FATF Report on Environmental Crime

The Financial Action Task Force (FATF) recently released a report on Money Laundering from Environmental Crime.  Environmental crime is something many don’t think about but it generates around $110 – $281 billion each year which makes it one of the most lucrative of all criminal activities.  It’s also considered low risk and high reward because of legal inconsistencies that don’t adequately address the financial aspects of the crimes.

The report focuses specifically on laundering money from forestry crime (e.g., illegal logging, illegal land clearance, etc.); illegal mining, and waste trafficking.  These three areas alone are believed to account for about two-thirds of environmental crime proceeds.  The report also outlined common characteristics of these three types.

Environmental crime affects the planet, public health & safety, human security, and social & economic development.  So, the impact goes well beyond the financial considerations.  Unfortunately, there have only been limited efforts to identify, investigate and prosecute money laundering activity related to environmental crime.  Developing a sufficient understanding of the money laundering risks associated with environmental crimes is an essential first step in developing a broader strategy to tackle this type of crime.

For more on this report from FATF, check out our August edition of Banking on BCC.


Updated Compliance Policy

We recently updated our sample Compliance Policy which is available now in the Free Downloads on our website (see General Tools).

We utilized both the FDIC’s Consumer Compliance Examination Manual and the CFPB’s Examination Procedures for Compliance Management in developing this policy and greatly expanded it with necessary Compliance Management System (CMS) components.

While we’re on the topic of CMS, we have a six-part webinar series on Compliance Management.  This comprehensive training will cover a variety of topics from Board & Senior Management Oversight, the Role of the Compliance Officer, Complaint Management, Culture and much, much more.  You don’t want to miss it!


Final Mortgage Servicing Rule Effective August 31st!

On June 28th, the CFPB issued a final mortgage servicing rule that encourages borrowers and servicers to work together to avoid foreclosure in the face of COVID-19 hardships.  The final rule will:

  • Allow loan modification options based on incomplete loss mitigation applications (subject to set requirements and restrictions);
  • Upon live contact, temporarily require servicers to provide certain information on homeownership counseling and:
    • provide borrowers not currently in a forbearance program information on any available COVID-19 payment relief;
    • for certain borrowers in forbearance programs that are nearing completion or recently ended, provide information on the borrower’s forbearance program and other available relief options (with the first live contact).
  • Temporarily implement additional “procedural safeguards” that must generally be met before initiating foreclosure; and,
  • Require servicers to contact certain borrowers at least 30 days before the end of a COVID-19-related short-term payment forbearance program. 
    • This applies to borrowers that remain delinquent after a short-term payment forbearance program was offered on the basis of an incomplete loss mitigation application.  Servicers will need to reach out to see if the borrower wishes to complete the application for additional help.  If so, the servicer must work to complete it before the end of the forbearance program.

You can read an Executive Summary of the Final Rule here.

Small servicers are technically exempt from the final rule.  It’s obvious the CFPB is focused on preventing “avoidable” foreclosures and is “closely monitoring” servicers to learn how they are working with borrowers to reach positive outcomes.  There’s not much time to comply, as the rule takes effect August 31, 2021.  To learn more about this and other mortgage servicing requirements, join us August 12th for our Mortgage Servicing webinar!


The Right of Rescission

The Truth in Lending Act’s right of rescission requirements always seem to generate a lot of questions.  Knowing when to give it, who to give it to and how to count the three-day rescission period can all be tricky.  Here are some questions we’ve received recently:

Question:  Are we required to give rescission for a HELOC secured by an investment property that’s not the borrower’s primary residence?

Answer:  No, the right of rescission only applies when a security interest is taken in a dwelling someone both owns and is their primary residence.

Question:  A mother and daughter own a home together.  The home is the mother’s primary residence and the daughter lives in another state.  Mom is getting a home equity loan in her name only.  Daughter does not get the right to rescind since the home isn’t her primary dwelling, but does she need to receive a copy of the Closing Disclosure?

Answer:  A non-borrower is only required to receive a copy of the Closing Disclosure if the individual has the right to rescind.

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Complying with the Regulation E

Complying with the Regulation E error resolution requirements isn’t always easy.  Financial institutions often want to protect their interests, which is good business sense, but many forget that Regulation E is about protecting the consumer.  We’ve also seen Regulation E violations cited more and more by examiners.  We’re here to help!

Get a refresher on the requirements and check out our “Regulation E: Errors & Disputes” webinar which is available now OnDemand.  One registration gets your whole team trained so add this to your training library today!

We also have a lot of tools available on the FREE Resources page on our website.  Just go to the “Deposit Operations Tools” and you will find EFT flowcharts, investigation forms, sample letters and more!

Did you know we also have a YouTube Channel with helpful videos?  Check out our videos on Regulation E!