FinCEN issued final rules under the Bank Secrecy Act on customer due diligence requirements for: banks; brokers or dealers in securities; mutual funds; futures commission merchants; and introducing brokers in commodities. The rules contain explicit customer due diligence requirements and include a new requirement to identify and verify the identity of beneficial owners of legal entity customers, subject to certain exclusions and exemptions.
In our September 11, 2014 comment letter, IBAT pointed out several shortcomings in the proposed rule. FinCEN made several changes to the final rule, including some recommended by IBAT. FinCEN clarified the definition of legal entity customer, extended the transition period from one year to two years, eliminated the requirement that a financial institution use the Certification Form, expanded the categories of excluded legal entities, simplified the requirements on charities and nonprofits, and clarified that financial institutions are not required to periodically update beneficial ownership information.
“While the beneficial ownership rule will increase some record keeping, we are pleased that our comments in concert with others apparently helped to moderate the final text,” said Karen Neeley, IBAT General Counsel.
Staff contact: Shannon Phillips, email@example.com, 512-275-2221
IBAT filed a comment letter with the Texas Ethics Commission on its disclosure of interested parties rule. This is the rule that fleshes out the new law requiring businesses that have contracts with governmental entities (like public fund deposit contracts) to file a disclosure of interested parties form with the Texas Ethics Commission. The proposed changes would exempt publicly traded companies from disclosing their four most highly compensated employees.
We are requesting the same treatment for community banks. In addition, we suggest that only written contracts should be covered and that the term “value” should be further clarified. For general information about this rule, click here.
Staff contact: Shannon Phillips, firstname.lastname@example.org, 512-275-2221
A heartfelt and well-deserved congratulations to Debbie Scanlon, CPA, partner at BKD, LLP, for being named a finalist in the Houston Business Journal’s Women Who Mean Business Awards. Scanlon transferred to BKD in Houston, an IBAT associate member, in 2003 and has since helped establish the firm’s $4 million banking practice.
IBAT President and CEO Chris Williston wrote a nomination letter for Scanlon, touting her invaluable service on IBAT’s Associate Member Advisory Council, Leadership Division Board of Directors and Strategic Planning Committee.
“The success of BKD’s banking practice is grounded not only in Debbie’s expertise on complex banking accounting rules but also on her willingness to involve herself in initiatives of importance to the industry,” said Williston. He went on to say, “Perhaps most importantly, her integrity and professionalism are beyond reproach and widely respected throughout all financial institution channels.”
Staff contact: Chris Williston, email@example.com, 512-474-6889
Did you know? IBAT, in conjunction with Financial Education, Inc., hosts close to 150 webinars a year. Webinars are a very economical way to train your staff for one low price. Everyone can sit in on the program with the use of a speakerphone and a computer, or access archived webinars on-demand.
Topics are broken up by category or by date and include:
You can access a complete listing of upcoming webinars and archived webinars here.
Last week, the Treasury Department released the findings of a year-long study that looked at recommendations and concerns relative to the growing marketplace lending industry.
The white paper, Opportunities and Challenges in Online Marketplace Lending, called upon Congress to consider legislation that addresses both industry oversight and borrower protections. In particular, it expressed concerns that the business model of marketplace lenders does not adequately address lending compliance and credit risk concerns.
The white paper further recommended that:
- Regulators develop a plan for effective oversight and small business borrower protections;
- Companies shore up their operational model to provide a contingency plan for a less-favorable credit environment;
- The industry adopts greater transparency and registration standards for the purposes of developing a stable secondary market and securitization activity;
- Online lenders seek additional partnerships with “high-touch” lenders like Community Development Financial Institutions; and
- Regulators form an interagency working group to identify and promote awareness of existing regulations that apply to the industry.
“As the financial services industry rapidly evolves, in our assessment it is extremely important that new entrants and all participants have appropriate regulatory oversight. Both borrowers and investors need to know exactly what they’re getting into,” said Chris Williston, IBAT President and CEO. “IBAT concurs with the Treasury study and hopes that Congress will act swiftly and appropriately to ensure adequate protections for all parties as well as maintaining a level playing field for those already in this space.”
