March 2016

Volume 4, Issue 7

Posted on 3/31/2016

Mobile Banking Usage Continues to Grow According to the Federal Reserve Annual Report
This Wednesday, the Federal Reserve released its annual Consumers and Mobile Financial Services 2016 report showing that mobile financial use continues to grow as expected. This growth stems from the increase in smartphone adoption and the attraction to the convenience of mobile banking. This is the fifth annual report, which studies how consumers use mobile phones to access banking services, including making payments, transferring money, and paying for goods/services ("mobile payments").
 
Overall, the report found that 43% of adults with mobile phones and bank accounts reported using mobile banking, an increase of 4% from the prior year's survey. It also found an significant increase in mobile payment usage over the last 5 years. Read the full report with an analysis of its findings here -  - http://www.federalreserve.gov/newsevents/press/other/20160330a.htm
 
Providing mobile banking services comes with certain mobile banking risks. Join us on Tuesday, April 5th as Brandy Lalla explores these risks and what your institution needs to know when implementing or expanding your mobile banking offerings. For more information or to purchase, click here

CFPB Issues Advisory and Report for Financial Institutions on Preventing Elder Financial Abuse
The Consumer Financial Protection Bureau (CFPB) issued an advisory and a report with recommendations for banks and credit unions on how to prevent, recognize, report, and respond to financial exploitation of older Americans. Financial exploitation, the illegal or improper use of a person's funds, property or assets, is the most common form of elder abuse and costs seniors billions of dollars per year.

Older consumers are attractive targets for financial abuse because they may have significant assets or equity in their homes and usually have a regular source of income such as Social Security or a pension. They may also be especially vulnerable due to isolation, cognitive decline, physical disability, or other health problems. In recent studies, about 17 percent of seniors reported that they have been the victim of financial exploitation, but few cases ever come to the attention of protective services.

With their opportunities for face-to-face transactions, banks and credit unions are well-situated to protect older Americans from financial exploitation. The great majority of older adults have checking or savings accounts and many rely on tellers as their primary form of banking. Financial institutions are also uniquely suited to detect and act when an elder account holder has been targeted or victimized, and are mandated to report suspected elder financial exploitation under many states' laws. To read this advisory in its entirety, click here

Join Susan Wind on May 11 and learn more about how your institution can detect and prevent elder fraud. Click here for more information. 

FinCEN Issues FAQs Regarding Prepaid Access
The Finanical Crimes Enforcement Network (FinCEN) has issued guidance regarding prepaid accress. These FAQs are in addition to, and supplement, the FAQs entitled "Final Rule - Definitions and Other Regulations Relating to Prepaid Access," which were issued on November 2, 2011. The 2011 FAQs are found here.  The 2016 FAQs can be found here

Volume 4, Issue 6

Posted on 3/29/2016

Taxpayers Who Turned 70 1/2 in 2015 Must Take Required Minimum Distribtuions from IRAs and Retirement Plans by April 1, 2016
The Internal Revenue Service today reminded taxpayers who turned 70½ during 2015 that in most cases they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Friday, April 1, 2016.

The April 1 deadline applies to owners of traditional (including SEP and SIMPLE) IRAs, but not Roth IRAs. Normally, it also applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans.

The April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by Dec. 31. So, a taxpayer who turned 70½ in 2015 (born after June 30, 1944 and before July 1, 1945) and receives the first required distribution (for 2015) on April 1, 2016, for example, must still receive the second RMD by Dec. 31, 2016. 

Affected taxpayers who turned 70½ during 2015 must figure the RMD for the first year using the life expectancy as of their birthday in 2015 and their account balance on Dec. 31, 2014. The trustee reports the year-end account value to the IRA owner on Form 5498in Box 5. Worksheets and life expectancy tables for making this computation can be found in the appendices to Publication 590-B.

