Maryland Legal Alert for Financial Services

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CFPB Finalizes Section 1071 Rule Under Regulation B of ECOA

FinCEN Proposes Rule to Expand Whistleblower Incentives and Protections

CFPB Finalizes Section 1071 Rule Under Regulation B of ECOA

The Consumer Financial Protection Bureau recently finalized its rule revising Regulation B, which implements the changes to the Equal Credit Opportunity Act (“ECOA”) made by Section 1071 of the Dodd-Frank Act. The revised rule substantially narrows portions of the CFPB’s original 2023 framework, reduces reporting obligations for some lenders, and establishes a new uniform compliance deadline of January 1, 2028. 

As discussed in our prior article, the CFPB previously proposed scaling back certain elements of Regulation B in response to industry concerns regarding compliance burden, operational complexity, and implementation challenges. The CFPB’s final rule largely adopts the agency’s proposed revisions and reflects a significant departure from the original 2023 rulemaking. 

The revised rule modifies several core aspects of the original Section 1071 framework, including:

• Narrowing the scope of covered financial institutions and covered credit transactions;
• Revising the definition of “small business”;
• Reducing or modifying certain required data points;
• Establishing a single compliance date of January 1, 2028 for covered institutions.

The CFPB stated that the revisions are intended to reduce regulatory burden, improve data quality, and minimize disruption to small business lending markets.

Practice Pointer: Financial institutions should continue reviewing their small business lending programs, data collection practices, and internal procedures to ensure readiness well in advance of the January 1, 2028 compliance deadline. Institutions should also evaluate whether existing loan origination systems, vendor platforms, and compliance management systems can accommodate the revised reporting requirements.

For more information concerning this topic, please contact Tamia J. Morris

Contact Tamia J. Morris | 410-576-4021

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FinCEN Proposes Rule to Expand Whistleblower Incentives and Protections

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) recently submitted to the Federal Register a Notice of Proposed Rulemaking (“NPRM”) intended to fully implement FinCEN’s whistleblower program by establishing a formal framework for offering financial incentives and protections to individuals who report certain financial crimes and sanctions violations.

According to FinCEN, the proposed rule is designed to encourage individuals to report violations involving the Bank Secrecy Act (“BSA”), U.S. sanctions programs administered by the Office of Foreign Assets Control (“OFAC”), and other laws intended to safeguard the U.S. financial system and national security. 

Key Components of the Proposed Rule

• Procedures for whistleblowers to submit information and award applications in a timely and secure manner;
• Eligibility criteria and procedures for adjudicating award applications; 
• Awards ranging from 10% to 30% of collected monetary penalties where a whistleblower’s information leads to a successful enforcement action by Treasury or the Department of Justice; and
• Protections for whistleblowers who provide information to FinCEN’s whistleblower program.

Although FinCEN’s whistleblower program was previously established under the Anti-Money Laundering Act of 2020 and the Anti-Money Laundering Whistleblower Improvement Act of 2022, FinCEN stated that the proposed rule would fully implement those statutory provisions.

FinCEN also recently launched an online whistleblower portal intended to facilitate the submission of tips and supporting documentation.
Members of the public may submit comments regarding the NPRM within 60 days following publication in the Federal Register.

For more information concerning this topic, please contact Tamia J. Morris

Contact Tamia J. Morris | 410-576-4021

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