Pub. 10 2015-2016 Issue 3

September/October 2015 27 Extraordinary Service for Extraordinary Members. Nebraska banks provide innovative financial solutions to the communities they serve. We are here to enhance your success. Loan Documentation and Negotiation Loan Participations Bank Mergers and Acquisitions Succession Planning for Owners Commercial Litigation Regulatory Consultation and Compliance Loan Default Remedies and Bankruptcy Representation Real Estate Purchase, Sale and Leasing General Business Representation Nathan J. Gurnsey (402) 437-8534 Andrew B. Koszewski (402) 437-8531 Frank J. Mihulka (402) 898-7413 Michael D. Matejka (402) 898-7409 Jill D. Fiddler (402) 437-8532 Daniel R. Carnahan (402) 898-7433 www.woodsaitken.com Omaha Lincoln Denver flood updates give a grace period to come into compliance with those requirements and, therefore, lenders must give notice of the availability of flood escrow on existing accounts by June 30, 2016. That model form is also provided in the appendices to the regulation. What is the Citizens Bank Consent Order and what does it mean for my bank? AConsumer Financial Protection Bureau (CFPB) Consent Order was entered against RBS Citizens Group Inc. for Unfair Acts and Practices related to deposit discrepancies on Aug. 11, 2015. Per the consent order, Citizens had a system in place wherein, if the amount of a discrepancy were below a certain threshold, the bank would not verify the discrepan- cies between the deposit slip and the item. Prior to 2012, the threshold was $50 and after September 2012, the threshold was $25 for verification. In cases where the amount fell under the threshold amount, the bank credited the account for the total of the deposit slip even when it was known that the item the consumer deposited was in a different amount. The bank’s general ledger was then credited or debited with the difference between the amounts. The bank failed to give full credit to the customer where the deposit slip was less than the amounts deposited and, in total, it was found that Citizens had under-credited their customers, and credited the bank’s general ledger, to the tune of $12.3million. In ad- dition, the bank’s own verification policy required a limited review when the amount fell between $23 and $50 (prior to February 2011) and later, between $5 and $20. However, the limited review was generally not completed and, therefore, most deposits that fell under the threshold were not verified. Finally, the bank’s advertising and account agreements were found to have either explicitly stated or implied that every deposit would be verified when they were not. So, what does this mean for your bank? It means that if you have a threshold amount for verifications, now would be a good time to look at that system and ensure that the ap- propriate checks are in place to avoid under-crediting your customers. Furthermore, it would be prudent to ensure the bank’s advertising is accurate as to deposit verification and that the bank and its employees are following its verification policies and procedures. Given that there has been a consent order on this issue, this is something that is more likely to be reviewed in your next exam and/or audit. Did the Patriot Act expire? Does that mean banks no longer have to comply with CIP requirements? How does the USA Freedom Act affect my bank? There has been a lot of confusion over the sunsetting of provisions of the Patriot Act, but the Patriot Act did not expire—only certain sections of it did. Those sections were then reinstated via the USA FreedomAct. However, the USA FreedomAct did not replace the Patriot Act, whichmeans the provisions that affect banks—namely the CIP requirements— are, and have been, in place. The provisions that did sunset and were reinstated deal with intelligence collection. You will find more information by looking at the legislation (H.R. 2048), which you find at https://www.congress.gov/114/bills/ hr2048/BILLS-114hr2048enr.pdf. What else should I be on the lookout for? Bankers should definitely stay tuned to the CFPB, which is expected to finalize both the proposed Home Mortgage Disclosure Act (HMDA) rules from last winter and the Prepaid Card rules. The HMDA rules are expected to be finalized this fall and the Prepaid Card rules are expected to be finalized in early 2016.  Silvia Garcia Maggio serves as an associate general counsel for Compliance Alliance. After graduating from the University of Texas School of Law in 2011, Maggio began her career in real property and foreclosure law. Employed by a national mortgage servicer since 2012, she worked on the OCC independent foreclosure audit and in compliance for Enterprise Risk Management, gaining a multitude of experience dealing with multistate and federal banking regulations. Maggio started with Compliance Alliance in March 2014. She is part of a team of attorneys who assist Compliance Alliance members with a wide range of regulatory and compliance inquiries. Compliance Alliance offers a comprehensive suite of compliance management solutions. Learn how to put them to work for your bank by calling (888) 353-3933, visiting compliancealliance.com , or emailing info@compliancealliance.com .