September 2016 A Regulatory & Legislative Advisory for Compliance Professionals
Inside . . .
2 More on the TRID
4 ABA Seeks Stories
on Small Dollar Loans
4 ABA Welcomes
CFPB Privacy Moves
4 Arbitration Proposal
Not in Public Interest
5 Response to Senate
Letter on Tailored
5 GAO: SBRFA
Process Too Rushed
6 TCPA Exemption on
7 New URLA Form
7 Trades: Allow
Comment on PACE
Bank Secrecy Act
9 Fact Sheet on AML
9 Proposal on AML,
CIP for Banks Without
9 Redux: OCC
PENTAGON ISSUES ABA-ADVOCATED GUIDANCE ON MLA
With recent changes to the Military Lending Act rules set to take effect in October, the
Department of Defense on August 26 issued an interpretive rule clarifying several
elements of the changes. In multiple meetings and written communications with DoD
the course of the last year, ABA aggressively advocated for further clarifications to the
MLA rule to facilitate compliance with minimal imposition on customer service.
The interpretive rule clarifies that banks may continue to provide credit secured by a
bank account to military personnel and their spouses and dependents and that they
may provide generic oral disclosures about payment obligations, rather than the
specific payment obligation of the individual borrower. The rule also clarifies that the
banks may rely on information about military status that is obtained through DoD or a
credit bureau up until the time the account is opened.
Compliance with the MLA changes – which extend MLA restrictions to cover credit
cards, lines of credit, installment loans and deposit advances offered to service
members and their dependents – remains mandatory on October 3. ABA has updated
its Staff Analysis of the interpretive rule. Read the interpretive rule. View the
updated Staff Analysis.
Trades Raise Concerns about MLA Compliance Timeline
Shortly after the release of the interpretive rule, and cognizant that the October 3
compliance deadline is bearing down, ABA and several financial trade associations on
August 31 wrote to the heads of the federal regulatory agencies raising concerns
about the fast-approaching compliance deadline for changes to the rule. Given the
short time frame between this clarification and the implementation deadline (and the
severe penalties for lack of full compliance), the groups urged regulators to provide
banks with a six-month window to ensure that systems are properly implemented and
tested before they are subject to transactional testing for compliance during exams.
They added that DoD has also experienced significant delays in creating a system for
providing lenders with military status information, which will leave banks unable to
finalize and test their compliance programs until mid-September. Read the letter.
ABA Seeks Clarified Exam Procedures on MLA Changes
In its latest advocacy, ABA on September 2 requested examination procedures from
the prudential regulators that would clarify how banks will be examined on particular
points within the rule.
Specifically, ABA urged the agencies to distinguish between “phony” purchase money
loans designed to evade the requirements and legitimate purchase loans with related
services and products financed by the loan. ABA asked the agencies to allow lenders
to rely on the borrower’s statement that a loan is being used to purchase a vehicle or
personal property, which makes the loan exempt from the rule.