf/2022-22973.pdf Federal Register, Vol. 87, No. 203, 10/21/2022, 64082-64083.

FEMA seeks comment regarding proposed flood hazard determinations, which may include additions or modifications of any Base Flood Elevation (BFE), base flood depth, Special Flood Hazard Area (SFHA) boundary or zone designation, or regulatory floodway on the Flood Insurance Rate Maps (FIRMs), and where applicable, in the supporting Flood Insurance Study (FIS) reports for communities in the states of Indiana and Minnesota, in the table in the notice. The FIRM and FIS report are the basis of the floodplain management measures that the community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in the National Flood Insurance Program (NFIP). Comments are due 01/26/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR2022-10-28/pdf/2022-23543.pdf Federal Register, Vol. 87, No. 208, 10/28/2022, 65217-65218.

FEMA seeks comment regarding proposed flood hazard determinations, which may include additions or modifications of any Base Flood Elevation (BFE), base flood depth, Special Flood Hazard Area (SFHA) boundary or zone designation, or regulatory floodway on the Flood Insurance Rate Maps (FIRMs), and where applicable, in the supporting Flood Insurance Study (FIS) reports for communities in the state of Iowa, as listed in the table in the notice. The FIRM and FIS report are the basis of the floodplain management measures that the community is required either to adopt or to show evidence of having in effect in order to qualify or remain qualified for participation in the National Flood Insurance Program (NFIP). Comments are due 02/08/2023. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-11-10/ pdf/2022-24513.pdf. Federal Register, Vol. 87, No. 217, 11/10/2022, 67925-67926.

Regulatory Spotlight

FEMA Issues Correction to Proposed Flood Hazard Determinations.

FEMA issued a correction to a previously published proposed flood hazard determination. On 08/04/2022, FEMA published in the Federal Register a proposed flood hazard determination notice that contained an erroneous table. The notice provides corrections to the previously published table to be used in lieu of the erroneous information. The table provided in the correction represents the proposed flood hazard determinations and communities affected for Athens County, Ohio, and Incorporated Areas. Comments are due 01/10/2023. The correction may be viewed at: https://www. govinfo.gov/content/pkg/FR-2022-10-12/pdf/2022-22134.pdf Federal Register, Vol. 87, No. 196, 10/12/2022, 61614-61615.

IRS Issues Rules Regarding Section 42 Low-Income Housing Credit Average Income Test Regulations.

The Internal Revenue Service (IRS) issued final and temporary rules which set forth guidance on the average income test for purposes of the low-income housing credit. If a building is part of a residential rental project that satisfies the test, the building may be eligible to earn low-income housing credits. The final and temporary rules affect owners of low-income housing projects, tenants in the projects, and state or local housing credit agencies that monitor compliance with the requirements for low-income housing credits. IRS also issued a proposed rule related to the recordkeeping and reporting requirements for the average income test. The final and temporary rules are effective 10/12/2022. Comments regarding the proposed recordkeeping rule are due 12/12/2022. The final and termporary rules may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-12/pdf/2022-22070.pdf Federal Register, Vol. 87, No. 196, 10/12/2022, 61489-61506. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-12/ pdf/2022-22100.pdf Federal Register, Vol. 87, No. 196, 10/12/2022, 61543-61544.

IRS Issues Final Rule on Affordability of Employer Coverage for Family Members of Employees.

IRS issued a final rule under section 36B of the Internal Revenue Code that amends the regulations regarding eligibility for the premium tax credit to provide that affordability of employer-sponsored minimum essential coverage for family members of an employee is determined based on the employee’s share of the cost of covering the employee and those family members, not the cost of covering only the employee. The final rule also adds a minimum value rule for family members of employees based on the benefits provided to the family members. The final rule is effective 12/12/2022 The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-13/pdf/2022-22184.pdf. Federal Register, Vol. 87, No. 197, 10/13/2022, 61979-62003.

SBA Announces Application Deadline for MREIDL.

The Small Business Administration (SBA) issued application deadline for the Military Reservist Economic Injury Disaster Loan Program (MREIDL). Effective 10/01/2022, small businesses employing military reservists may apply for economic injury disaster loans if those employees are ordered to perform active service for a period of more than 30 consecutive days, and those employees are essential to the success of the small businesses’ daily operations. Contact information for more information applying for the program and where to file applications may be found within the notice. Program interest rates are published quarterly in the Federal Register. The current rate for eligible small businesses is 3.040. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-13/pdf/2022-22251.pdf Federal Register, Vol. 87, No. 197, 10/13/2022, 62169.

SBA Issues Proposed Rule on Small Business Investment Company Investment Diversification and Growth.

