The California Department of Business Oversight has alerted financial institutions to monitor and report illegal transactions of unlicensed payday lending activity, the state regulator said.
What's more, the CDBO said it will be examining banks and credit unions to make sure they are taking measures to prevent unlicensed payday transactions.
“Department examinations will review for compliance to ensure safeguards are in place to prevent unlicensed payday lenders from gaining access to the ACH network and victimizing Californians,” CDBO Commissioner Jan Lynn Owen wrote in an Oct. 7 letter to financial institutions.
The commissioner also warned in her letter that to the “extent a bank or credit union conducts any business with unlicensed payday lenders, such activity could implicate safety and soundness concerns.”
For example, a bank or credit union may violate Bank Secrecy Act/Anti-Money Laundering requirements if its customer due diligence procedures do not confirm a customer's compliance with state licensing requirements, according to the commission.
Since January, the CDBO said it has taken numerous enforcement actions, including issuing Internet alerts, desist and refrain orders, voiding transaction orders and citations against unlicensed online payday lenders.
The names of unlicensed lenders that have received multiple consumer complaints are listed on the commission's website.
Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.
Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
- Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
