District Circular Letters
December 16, 1997
REGULATION Y:
REAL ESTATE APPRAISALS
DELEGATION OF AUTHORITY:
DETERMINING NECESSITY OF APPRAISERS
FINCEN:
COLOMBIAN BLACK MARKET PESO
To Bank Holding Companies, State Member Banks,
Edge Act Corporations, U.S. Branches and Agencies
of Foreign Banks, and Others Concerned
in the Twelfth Federal Reserve District
Proposed Amendment to Appraisal Regulation (Docket R-0990)
The Federal Reserve Board has requested comment on a proposed amendment
to its Appraisal Regulation for bank holding companies to exempt from
the Board's appraisal requirements any transaction involving the underwriting
or dealing of mortgage-backed securities.
Comment is requested by January 8, 1998.
The proposed amendment would permit a bank holding company or a nonbank
subsidiary of a bank holding company with the authority to underwrite
or deal in mortgage-backed securities to do so without demonstrating that
the loans underlying the securities are supported by appraisals at origination
that meet the Board's appraisal requirements.
As the proposal notes, the Board believes the public rating or due diligence
that the market requires for mortgage-backed securities provides information
that is at least as sufficient for assessing risks as provided by new
appraisals for the underlying loans.
Final Rule Regarding Delegation of Authority (Docket R-0991)
The Board has delegated to the Director of the Division of Banking Supervision
and Regulation the Board's existing authority to determine for an individual
transaction that the services of an appraiser are not necessary for the
protection of Federal financial and public policy interests in a real
estate-related financial transaction or the protection of the safety and
soundness of the institution involved.
This delegation of authority, which became effective December
9, 1997, is intended to aid in the efficient processing of requests
for individual exemptions from the Board's appraisal regulation.
Financial Crimes Enforcement Network Advisory Regarding Money Laundering
The Treasury Department's Financial Crimes Enforcement Network (FinCEN)
has published FinCEN Advisory, Issue 9, regarding the Colombian
black market peso exchange. The advisory is designed to alert banks and
other depository institutions to a large-scale, complex money laundering
system being used extensively by Colombian drug cartels to launder the
proceeds of narcotics sales. This system is affecting both U.S. depository
institutions and many U.S. businesses. The advisory is intended to help
institutions and businesses understand how the money laundering system
works, so that they may take steps to help law enforcement agencies in
their efforts to counter the system.
Copies
Copies of the Board's notices (Docket
R-0990 and Docket
R-0991) and the FinCEN advisory are available
from our Corporate Services Department. To request copies to be sent via
mail, please call (415) 974-2748. To request copies to
be sent via fax, please call (415) 974-3333, and specify
document numbers 4179, 4181, and 4182,
respectively.
Internet Access
The FinCEN Advisory is available via the FinCEN site, at http://www.ustreas.gov/fincen/pubs.html.
Additional Information
For additional information regarding Regulation Y and the Rules Regarding
Delegation of Authority, please contact our Banking Supervision and Regulation
Department, at (415) 974-3007. For additional information
regarding FinCEN Advisory, Issue 9, please contact FinCEN, at
(703) 905-3773.
FEDERAL RESERVE BANK OF SAN FRANCISCO
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