SBA issued a proposed rule to revise the regulations for the Small Business Investment Company (SBIC) Program to significantly reduce barriers to program participation for new SBIC fund managers and funds investing in underserved communities and geographies, capital intensive investments, and technologies critical to national security and economic development. The proposed rule introduces an additional type of SBIC (Accrual SBICs) to increase program investment diversification and patient capital financing for small businesses and modernize rules to lower financial barriers to

Regulatory Spotlight

program participation. The proposed rule will help SBA implement the Executive Order, Advancing Racial Equity and Support for Underserved Communities Through the Federal Government, by reducing financial and administrative barriers to participate in the SBIC Program. The proposed rule would also help modernize the program’s license offerings to align with a more diversified set of private funds investing in underserved small businesses. The proposed rule also incorporates the statutory requirements of the Spurring Business in Communities Act. Comments are due 12/19/2022 The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-19/pdf/2022-22340.pdf Federal Register, Vol. 87, No. 201, 10/19/2022, 63436-63458.

SBA Proposes to Lift Moratorium on Licensing New SBLCs and to Create Mission-Based SBLC.

SBA proposed to lift the moratorium on licensing new Small Business Lending Companies (SBLCs) and add a new type of entity called a Mission-Based SBLC. SBA also proposed to remove the requirement for a Loan Authorization. Comments are due 01/06/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-202211-07/pdf/2022-23597.pdf Federal Register, Vol. 87, No. 214, 11/07/2022, 66963-66971.

SBA Proposes to Amend Affiliation and Lending Criteria for Business Loan Programs.

SBA seeks comment on proposed amendments to various regulations governing SBA’s 7(a) Loan Program and 504 Loan Program, including use of proceeds for partial changes of ownership, lending criteria, loan conditions, reconsiderations, and affiliation standards, to expand access to capital to small businesses and drive economic recovery. The proposed amendments to affiliation standards will also apply to the Microloan Program, Intermediary Lending Pilot Program, Surety Bond Guarantee Program, and the Disaster Loan programs (except for the COVID Economic Injury Disaster Loan (EIDL) Disaster Loan Program). Comments are due 12/27/2022. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-26/pdf/2022-23167.pdf Federal Register, Vol. 87, No. 206, 10/26/2022, 64724-64734.

FCIC Amends Walnut Crop Insurance Provisions.

The Federal Crop Insurance Corporation (FCIC) issued a final rule to amend its walnut crop insurance regulations to remove the minimum acreage insurability requirement. The change will align the insurability requirements for walnut crop insurance with other tree nut insurance policies. Many walnut producers also grow other tree nut crops. Having different insurability requirements for crop insurance for similar crops has created additional work and confusion for producers and their Approved Insurance Providers (AIP). Much like other tree nut policies, the Walnut Crop Provisions will continue to require that the producer has a share in the orchard, the trees be adapted to the area, grown in an orchard acceptable to the AIP if inspected, and meet a minimum age requirement. The remaining insurability requirements have proven to be effective underwriting controls in the other tree nut policies to ensure the walnut crop insurance program remains actuarially sound with the change. In aligning the insurability requirements for walnuts and similar crops, the change is expected to make it easier for producers to obtain walnut crop insurance. The final rule is effective 10/31/2022. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-25/pdf/202223111.pdf Federal Register, Vol. 87, No. 205, 10/25/2022, 64365-64368.

Agencies Issue NOSA for FY 2023 Strategic Economic and Community Development Program.

The Rural Business-Cooperative Service (RBC), Rural Housing Service (RHS), and Rural Utilities Service (RUS) (collectively, the agencies) issued a notice of solicitation of applications (NOSA) for the Strategic Economic and Community Development priority, as reauthorized by Section 6401 of the Agriculture Improvement Act for projects that support multi-jurisdictional and multi-sectoral strategic community investment plans. The NOSA describes the requirements by which the agencies will consider projects eligible for the covered programs’ reserved appropriated funds and the information needed to submit an application. The NOSA has been issued prior to passage of a final appropriations act for FY 2023 to allow potential applicants time to submit applications for financial assistance under the covered programs and to give the agencies time to process applications. The NOSA may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-11-07/pdf/2022-24133.pdf Federal Register, Vol. 87, No. 214, 11/07/2022, 67010-67013.

Regulatory Spotlight

RUS Confirms Final Rural eConnectivity Program Rule.

The Rural Utilities Service (RUS) published a final rule with comment in the Federal Register on 02/26/2021, to establish the Rural eConnectivity Program. The final rule described the eligibility requirements, application process, criteria that RUS uses to assess applicants’ creditworthiness, and outlined the application process. RUS has confirmed the final rule as it was published and provides responses to the comments that addressed the broadband speed used to determine eligibility. The final rule published in the Federal Register on 02/26/2021, is confirmed as of 04/27/2021. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-19/pdf/2022-22677.pdf Federal Register, Vol. 87, No. 201, 10/19/2022, 63419.

RHS Waives

Regulatory

Requirements for Section 502 Direct and Guaranteed Manufactured Housing Pilots.

