Compliance Blog

Written By JiJi Bahhur, Regulatory Compliance Counsel

Fair Lending.  The Consumer Financial Protection Bureau (CFPB) is responsible for enforcing the Equal Credit Opportunity Act (ECOA).  As part of this responsibility, the CFPB recently issued CFPB Bulletin 2012-04 (Fair Lending) to provide compliance guidance on the fair lending requirements of the ECOA and its implementing regulation, Regulation B.   

The Bulletin puts lenders on notice that the CFPB will be monitoring for potential fair lending violations, including practices with unlawful discriminatory effects.  The CFPB reaffirmed its commitment to enforcing the ECOA, by recognizing the “disparate impact doctrine” as one of three recognized methods of proving lending discrimination under the ECOA.  The Bulletin further puts lenders on notice that lending policies with disproportionate, negative effects on a protected class (“disparate impact”) are illegal and will be pursued by the CFPB. 

For a background on Fair Lending and Reg B issues, take a peek at NAFCU's on-demand webcast (live broadcast was April 11th).  

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IRS Reporting.  The IRS finalized a rule requiring financial institutions to report interest paid on or after January 1, 2013, to non-U.S. citizens of certain countries.  Alternatively, credit unions may report interest paid to all nonresident aliens.  The interest (the aggregate of $10 or more) paid to a nonresident alien should be reported on Form 1042-S, “Foreign Person’s U.S. Source Income Subject to Withholding,” for the calendar year in which the interest was paid. 

For a full reading of the rule, go here.  Revenue Proceeding 2012-24 is here - listing the countries covered by this new requirement.  

NAFCU Members:  Our Regulatory Affairs team has provided a Final Regulation on this issue (12-EF-04) that is available for download.