Compliance Update with Amy K

A FinCEN Alert relating to Russian sanctions; a free webinar on factors and tools that influence youth financial behavior; and CFPB issues bulletin on deceptive practices. 

FinCEN Alert – Russian Sanctions Evasion Attempts
A reminder regarding the Financial Crimes Enforcement Network (FinCEN) Alert FIN-2022-Alert001 that relates to potential Russian sanctions evasion attempts. The Alert stresses the need for financial institutions to remain vigilant in identifying and reporting potential sanction evasion activity. As discussed in the Alert - FinCEN also strongly encourages all financial institutions to make full use of their ability to share information consistent with Section 314(b)5 of the USA PATRIOT Act.

Sanctions evasion activities could be conducted by a variety of actors, including CVC exchangers and administrators within or outside Russia, that retain at least some access to the international financial system. The Alert includes a number of Red Flags that credit unions should be mindful of, such as:  

• Use of corporate vehicles (i.e. legal entities, such as shell companies, and legal arrangements) to obscure (i) ownership, (ii) source of funds, or (iii) countries involved, particularly sanctioned jurisdictions.
• A customer’s transactions are initiated from or sent to the following types of Internet Protocol (IP) addresses: non-trusted sources; locations in Russia, Belarus, FATF-identified jurisdictions with AML/CFT/CP deficiencies, and comprehensively sanctioned jurisdictions; or IP addresses previously flagged as suspicious.
• A customer’s transactions are connected to CVC addresses listed on OFAC’s Specially Designated Nationals and Blocked Persons List.
• A customer initiates a transfer of funds involving a CVC mixing service.
• A customer has either direct or indirect receiving transaction exposure identified by blockchain tracing software as related to ransomware.

The Alert includes directions on what to include in any filed SAR related to this activity. FinCEN requests that financial institutions reference this alert by including the key term “FIN-2022-RUSSIASANCTIONS” in SAR field 2 (Filing Institution Note to FinCEN) and the narrative to indicate a connection between the suspicious activity being reported and the activities highlighted in this alert.
 
NCUA Letter to Credit Unions
The National Credit Union Administration (NCUA) recently issued Letter to Credit Unions 22-CU-06 announcing that it will enter Phase 2 of resuming its onsite operations on April 11, 2022.

As explained in the Letter - Phase 2 permits NCUA staff to volunteer to work onsite, including conducting examination and supervision work at credit unions located in counties with low or moderate COVID-19 community levels, as defined by the CDC. Onsite work in counties with high COVID-19 community levels may be allowed when necessary and with prior approval from NCUA management.
 
Webinar – Youth & Financial Stability 
The NCUA and FDIC are co-hosting a free webinar on April 14, “Account Access and Financial Education for Youth Participating in Employment Programs (Part III): Factors and Tools that Influence Youth Financial Behavior.”

​This webinar is focused on credit union officials, bankers, and workforce providers who help young people (ages 16–24) toward financial stability.

During the webinar, National Endowment for Financial Education (NEFE) expert Chelsea Norton will share insights from recent updates to NEFE’s Personal Finance Ecosystem, a visual roadmap that lays out factors influencing financial well-being. Ms. Norton will discuss popular media outlets that young people independently seek to increase their personal financial knowledge, including financial influencers or Finfluencers. Register for this webinar here.
 
CFPB Bulletin 2022-05
The Consumer Financial Protection Bureau (CFPB) recently issued Bulletin 2022-05 that discusses unfair and deceptive acts or practices that impede consumer reviews, which can be found here. The Bulletin discusses interplay between the Consumer Review Fairness Act and the Consumer Financial Protection Act, which was enacted in response to companies that were restricting consumer reviews.

The Consumer Review Fairness Act voids contract language that would prohibits or restricts the ability of an individual who is a party to the form contract to engage in a covered communication. A covered communication is defined as “a written, oral, or pictorial review, performance assessment of, or other similar analysis of, including by electronic means, the goods, services, or conduct of a person by an individual who is party to a form contract with respect to which such person is also a party.” (Consumer review.)

Sections 1031 and 1036 of the CFPA prohibit a covered person or service provider from engaging in an “unfair, deceptive, or abusive act or practice” that is “in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service.”

The CFPB finds that it would be deceptive to include a restriction on consumer reviews in a form contract, given that the restriction would be void under the Consumer Review Fairness Act.

Furthermore, if a covered person or service provider attempts to pressure a consumer to remove an already posted negative review, by invoking a restriction on consumer reviews that is void under the Consumer Review Fairness Act, that would also generally be a deceptive act or practice.

The CFPB would apply unfairness principles if it encounters a covered person or service provider, acting within the scope of the CFPA, who uses contractual restrictions to restrict consumer reviews.

Finally, the CFPB discusses situations in which a company could manipulate a consumer’s comprehension of reviews. The CFPB intends to carefully scrutinize whether covered persons or service providers are skewing consumers' understanding of consumer reviews in a manner that is deceptive (or unfair or abusive). To illustrate this scenario, the CFPB cited to two FTC cases, one of which involved “a company that sold products through a website allegedly had ‘four- and five-star reviews automatically post to the website but did not approve or publish hundreds of thousands lower-starred, more negative reviews.’ The FTC found that this was a deceptive act or practice, misleading consumers who read the website into believing that the posted ratings accurately reflected the consumer reviews submitted.”
 
DOJ – Web Accessibility
The Department of Justice recently issued guidance concerning the Americans with Disabilities Act (ADA) and web accessibility. The guidance provides examples of website accessibility barriers – such as poor color contrast or lack of text alternatives on images. The DOJ provides discussion on how to make web content accessible to people with disabilities including providing links to a number of resources.
 
Compliance Solution – RecoveryPro
If you haven’t explored RecoveryPro, now is the time! Business Continuity Planning (BCP) has been near the top of many credit union’s strategic planning goals. RecoveryPro can help your credit union create, maintain, and distribute your BCP so you will be ready to jump into action when a work stoppage occurs. RecoveryPro is priced very competitively and is deeply discounted for affiliated credit unions. A Video Tour is now available so you can take a closer look at the RecoveryPro system.

As always, DakCU members may contact Amy Kleinschmit with any compliance related questions or concerns. 

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