For more information, click here

Save on Your Taxes and for Retirement with the Saver's Credit
If you contribute to a retirement plan, like a 401(k) or an IRA, you may be able to claim the Saver's Credit. This credit can help you save for retirement and reduce the tax you owe. Here are some key facts that you should know about this important tax credit:
  • Formal Name.  The formal name of the Saver's Credit is the Retirement Savings Contribution Credit. The Saver's Credit is in addition to other tax savings you get if you set aside money for retirement. For example, you may also be able to deduct your contributions to a traditional IRA.
  • Maximum Credit.  The Saver's Credit is worth up to $4,000 if you are married and file a joint return. The credit is worth up to $2,000 if you are single. The credit you receive is often much less than the maximum. This is partly because of the deductions and other credits you may claim.
  • Income Limits.  You may be able to claim the credit depending on your filing status and the amount of your yearly income. You may be eligible for the credit on your 2015 tax return if you are:
    • Married filing jointly with income up to $61,000
    • Head of household with income up to $45,750
    • Married filing separately or a single taxpayer with income up to $30,500
  • Other Rules.  Other rules that apply to the credit include:
    • You must be at least 18 years of age.
    • You can't have been a full-time student in 2015.
    • No other person can claim you as a dependent on their tax return.
  • Contribution Date.  You must have contributed to a 401(k) plan or similar workplace plan by the end of the year to claim this credit. However, you can contribute to an IRA by the due date of your tax return and still have it count for 2015. The due date for most people is April 18, 2016.
  • Form 8880.  File Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the credit.
  • Free File.  If you can claim the credit, you can prepare and e-file your tax return for free using IRS Free File. The tax software will do the hard work for you. It will do the math and complete the right forms. Free File is available only through the IRS.gov website.
Use the Interactive Tax Assistant interview tool to help you determine if you qualify to claim the Retirement Savings Contributions Credit. Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Agencies Issue Guidance on Applying New CIP Requirements to Holders on Prepaid Cards
New Customer Identification Program rules on prepaid cards came out through interagency guidance to clarify that a bank's Customer Identification Program (CIP)  should apply to the cardholders of general purpose prepaid cards that have the features of an account and are issued by a bank.  This guidance states that each general purpose prepaid cards should be treated as an account if it provides a bank's customer with (1) the ability to reload funds or (2) access to credit or overdraft features.  The guidance applies to these cards even if they are sold, distributed, promoted, or marketed by third-party program managers.
 
The CIP rule, set forth in Section 326 of the USA PATRIOT Act, requires a bank to obtain information sufficient to form a reasonable belief regarding the identity of each "customer," including, at a minimum, obtaining the customer's name, date of birth, address, and tax identification number and to establish risk-based procedures to verify the identity of new customers.  To determine if CIP requirements apply to purchasers of prepaid cards, the issuing bank should first determine whether the issuance of a prepaid card results in the creation of an account; and if so, ascertain the identity of the holder of that card. This program will review this new interagency guidance for financial institutions from start to finish.
Join Debbie Crawford for a webinar on April 11th as she discusses these new rules and how they apply to your institution. Participants of this webinar will receive a sample policy change and sample procedures. For more information about this webinar or to purchase it,  click here. 
 
ITINs Now Renew Every Three Years
H.R. 2029, Consolidated Appropriations Act, 2016, Division Q Protecting Americans from Tax Hikes (PATH) Act of 2015 (P.L. 114-113) was signed into law on December 18, 2015. It includes Section 203 which outlines new specific rules relating to the issuance of ITINs. This legislation will ultimately modify the approach for ITIN issuance that was previously communicated in IR-2014-76 on June 30, 2014. We are still evaluating the changes required to implement the new legislation. Further details will be posted on irs.gov in the coming months. Until then, ITINs will continue to be issued using existing policies and procedures.
 
Effective January 1, 2013, the IRS implemented new procedures that affect the Individual Taxpayer Identification Number (ITIN) application process. Some of the information below, including the documentation requirements for individuals seeking an ITIN, has been superseded by these changes. Taxpayers and their representatives should review these program changes, which are further explained in these Frequently Asked Questions, before requesting an ITIN.
 
Effective January 1, 2013, authorized representatives for Certifying Acceptance Agents are required to complete forensic training and submit the original certificate of completion with their Form 13551 Application to Participate in the IRS Acceptance Agent Program.
 
Join Debbie Crawford for the Opening Accounts for Nonresident Aliens webinar on April 7th where she will cover this new updated information regarding ITINs. For more information or to register,click here

Volume 4, Issue 5

Posted on 3/23/2016

Agencies Issue Guidance on Applying New CIP Requirements to Holders on Prepaid Cards
New Customer Identification Program rules on prepaid cards came out through interagency guidance to clarify that a bank's Customer Identification Program (CIP)  should apply to the cardholders of general purpose prepaid cards that have the features of an account and are issued by a bank.  This guidance states that each general purpose prepaid cards should be treated as an account if it provides a bank's customer with (1) the ability to reload funds or (2) access to credit or overdraft features.  The guidance applies to these cards even if they are sold, distributed, promoted, or marketed by third-party program managers.
 
The CIP rule, set forth in Section 326 of the USA PATRIOT Act, requires a bank to obtain information sufficient to form a reasonable belief regarding the identity of each "customer," including, at a minimum, obtaining the customer's name, date of birth, address, and tax identification number and to establish risk-based procedures to verify the identity of new customers.  To determine if CIP requirements apply to purchasers of prepaid cards, the issuing bank should first determine whether the issuance of a prepaid card results in the creation of an account; and if so, ascertain the identity of the holder of that card. This program will review this new interagency guidance for financial institutions from start to finish.
Join Debbie Crawford for a webinar on April 11th as she discusses these new rules and how they apply to your institution. Participants of this webinar will receive a sample policy change and sample procedures. For more information about this webinar or to purchase it, click here. 
 
