WASHINGTON — The midterm elections Tuesday night upended the power dynamic in the nation's capital, with Democrats seizing control of the House. But the net result of that for financial institutions will likely be very little change in regulatory or legislative policy.

With Republicans still controlling the Senate, regulators and banks are in for two years of even more divided government. Rather than tangible reforms, the biggest impact will be a change in rhetoric in the House, and perhaps mixed messaging from two chambers often in conflict.

“Democratic oversight [in the House] will be, ‘Regulators are going too far in loosening oversight,’ said Brandon Barford, a policy analyst at Beacon Policy Advisors. He added that the upper chamber will urge the agencies to continue writing rules under the regulatory relief law passed last spring. “Republican oversight in the Senate is going to be, ‘You’re not moving fast enough to implement S 2155.’”

If the GOP had held on to power in the House, the industry could have hoped for more momentum on the reg relief front. But the recent Senate law making targeted changes to the Dodd-Frank Act, which President Trump signed in May, may be the last major piece of financial services legislation for the foreseeable future.

The federal depository institutions regulators and FinCEN issued a joint statement to address instances in which certain banks and credit unions may decide to enter into collaborative arrangements to share resources to manage their BSA and AML obligations more efficiently and effectively.

Interagency Statement on Sharing Bank Secrecy Act Resources

October 3, 2018


The Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) (collectively, the Agencies), are publishing this statement to address instances in which banks may decide to enter into collaborative arrangements to share resources to manage their Bank Secrecy Act (BSA) and anti-money laundering (AML) obligations more efficiently and effectively. Collaborative arrangements as described in this statement generally are most suitable for banks with a community focus, less complex operations, and lower-risk profiles for money laundering or terrorist financing. The risk profile is bank-specific, and should be based on a risk assessment that properly considers all risk areas, including products, services, customers, entities, and geographic locations.

Collaborative arrangements involve two or more banks with the objective of participating in a common activity or pooling resources to achieve a common goal. Banks use collaborative arrangements to pool human, technology, or other resources to reduce costs, increase operational efficiencies, and leverage specialized expertise.

Notably, this interagency statement does not apply to collaborative arrangements or consortia formed for the purpose of sharing information under Section 314(b) of the USA PATRIOT Act. Further, banks that form collaborative arrangements as described in this interagency statement are not an association for purposes of Section 314(b) of the USA PATRIOT Act.  Banks should contact FinCEN for additional information concerning the 314(b) program and requirements.

A new credit score that includes a consumer’s cash flow alongside their credit score — dubbed UltraFICO — is winning praise for its potential to help expand access to credit but also stoking concerns about its data privacy implications.

FICO announced this week that it is testing a new credit score with Experian and data aggregator Finicity that draws on several months' worth of data from consumers’ bank accounts. The idea, according to FICO, is to create a “second chance” score that could allow consumers who’ve been denied credit due to the traditional model another shot at obtaining it.

But some observers saw an immediate potential problem — namely with credit bureaus getting unfettered access to bank account data.

“If the credit bureaus want to start routinely accessing our bank accounts, they should be subject to bank-like regulation,” said Sheila Bair, a former chairman of the Federal Deposit Insurance Corp. “I’ve been a critic of big U.S. banks in certain areas, but I do believe their information security systems are substantially superior to the credit bureaus and that is due, in large part, to their regulated status.”

Bair sees a potential upside in that it could help expand credit access, but wonders if it’s worth the risk.

“The privacy and information security issues could easily outweigh those benefits,” she said.

Bair isn’t alone. Gary Reeder, vice president of innovation and policy at the CFSI, is concerned about risk on a systemic level around companies like credit bureaus that the entire financial services industry depends on so heavily.

“We’re getting to where we have larger sets of data housed in institutions that the entire financial services industry rests on, and they don’t have the same regulation and security protocols a regulated bank would have,” he said.

The Americans with Disabilities Act (ADA), passed by Congress in 1990, is considered to be the most comprehensive civil rights law regarding the needs of individuals with disabilities. The ADA prohibits discrimination in employment, public services, public accommodations, and telecommunications. Financial institutions are now quite familiar with public accommodations such as braille on ATMs, ramps, and wider doors for easier access. And, financial institutions, while brick and mortar still exist, have a stronger presence electronically now more than ever. When was the last time your financial institution reviewed its website for ADA compliance? Are you familiar with the proposed rule in 2010 by the Department of Justice (DOJ) that would amend Title III? While this proposed rule has been postponed multiple times, your financial institution may not want to sit back and wait for a final rule to be announced. Taking a proactive stance allows your financial institution to possibly prevent any lawsuits and also provide a fair experience for all users, including those individuals with disabilities.

Risk Assessment

Before implementing any type of control to mitigate risk, it's important to understand where your financial institution lands in terms of risk. As part of the risk assessment process, it's important to know if your financial institution is required to be compliant with the ADA on its website. More than likely, if your financial institution is required to comply for public accommodations, its website will be more than likely required to comply as well. Make sure that your risk assessment is all encompassing of the ADA and hone in on website accessibility.

The game changes on January 1st, 2019.

At AIME Fuse 2018, AIME Chairman Anthony Casa revealed Arive, the new platform designed exclusively for independent mortgage brokers. Arive is a fully-integrated user experience, filling the role of an LOS, POS, CRM, pricing engine, and more, with lender connectivity and digital document storage, all in one tidy package.

The platform was designed for and by today’s mortgage broker. With one login, a broker can transact in one place, eliminate manual data entry between systems, and eliminate the plethora of lender portals that exists today.

“The game has changed. We have 35,000 people, 16% of the market, acting as one. One voice. One authority, to be able to hold every single participant in this channel accountable. This is the new game.”

The announcement received a standing ovation.

Arive promises more than the streamlining of the origination process. Independent brokers don’t benefit from economies of scale in most cases, and one of the goals behind Arive is to bring cheaper services to the independent broker. If 35,000 brokers are able to operate as one unit and shop the market, Casa said, the results would be much cheaper services for the individual broker. This doesn’t just apply to loan-related services, either; it applies to everything from website development to health insurance.