The Rural Housing Service (RHS) announced the waiver of two regulatory requirements for the Section 502 Direct and Guaranteed Manufactured Housing pilot program. RHS’ intention is to evaluate the existing regulations and remove regulatory barriers to assist eligible applicants with improved ease of use for very low- to moderate-income homeowners seeking to purchase affordable housing. The pilot also supports the current Administration’s Housing Supply Action Plan which seeks to boost new financing mechanisms to build and supply quality affordable housing units. The notice briefly discusses the continuation of the existing waivers and provides contact information for additional details about the pilot program. The effective date of the two regulatory waivers is 11/02/2022. The duration of the pilot program is anticipated to continue until 11/04/2024, at which time RHS may extend the pilot program (with or without modifications) or terminate the program. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-202211-02/pdf/2022-23754.pdf Federal Register, Vol. 87, No. 211, 11/02/2022, 66075-66077.

RHS Seeks Comment on Direct Single Family Housing Loans and Grants Information Collection.

RHS seeks comment regarding its intention to revise an information collection titled, 7 CFR part 3550, Direct Single Family Housing Loans and Grant Programs. Through its direct single family housing loan and grant programs RHS provides eligible applicants with financial assistance to own adequate but modest homes in rural areas. The financing and servicing are provided directly by RHS. The revisions include an increase in the number of burden hours. The change is attributed to the adding of a newly simplified section 504-intake form and prequalification process. Comments are due 12/19/2022. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-19/pdf/2022-22669.pdf. Federal Register, Vol. 87, No. 201, 10/19/2022, 63474-63475.

SEC Issues Final Electronic Recordkeeping Requirements for Certain Brokers, Dealers, and Swap Participants.

The Securities and Exchange Commission (SEC) issued a final rule to adopt amendments to the recordkeeping rules applicable to broker-dealers, security-based swap dealers, and major security-based swap participants. The amendments modify requirements regarding the maintenance and preservation of electronic records, the use of third-party recordkeeping services to hold records, and the prompt production of records. SEC has also designated broker-dealer examining authorities as SEC designees for purposes of certain provisions of the broker-dealer record maintenance and preservation rule. The final rule is effective 01/03/2023. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-11-03/pdf/2022-22670.pdf Federal Register, Vol. 87, No. 212, 11/03/2022, 66412-66452.

SEC Adopts Updated EDGAR Filer Manual.

SEC announced the adoption of amendments to Volume II of the Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) Filer Manual (Filer Manual) and related rules and forms as further outlined in the announcement. The EDGAR system was upgraded on 09/19/2022. The final rule is effective 10/13/2022. The final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-13/pdf/2022-22194.pdf. Federal Register, Vol. 87, No. 197, 10/13/2022, 61977-61979.

Regulatory Spotlight

SEC Issues Proposed Rule on Standards for Covered Clearing Agencies for Treasury Securities and Application of the Broker-Dealer Customer Protection Rule.

SEC issued a proposed rule to amend the standards applicable to covered clearing agencies for U.S. Treasury securities to require that such covered clearing agencies have written policies and procedures reasonably designed to require that every direct participant of the covered clearing agency submit for clearance and settlement all eligible secondary market transactions in U.S. Treasury securities to which it is a counterparty. In addition, SEC has proposed additional amendments to the Covered Clearing Agency Standards, with respect to risk management. The requirements are designed to protect investors, reduce risk, and increase operational efficiency. Finally, SEC has proposed to amend the broker-dealer customer protection rule to permit margin required and on deposit with covered clearing agencies for U.S. Treasury securities to be included as a debit in the reserve formulas for accounts of customers and proprietary accounts of broker-dealers (PAB), subject to certain conditions. Comments are due 12/27/2022. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-25/pdf/2022-20288.pdf. Federal Register, Vol. 87, No. 205, 10/25/2022, 64610-64682.

FTC Issues Proposed Rule on Impersonation of Government and Businesses.

The Federal Trade Commission (FTC) issued a proposed rule entitled, Rule on Impersonation of Government and Businesses, which would prohibit the impersonation of government, businesses, or their officials. FTC finds such impersonation to be prevalent based on the comments it received in response to an advance notice of proposed rulemaking and other information discussed in the proposal. FTC seeks comment, data, and arguments concerning the utility and scope of the proposed rule to prohibit the impersonation of government, businesses, or their officials. Comments are due 12/16/2022. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-202210-17/pdf/2022-21289.pdf Federal Register, Vol. 87, No. 199, 10/17/2022, 62741-62751.

FTC Extends Comment Period for Commercial Surveillance and Data Security ANPR.

FTC announced an extension of the comment period for the advance notice of proposed rulemaking (ANPR) regarding whether FTC should prescribe new trade regulation rules or other regulatory alternatives concerning commercial surveillance and data security practices that are prevalent and unfair or deceptive. The ANPR was published in the Federal Register on 08/22/2022. Comments are due 11/21/2022. The ANPR may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2022-10-20/pdf/2022-22813.pdf. Federal Register, Vol. 87, No. 202, 10/20/2022, 63738-63739.

FTC Issues ANPR to Address Deceptive or Unfair Acts or Practices Relating to Fees.

