Product Updates for December 2023
The Product Updates for December 2023 from BankPolicies.com feature the following revised policy and form template products:
Bank Secrecy Act Policy Template – Comprehensive Version
Customer Identification Program Policy Template
The update to these products is in response to FinCEN’s final rule entitled “FinCEN Extends Deadline for Companies Created or Registered in 2024 to File Beneficial Ownership Information Reports” dated 11/29/23 that extends the deadline for certain reporting companies to file their initial beneficial ownership information (BOI) reports with FinCEN. Reporting companies created or registered in 2024 will have 90 calendar days from the date of receiving actual or public notice of their creation or registration becoming effective to file their initial reports. FinCEN will not accept BOI reports from reporting companies until January 1, 2024, and no reports should be submitted to FinCEN before that date.
The final rule is effective January 1, 2024.
BSA Suspicious Activity Report Notices Template
The update to this product is in response to FinCEN Alert FIN-2023-Alert007 entitled “FinCEN Alert on COVID-19 Employee Retention Credit Fraud” dated 11/22/23 that alerts financial institutions on fraud schemes related to the COVID-19 Employee Retention Credit (ERC) and is urging vigilance in identifying and reporting related suspicious activity. The ERC was authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act as a tax credit to encourage businesses to keep employees on payroll during the COVID-19 pandemic and was subsequently extended and amended three times.
As a reminder, the BSA Suspicious Activity Report Notices Template is included in the purchase price of the Bank Secrecy Act Policy Template – Comprehensive Version.
Community Reinvestment Act Policy Template
The update to this product is in response to the Joint Press Release entitled “Agencies Issue Final Rule to Strengthen and Modernize Community Reinvestment Act Regulations” dated 10/24/23 that announced a final rule to strengthen and modernize regulations implementing the Community Reinvestment Act (CRA) to better achieve the purposes of the law. The CRA is a landmark law enacted nearly 50 years ago to encourage banks to help meet the credit needs of their entire communities, especially in low- and moderate-income (LMI) neighborhoods, in a safe and sound manner.
In general, the final rule updates the CRA regulations to achieve the following key goals:
- Encourage banks to expand access to credit, investment, and banking services in LMI communities;
- Adapt to changes in the banking industry, including internet and mobile banking;
- Provide greater clarity and consistency in the application of the CRA regulations; and
- Tailor CRA evaluations and data collection to bank size and type.
Most of the final rule’s requirements will be applicable beginning January 1, 2026. The remaining requirements, including the data reporting requirements, will be applicable January 1, 2027.
The update to this product is in response to OCC Bulletin 2023-37 entitled “Retail Lending: Risk Management of Buy Now, Pay Later Lending” dated 12/06/23 that assist banks in effectively managing risks associated with “buy now, pay later” (BNPL) lending and in offering BNPL loans in a responsible manner.
In general, “buy now, pay later” is widely used to describe various types of installment lending products. This bulletin addresses BNPL loans that are payable in four or fewer installments and carry no finance charges (i.e., the loans carry 0% interest and no other finance charges). Other characteristics of BNPL loans can vary. Loans with payment terms greater than four installments or that charge interest or carry other finance charges are treated as traditional installment loans (a longstanding bank product) and are therefore not within the scope of this bulletin.
The update to this product is in response to the Federal Reserve’s Final Rule issued on 11/27/23 that announced technical details related to reserve requirements for depository institutions, which will remain zero. The annual adjustment and publication of the reserve requirement exemption amount and low reserve tranche is required by law and does not indicate a change in depository institutions’ reserve requirements.
If reserve requirement ratios were not zero, the reserve requirement exemption amount and the low reserve tranche would be used to determine the reserve requirement ratios that could apply to a depository institution. Specifically, the reserve requirement exemption amount is the amount of a depository institution’s reservable liabilities that will always be exempt from reserve requirements. The low reserve tranche amount is the amount of a depository institution’s net transaction accounts that may be subject to a reserve requirement ratio not greater than three percent. A depository institution’s net transaction accounts greater than the low reserve tranche may be subject to a reserve requirement ratio of not greater than 14 percent.
For 2024, the reserve requirement exemption amount will be set at $36.1 million, unchanged from 2023, and the low reserve tranche will be set at $644.0 million, down from $691.7 million in 2023.
The new amounts are derived using formulas specified in the Federal Reserve Act and will apply beginning January 1, 2024.
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