Product Updates for January 2020
The Product Updates for January 2020 from BankPolicies.com feature the following revised policy template products:
The update to these products is in response to the FDIC’s announcement of a revised “Risk Management Manual and Examination Policies” dated 12/06/19. Specifically, Section 3.5 – Premises and Equipment has been updated to reflect changes in the Accounting Standards Codification (ASC) 840, which is being replaced by ASC 842. Under the predecessor accounting standard, ASC 840, lessees recognize lease assets and lease liabilities on the balance sheet for capital leases, but not for operating leases. ASC 842 requires all lessees, including institutions leasing premises and other fixed assets to recognize a right-of-use asset and the lease liability on its balance sheet for all leases, including operating leases with terms of more than 12 months. ASC 842 is effective for public business entities (as defined in U.S. GAAP) and will become effective for all other institutions for fiscal years beginning after December 15, 2020, and interim reporting periods within fiscal years beginning after December 15, 2021. Early application is permitted.
The update to these products is in response to the Joint Release entitled “Agencies Clarify Requirements for Providing Financial Services to Hemp-Related Businesses” dated 12/03/19 that clarifies the legal status of hemp growth and production and the relevant requirements under the Bank Secrecy Act (BSA) for banks providing services to hemp-related businesses.
The statement emphasizes that banks are no longer required to file suspicious activity reports (SAR) for customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations. For hemp-related customers, banks are expected to follow standard SAR procedures, and file a SAR if indicia of suspicious activity warrants.
This statement provides banks with background information on the legal status of hemp, the U.S. Department of Agriculture’s (USDA) interim final rule on the production of hemp, and the BSA considerations when providing banking services to hemp-related businesses.
This statement also indicates that the Financial Crimes Enforcement Network (FinCEN) will issue additional guidance after further reviewing and evaluating the USDA interim final rule.
The statement was issued by the Federal Reserve Board, the Federal Deposit Insurance Corporation, FinCEN, the Office of the Comptroller of the Currency and the Conference of State Bank Supervisors. Banks can contact the USDA, state departments of agriculture, and tribal governments with further questions regarding the Agriculture Improvement Act of 2018 (2018 Farm Bill) and its implementing regulations.
In addition, the Bank Secrecy Act Policy Template – Comprehensive Version was revised in response to FinCEN Notice 2019-1 that announced a further extension of time for certain Report of Foreign Bank and Financial Accounts (FBAR) filings in light of the notice of proposed rulemaking (NPRM) FinCEN issued on March 10, 2016, which proposes to revise the regulations implementing the Bank Secrecy Act (BSA) regarding FBARs. As such, FinCEN is further extending the filing due date to April 15, 2021, for individuals whose filing due date for reporting signature authority was previously extended by Notice 2018-1.
As a reminder, the complete contents of the Marijuana-Related Business Policy Template are included within topic 6 of the Bank Secrecy Act Policy Template – Basic Version and topic 8 of the Bank Secrecy Act Policy Template – Comprehensive Version.
The update to these products is in response to the FFIEC’s Press Release entitled “Financial Regulators Revise Business Continuity Plan Booklet to Stress to Examiners the Value of Resilience to Avoid Disruptions to Operations” dated 11/14/19 that announced that the FFIEC members updated and renamed the Business Continuity Planning booklet issued in February 2015 to Business Continuity Management (BCM) to reflect updated information technology risk practices and frameworks. The updated Business Continuity Management booklet focuses on enterprise-wide approaches that address technology, business operations, testing, and communication strategies critical to the continuity of the business. The booklet describes principles and practices for information technology (IT) and operations designed to achieve safety and soundness, consumer financial protection, and compliance with applicable laws, regulations, and rules.
As the booklet makes clear, business continuity focuses on more than just the planning process to recover operations after an event. Business continuity also includes the continued maintenance of systems and controls for the resilience and continuity of operations. Business continuity is an integral part of the risk management life cycle of an entity’s systems, processes, and operations.
The Business Continuity Management booklet describes principles to help examiners determine whether management addresses risks related to the availability of critical financial products and services. The booklet uses common terms and builds on widely used standards to facilitate effective supervision. The updated examination procedures will also help examiners assess the adequacy of an entity’s overall business continuity management program.
As a reminder, the complete contents of the Business Resumption Impact Analysis Policy Template are included within the Business Continuity Management Policy Template (formerly entitled “Business Continuity Plan Policy Template”) as topic 17.
The update to this product is in response to the Joint Release entitled “Joint News Release: Agencies Release Annual CRA Asset-Size Threshold Adjustments for Small and Intermediate Small Institutions” dated 12/30/19 that announced the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank, and intermediate small savings association under the Community Reinvestment Act (CRA) regulations.
The update to this product is in response to the Federal Reserve’s Press Release entitled “Federal Reserve Approves Modifications to National Settlement Service and Fedwire Funds Service to Support Enhancements to the Same-Day Automated Clearinghouse Service” dated 12/23/19 that approved modifications to the Federal Reserve Banks’ National Settlement Service (NSS) and Fedwire Funds Service to support enhancements to the same-day automated clearinghouse (ACH) service. In addition, the Federal Reserve Board approved changes intended to reduce the risk that the modified service closings and cutoffs would increase the frequency of delays to the reopening of the Fedwire Funds Service. Finally, the Federal Reserve Board approved corresponding changes to the Federal Reserve Policy on Payment System Risk (PSR policy) related to a new posting time for transactions and an increased daylight overdraft fee.
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