Each quarter, our financial institutions experts bring you the top headlines to keep you updated on regulatory compliance matters impacting banks and credit unions. Here’s the latest roundup of information you need to know.
The topics covered in this update include:
- Lending compliance
- Deposit compliance
- Other compliance
- Third-party risk management
- Financial crimes, including anti-money laundering/countering the financing of terrorism
Lending compliance
Agencies announce dollar thresholds for applicability of truth in lending and consumer leasing rules for consumer credit and lease transactions
The Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), and Consumer Financial Protection Bureau (CFPB) announced new dollar thresholds for consumer credit and lease transactions These thresholds determine whether certain consumer credit and lease transactions are subject to the protections of Regulation Z (truth in lending) and Regulation M (consumer leasing). The threshold will rise in 2025 from $69,500 to $71,900 effective Jan. 1, 2025. Private education loans and loans secured by real property, such as mortgages, are subject to Regulation Z regardless of the loan amount.
Agencies announce dollar thresholds for smaller loan exemption from appraisal requirements for higher-priced mortgage loans
The FRB, OCC, and CFPB announced new dollar thresholds for smaller loan exemptions from appraisal requirements for higher-priced mortgage loans. The 2025 threshold for higher-priced mortgage loans that are subject to special appraisal requirements will increase from $31,000 to $32,400 effective Jan. 1, 2025. This adjustment is based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as of June 1, 2024.
CFPB published adjustments to thresholds under TILA and FCRA
The CFPB announced two threshold adjustments for 2025. The first, under the Truth in Lending Act (TILA), keeps the minimum interest charge disclosure threshold at $1.00 and sets the high-cost mortgage threshold at $26,968. The second adjustment maintains the maximum charge for consumer file disclosures under the Fair Credit Reporting Act (FCRA) at $15.50. Both adjustments take effect on Jan. 1, 2025.
CFPB published Supervisory Highlights describing illegal practices in auto lending
The CFPB’s latest Supervisory Highlights report uncovers illegal practices in auto finance, such as wrongful repossessions and inaccurate disclosures. Lenders were found repossessing cars despite timely payments or loan extensions, misapplying payments, and providing incorrect credit report information. The report also highlights issues with add-on products, where consumers were charged for unwanted products and denied refunds upon early loan termination. The CFPB has directed auto-finance companies to stop these practices and ensure add-on products are optional and properly refunded. Additionally, lenders misled borrowers about qualifying for low interest rates and placed inaccurate loan information on thousands of consumers’ credit reports.
CFPB issues final rule on overdraft lending
The CFPB issued a final rule limiting banks with at least $10 billion in assets from charging overdraft fees of more than $5 unless they voluntarily set a cap that covers their actual costs and losses or treats overdraft protection as a loan covered by the TILA. The final rule was published on Dec. 12, 2024; the effective date is Oct. 1, 2025. On Dec. 12, 2024, the American Bankers Association joined the Mississippi Bankers Association in filing a lawsuit challenging the CFPB’s effective cap on overdraft fees. The lawsuit argues that overdraft fees can’t be regulated under the TILA as they’re not credit products, and that CFPB acted arbitrarily and capriciously by failing to consider the costs and benefits of the rule.
Deposit compliance
CFPB finalizes rule on federal oversight of popular digital payment apps to protect personal data, reduce fraud, and stop illegal “debanking”
The CFPB finalized a new rule on Nov. 21, 2024, to supervise large nonbank companies offering digital funds transfer and payment wallet apps. This rule aims to ensure that these companies, which handle more than 50 million transactions per year, follow federal laws similar to those that large banks, credit unions, and other financial institutions must adhere to. The rule will help protect consumer privacy, guard against fraud, and prevent illegal account closures, often referred to as “debanking.” The rule will be effective 30 days after publication in the Federal Register.
Other compliance
FDIC announces extension of comment period for deposit insurance recordkeeping rule for banks’ third-party accounts
The Federal Deposit Insurance Corporation announced an extension of the comment period for deposit insurance recordkeeping rules for third-party accounts. The extension is for 45 days, moving the deadline to Jan. 16, 2025. The proposed rule aims to address risks associated with certain third-party arrangements, protection of depositors, and promotion of public confidence in insured deposits.
CFPB proposes rule to stop data brokers from selling sensitive personal data to scammers, stalkers, and spies
On Dec. 3, 2024, the CFPB proposed a new rule aimed at regulating data brokers who sell sensitive personal and financial information. The proposed rule seeks to limit the sale of personal identifiers like Social Security numbers and phone numbers, ensuring that financial data is only shared for legitimate purposes, such as facilitating mortgage approvals, and not sold to scammers targeting vulnerable individuals. The rule would classify data brokers selling sensitive consumer information as “consumer reporting agencies” under the Fair Credit Reporting Act (FCRA), requiring them to comply with accuracy requirements, provide consumers access to their information, and maintain safeguards against misuse. Comments must be received on or before March 3, 2025.
Federal bank regulatory agencies seek further comment on interagency effort to reduce regulatory burden
Federal bank regulatory agencies announced the third notice requesting comments to reduce regulatory burden. This initiative is part of the Economic Growth and Regulatory Paperwork Reduction Act of 1996, which mandates that the Federal Financial Institutions Examination Council and federal bank regulatory agencies review their regulations at least once every 10 years to identify outdated or unnecessary regulatory requirements. The agencies have divided their regulations into 12 categories and are currently soliciting comments on three categories: rules of procedure, safety and soundness, and securities. The public has 90 days from the publication date in the Federal Register to submit their comments. The agencies will continue to request comments on the remaining categories in 2025, aiming to identify regulations that are outdated, unnecessary, or unduly burdensome.
FDIC extends compliance date for official sign requirements
The FDIC has extended the compliance date for the new signage and advertising rule from Jan. 1, 2025, to May 1, 2025. This extension gives financial institutions additional time to implement new processes and systems. The extension specifically applies to Part 328, subpart A, which is part of the final rule aimed at modernizing the use of official FDIC signs and advertising statements. The Jan. 1, 2025 compliance date regarding subpart B is unchanged.
Third-party risk management
No updates occurring during the quarter.
Financial crimes, including anti-money laundering/countering the financing of terrorism
U.S. Department of Treasury issues Interim Final Rule on OFAC recordkeeping requirements
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued an Interim Final Rule (IFR) to extend OFAC’s current recordkeeping requirements from five to 10 years. The IFR was published in the Federal Register on Sept. 13, 2024, with public comments due by Oct. 15, 2024. The new recordkeeping requirements are set to take effect on March 12, 2025.
Agencies issue statement on elder financial exploitation
Five federal financial regulatory agencies issued a statement on elder financial exploitation on Dec. 4, 2024. The statement highlights the significant impact of elder financial exploitation, noting that older adults who experience such exploitation can lose their life savings and financial security. A FinCEN financial trend analysis of Bank Secrecy Act reports over a one-year period ending in June 2023 found that about $27 billion in reported suspicious activity was linked to elder financial exploitation. The statement includes examples of practices that supervised institutions may use to help identify, prevent, and respond to elder financial exploitation, such as developing effective governance and oversight, training employees, using transaction holds and disbursement delays, establishing a trusted contact designation process, filing suspicious activity reports, and engaging with elder fraud prevention and response networks.
