Independent Banker - January 2020 - 33

Next: What's on the horizon for community bank lending?
Q alternative approaches for minority- and women-owned
fi nancial institutions and certifi ed
community development fi nancial institutions
(CDFI)
Q parity in the application of CRA to all fi nancial
service providers that serve consumers and small
businesses
" CRA will be an area for community banks to
watch and focus on in 2020, " says Lilly Thomas,
senior vice president and senior regulatory counsel
for ICBA. " Community banks may need to
change their handling of CRA programs and
record keeping. Eff ective CRA modernization
should reduce regulatory uncertainty and complexity
and should clarify and enhance the ability
of banks of all charter types and sizes to serve
their communities. "
Reforms coming from Congress
According to Paul Merski, ICBA's group executive
vice president of congressional relations and
strategy, several pieces of legislation are advancing
in Congress that could dramatically reform
Bank Secrecy Act (BSA) and anti-money laundering
(AML) compliance for community banks.
In May 2018, the Financial Crimes Enforcement
Network's (FinCEN) Customer Due Diligence
Requirements for Financial Institutions Rule
(CDD Rule) became eff ective. It, among other
things, required fi nancial institutions to identify
and verify the identity of the benefi cial owners
of companies opening accounts. Now, legislative
eff orts are underway to remove banks from the
benefi cial ownership reporting process and change
how companies disclose their benefi cial owners.
A bill introduced in and passed by the House
Committee on Financial Services as the Corporate
Transparency Act of 2019 (H.R. 2513) would
ensure that persons who form corporations or
limited liability companies in the U.S. report the
benefi cial owners of those corporations or limited
liability companies to FinCEN when they
are formed, relieving community banks of the
burden of collecting this information from their
customers. Meanwhile, there has been bipartisan
support in the Senate Banking Committee
for such an action, including federal reporting
requirements and maintaining all benefi cial ownership
information in a federal database. It is
likely that further actions to vote on the bill in the
House and Senate could occur in 2020.
Additional reforms could result from the Coordinating
Oversight, Upgrading and Innovating
Technology, and Examiner Reform (COUNTER)
Act (H.R. 2514), which includes provisions for a
feedback loop between law enforcement and the
banks. The bill also recognizes the outdated currency
transaction report (CTR) thresholds and
would begin to address more meaningful fi ling of
CTRs by increasing the threshold for CTR reporting
to $20,000 or more from the current $10,000
threshold and indexing this threshold to infl ation
with adjustments made in fi ve-year increments.
" Another area advancing to change the regulatory
environment is uncertainty around banking
cannabis-related legitimate businesses and service
providers because of confl icting federal and
state laws, " Merski says. At the time of this writing,
the House had passed legislation the Secure
And Fair Enforcement (SAFE) Banking Act of
2019 (H.R. 1595) to establish a cannabis-banking
safe harbor in states where cannabis is legal
in some form-currently 33 states.
Other regulatory reforms
There are many other regulatory issues on the
2020 horizon.
" Data security remains a focus, " says Viveca
Quick stat
321-
103
The House vote
passing the
Secure and Fair
Enforcement
Act (SAFE) in
September 2019
Ware, ICBA's group executive vice president of
regulatory policy. " Initiatives are growing to
compel all participants in the processing chain
to be subject to the same requirements for data
security standards. Also, product and service
innovation for community banks must meet the
needs of customers while meeting reasonable and
prudent regulatory requirements. "
Regulatory reform is shifting from creating new
and strengthened rules to refi ning and modifying
bank regulation to right-size regulatory requirements
to the fi nancial institutions to which they
apply, to adjust requirements perceived as overly
burdensome and to refi ne expectations communicated
to banks by regulators. Community banks
might not expect to be free of regulatory change,
but the industry may breathe a sigh of relief at the
potential changes to come in 2020.
Mary Thorson Wright, a former Federal Reserve
examiner, is a financial writer in Virginia.
independentbanker.org Q 33
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Independent Banker - January 2020

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