ITINs Now Renew Every Three Years
H.R. 2029, Consolidated Appropriations Act, 2016, Division Q Protecting Americans from Tax Hikes (PATH) Act of 2015 (P.L. 114-113) was signed into law on December 18, 2015. It includes Section 203 which outlines new specific rules relating to the issuance of ITINs. This legislation will ultimately modify the approach for ITIN issuance that was previously communicated in IR-2014-76 on June 30, 2014. We are still evaluating the changes required to implement the new legislation. Further details will be posted on irs.gov in the coming months. Until then, ITINs will continue to be issued using existing policies and procedures.
 
Effective January 1, 2013, the IRS implemented new procedures that affect the Individual Taxpayer Identification Number (ITIN) application process. Some of the information below, including the documentation requirements for individuals seeking an ITIN, has been superseded by these changes. Taxpayers and their representatives should review these program changes, which are further explained in these Frequently Asked Questions, before requesting an ITIN.
 
Effective January 1, 2013, authorized representatives for Certifying Acceptance Agents are required to complete forensic training and submit the original certificate of completion with their Form 13551 Application to Participate in the IRS Acceptance Agent Program.
 
Join Debbie Crawford for the Opening Accounts for Nonresident Aliens webinar on April 7th where she will cover this new updated information regarding ITINs. For more information or to register,click here

Volume 4, Issue 4

Posted on 3/1/2016

OCC Issues Bulletin Regarding the Process for BSA Administrative Enforcement Actions Based on Noncompliance With BSA Compliance Program Requirements
This bulletin supplements the "Interagency Statement on Enforcement of Bank Secrecy Act/Anti-Money Laundering Requirements" by providing guidance on the process the Office of the Comptroller of the Currency (OCC) has implemented to provide national banks, federal savings associations, and federal branches and agencies (collectively, banks) with an opportunity to respond to potential noncompliance with Bank Secrecy Act (BSA) compliance program requirements or repeat or uncorrected BSA compliance problems. 

It describes the OCC's process for administrative enforcement actions based on noncompliance with BSA compliance program requirements or repeat or uncorrected BSA compliance problems. These actions include providing banks with notice and an opportunity to respond before the decision to issue a cease-and-desist order is finalized.

The OCC uses a variety of methods to communicate problems or weaknesses in a bank's systems and controls, including BSA deficiencies, and to obtain corrective action. As explained in this bulletin, however, when these deficiencies rise to the level of noncompliance with BSA compliance program requirements or result in repeat or uncorrected BSA compliance problems, a statutory mandate requires the OCC to issue a cease-and-desist order.

In view of the consequences of noncompliance with BSA compliance program requirements or repeat or uncorrected BSA compliance problems, and to ensure that the process for taking administrative enforcement actions based on such violations is measured, fair, fully informed, and timely, the OCC's process generally includes notice and an opportunity for the bank to respond in advance of a decision to issue a mandatory cease-and-desist order.

For more information, click here
 
OCC Revises Civil Money Penalty Policy
The Office of the Comptroller of the Currency (OCC) is publishing its revised Policies and Procedures Manual (PPM) policy for assessing civil money penalties (CMP). This revised PPM 5000-7 (REV), "Civil Money Penalties," dated February 26, 2016, replaces the PPM of the same title issued in June 1993. The revised PPM sets forth the OCC's policies and procedures for the assessment of CMPs against institution-affiliated parties (IAP), national banks, federal savings associations, federal branches and agencies, and bank service companies and service providers.

The revised PPM includes
  • a new "CMP Matrix for Institutions" for assessing CMPs against national banks, federal savings associations, federal branches and agencies, and bank service companies and service providers.
  • a revised "CMP Matrix for Institution-Affiliated Parties" for assessing CMPs against IAPs.
For more information or to read this bulletin in its entirety, click here

Help for International Taxpayers Begins on IRS.gov
The Internal Revenue Service reminds U.S. taxpayers living abroad, as well as other international taxpayers,that IRS.govprovides the best starting place for getting answers to their important tax questions. This filing season, six new YouTube videos on common issues that international taxpayers face are also available.
The International Taxpayers page on IRS.gov is packed with information designed to help taxpayers living abroad, resident aliens, nonresident aliens, residents of U.S. territories and foreign students. The web site also features a directory that includes overseas tax preparers.
 
"These resources provide critical information to assist taxpayers with many different needs," said IRS Commissioner John Koskinen.  "Tax issues can be even more challenging for international taxpayers, and IRS.gov provides important details they need to understand their obligations."
 
International taxpayers will find the online IRS Tax Map and theInternational Tax Topic Index to be valuable sources of answers for their tax questions. These online tools assemble or group IRS forms, publications and web pages by subject and provide users with a single entry point to find tax information.
 
For more information, click here

Do you have a question or topic that you would like to see addressed in our monthly newsletter? If so, email us and let us know. Send questions and/or topic suggestions to info@bankersecampus.com.