Compliance News: Department of Defense Issues Updated MLA Guidance
See highlights of the update, plus recent legal briefs and answers to your compliance question of the week.
Last week, the Department of Defense issued updates to its Military Lending Act guidance. The updates clarify the previously issued guidance, which was released in the form of several FAQs.
Highlights of the update include the following clarifications:
- If a covered-borrower trades in a motor vehicle with negative equity as part of the purchase of another vehicle, and the credit transaction to purchase the second vehicle includes financing to repay the credit on the trade-in, the entire transaction is still eligible for the exclusion.
- Conversely, a credit transaction that also finances a credit-related product or service rather than a product or service expressly related to the motor vehicle is not eligible for the exceptions.
Further clarifications relate to security interests in a covered borrower’s deposit accounts, and the determination of covered borrower status.
Question of the Week
If a credit union plans to give each new member a $25 cash gift in connection with opening a new share deposit account, are there any IRS reporting requirements?
Yes. A cash gift credited to a member in relation to the opening of a credit union deposit account is considered interest. When the interest paid to the member by a credit union (or the fair market value of merchandise given) exceeds $10 within a calendar year, a 1099-INT is required. Therefore, the credit union would need to complete form 1099-INT for each member who received the $25 cash gift.
National Credit Union Administration (NCUA)
The NCUA released a Board Action Bulletin detailing its most recent board meeting. During the meeting, the agency approved a final rule implementing its central office organization and an amendment of the definition of “in danger of insolvency.”
The NCUA released credit union performance data for the third quarter of 2017. Credit unions saw an increase in total assets, total loans outstanding, net income, and insured shares and deposits. Additionally, the number of credit unions with a low-income designation also increased.
Federal Reserve Board (FRB)
The FRB issued a statement regarding the Federal Open Market Committee’s decision to raise the target range for federal funds to 1 ¼ – 1 ½ percent.
Department of Defense (DOD)
The DOD issued a long-awaited interpretive rule for the Military Lending Act. The interpretive rule amends and clarifies previous guidance released by the DOD in 2016.
A bill passed Congress that extends the DOD’s SCRA sunset date through December 31, 2019.
Financial Crimes Enforcement Network (FinCEN)
FinCEN updated its FAQs on the Bank Secrecy Act.
Financial Stability Oversight Council (Council)
The Financial Stability Oversight Council released its 2017 annual report. The Council is charged with identifying risks to the financial stability of the United States, promote market discipline, and respond to emerging threats to the stability of the U.S. financial system. The report provides annual recommendations, information on financial developments, regulatory developments and council activities, and potential emerging threats and vulnerabilities.
Office of Foreign Assets Control (OFAC)
OFAC has updated the SDN list as of Dec. 13, 2017. The last update prior to this was Dec. 5, 2017.
Questions? Contact the Compliance Hotline: 1.800.546.4465, firstname.lastname@example.org.