FTC seeks comment regarding an advance notice of proposed rulemaking (ANPR) to address certain deceptive or unfair acts or practices relating to fees. FTC seeks comment, data, and arguments concerning the need for such a rulemaking to prevent persons, entities, and organizations from imposing such fees on consumers. Comments are due 01/09/2023. The ANPR may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-11-08/pdf/2022-24326.pdf. Federal Register, Vol. 87, No. 215, 11/08/2022, 67413-67424.

FTC Issues ANPR Regarding Use of Reviews and Endorsements.

FTC seeks comment regarding an advance notice of proposed rulemaking (ANPR) to address certain deceptive or unfair uses of reviews and endorsements. FTC seeks comment, data, and arguments concerning the need for such a rulemaking to prevent unfair or deceptive marketing utilizing reviews and endorsements. In addition, FTC seeks comment regarding how FTC can ensure the broadest participation by affected interests in the rulemaking process. Comments are due 01/09/2023. The ANPR may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-11-08/pdf/2022-24139.pdf Federal Register, Vol. 87, No. 215, 11/08/2022, 67424-67430.

VA Proposes Revisions to VA-Guaranteed or Insured Interest Rate Reduction Refinancing Loans.

The Department of Veteran Affairs (VA) proposed to amend its rules on VA-backed interest rate reduction refinancing loans (IRRRLs). The Economic Growth, Regulatory Relief, and Consumer Protection Act and the Protecting Affordable

Regulatory Spotlight

for Veterans Act outline the circumstances in which VA may guarantee or insure refinance loans by setting forth net tangible benefit, recoupment, and seasoning standards. The proposed rule would update VA’s existing IRRRL regulation to current statutory requirements. Comments are due 01/03/2023. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-11-01/pdf/2022-23387.pdf. Federal Register, Vol. 87, No. 210, 11/01/2022, 65700-65714.

VA Seeks Comment on VA-Guaranteed Home Loan Cash-Out Refinance Loan Comparison Disclosure.

VA seeks comment regarding an information collection titled, VA-Guaranteed Home Loan Cash-out Refinance Loan Comparison Disclosure. All refinancing loan applications taken on or after the effective date that do not meet the requirements listed within the notice may be subject to indemnification or the removal of the guaranty. The collection applies to three categories of refinance loans: Interest Rate Reduction Refinancing Loans (IRRRL), TYPE I Cash-Out Refinance, and TYPE II Cash-Out Refinance. Comments are due 12/27/2022. The notice may be viewed at: https://www. govinfo.gov/content/pkg/FR-2022-10-26/pdf/2022-23227.pdf Federal Register, Vol. 87, No. 206, 10/26/2022, 64860-64861.

VA Issues ANPR on Loss-Mitigation Options for Guaranteed Loans.

VA’s Loan Guaranty Service seeks comment on an advanced notice of proposed rulemaking (ANPR) which would expand VA’s incentivized loss-mitigation options available to servicers that assist veterans whose VA-guaranteed loans are in default. Although VA identifies, specific topics and questions for discussion within the ANPR, it encourages commenters to discuss any other topic that will help VA as it explores whether to expand the incentivized loss-mitigation options outlined in VA regulation. Comments are due 01/17/2023. The ANPR may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2022-10-17/pdf/2022-22414.pdf Federal Register, Vol. 87, No. 199, 10/17/2022, 62752-62753.

DOL Issues Proposed Rule on Employee or Independent Contractor Classification Under FLSA.

The Department of Labor (DOL) has proposed to modify Wage and Hour Division regulations to revise its analysis for determining employee or independent contractor classification under the Fair Labor Standards Act (FLSA) to be more consistent with judicial precedent and the FLSA’s text and purpose. Comments are due 11/28/2022. The proposed rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-13/pdf/2022-21454.pdf Federal Register, Vol. 87, No. 197, 10/13/2022, 62218-62275.

DOL Extends Comment Period for Employee or Independent Contractor Classification Under FLSA.

DOL announced an extension of the comment period for the proposed rule, Employee or Independent Contractor Classification Under the Fair Labor Standards Act (FLSA), published in the Federal Register on 10/13/2022. The comment period has been extended to 12/13/2022. The proposed rule may be viewed at: https://www.govinfo.gov/ content/pkg/FR-2022-10-26/pdf/2022-23314.pdf Federal Register, Vol. 87, No. 206, 10/26/2022, 64749.

NLRB Extends Comment Period for Proposal Regarding Standard for Determining Joint Employer Status.

The National Labor Relations Board (NLRB) announced an extension of the comment period for a proposed rule published in the Federal Register on 09/07/2022, regarding the revision of the standard for determining whether two employers, as defined in section 2(2) of the National Labor Relations Act, are joint employers of particular employees within the meaning of section 2(3) of the Act. The comment period has been extended to 12/07/2022. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-19/pdf/2022-22690.pdf. Federal Register, Vol. 87, No. 201, 10/19/2022, 63465.

