Financial Institutions

Friday, 26 September 2014

Income tax allocation agreements

Written by Rehmann Team

The Federal Deposit Insurance Corporation (FIDOC) recently issued an addendum to Policy Statement FIL-30-2014, Policy Statement on Income Tax Allocation in a Holding Company Structure (Interagency Policy Statement). The addendum pertains to intercompany tax allocation agreements and ensures that insured depository institutions (IDIs) in a consolidated group maintain an appropriate relationship regarding the payment of taxes and treatment of tax refunds. An intercompany tax allocation agreement is a contractual legal agreement pertaining to the computation of income taxes (current and deferred), payment of income taxes, and reimbursements to an institution when it has a loss for tax purposes.  A holding company and its subsidiary institution(s) are encouraged to enter into a written, comprehensive tax allocation agreement tailored to their specific circumstances...

Friday, 26 September 2014

FASB public interest entity definition and considerations

Written by Rehmann Team

In December of 2013 the FASB issued Accounting Standards Update (“ASU”) 2013-12, Definition of a Public Business Entity. The FASB definition is much broader than the previous definitions included within generally accepted accounting principles (“GAAP”). Whether an institution meets the new definition of a public business entity (“PBE”) requires careful analysis and may result in an answer that initially comes as a surprise. The new definition is to be applied in practice to determine which institutions will be able to avail themselves to new accounting alternatives developed by the Private Company Council (“PCC”) and other private company relief that the FASB provides in new standards...

Monday, 30 June 2014

Flood insurance changes

Written by Rehmann Team

In July 2012, Congress reauthorized the National Flood Insurance Pool (NFIP) for five years under the Biggert-Waters Flood Insurance Reform Act (BWA). This action supported real estate transactions for more than 5 million business owners and homeowners in 20,000 communities nationwide who rely on the NFIP and where flood insurance is required for a mortgage, according to the American Bankers Association. On March 21, 2014, President Obama signed the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) into law, effectively repealing and modifying certain provisions of the BWA. Changes of particular interest to financial institutions include: HFIAA Section 13 amends Section 102 of the Flood Disaster Protection Act (FDPA)...

Monday, 30 June 2014

Coming soon: cybersecurity assessments

Written by Rehmann Team

Cybersecurity: the technologies, processes and practices designed to protect networks, computers, programs and data from attack, damage or unauthorized access. The Federal Financial Institutions Examination Council (FFIEC) has not been shy about its enhanced focus on cybersecurity risk mitigation at smaller financial institutions. Actions have included the creation of the Cybersecurity and Critical Infrastructure Working Group, and the National Institute of Standards and Technology's issuance of the voluntary cybersecurity framework. Plus, in early April, the FFIEC issued warnings about Distributed denial of service (DDoS) attacks and ATM cash-out schemes targeting smaller institutions...

Monday, 30 June 2014

What is a critical vendor? It depends ...

Written by Rehmann Team

Recently, the Office of the Comptroller of the Currency (OCC), Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC) and Federal Reserve have issued updated rules requiring financial institutions to increase their oversight of third-party vendors by determining risks, conducting on-site visits, carefully structuring and reviewing contracts, and remembering that, ultimately, responsibility for third-party failures rests firmly with the bank. This includes failures by other parties with whom the third-party might contract, making due diligence research on a vendor more important than ever. Specifically, OCC guidance on third-party vendor relationships notes that community banks should adopt risk management practices that align with the risk profile and complexity of the third-party relationships, especially those that are involved in critical activities. What qualifies as a “critical activity”?..

Thursday, 24 April 2014

Social media + financial institutions

Written by Jessica Dore, CISA

Like it or not: when it comes to social media, financial institutions must play by certain rules. Social media introduces potential risks to financial institutions, including compliance/legal risk and reputation risk that might be caused by poor due diligence, lack of oversight, or lax control on how, when and by whom social media is used. Because of this, efforts to train employees on the proper use of social media should be appropriate to the breadth of the financial institution’s social media usage to attract, acquire and retain customers. Such training should be developed with participation from specialists in compliance, technology, information security, legal, human resources and marketing...

Monday, 31 March 2014

Is mortgage lending on the way out ... or the way up?

Written by Rehmann Team

The mortgage lending business is in a major state of change due to increasing rates, fewer refinancings, lower margins and more Consumer Finance Protection Bureau (CFPB) regulations. That equation means banks have to seriously consider their mortgage lending business and how well-prepared they are to attract new customers, manage credit risk, improve efficiency, absorb compliance expenses and cut costs to make it an attractive prospect.The Mortgage Bankers Association (MBA) expects a 32 percent decline in mortgage originations during 2014. While purchase originations are expected to increase 9 percent, refinance originations are expected to fall 57 percent...

Monday, 31 March 2014

BSA ... the Mary Jane dilemma

Written by Rehmann Team

The Controlled Substances Act makes it illegal under federal law to manufacture, distribute or dispense marijuana. However, as more and more states legalize the sale and distribution of marijuana for medicinal or personal use, the Department of Justice has said that it is not going to enforce the Act as long as the marijuana sales are not in violation of state law. While there is a lot of discussion about this in and of itself (how can the federal government simply decide not to enforce a law that is on the books?), this situation raises a set of other issues for banks, which are asking: Should we bank with marijuana businesses that are deemed “legitimate and legal” under state law, but are in violation of federal law?..

Friday, 28 March 2014

KYC goes beyond CIP

Written by Rehmann Team

The final rule adopted to implement section 326 of the USA PATRIOT Act is intended to standardize BSA compliance processes and practices by making the existing “Know Your Customer” (KYC) policy the foundation of the section 326 Customer Identification Program (CIP). The final rule includes a comment that Treasury, the Office of the Comptroller of the Currency (OCC) and Office of the Thrift Supervision (OTS) believe that many national banks already have procedures in place that fulfill most of the requirements of the final rule. Are community banks as well prepared? Nearly half of U...

Thursday, 27 March 2014

ACH self-assessment rules

Written by Rehmann Team

Traditionally, the Automated Clearing House (ACH) system is used for direct deposit of payroll and government benefit payments, and for the direct payment of mortgages and loans. Recently, the system has expanded to include one-time debits and check conversions. With this additional customer convenience and ease of moving money comes additional compliance and risk concerns. These new concerns were addressed with the ACH Security Framework, which addresses the minimum security requirements for the protection of non-public personal information...

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