Bank Wire: CFPB Updated its Exam Manual to Reflect its Anti-discrimination Stance

CFPB expands its authority to punish banks for discrimination

In a March 16 announcement, the Consumer Financial Protection Bureau (CFPB) announced that it will expand its antidiscrimination efforts to situations in which fair lending laws may not apply. Examples include servicing, collections, consumer reporting, payments, remittances and deposits.

Fair lending laws, such as the Equal Credit Opportunity Act (ECOA), target discrimination in the extension of credit. But discrimination in other consumer finance areas also may trigger liability under the Consumer Financial Protection Act (CFPA), which prohibits unfair, deceptive, and abusive acts or practices. For example, the announcement explains, denying access to a checking account on the basis of race could be an unfair practice even if ECOA doesn’t apply. Discrimination can violate the CFPA regardless of whether it’s intentional.

The CFPB updated its exam manual to reflect its antidiscrimination stance, noting that discrimination may be deemed unfair if it “[causes] substantial harm to consumers that they cannot reasonably avoid, where that harm is not outweighed by countervailing benefits to consumers or competition.” Examiners will require banks and other supervised companies to “show their processes for assessing risks and discriminatory outcomes, including documentation of customer demographics and the impact of products and fees on different demographic groups.”

FinCEN’s Rapid Response Program for cyber-enabled financial crime

In a recent fact sheet, the Financial Crimes Enforcement Network (FinCEN) highlighted its Rapid Response Program (RRP). This program helps victims and their financial institutions recover funds stolen as the result of certain cyber-enabled financial crime schemes, including business email compromise. RRP is a partnership among FinCEN, U.S. law enforcement and foreign partner agencies. It facilitates recovery of stolen funds through rapidly sharing financial intelligence and collaborating with foreign partner agencies to block fraudulent transactions, freeze funds, and stop and recall payments.

To date, the RRP has been used in approximately 70 foreign jurisdictions to recover more than $1.1 billion. The fact sheet provides guidance on how to activate the RRP. This guidance includes a flow chart that outlines the complaint process, as well as instructions on filing suspicious activity reports in connection with activities targeted by an RRP complaint.

FDIC imposes notice requirement for banks involved in crypto activities

In a recent financial institutions letter (FIL), the FDIC required FDIC-supervised institutions to notify the FDIC if they plan to engage in or are currently engaged in any activities involving or related to crypto assets. Unlike a similar policy announced earlier by the Office of the Comptroller of the Currency (OCC), the FDIC policy doesn’t require institutions to obtain specific approval of such activities.

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