Mortgages

Regulatory Spotlight

SSA Announces 2023 Cost-of-Living Increase and Other Determinations.

The Social Security Administration (SSA) issued a notice to announce, under Title II of the Social Security Act, there will be an 8.7 percent cost-of-living increase in Social Security benefits effective December 2022. In addition, the national average wage index for 2021 is $60,575.07. The cost-of-living increase and national average wage index affect other program parameters as described in the notice. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR2022-10-24/pdf/2022-23073.pdf. Federal Register, Vol. 87, No. 204, 10/24/2022, 64296-64302.

NCUA Seeks Comment on Information Collections for Records Preservation, Federal Credit Union Bylaws, and Certain Payments on Shares.

The National Credit Union Administration (NCUA) seeks comment regarding three information collections. The first collection in the notice is titled, Records Preservation. Part 749 of NCUA regulations directs each credit union to have a vital records preservation program that includes procedures for maintaining duplicate vital records at a location far enough from the credit union’s offices to avoid the simultaneous loss of both sets of records in the event of disaster. Part 749 also requires the program be in writing and include emergency contact information for employees, officials, regulatory offices, and vendors used to support vital records. The second information collection is titled, Federal Credit Union (FCU) Bylaws, Appendix A to Part 701. The FCU Act and Bylaws require new and current FCUs to prepare and maintain documents, such as organization certificate, charter, notices, meeting minutes, and election results, and notify NCUA of certain changes. NCUA uses the information to regulate the safety and soundness of FCU and protect the National Credit Union Share Insurance Fund (NCUSIF). The third information collection is titled, Payments on Shares by Public Units and Nonmembers, 12 CFR 701.32. Section 107(6) of the FCU Act and section 701.32 of NCUA Rules and Regulations may receive from public units and political subdivisions and nonmember credit unions, payments on shares. Limitations on nonmember and public unit deposits in FCUs is 50 percent of the difference of paid-in and unimpaired capital and surplus and any public unit and nonmember shares, as measured at the time of acceptance of each public unit or nonmember share. The collection of information is necessary to protect the NCUSIF. Comments are due 12/27/2022. The notice may be viewed at: https://www.govinfo.gov/content/pkg/FR-2022-10-26/pdf/2022-23267. pdf Federal Register, Vol. 87, No. 206, 10/26/2022, 64817-64818.

In-House Legal Counsel Webinar Series

November 22, 2022 9–11 a.m.

Complex Issues When Dealing with Death of a Customer

Presenters: Christopher Schmidt and Thomas Vercauteren Boardman Clark Law Firm, Madison

The WBA In-House Legal Counsel Webinar Series is designed to give in-house bank attorneys the content they need to keep up to date on legal issues that affect a bank’s day-to-day operations.

Participants will also have the opportunity to earn CLE credits on topics that are specific to the banking industry.

Learn more or register online at: www.wisbank.com/LegalCounselWebinar

CLE Hours 2021 and 2022

List of Recent WBA Programs to Receive Continuing Legal Education Designation

Wisconsin Bank Attorney:

The Board of Bar Examiners of the Supreme Court of Wisconsin has approved the following completed WBA educational programs for use toward the Wisconsin mandatory Continuing Legal Education (CLE) requirement for attorneys. None of the activities listed below include Ethics and Professional Responsibility (EPR) hours or qualify for GAL education.

2021

WBA Compliance Forum, June 2021

3.0 CLE Hours

June 22, 2021 — Stevens Point

June 23, 2021 — Madison

WBA Trust Conference, May 2021

5.5 CLE Hours

May 18, 2021 — live webcast

WBA Compliance Forum, November 2021

4.0 CLE Hours

November 9, 2021 — Wausau

November 10, 2021 — Madison

WBA Compliance Forum, February 2022

3.0 CLE Hours

February 22, 2022 — Wausau

February 23, 2022 — Madison

WBA Compliance Forum, June 2022

4.5 CLE Hours

June 28, 2022 — Wisconsin Dells

WBA Trust Conference, May 2022

5.0 CLE Hours

May 25, 2022 — Madison

WBA Compliance Forum, November 2022

___ CLE Hours submission pending

November 15, 2022 — Wisconsin Dells

2022

WBA In-House Legal Counsel Series

September 2021

Mergers and Acquisitions, Pre and Post M/A Issues to Consider 2.0 CLE Hours — live webcast and on demand

October 2021

Troubled Business Borrowers Deal with Real and Personal Property in a Defaulted Loan 2.0 CLE Hours — live webcast and on demand

WBA In-House Legal Counsel Series

March 2022

Survey and Title Review (with Endorsements) 2.0 CLE Hours — live webcast and on demand

March 2022 Court Case Update: Recent Federal and State Cases 2.0 CLE Hours — live webcast and on demand

April 2022 Employment Law Overview and Update 2.0 CLE Hours — live webcast and on demand

May 2022

Municipal Lending Update 2.0 CLE Hours — live webcast and on demand

November 2022

Complex Issues When Dealing with Death of Customer ___ CLE Hours submission pending — live webcast and on demand

Compliance Notes

2:00 to 3:30 p.m.