Staff contact: Christopher Williston, firstname.lastname@example.org, 512-275-2208
The final step of the primary season is upon us. Early voting for the May 24 runoff elections began yesterday, and polls are open until this Friday, May 20. Voter information is available on the Secretary of State’s website.
Based on the results of polling in the various districts, the IBAT PAC is supporting the following candidates:
- Congressional District 19 – Jodey Arrington
- Senate District 1 – Bryan Hughes
- Senate District 24 – Dawn Buckingham
- House District 54 – Austin Ruiz
- House District 64 – Lynn Stucky
- House District 73 – Douglas R. Miller
- House District 128 – Wayne Smith
Voter turnout in these races is always abysmally low, so your vote is that much more important. We encourage you to vote, and ask that you stress the importance of participating in the process to those in your circles of influence.
Staff contact: Steve Scurlock, email@example.com, 512-275-2226
Lest it go unnoticed, Friday was Friday the 13th and caution was the word of the day. Even if it weren’t for the unfortunate date, caution would still have been the word of the day. In a letter to Congress this week, Fed Chair Yellen explained how the utilization of negative interest rates would not be ruled out as a potential policy tool to counteract future economic adversities. The very next day, at two separate events, Boston Fed President Eric Rosengren and Esther George, President of the Kansas City Fed, both intimated that the Central Bank is in danger of stoking an asset bubble if rate hikes are too long in coming. No one can accuse the FOMC of cognitive homogeneity.
IBAT’s Dine and Demo, a successful new series, kicked off in late March. Don’t worry, it’s not too late if you missed it. The next webinar will take place on May 24, 2016, and now is the perfect time for bankers to register. In case you’re wondering, what is Dine and Demo?
The IBAT Dine and Demo series is a quarterly lunchtime webinar, noon-1 p.m., in which up to seven companies provide product demonstrations in seven minutes or less. There is no cost for bankers to attend so order in lunch, gather your team around the conference room table and see the best that industry providers have to offer from the comfort of your own bank.
There is a full lineup for the second webinar, including CalTech and S&P Global Market Intelligence. It promises to be a well-rounded group worthy of your time. CalTech will present EverSpace, a comprehensive virtual IT infrastructure solution. S&P will present SNL Commercial Prospecting, which identifies outstanding loans in your market and helps target prospects by property type, loan size, etc.
We’ve heard from bankers about your lack of time to meet with providers – Dine and Demo is the solution. We highly encourage you to participate in this free program on May 24, 2016. Register now and learn more about Dine and Demo here.
Staff contact: Julie Courtney, firstname.lastname@example.org, 512-275-2217
IBAT’s May Consumer Tips article about the importance of your credit score is now available online. While a credit score is a mystery to many consumers, it’s something that needs to be understood and is quite straightforward. These tips discuss what a credit score is, how it’s calculated, ways it is used and how it can be improved.
Please feel free to share IBAT's May Consumer Tips with your bank customers.
Staff contact: Lindsey Gehrig, email@example.com, 512-275-2215
IBAT proudly participated in the First Lady's Texas Main Street Program (TMSP) Tour last week as three new cities – Sherman, Corpus Christi and Brownsville – became designated Main Street communities. The TMSP is a program administered by the Heritage Development Division of the Texas Historical Commission. The mission of the TMSP is "to provide technical expertise, resources and support for Texas communities in the preservation and revitalization of historic downtowns and commercial neighborhood districts.” As lead sponsor of the First Lady's Main Street Tour for more than 20 years, IBAT’s Steve Scurlock attended and spoke on behalf of the association. Also in attendance from IBAT were Curt Nelson and Meredyth Fowler.
Texas First Lady Cecilia Abbott took part in her second Main Street Tour this year, continuing the tradition and success of this state program. State and local officials, local business owners, volunteers and dozens of local residents gathered in all communities, and entertainment was provided by local schools and members of the military.
The First Lady’s design rendering of the soon-to-be revitalized area was presented in each city. The TMSP is one of the oldest and largest programs of its kind in the nation with 87 fully designated communities as the program’s revitalization effort for historic downtowns continues to grow. IBAT is honored to be a sponsor of this important program.
