Independent Banker - December 2024 - 18

PORTFOLIO
" [Check fraud has] been an
issue before this past year, but
it's really become much more of
a problem impacting a lot of our
members' bottom lines. "
-LANCE NOGGLE, ICBA
arbitrarily and capriciously "
in finalizing the Dodd-Frank
Section 1071 small business data
collection rule.
requirements per the enactment of the
Cyber Incident Reporting for Critical
Infrastructure Act of 2022.
ICBA supported that legislation,
but this proposed rule would require
banks to meet additional reporting
requirements that they currently are
not subject to, says Lance Noggle,
ICBA's senior vice president of
operations and senior regulatory
counsel. " Mainly, it's about timing, "
he says. " There's different timing for
how banks report a cyber incident to
the FDIC than for DHS. We're hoping
that DHS will work with our banking
regulators to come up with one set of
reporting requirements for banks. "
5
Increased check fraud
scrutiny for megabanks
Check fraud has become
a major issue, Noggle says. ICBA
member banks have complained
to regulators that large banks are
unwittingly processing fraudulent
checks by thieves stealing or altering
checks made by customers of other
banks, including community banks.
" It's been an issue before this past
year, but it's really become much more
of a problem impacting a lot of our
members' bottom lines, " he says.
In response, in their exams
with larger banks, regulators are
placing extra emphasis on those
banks' procedures for accepting and
processing checks, particularly on the
megabanks' fraud-detection efforts.
" We've also entered into a partnership
with the U.S. Postal Service to try to
message some additional ways people
can protect themselves when mailing
checks, " Noggle adds.
While many banks have improved
their check fraud prevention efforts,
thieves have found even more ways
to perpetrate this type of fraud, says
David Long, executive vice president
of correspondent banking and capital
markets at $2.5 billion-asset Bryant
Bank in Tuscaloosa, Ala.
" [Banks have invested in] customer
education efforts, letting people
know not to mail checks in a very
evident way, " says Long, " and [have]
put in tools and processes that can
help business customers protect
themselves, as well as the bank. "
Bryant Bank also reminds customers
that the bank won't ask for their
personal information in emails or text
messages, he says. Rather, fraudsters
routinely pose as bank representatives
through these channels in an effort
to dupe customers into providing
personal information, so that
fraudsters can either impersonate
them or create counterfeit checks.
CRA and Section
1071 final rules
ICBA intervened in a suit
against the CFPB for " exceeding
its statutory authority and acting
6
18 // ICBA Independent Banker // December 2024
As a result of ICBA's efforts,
the court expanded its temporary
injunctive relief to all covered
financial institutions, resulting
in a 290-day extension of the
compliance date. Although the
U.S. District Court denied the
plaintiffs' and intervenors' motion
for summary judgment on the
Administrative Procedures Act
challenges to the rule, ICBA is
seeking to appeal the decision in the
United States Court of Appeals for
the 5th Circuit.
Further, ICBA and other groups
continue a legal challenge to federal
banking regulators' Community
Reinvestment Act final rule, arguing
that regulators exceeded their
statutory authority and that the
rule will limit future bank lending.
A federal judge earlier this year
granted an injunction against the
CRA rule, as requested by ICBA, and
the effective dates will be extended
for each day the injunction remains
in place, pending the resolution of
the lawsuit.
Still, some community banks,
including Bryant Bank, are
" spending time, effort and money
to have infrastructure " in place to
be prepared for implementation,
Long says.
" There's a lot of procedures,
policies and systems that have
to be put in place for those new
regulations, and we're working on
all of the above to make sure we
take care of our customers, " he says.
" That's always our focus, as well as
making sure the bank is doing things
in an appropriate fashion. "
Katie Kuehner-Hebert is a writer
in California.
Independent Banker - December 2024

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