COMPLIANCE Q&A By Bill Showalter, Senior Consultant, Young & Associates, Inc. SPRING 2022 Young & Associates provides banks and thrifts with support for their compliance programs, independent reviews, and in-bank training, as well as a full menu of management consulting, loan review, IT consulting, and policy systems. BSA. Q: We found that one of our customers is providing services that make it a money service business (MSB), but it is not registered. What should we do? A: The Financial Crimes Enforcement Network (FinCEN) states in its BSA Manual that registration with FinCEN, if required, and compliance with any state-based licensing requirements represent the most basic compliance obligations for MSBs. Therefore, it is reasonable and appropriate for a bank to require an MSB to provide evidence of compliance with such requirements, or to demonstrate that it is not subject to such requirements due to the nature of its financial services or its status exclusively as an agent of another MSB(s). FinCEN asserts that a bank should file a Suspicious Activity Report (SAR) if it becomes aware that a customer is operating in violation of the MSB registration or state licensing requirement. FinCEN also notes that there is no requirement in the BSA regulations for a bank to close an account that is the subject of a SAR. The decision to maintain or close an account should be made by bank management under standards and guidelines approved by its board of directors. HPA. Q: I am finding mixed messages as to whether the private mortgage insurance (PMI) disclosures are required for loans on investment rental properties. I have been going back and forth on this issue. Which is it? A: The Homeowners Protection Act (HPA) — there is no implementing regulation — covers only consumerpurpose loans (those for personal, family, or household purposes), so it does not apply to loans involving nonowner-occupied investment properties. A covered “residential mortgage transaction” is a transaction in which a mortgage, deed of trust, purchase money security interest arising under an installment sales contract, or equivalent consensual security interest is created or retained against a singlefamily dwelling that is the principal residence of the mortgagor to finance the acquisition, initial construction, or refinancing of that dwelling. TISA. Q: I’m comparing the fees disclosed on a Truth in Savings account disclosure to a monthly statement for the same deposit product. The account disclosure describes the fee as “A dormant account fee of $2.00 per month will be charged after three years of inactivity.” The description on the statement is “Service Charge.” Doesn’t the disclosed name of the fee have to be the same or similar enough for the consumer to determine what the fee is for? A: Yes, you are correct. The Official Staff Commentary on Regulation DD requires that financial institutions must use consistent terminology to describe terms or features required to be disclosed. The example given in the Commentary is that if an institution describes a monthly fee (regardless of account activity) as a “monthly service fee” in account-opening disclosures, the periodic statement and any change-in-term notices must use the same terminology that consumers can readily identify the fee. TILA. Q: We have a loan to a husband and wife, secured by their home. The wife is the only one on the deed and mortgage. However, our lending team gave both husband and wife rescission notices. But I thought it should be given only to one who is on the deed. Is this correct? 14 The Community Banker mibonline.org
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