FDIC recently reported that despite the unprecedented economic challenges posed by the COVID-19 pandemic, nearly 96 percent of U.S. households were banked in 2021, according to FDIC’s 2021 National Survey of Unbanked and Underbanked Households. The survey also found an estimated 4.5 percent of U.S. households (representing 5.9 million households), lacked a bank or credit union account, the lowest national unbanked rate since the FDIC survey began in 2009. FDIC also posted a podcast regarding the topic, The Unbanked and Underbanked. The news release may be viewed at: www.fdic.gov/news/press-releases/2022/pr22075.html. The podcast may be accessed at: https://anchor.fm/ fdic/episodes/The-Unbanked-and-Underbanked-e1po993

CFPB released a new bulletin which highlights a rise in crypto-asset complaints. Consumers most commonly reported being victimized by frauds, theft, account hacks, and scams. Consumers also had issues with executing transactions and transferring assets between exchanges. Many consumers had issues with accessing funds in their account due to outright platform failures, identity verification issues, security holds, or because of technical issues with platforms. Poor customer service is a common theme across crypto-related complaints. Crypto-assets are a private sector digital asset that depend primarily on cryptography and a distributed ledger (such as a blockchain) or similar technology; the assets are also commonly referred to as “virtual currencies,” “cryptocurrencies,” “crypto tokens,” “crypto coins,” or simply “crypto.” The bulletin may be viewed at: www.consumerfinance.gov/about-us/newsroom/cfpbpublishes-new-bulletin-analyzing-rise-in-crypto-asset-complaints/

IRS announced the amount individuals can contribute to their 401(k) plans in 2023 has increased to $22,500, up from $20,500 for 2022. IRS also issued technical guidance regarding cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2023. In addition, the limit on annual contributions to an IRA increased to $6,500, up from $6,000. The announcement and cost-of-living adjustments may be viewed at: www.irs.gov/newsroom/401k-limit-increases-to-22500-for-2023-ira-limit-rises-to-6500

FDIC released an update to its Risk Management Manual of Examination Policies. The updates include revisions to the risk scoping activities and credit card related merchant activities within Section 22.1 of the manual. The updated manual may be viewed at: www.fdic.gov/regulations/safety/manual/index.html

FHFA announced the validation and approval of both the FICO 10T and VantageScore 4.0 credit score models for use by Fannie and Freddie. Currently, the Classic FICO model has been used for nearly twenty years. After a multiyear transition period, lenders will be required to deliver loans with both scores when available. The change is expected to provide more accurate credit scores, more inclusive scores, and enhance safety and soundness in the housing market. FHFA also announced that Fannie and Freddie will require two, rather than three, credit reports from national consumer reporting agencies. This change is expected to reduce costs and encourage innovation. The announcement may be viewed at: www.fhfa.gov//Media/PublicAffairs/Pages/FHFA-Announces-Validation-of-FICO10T-and-Vantage-Score4for-FNM-FRE.aspx

OCC announced it will establish an Office of Financial Technology early next year to bolster its expertise and ability to adapt to a rapidly changing banking landscape. The Office of Financial Technology will build on and incorporate the Office of Innovation, which OCC established in 2016 to coordinate its efforts to support responsible financial innovation. The office will provide strategic leadership, vision, and perspective for OCC’s financial technology activities and related supervision. The news release may be viewed at: www.occ.gov/news-issuances/news-releases/2022/nrocc-2022-133.html

FRB released its most current version of the Beige Book. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its district through reports from bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. The latest Beige Book may be viewed at: www.federalreserve.gov/monetarypolicy/beige-book-default.htm

The federal banking regulators will host an interagency webinar on Fair Lending on 12/06/2022, from

EST. Speakers will represent eight federal agencies: CFPB, HUD, DOJ, FDIC, FHFA, FRB, OCC, and NCUA. Registration for the webinar may be found at: https://stlouisfed-org.zoomgov.com/webinar/register/WN_ tGNM9OiaTlCCEJ4XhAFjxA

Compliance Notes

FHFA announced the 2023 multifamily loan purchase caps for Fannie Mae and Freddie Mac will be $75 billion for each enterprise, for a combined total of $150 billion to support the multifamily market. The 2023 caps reflect an anticipated contraction of the multifamily originations market in 2023. To ensure a strong focus on affordable housing and traditionally underserved markets, FHFA will require that at least 50 percent of Fannie’s and Freddie’s multifamily business be mission-driven affordable housing. More information about the 2023 caps may be viewed at: www.fhfa.gov//Media/PublicAffairs/Pages/FHFA-Announces-2023-Multifamily-Loan-Purchase-Caps-for-Fannie-Maeand-Freddie-Mac.aspx