Staff contact: Meredyth Fowler, firstname.lastname@example.org, 512-275-2245
We are quickly approaching summer break and with that, IBAT's 31st Annual Leadership Conference. This year we invite you to bring your entire family to the beautiful Moody Gardens Resort & Spa, June 23-25, 2016.
We're excited to announce our entertainment for the Friday Family Fun Night. We hope you will join us for an evening of food, fun and dancing, featuring entertainment by Texas-native Radney Foster.
Also, there is still time to take advantage of early bird registration prices and discounted hotel rates through May 25! Register your family today!
Staff contact: Julie Courtney, email@example.com, 512-275-2227
Although Congress is not expected to act on significant tax reform this year, Republican leaders have introduced legislation that could serve as a model for tax reform measures in the next Congress. Among the proposals introduced is a reduction in the corporate tax rate – a move that would disadvantage pass-through entities like corporations organized under Subchapter S of the tax code.
Approximately 2,000 community banks, including 240 in Texas, and many small businesses are organized as S corporations and thus are taxed at the marginal individual tax rate on a pro rata basis of ownership. A decrease in the corporate tax rate with no accompanying decrease in the individual tax rate would further disadvantage these business by creating a wider gap between the tax liability of C corporations and pass-through entities.
Chairman Vern Buchanan, a member of the Committee on Ways and Means, introduced H.R. 5076 – the Main Street Fairness Act, which addresses current and future tax parity for pass-through entities as Congress debates tax reform. The maximum individual tax rate is currently 39.6 percent, versus a maximum corporate rate of 35 percent. H.R. 5076 would remedy the current disparity and ensure that the parity is preserved in future tax reform.
For the good of countless small businesses organized as pass-through entities, as well as S-corporation community banks, IBAT unequivocally supports H.R. 5076.
Staff contact: Steve Scurlock, firstname.lastname@example.org, 512-275-2226
IBAT appreciates the effort of the 11 associate members that submitted entries. We also thank the independent committee for the time, effort and care that went into the selection of the 2016 IBAT Five*Star Award winners.
- Fenimore, Kay, Harrison & Ford, LLP (Tier 1)
- Advantage Health Plans Trust (Tier 2)
- BKD, LLP (Tier 3)
The awards will be presented during the general session at IBAT's 31st Annual Leadership Conference on Friday, June 24 at the Moody Gardens Resort & Spa in Galveston. We hope to see you there!
Staff contact: Darlene Revers, email@example.com, 512-275-2217
We’ve all seen the yearbook photos of the FOMC members seated around the big, shiny table. Has anyone else noticed that there is no sign of a Bloomberg terminal in the room? Maybe it’s in that fancy credenza. For a decision-making body whose decision-making process is self-described as being “data driven,” last week’s jobs data will presumably make its way to the Committee with or without help from the Bloomberg. And when it does, those fence sitters among the voting committee members who have broadcast that the big, shiny table may have a June rate hike on it may want to rethink things. If only last week’s employment data were as shiny as the table.
The Federal Reserve’s first tightening cycle in more than a decade is finally here, and interest rate risk is no longer a future possibility but now a current reality. In partnership with The Baker Group, an IBAT Endorsed Service Provider, IBAT is pleased to offer Crossroads 2016: Solutions for Managing Interest Rate Risk, Liquidity and Investments Summit.
The summit will review current national and local economic conditions as well as the outlook for monetary policy in 2016. Also discussed will be various interest rate risk issues bankers may face in the next rate cycle, including specific examples of the types of analysis that are necessary to comply with heightened regulatory scrutiny on IRR. New tools for liquidity risk management will be explored, as will specific strategies to manage risk and maximize performance in bond portfolios.
We invite directors, CEOs, CFOs, investment officers, portfolio managers and others involved in their bank’s financial management to join us at The Omni Mandalay Hotel at Las Colinas in Irving on May 12, 2016 for Crossroads 2016. Register, learn more about the key topics and meet the summit leaders here.
Staff contact: Jessica Hernandez, firstname.lastname@example.org, 512-275-2207