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Resources from our Compliance Experts

Managing Sanctions

As any BSA Officer can attest, maintaining effective controls in an Office of Foreign Assets Control (OFAC) program can be cumbersome in the best of times. And, managing that program in the midst of a crisis, where new sanctions are issued frequently, can be particularly difficult.  

As our industry is aware, the Russian Federation’s invasion of Ukraine has been met with the imposition of unprecedented economic actions from the United States and others. Managing those sanctions and maintaining diligence in supporting those efforts is paramount.

OFAC updates their website regularly. In addition to providing links to SDN and other sanctions lists, they also provide a quick link to “OFAC Recent Actions,” which interested parties may find helpful. It may be found here.

In connection with these sanctions, FinCEN issued an Alert (FIN-2022-Alert001) earlier this month entitled, “FinCEN Advises Increased Vigilance for Potential Russian Sanctions Evasion Attempts.” This important Alert references the pressures imposed on Russia and Belarus, and alerts the industry to possible activities to evade those sanctions. 

Besides highlighting recent U.S. Department of Treasury actions in response to the Ukraine invasion, the Alert also emphasizes that attempts to evade these sanctions may come in a variety of forms.  Red flag indicators include, but are not limited to, the following:

• 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.
• Use of shell companies to conduct international wire transfers, often involving financial institutions in jurisdictions distinct from company registration.
• Use of third parties to shield the identity of sanctioned persons and/or PEPs seeking to hide the origin or ownership of funds, for example, to hide the purchase or sale of real estate.

The Alert also provides helpful information, and other red flag indicators, related to:

• sanctions evasion attempts using convertible virtual currency (CVC), and
• possible ransomware attacks and other cybercrime.

BSA Staff should review the Alert in its entirety, which also addresses SAR filing, SAR instructions, and other relevant BSA requirements. FinCEN’s Alert may be found here.

Appraisal / Valuation Scrutiny Increasing

As we have reported on from time to time, supervisory agencies are increasing their focus on fair lending. While fair lending considers a wide variety of factors during the entire life cycle of credit, one topic that is receiving greater interest has to do with appraisals and valuations.

The CFPB recently announced the final report release from the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE). As reflected in the PAVE action plan summary, the plan:

• Outlines the historical role of racism in the valuation of residential property;
• Examines the various forms of bias that can appear in residential property valuation practices; and
• Describes how government and industry stakeholders will advance equity through concrete actions and recommendations.

This report addresses which laws enforce appraisal equity and provides information on the Agency’s commitments to address discrimination and bias. Residential appraisal-related management are encouraged to read the report, which may be found here. 

ICYMI...Modified HMDA LARs Now Available

In case you missed it… the HMDA modified loan/application register (LAR) information for 2021 is now available. This information can be found here.

Web Access & the ADA

While the management of your institution’s website and the handling of legal issues are areas that may not be directly tied to compliance, making sure products and services are accessible to everyone is why we’re here. 

The Americans with Disabilities Act (ADA) was signed into law in 1990. It was modeled after the Civil Rights Act of 1964 and serves as an equal opportunity law for people with disabilities. 

In an important step of support, the Department of Justice recently published guidance related to web accessibility and the ADA. As noted at ADA.gov, “This guidance describes how state and local governments and businesses open to the public can make sure that their websites are accessible to people with disabilities as required by the Americans with Disabilities Act (ADA).”

Of note, Title III of the ADA prohibits discrimination against people with disabilities by businesses open to the public, which includes financial institutions. As referenced in the guidance, “The Department of Justice does not have a regulation setting out detailed standards, but the Department’s longstanding interpretation of the general nondiscrimination and effective communication provisions applies to web accessibility.”

IT staff and website management are encouraged to review the new guidance and consider aspects of the institution’s website that may not be accessible to those with disabilities. The guidance may be found here.