FRB released the October 2022 Senior Loan Officer Opinion Survey on Bank Lending Practices which addresses changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally correspond to the third quarter of 2022. Regarding loans to businesses, survey respondents reported, on balance, tighter standards and weaker demand for C&I loans to firms of all sizes over the third quarter. Meanwhile, banks reported tighter standards and weaker demand for all CRE loan categories. The full survey may be viewed at: www.federalreserve.gov/data/sloos/sloos-202210.htm

FinCEN issued its most recent Financial Trend Analysis of ransomware-related BSA filings for 2021, indicating that ransomware continued to pose a significant threat to U.S. critical infrastructure sectors, businesses, and the public. The report focuses on ransomware trends in BSA filings from July-December 2021, and addresses the extent to which a substantial number of ransomware attacks appear to be connected to actors in Russia. The analysis covers pertinent ransomware activities for calendar year 2021, focuses on the second half of 2021, and builds on the BSA data underlying FinCEN’s October 2021 report. Among the most notable findings in the report: reported ransomware-related incidents have substantially increased from 2020; ransomware-related BSA filings in 2021 approached $1.2 billion; and roughly 75 percent of the ransomware-related incidents reported to FinCEN during the second half of 2021 pertained to Russia-related ransomware variants. The report may be viewed at: www.fincen.gov/news/news-releases/fincenanalysis-reveals-ransomware-reporting-bsa-filings-increased-significantly

OCC will host a symposium on bank mergers in Washington, D.C., on 02/10/2023. The symposium will promote public input and discussion regarding the framework for analyzing bank mergers under federal law, including topics such as competition, financial stability, and convenience and needs. The symposium is expected to include keynote remarks, panel presentations reflecting a range of views, and discussions about research on bank mergers. The announcement may be viewed at: occ.gov/news-issuances/news-releases/2022/nr-occ-2022-132.html

FDIC has released its November 2022 Consumer News. The most recent edition focuses on servicemembers on the move and includes information regarding reviewing household budgets, changes to housing, evaluating banking needs, and avoiding scams. The publication may be viewed at: www.fdic.gov/resources/consumers/consumernews/2022-11.html

Insights of a Wisconsin Compliance Officer

These friendships are certainly not unique just for WBA Legal as the Wisconsin compliance community is a generous one and compliance officers routinely share expertise, experiences, and tips with each other; through that sharing many have a broad network of fellow compliance officer contacts and friendships.

This new section is meant to provide insights of a Wisconsin compliance officer from the broad network of WBA Legal and Wisconsin’s compliance officer community. In addition, as happens in every industry, there are times when an industry sees a changing of the guard so to speak as anchors of the industry retire. In Wisconsin’s compliance community, we are currently experiencing such a time as many longtime compliance professionals are or will be retiring over the next few years. As compliance manuals, files, and tidbits are being handed off to the next generation of compliance experts, WBA Legal also wanted to capture insights and thoughts of wisdom from those retiring.

In this inaugural section, WBA Legal is excited to share the insights of a beloved compliance officer whose tenure in compliance reaches back to the 1990s. Much has changed in compliance since that time, and many an hour has been spent trying to understand just what exactly it is that compliance examiners seek as it seems to change from exam to exam.

Please enjoy some insights as shared from the eyes of Bev Downing, Vice President – Compliance, Royal Bank, Elroy Wisconsin.

Q: When did you start in compliance? Why compliance?

Bev: I was first “assigned” Compliance in the 1990’s as a side job to my lending position. I only found out that I was that Bank’s Compliance Officer because I read it in the Board minutes! I remember thinking that I should probably do something as Compliance Officer, but, at that time, I wasn’t sure just what all might be involved. Turns out, I was doing a lot of compliance work with my lending job, so it was just a matter of looking at it from a Compliance standpoint and organizing accordingly. Although I enjoyed being a Lender, I enjoyed the Compliance part of my job a lot more, but it seemed that Compliance always took a back seat to my Lending position. I began my current position as Compliance Officer for Royal Bank in Elroy in 2007. What a relief to be able to concentrate solely on Compliance!

Q: Do you have any particular “trick” or how best do you tackle understanding a new reg or new requirement? Start small. New regulations and requirements take a long time to get from a starting point to an implementation date. I find it very helpful to put the initial written information in a folder and add to the folder as more information becomes available. As time goes on and more information is gathered, I can sort the information into an organized workbook where I can study the materials and put together an implementation plan and timeline. A new regulation is like a big puzzle. When you first encounter it, it’s all scattered about, but as time goes on, the pieces come together and eventually you have a finished product – just in time for implementation day!

Q: TRID aside (as many would likely pick TRID), what is your least fav regulation to manage? Why? Flood – 100%. Flood rules can be burdensome and timing requirements can be confusing, especially if you have to force place an insurance policy. The penalties for non-compliance can be huge. One mishandled file could result in thousands of dollars in penalties. A good, written, procedure is a MUST.

Q: What are you most proud of accomplishing in your career? I am very pleased to have achieved and maintained a high standard of Compliance over the course of my tenure here.

