Pub. 16 2019 Issue 4

6 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S n EXECUTIVE VICE PRESIDENT’S MESSAGE continued from page 5 The final rule clarifies that tuition assistance, benefit plan contributions, sign-on bonuses (with no clawback provision), and the cost of providing wellness programs, gym access, coffee and snacks, parking benefits, and cellphone reimbursements may be excluded from the regular rate. to both state-sanctioned canna- bis businesses and the ancillary businesses that provide them with goods and services. As a re- sult, these businesses are forced to operate in cash, which in turn has introduced pressing public safety, tax collection, and regula- tory oversight challenges in those states. S. 1200 and the recently passed House version (H.R. 1595) represent a narrowly-tailored bi- partisan solution to address these specific public policy challenges created by the federal prohibition on banking cannabis-related funds. The primary goal is to get state-sanctioned cannabis cash off the streets and into regulated financial institutions, where it will be safer and more transpar- ent to state regulators and law enforcement. The bill would not change the status of cannabis at the federal level, but, as further detailed below, respects state sov- ereignty. It also does not facilitate cannabis sales in states that have chosen not to legalize it. Regulations • The Community Reinvest- ment Act (CRA) requires bank- ing regulators to assess bank and savings associations’ record of helping to meet the credit needs of the communities in which they are chartered and to consider an institution’s record when evalu- ating certain corporate applica- tions. The Act was chosen in 1977 to encourage banks to help meet the credit needs of the commu- nities in which they operate, including low and moderate-in- come neighborhoods. The rules implementing CRA, however, have not kept pace with the times or with new technologies and are holding back investments in the very communities the law is intended to serve. This has prompted a regulatory review of the best way to modernize CRA. We strongly support modernizing CRA and have urged regulators to: align CRA resources with actual community needs; reflect changes in technology, consumer preferences and the business of banking; increase certainty and transparency regarding regulato- ry interpretations and standards; improve the supervisory process; and apply CRA-like requirements to other financial firms, including credit unions. The House Finan- cial Services Committee has held hearings to consider OCC/FDIC proposals to modernize CRA. • Bank Secrecy Act/Anti-Mon- ey Laundering (BSA/AML). The banking industry not only supports the ILLICIT CASH Act (S. 2563) but also supports regu- latory initiatives to improve the BSA/AM system: - Interagency cooperation among the prudential regu- lators to identify steps that can streamline the process and eliminate inefficiencies, particularly steps to promote innovation. - FinCEN efforts to identify metrics that can quantify and measure success to ensure that resources are used wisely. - FinCEN efforts to evaluate the effectiveness of the BSA compliance regime to identify steps that can eliminate un- necessary reporting, facilitate information sharing between financial institutions and to- and-from law enforcement. - Efforts to identify and share law enforcement priorities with the financial sector to let banks make the most efficient and effective use of limited resources. - Ensure that the risk-based approach to BSA compliance is reflected in the examination process, keeping the FFIEC BSA/AML examination man- ual updated, and providing in- teragency and regular training for BSA examiners. Overtime Rule The Department of Labor has issued a final rule clarifying which payments to employees can be excluded from the calculation of the employee’s “regular rate” of pay. The rule took effect Janu - ary 15, 2020. The calculation of an employee’s regular rate of pay is important because, under the Fair Labor Standards Act, banks and other employers must pay an employee 1.5 times the employee’s regular rate of pay for any hours over 40 hours that the employee works in a workweek unless that employee is exempt from overtime requirements. An employee’s regular rate of pay may differ from the employee’s hourly rate of pay because the regular rate includes certain payments and benefits provided to the employee. The final rule clarifies that tuition assistance, benefit plan contributions, sign-on bonuses (with no clawback provision), and the cost of pro- viding wellness programs, gym access, coffee and snacks, parking benefits, and cellphone reimbursements may be excluded from the regular rate. The final rule excludes student loan repayments and adoption assistance from the regular rate and clarifies that travel reimbursement that follows the Internal Revenue Service’s guidelines is inherently reasonable. n