Q: What will you miss the most? My co-workers of course! And all those wonderful people that have helped me out along the way. As for Compliance, I will miss the challenges that come with every day. I never know exactly what my day will bring and no two days are ever the same.

WBA Legal wishes to introduce a new section within the WBA Compliance Journal meant to highlight insights from fellow Wisconsin compliance officers. Through interactions on calls of the WBA Legal Call Program, in teaching at WBA Education compliance schools and programs, and as staff liaisons to banker-led WBA Committees and Sections, WBA Legal has developed many longstanding friendships with compliance officers from across Wisconsin.

Insights of a Wisconsin Compliance Officer

Q: Now at this side of your career, and with all of your compliance experience and all that you have helped to implement, what advice would you have given yourself when you first started in compliance? Don’t stress over exams and audits. The examiners and auditors are there to help you and can be one of your best sources of information and guidance.

Q: How did you successfully train fellow compliance staff and/or other bank staff on the importance of paying attention to compliance and for the need to get compliance right? It’s all in presentation. The term “Regulation” in itself carries a lot of weight. A quick overview of the penalties for noncompliance also gets their attention and sharing deficiency reports with the Board of Directors is key.

Q: Funniest compliance or banking related story/experience?

Compliance speak is an acquired language. In my first or second verbal report to our Board of Directors, the Chairman of the Board had to ask me to use full phrases instead of acronyms so he could better understand what I was talking about.

Q: What are you looking forward to the most after leaving compliance behind? Freeing up space in my brain for something other than regulatory requirements!

Q: Any parting thoughts for the new compliance guard? Be visible. All staff should know who you are, how to contact you and be comfortable doing so. Let them know right up front that if you don’t know the answer to their question, you will find it.

WBA wishes Bev all the best in her retirement. It has been a great pleasure working with Bev over all the years.

Bev Downing, vice president – compliance, Royal Bank, Elroy, was presented with a WBA Lifetime Service Award in recognition of her 39 years in the banking industry and in celebration of her retirement.

Bev (center) is pictured with WBA Vice President – Legal Heather MacKinnon and Royal Bank President and CEO Dan Ravenscroft. Ravenscroft also serves as a member of the WBA Board of Directors.

In keeping with Bev’s wishes, attendees dressed casually in Wisconsin sports team apparel to celebrate her big retirement “win.”

Congratulations and best wishes, Bev!

DECEMBER 2022

• Branch Manager Boot Camp: Session 4

15 4-part series; virtual half days; $800/attendee

JANUARY 2023

• Midwest Economic Forecast Luncheon

12 Virtual

• Community Bankers for Compliance (CBC) – Session I

24 25 Virtual half days; membership (pricing options vary)

FEBRUARY 2023

• Bank Executives Conference

8–10 Wisconsin Dells

• Compliance Forum: Session 3 14 Wisconsin Dells; annual membership (pricing varies)

MARCH 2023

• Advanced IRA Workshops

7 Madison or virtual; $245/attendee

•Loan Compliance School

13–17 Madison or virtual; $1,295/attendee

•Real Estate Compliance School

15 17 Madison or virtual; $795/attendee

•Introduction to Commercial Lending School

20 22 Madison; $895/attendee

• Security Officer Workshops

22 Wisconsin Dells or virtual; $245/attendee

• Call Report Review & Update Workshop

TBD Virtual half days; $245/attendee

APRIL 2023

•Residential Mortgage Lending School

11 14 Madison; $1,045/attendee

• Agricultural Bankers Conference

13 14 Wisconsin Dells; $300/ag section member or $350/non section member attendee

APRIL 2023 (continued)

• Power of Community Week 17 22 www.wisbank.com/BanksPowerWI

• Compliance Management School 18 20 Madison; $795/attendee

• Women in Banking Conference 25 Wisconsin Dells or virtual; team pricing available

• Community Bankers for Compliance (CBC) – Session II 26 Wisconsin Dells or virtual; membership (pricing options vary)

• Principles of Banking Course TBD Locations TBD; $550/attendee

• HR Conference

TBD Location TBD; $245/attendee

MAY 2023

• American Mortgage Conference 1–3 South Carolina

• School of Bank Management 8–12 Madison; $1,395/attendee

• BSA/AML Conference 10 11 Location TBD; $450/attendee

• CFO Conference 17 Madison; $245/attendee

• Directors Summit 18 Madison; $225/attendee

• Trust Conference 25 Madison; $245/attendee

• Capitol Day TBD Madison

KEY: Color Coded Event Descriptions…

• ConferencesI Summits – One or more days, based on hot topics, industry news and best practices; scheduled time for peer networking. • SchoolsI Boot Camps – Focused on a particular area of banking, allowing for a deep dive into that focused area over the course of two to six days. • WorkshopsI Seminars – One day programs, sometimes in multiple locations, focused on a specific topic or area of banking. • WBA-Hosted Webinars – Two hour webinars instructed with a particular focus on Wisconsin state law and rules. • Other Events

WI